Financial Exploitation of the Elderly on the Rise

Elder financial abuse"Grappling with growing financial exploitation of the elderly, state officials are pressing for laws that require financial advisers to report suspected ‘elder fraud' to authorities."

New laws face resistance from the financial industry, which claims they could result in a massive number of false reports. People 60 years and older were involved in 171,230 fraud complaints tracked by the Federal Trade Commission in 2014. That's more than double the number in 2010, although some of that jump could come from better reporting.

The Wall Street Journal says that American retirees are exercising greater control over their finances with the decline in traditional pension plans. The article, "Officials Seek Clampdown on Elder Fraud," explains that the complexity of managing and investing savings poses a challenge, particularly as the U.S. population ages. Especially with more people projected to get dementia, this may open up the door to more exploitation.

Fraud can be anything from sweepstakes scams and bogus investment schemes to dishonest caregivers or family members stealing the senior's savings. In some instances, investment advisers or stockbrokers have been found guilty of churning accounts through unnecessary trades, resulting in high fees or losses.

Statistics show that seniors lost at least $2.9 billion to financial abuse in 2010. That was an increase of 12% in two years, according to Met Life. To help prevent this, a coalition of state securities regulators is proposing a model state law that would require financial advisers — including brokers at large investment houses and independent advisers and their supervisors — to report suspected elder financial fraud to both a state securities regulator and an adult protective-services agency.

The bill would require immediate reporting by a financial adviser who "reasonably believes that financial exploitation" of an older person "may have occurred, may have been attempted, or is being attempted." The proposed legislation affords brokers and advisers civil immunity from privacy violations for reporting suspected fraud and gives them the authority to place a hold temporarily on suspicious account disbursements.

Supporters say advisers and brokers are in a prime position to flag early warnings about exploitation. However, financial-industry trade groups are pushing back, arguing that the reporting requirement would overburden state agencies. And some financial advisers worry they could be hit with a lawsuit if they miss an abuse case since about 40% to 50% of all "red flags" of suspicious activity turn out to be false. This is according to the Securities Industry and Financial Markets Association, the main Wall Street trade group. But a "voluntary" reporting system would let securities firms look into these claims in-house before going to authorities.

Roughly half of the states require elder fraud reporting by certain financial professionals, but these laws don't always extend specifically to financial advisers. And all states have an adult protective-services agency to investigate reports of abuse, neglect, and exploitation of the elderly; however, dementia, embarrassment, or reluctance to report family members all contribute to low disclosure rates. In fact, a 2014 survey found that 44% of agency officials said financial institutions were frequently unwilling to provide a client's records, and 40% reported long delays obtaining these records.

FINRA, the Financial Industry Regulatory Authority, Wall Street's self-regulator, recently drafted its own rule to permit firms to put temporary holds on suspicious account disbursements — although it doesn't have a provision for mandatory reporting. Right now when financial advisers suspect an aging client is being taken advantage of, many say they are hampered by strict rules governing the execution of trades and processing of withdrawals. They also are concerned with violating privacy laws if they report these concerns.

Reference: Wall Street Journal (December 29, 2015) "Officials Seek Clampdown on Elder Fraud"


Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment


We have a LOT more where that came from!

We hate spam too. We will never share or sell your information.

Call Now ButtonCall Us Now https://jsfiddle.net/7h5246b8/

Request a free consultation

We hate spam too. We will never share or sell your information.

We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
  • Please continue to follow the directives of our local, state, and federal agencies. For your health and in consideration of our team who is assisting you, if you’ve scheduled an office appointment or planned to drop off paperwork and are experiencing a fever, dry cough, or shortness of breath, please contact your primary care doctor for guidance and then our office to reschedule.

Thank you, Walt and the Zaremba Team

Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.