Elder financial abuse is being called the fastest growing area of crime in America. And it may be happening in your family if you aren't paying attention to a caregiver — or a relative — who, under the guise of being helpful, is syphoning off an elderly person's life savings.
According to AARP, 60 percent of the Adult Protective Services cases of financial abuse nationwide involved an adult child of the elderly person. Much of this theft is committed by their own family members under the guise of "helping them" or simply rationalizing that the money would be theirs someday, so why not now.
Women are twice as likely to be victims as men. Most are between the age of 80 and 89, and are living alone, trying to maintain their independence. But elderly men are similarly abused as the generation before the boomers lives longer thanks to medical science and becomes more dependent on caregivers.
Who pays? We all do. It's not just the humiliation when the senior realizes what has happened. Many are too frightened of their caregiver or of being left alone to even report this crime. But once the money is drained, these seniors become wards of the Medicaid system — shuffled off to nursing homes and receiving the least competent care — all paid for by the taxpayers. A recent MetLife study estimates the cost of financial elder abuse at $2.9 billion a year and rising.
The only good news is that Financial Elder Abuse is becoming a trending media topic. This past month saw National Senior Citizen's Day. As part of that recognition there is more publicity about financial elder abuse.
The Consumer Financial Protection Bureau has just this month issued a guide to help assisted-living and nursing-facility staff better protect the people in their care by preventing and addressing financial abuse and scams. The guide helps staff recognize, record and report financial mistreatment by family members or other trusted people handling the finances of an incapacitated adult.
And in recognition that much of the abuse happens through the banking industry (which is where the money is), the American Bankers Association has just announced an alliance with AARP to focus on the issue of financial elder abuse. In the announcement the ABA president Frank Keating said: "Our planned alliance with AARP will help us provide bankers, older Americans and their caregivers with the tools they need to thwart financial crimes."
Banks always have to tread carefully between the Federal regulators — who through legislation such as Gramm, Leach, Bliley, have mandated privacy for financial matters — and the various state legislation across the country (because this issue of elder abuse is primarily state-regulated), many of whom have mandated reporting of suspicious activity by the banks.
But according to the American Bankers Association there definitely is a basis for banks to legally report suspected elder financial abuse. The exceptions to the privacy rules allow a financial institution to disclose nonpublic personal information in order to "protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability."
In fact, on Feb. 22, 2011, the Financial Crimes Enforcement Network of the U.S. Treasury issued a report dealing with the issue, and saying: "Financial institutions can play a key role in addressing elder financial exploitation due to the nature of the client relationship. ... We emphasize that all filers should report all forms of elder abuse ... " In the report, banks were encouraged to report elder abuse by using the SARS form — the suspicious activity report form, commonly used in suspected money-laundering cases.
Surprisingly, and sadly, there is no national law against financial elder abuse. Protection and prosecution is left to the states. And only California and Florida have state laws mandating the reporting of financial elder abuse (or abuse of any handicapped adult). Yet almost every state has a department on aging and its own toll-free reporting number. But only in a few states is activity coordinated between law enforcement, the state attorney general and the aging departments. As a result, much elder abuse goes unreported, or worse — uninvestigated!
What can you do? Search and publicize your state's elder abuse hotline number. Remind your local elected police commissioners and public servants that elder abuse is a crime (under fraud statutes, even if there is no specific elder law applicable). And let's all remember that one day we could be the abused elders! That's the Savage Truth.
Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. She is the author of the new book, "The New Savage Number: How Much Money Do You Really Need to Retire?" "Terry answers readers' personal finance questions on her blog at www.TerrySavage.com. To find out more about Terry Savage and read her past columns, visit the Creators Syndicate Web page at www.creators.com.