Americans 62 and older, both rich and poor, are the target of widespread financial abuse from mortgage companies, banks, credit bureaus and debt collectors, according to a new report released Thursday.
Two nonprofit public interest groups, the Frontier Group and the U.S. PIRG Education Fund, analyzed more than 72,000 complaints filed with the Consumer Financial Protection Bureau (CFPB), also known as the Consumer Bureau, since its inception in 2011.
The report details predatory practices targeting older adults, including deceptive marketing campaigns from reverse mortgages lenders; inaccurate credit reports, often due to medical debts from deceased family members; and harassing and abusive phone calls from debt collectors.
"Many older consumers are at increased risk because of health or living conditions, including cognitive decline, isolation, disability or the recent loss of a loved one," the report said. "These conditions can make seniors more appealing targets for scammers, more susceptible to misleading advertising, or more prone to misunderstanding confusing terms or fee schedules."
There are more than 60 million Americans age 62 or older. A 2017 study from the American Journal of Public Health estimated that each year, 5.4% of older consumers are affected by financial scams or fraud.
"Older consumers with access to financial resources — savings, equity in their homes, or guaranteed income from Social Security or pensions — can be tempting targets for scammers or predatory businesses looking to take advantage of their wealth or income," the Frontier Group/U.S. PIRG report explained. "These include scammers peddling fake products or charities, mortgage companies promising easy cash through refinancing, or investment brokers peddling inappropriate high-risk investments."
Financial abuse of the elderly was the subject of an InvestmentNews special report earlier this year.
Mortgages are the leading source of complaints to the Consumer Bureau, accounting for nearly one-third of complaints by older consumers. A small portion of those mortgage complaints — 5% — relate to reverse mortgages that are only available to homeowners age 62 or older as a way to tap the equity in their home without having to move.
Credit reports are the second leading source of complaints by older consumers, accounting for 17% of such complaints. Most complaints relate to incorrect information appearing on reports, including medical debts of recently deceased family members.
Debt collection is the third-leading source of complaints by older consumers involving either inaccurate debt reporting or mistreatment by debt collectors including harassment, threats and abusive language.
Many of the complaints from older consumers have been the subject of enforcement actions by the Consumer Bureau, including those against several reverse mortgage lenders and the three major credit reporting companies — Equifax, Transunion and Experian — for allegedly deceptive practices regarding the value of the credit reports they sold to consumers.
The District of Columbia, Nevada, Delaware, Maryland and Georgia had the most complaints by older consumers relative to their population of older citizens.
DEFENDING THE CFPB
Beyond detailing a litany of financial abuses against the elderly, the report offered a blatant defense of the nascent consumer protection agency that has come under attack from a variety of financial services industry sectors and the Trump administration.
In June, the U.S. Treasury Department issued a report calling for the elimination of many of the central provisions of the Dodd-Frank Act put in place after the 2008 financial crisis, including stripping the CFPB of its power and saying the president should be able to remove its director, Richard Cordray, who was appointed by President Barack Obama.
"In addition to returning billions of dollars to wronged consumers, the Consumer Bureau has also cracked down on bad actors, provided educational resources to help navigate complex financial products and situations, and fought for stronger legal protections," the report said. "Yet the Consumer Bureau's ability to protect older consumers, and all consumers, is at risk."
"Wall Street firms, other banks and financial players and even pay-day lenders are working for a return to the regulatory environment that existed before the 2008 financial crisis, when mistreatment of consumers was largely ignored by the federal government," the report charged.
The Consumer Bureau offers a variety of resources to help older Americans and their caregivers navigate the financial marketplace on its website.