Elder financial abuse is a type of elder abuse in which misappropriation of financial resources or abusive use of financial control, in the context of a relationship where there is an expectation of trust, causes harm to an older person.
The Older Americans Act of 2006 defines elder financial abuse, or financial exploitation, as “the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.”[1]
Family members and informal or paid caregivers have special access to seniors and thus are often in a position to inflict financial abuse through deception, coercion, misrepresentation, undue influence, or theft. Common abusive practices include:
Family members engaged in financial abuse of the elderly may include spouses, siblings, children, grandchildren or other relatives. They may engage in the activity because they feel justified, for instance, they are taking what they might later inherit or have a sense of "entitlement" due to a negative personal relationship with the older person, or that it is somehow the price of a promise of lifelong care. Or they may take money or property to prevent other family members from getting the money or for fear that their inheritance may be lost due to cost of treating illnesses. Sometimes, family members take money or property from their elders because of gambling or other financial problems or substance abuse. [2]
Seniors are also often deliberately targeted by scams, fraud, and misleading marketing – often by otherwise legitimate businesses.[3] This may include:
A 1996 study by AARP[5] found that while individuals over 50 comprised 35% of the American population, they accounted for 57% of all fraud victims (AARP, 1996). Seniors' level of vulnerability to this type of exploitation varies by the type of scam. For example, the AARP found that lottery fraud victims were more likely to be women over 70 living alone, with lower education, lower income, and less financial literacy, while victims of investment fraud were more likely to be men between the ages of 55 and 62 who were married, with higher incomes and greater financial literacy.[6]
Hybrid Financial Exploitation (HFE) is financial exploitation that co-occurs with physical abuse and/or neglect. HFE victims are more likely to be co-habiting with abusive individual, to have fair/poor health, to fear the abusive individual, to perceive abusive individual as caretaker, and to have a longer duration of abuse.[7]
Various attempts have been made to estimate the size and scope of the problem. The primary difficulties in estimating the size of the problem are:
| Author | Year | Estimated impact | Notes | |
|---|---|---|---|---|
| True Link[9] | 2015 | $36 billion in annual losses | The study found that 37% of seniors affected over any given five-year period, consistent with 15% annual victimization rates found elsewhere. They do not provide a loss per incident but found any given victim loses approximately $11,600 over five years. | |
| Allianz[10] | 2014 | 5% of seniors report having lost money to scams, with average losses of $30,000, meaning that seniors alive in 2014 have experienced $69 billion in total losses due to financial abuse. The study does not provide an annualized figure. | The study also noted that one in five adults 40‐64 reported having an older friend or family member who has been a victim, suggesting it may be underreported by a factor of two to four versus the self-report. | |
| MetLife[11] | 2011 | 1,256 incidents per year reported in the press resulting in $2.9 billion in losses. There is no explicit estimate of how much is lost to incidents not reported in the press. | Their estimate is based on an estimated 1,256 incidents of financial abuse reported in the press, out of approximately 40 million seniors. The report acknowledges that making an estimate based only on press reports will produce an underestimate by a factor of five to forty. The study also found that about one third of incidents were by family and friends, with the remainder by strangers or businesses. | |
| New York State | 2011 | 5.2% of seniors experience financial abuse by family members | Only includes financial abuse by family members in the past year among adults 60+. Other studies have suggested about a third of incidents involve a family member or friend, so this is also consistent with a 15% victimization rate. | |
| Investor Protection Trust[12] | 2010 | 20% have been affected by financial services swindles in the past | IPT defined swindles as "inappropriate investment, unreasonably high fees for financial services, or outright fraud." | |
| MetLife[13] | 2009 | 1,076 incidents per year resulting in $2.6 billion in losses | Based on only fraud reported in the press. The report acknowledges that making an estimate based only on press reports will produce an underestimate by a factor of five, though other estimates suggest it may be closer to a factor of forty. | |
| Federal Trade Commission[14] | 2007 | 14% of people (all ages) experience fraud loss of $50 billion in total | The Stanford Center on Aging inflation-adjusted this to 2012 dollars. They also cited another report listing a 15% victimization rate and average losses of $216 per victim. Another study found a 14% victimization rate among seniors.[15] | |
| AARP[16] | 2003 | 4% of adults 45+ self-reported experiencing a "major consumer swindle or fraud" in the last year | ||
| Senate Committee on Aging[17] | 2000 | Americans (all ages) lose $90 billion per year to telemarketing fraud and identity theft. | This is often combined with AARP and NASAA studies that suggest that approximately half of fraud victims are seniors to arrive at a number around $40-$50 billion. |
Other effects include damage to credit, missing work, depression, and loss of sleep.[18]