Older Americans are being financially abused by family members, strangers and businesses to the tune of $2.9 billion a year, according to the latest MetLife Inc. study.
That total is 12% greater than the study's 2008 findings, which estimated that elders were being swindled out of $2.6 billion a year. Both numbers may be underestimating the problem, however.
“I expect we'll continue to see this go up,” said Sandra Timmermann, director of the MetLife Mature Market Institute, which released the study earlier this month. “It's still a conservative estimate because four out of five cases are not reported.”
Senior citizens are especially vulnerable to financial fraud because they may be cognitively impaired or simply confused by complex financial opportunities or products. Research from behavioral economist David Laibson shows that people tend to make poorer financial decisions as they get older. They also are often lonely and more willing to talk to strangers.
In about half of elder financial fraud cases, the perpetrators were strangers. They often target victims when they are out shopping, driving or managing their financial affairs. The criminals often looked for particular “flags of vulnerability” such as handicap stickers on cars, canes, or looking and acting confused, according to the report, which analyzed news articles about crimes against older people from April through June 2010.
About 35% of the cases involved people who the victim knew, such as caretakers, handymen, friends, children and neighbors. The thieves took advantage of an opportunity to steal credit cards, forge checks, empty bank accounts, transfer assets and otherwise “decimate elders' financial safety nets,” the report said.
Businesses, such as attorneys, banks, contractors and accountants were responsible for ripping off older Americans in about 12% of the cases. Though there were fewer instances, these cases on average involved greater financial losses, the study found.
“In almost all instances, financial exploitation is achieved through deceit, threats and emotional manipulation of an elder,” Ms. Timmermann said.
Women were twice as likely as men to be victims of elder financial abuse.
“Aging is a woman's issue,” Ms. Timmermann said. “They live longer, they are often the ones living alone and they are probably perceived as more vulnerable.”
Last week, the Alliance for Investor Education highlighted 10 websites with resources to help older investors and their families detect scams and investment fraud. The sites are sponsored by the Securities and Exchange Commission, the Financial Industry Regulatory Authority Inc., the North American Securities Administrators Association Inc. and others.
The list can be found at investoreducation.org/elderinvestmentfraud.