Unmasking the Disturbing Reality of Elder Financial Exploitation

In recent findings by the Financial Crimes Enforcement Network (FinCEN), the growing menace of elder financial exploitation (EFE) has become more evident, shedding light on the severe financial threats faced by the elderly. According to a new FinCEN analysis, financial institutions reported suspicious activities approximating $27 billion in one year alone, underscoring the scale and impact of these exploitations.

Expert Insight

John Schwartz – Founder of the Center for Combating Elder Financial Abuse, believes the FinCEN estimate of $27 billion annual loss from elder financial exploitation closely aligns with an AARP study last year, estimating the losses at $28.3 billion.  These two estimates highlight the critical scale of this issue.

The Alarming Statistics and Types of Exploitation

Between June 2022 and 2023, over 155,000 filings highlighted suspicious activities related to EFE. These activities are typically categorized as elder scams and elder theft, with scams making up about 80% of the cases. These scams often involve tricking older adults into transferring money for non-existent benefits, while elder theft usually involves trusted individuals like family members misappropriating the elder’s assets.

Expert Analysis

John Schwartz believes the $27 billion annual loss represents losses from only 1% of the senior population.  Schwartz suggests that if the percentage of exploited seniors is 2%, then the estimated losses could potentially double to $54 billion annually.

The Main Culprits: Scams and Theft

Elder financial abuse primarily manifests in two forms: external scammers and trusted insiders. Scammers often target older adults through deceptive schemes that promise significant returns on investments or fake distress situations needing urgent financial assistance, exploiting their trust and lack of digital savvy. On the other hand, elder theft often occurs closer to home, perpetrated by relatives or caregivers who might have easier access to the elder’s financial information.

Case Highlight:

John Schwartz references the case of Scott Kohn, who masterminded a $300 million Ponzi scheme, exploiting military veterans and elderly investors seeking safe retirement investments, which serves as a stark warning of how investment schemes can decimate seniors’ financial security.

Vital Role of Financial Institutions

FinCEN emphasizes the crucial role that financial institutions play in identifying and preventing such exploitation. With ongoing submissions averaging nearly 16,000 reports per month, banks are instrumental in flagging these activities. Enhanced surveillance and reporting mechanisms are essential in this battle against financial abuse.

Banks and other financial entities are on the frontline in the fight against these exploitative practices. By meticulously monitoring and reporting suspicious activities, they serve as guardians of their elder clients’ financial safety. Leveraging advanced technologies like RembrandtAi® can significantly enhance these efforts. RembrandtAi® utilizes cutting-edge machine learning algorithms to identify and alert unusual transaction patterns in real time, making it an indispensable tool in protecting vulnerable seniors.

Strategic Steps Forward

FinCEN continues to emphasize the importance of vigilance and proactive reporting mechanisms. They advocate for enhanced collaboration between financial institutions and law enforcement to ensure a robust defense against elder financial exploitation. Educating the elderly about financial security measures and the common tactics used by fraudsters is also crucial in mitigating risks.

Protective Strategy

John Schwartz believes that seniors, along with a trusted and responsible family member, should conduct an annual “vulnerability assessment” to identify and mitigate potential vulnerabilities.  Schwartz further believes this proactive step can significantly aid in fortifying their defenses against potential financial predators.

What Can Be Done?

As our population ages, the financial security of older adults remains a top priority. It’s imperative that everyone involved—from financial institutions to family members—stays informed and prepared to act against these threats. For further information on FinCEN’s findings and protective strategies, visit their official release.

This comprehensive approach not only safeguards our elders but also fortifies the integrity of our financial systems, ensuring that they serve the welfare of all community members effectively.

Sources:

FinCEN: https://www.fincen.gov/news/news-releases/fincen-issues-analysis-elder-financial-exploitation

ENDEFA: https://endefa.org/about/