Older Americans are vulnerable to financial exploitation, and the situation seems to be getting worse after the pandemic.
Scholars, government agencies, and advocates have documented how older people fall victim to financial exploitation. The actual scale of the theft has proved elusive to quantify for a variety of reasons, ranging from the reluctance of victims to report an incident to inconsistent state data. A recent report from AARP and the National Opinion Research Center at the University of Chicago takes a dive into several databases and research studies to come up with a new estimate: The annual financial cost of exploitation of people 60 years and older is $28.3 billion.
Thieves target older adults for several reasons. They have typically accumulated some savings and financial resources. They may be dealing with mental and physical decline. They are often lonely and socially isolated. Recent research suggests the rate of financial exploitation has increased from pre-pandemic levels. Loneliness and social isolation are prime suspects.
The breakdown of the numbers is distressing. Family, friends, and caregivers were responsible for 72% of theft. Strangers stole the rest. These thefts can devastate an elder's finances. The crimes also impact the economy, including extra demands on private resources and public programs. "And then there are the truly human impacts, which other research has begun to identify, such as an older adults' mental and physical health," notes the report, "The Scope of Elder Financial Exploitation: What It Costs Victims."
The financial-services industry, law enforcement, and state attorneys general are making progress in combatting elder financial exploitation. Even though elder fraud is largely committed by people familiar to the victim, family members still have a major role to play in guarding against theft. Fraudsters, whether known to the victim or not, thrive on loneliness and social isolation of America's elders.
Family members, extended families, and close friends (depending on the history and relationships of aging elders) should reach out and get involved in ongoing conversations about finances. One person with power of attorney typically takes the lead. But others within the circle of connection should make sure they're in the loop. They should ask plenty of questions of the person designated with power of attorney and the aging elder.
There is no easy solution to the scourge of elder fraud. But conversation and connection are probably two of the better protections around until the broader society develops better institutional guardrails
Chris Farrell is a senior economics contributor to Marketplace and Minnesota Public Radio.