Elder Financial Abuse Reaches $2.9 Billion in 2010

A new MetLife study on elder financial abuse shows an estimated $2.9 billion lost by victims in 2010, with more than half of abuse cases perpetrated by strangers. MetLife says this type of abuse remains underreported, under-recognized, and under-prosecuted, despite the Elder Justice Act becoming law in 2010 and raising the profile on both elder abuse and elder financial abuse.

This year’s study, called Elder Financial Abuse: Crimes of Occasion, Desperation, and Predation Against America’s Elders, lists factors such as low social support, clinical depression, and social vulnerability as possible reasons why some elders are victimized. It also says the greatest changes between the 2008 and 2010 studies have to do with the type of perpetrator.

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Phone scammers and other cons/scams account for 28% of all abuse cases, up from 9% in 2008. Since the previous study, however, accounts of financial abuse by the hands of family have gone down by nearly 50%, and abuse from caregivers and trusted business professionals has declined. However, abuse perpetrated by victims’ friends has doubled, and 51% of studied cases of financial abuse were perpetrated by strangers.

Most of the financial abuse victims were in the 80 to 89 age range, with women more likely to be victimized than men, says MetLife. Additionally, perpetrators were primarily male, at 60%.

MetLife says financial abuse through Medicare and Medicaid fraud resulted in the highest average losses to victims, at more than $32 million. The dollar amount for elder financial abuse increased 12% from a 2008 study’s findings, titled Broken Trust: Elders, Family, and Finances and also conducted by MetLife.

This year’s study mentions how detrimental it is to elders when they are robbed of large amounts of money, as this jeopardizes their independence, retirement and healthcare. It calls for continued efforts to eradicate elder financial abuse, especially as it sometimes leads to other types of elder abuse.

Read the study here.

Written by Alyssa Gerace

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  • Reading just two weeks ago on RMD that a Congresswoman tied the rise in senior bankruptcies to the rise in reverse mortgages, will it be long before we read that the gains recently seen in call center originations is somehow tied to the increase in senior financial abuse occurring through telephone scams?  While it is ridiculous to conclude that increased HECM call center activity is somehow tied to increased senior financial abuse, it is not out of the realm of possibilities that someone with a voice in the media will try to make that case.
     
    The timing could not be worse.  It at least brings out the concern that seniors could be far more vulnerable to making bad financial decisions when the only contact with the actual purveyor of the financial product is by telephone.
     
    HUD should carefully review their call center policy.  Should there be a requirement that the individual providing the initial financial information on a HECM at the lender meet face-to-face with the senior to go over and complete  the application?  With as much financial gain as there is in the HECM product today, there is a real question if the cost to the lender is so formidable that this requirement should not be mandated.
     
    In this age of electronic advances, there is no excuse for a true old fashioned “boiler room” type HECM operation.  With little additional cost, brick and mortar call centers could easily become virtual so as to mitigate the travel cost issue related to face-to-face application originator meetings in the home of applicants.  Call center operators are vulnerable to a great deal of criticism and should reconsider their structure and modus operandi.  It is time that call center operations come out of the age of “boiler room operations” into the electronic “virtual” age with an emphasis on meeting with applicants in their own homes.

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