By Osnat Lupesko-Persky (Doctoral Student, Palo Alto University) and Lisa M. Brown, PhD (Professor, Palo Alto University)
On February 13, 2015, the Elder Justice Reauthorization Act (H.R. 988) was introduced in the House of Representatives. The bill addresses the growing problem of elder financial abuse and emphasizes the role the federal government should take in coordinating and leading state support efforts. It provides a legal framework for necessary cooperation between federal and state agencies that handle health, legal and social services.
Sadly, since April 2015, the bill has been buried deep in the Subcommittee on Higher Education and Workforce Training with no signs of progress in its legislation. In this blog post, we describe the reasons why we believe the Reauthorization Act would benefit millions of older adults and their families.
Financial abuse of older adults has been described as “the crime of the 21st century.” While some readers may consider such statements as hyperbole, the facts speak for themselves.
- According to a 2011 MetLife Study “elder financial abuse is estimated to be at least $2.9 billion dollars, a 12% increase from the $2.6 billion estimated in 2008.”
- More recent research from 2015 by True Link, a California-based financial services firm specializing in retirees, argues that MetLife’s financial estimates are significantly underestimated. According to the True Link report, annual losses due to older adult financial fraud reach $36.48 billion and have been identified as a rapidly growing epidemic.
It is of little surprise, therefore, that older adult financial abuse is an area of societal concern for policy makers, law enforcement, clinicians, and researchers.
What sets elder financial abuse apart from other types of financial fraud?
One significant reason that it is in a league of its own is that older adults are highly vulnerable relative to their younger counterparts. For example, those with diminished physical or mental capacity coupled with declined independence are at greatest risk for financial exploitation by:
- relatives, friends or caregivers,
- business fraud, such as nursing homes, attorneys, insurance or banking,
- fraud by strangers, through communication mediums (internet, phone, mail), and
- Medicare and Medicaid fraud.
What makes elder financial abuse so prevalent, persistent and ‘contagious’? Why is elders’ financial fraud ‘here to stay’ and even likely to increase?
There are several reasons supporting our conclusion:
- Baby-boomers, recently crossing the ‘senior’ threshold, are considered both money-makers and money spenders: According to a Nielsen report from 2012 “Boomers make the most money and they spend what they make”. Indeed, according to the National Committee for the Prevention of Elder Abuse, persons over 50 control over 70% of the nation’s wealth, and it is expected to increase.
- Improved longevity means an increased percentage of older adults with significant financial power: The Nielsen report predicted that by 2017, 50% of U.S. adult population will be aged 50 and older and they will control 70% of the country’s disposable income. Also, by 2050, there will be 161 million adults aged 50 and older, a 63% increase from 2010.
- Baby-boomers are a significant consumer force: Boomers account for nearly $230 billion in spending on consumer packaged goods and possess a whopping buying force of almost 50% of total sales. Such strong spending by an aging group of the population is bound to attract fraud attempts.
- Baby-boomers are technology-savvy: they account for 40% of wireless customers, and 41% of apple computers clients. In addition, they spend on average 22-25 hours monthly using the internet on a computer, which is 2 hours more than the monthly average of 14-25 years old. As financial fraud through the Internet increases, so will fraud attempts against older adults making purchases online.
How does financial abuse impact older adults?
Studies suggest that financial abuse frequently results in reduced emotional and physical health, in addition to financial damage. The True Link report estimated that almost 950,000 elderly victims are skipping meals as a result of financial abuse. Naturally, when a subset of the population is already more vulnerable physically and emotionally, the impact of a crime would be even more severe.
What is the right approach to address elder financial abuse – prevention or support and assistance after-the-fact?
In the past two decades, researchers and government policy-makers focused mainly on creating methods that law enforcement and other organizations could use to identify fraud attempts in order to preempt them. Far less academic research has focused on the types of support – legal, social, mental health or other – required after the damage was done. As a result, there are no viable policies that address mechanisms of support for older adult victims of financial abuse, and there are no significant mechanisms of coordination and cooperation between the different agencies (e.g., legal, social, health, etc.).
Since we now know that elder financial abuse is a growing problem, it is of paramount importance to expedite this legislation in order to:
- accelerate collaboration between relevant agencies and
- develop programs that provide better and more comprehensive care for older adults who are victims of financial abuse.
APA fact sheet on elder abuse
Elder abuse and neglect: In search of solutions
Administration on Aging fact sheet on elder rights
Consumer Financial Protection Bureau resources for older adults
DaDalt, O. (2016). Older adults and fraud: Suggestions for policy and practice. Journal of Economic & Financial Studies, 4(03), 38-44.
H.R. 988 Elder Justice Reauthorization Act. Retrieved from: https://www.congress.gov/bill/114th-congress/house-bill/988
MetLife (2011).The MetLife Study of Elder Financial Abuse: Crimes of Occasion, Desperation, and Predation Against America’s Elders. Retrieved from: https://www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-elder-financial-abuse.pdf
Nielsen and Boomagers, LLC. (2012). Introducing Boomers – Marketing’s most valuable generation. Retrieved from: http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2012-Reports/nielsen-boomers-report-082912.pdf
True Link. (2015). The True Link report on elder financial abuse. Retrieved from: https://truelink-wordpress-assets.s3.amazonaws.com/wp-content/uploads/True-Link-Report-On-Elder-Financial-Abuse-012815.pdf
U.S. Government Accountability Office. (2011). Elder Justice: Stronger Federal Leadership Could Enhance National Response to Elder Abuse. Retrieved from: http://www.gao.gov/assets/320/316224.pdf
Osnat Lupesko-Persky is a second year PhD student in Clinical Psychology at Palo Alto University and focuses on various areas of intersection between psychology and the law. Prior to her studies, Osnat worked as a criminal defense attorney at the law firm of Brafman & Associates in New York City. Osnat holds a Master’s degree in International Law and Diplomacy from the Fletcher School, Tufts University.
Lisa M. Brown, PhD, ABPP is a professor of psychology and director of the Trauma Program at Palo Alto University. She is licensed in Florida and California and is board certified through The American Board of Professional Psychology (ABPP) in Geropsychology. Dr. Brown’s clinical and research focus is on trauma and resilience, aging, health, vulnerable populations, disasters, and long-term care. Her research has been funded by the National Institute of Aging, the Centers for Disease Control and Prevention, Department of Veterans Affairs Health Services Research and Development Service, and the Agency for Healthcare Administration.
Image source: Shutterstock