Seniors lose billions to financial abuse
Survey released by nonprofit organization Investor Protection Trust
Senior citizens have been getting swindled out of billions of dollars a year, and the trend is only getting worse, studies show.
The majority, or 84%, of experts who deal with financial fraud of elders -- including financial planners, medical professionals and social workers -- have noticed an increase in financial abuses this year, according to a survey released this week by nonprofit organization Investor Protection Trust.
About 58% of the 762 respondents reported that they encountered investment fraud or financial exploitation of seniors "quite often" or "somewhat often." And 96% of experts said elderly fraud is a serious problem.
Meanwhile, research from insurance provider MetLife has found that Americans over the age of 60 lost about $2.9 billion to financial abuse in 2010 -- up 12% from the $2.6 billion lost in 2008.
About half of that fraud was perpetrated by complete strangers, while family, friends and neighbors accounted for about 34% of financial abuse, according to the report. In many cases, fraudsters stole seniors' Medicare or Medicaid benefits -- resulting in losses of $38 million in 2010.
The increase in financial abuse of the elderly prompted the Consumer Financial Protection Bureau, the government's new consumer watchdog, to launch an inquiry into the issue on Thursday.
The CFPB's director, Richard Cordray, said that at his former post as Attorney General of Ohio, he saw many instances of financial abuse against seniors -- including fraudulent lottery or sweepstakes scams where criminals stole the last of their money.
"Many seniors have routines, and their predictable patterns make them easier targets for predators," he said in a speech in Washington, D.C., a day before World Elder Abuse Awareness Day. "They can be lonely or overly trusting, and we now have many methods by which perfect strangers can communicate with them, often anonymously or posing as someone they are not."
The MetLife study also found that elderly women are nearly twice as likely to be victims as men. The majority of victims were between 80 and 89 years old, lived alone and were dependent on some sort of help around the home or with their health care.
Caregivers are often in a position where they can easily take advantage of seniors, especially if they have access to their finances, said Cordray.
"Abusers often assume that the victim will be too embarrassed or too frail to pursue legal action against them, and unfortunately that assumption is too often proven to be correct," said Cordray.
Most elderly victims of financial abuse don't report fraud because they are either too ashamed, don't realize they are being duped until it's too late to get their money back, or their adult children fail to recognize the problem in time to intervene, the IPT survey found.
To learn more about the problem and to determine whether action needs to be taken, the CFPB is seeking comments from the public about whether seniors are getting effective financial education or counseling and whether there are adequate resources available for seniors to determine the legitimacy of a financial planner or advisor. The agency is also asking for examples of any abusive and deceptive practices currently targeting seniors, and veterans and military retirees in particular.
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