Using a first-of-its-kind methodology, the AARP released a recent report that shows victims of elder financial exploitation (EFE), i.e., adults over the age of 60, lose approximately $28.3 billion annually – and that’s just in the United States. Every year, millions of older Americans lose significant portions of their life savings, and according to research, the problem is only growing.
In fact, it was uncovered that during the pandemic, the rate of exploitation doubled. And the financial industry – most specifically – has been feeling the direct impacts of this devastating crime, losing billions of dollars each year.
The report also shows that the vast majority of funds stolen from older Americans are by someone they know. Friends, family members, or caregivers are responsible for $20.8 billion. That translates to 72% of EFE dollars being taken. Exploitation by strangers accounts for the additional $8 billion, or 28%.
“While strangers may rely on quick and irreversible transactions such as gift cards or wire transfers, perpetrators familiar to the victim are more likely to make incremental inroads, gaining direct access to funds, for example, by attaining joint ownership or power of attorney status on their victims’ accounts,” said Jilenne Gunther, national director of AARP’s BankSafe Initiative and the author of the report.
The AARP research draws on three key sources of financial exploitation data maintained by federal agencies, as identified by the US Government Accountability Office.
- Consumer Sentinel Network (Sentinel), consisting of consumer reports of fraud collected and compiled by the Federal Trade Commission from various government and nonprofit sources.
- Internet Crime Complaint Center (IC3), consisting of consumer reports of cybercrime submitted to the Federal Bureau of Investigation (cost data included in IC3 do not overlap with data in the Sentinel report).
- EFE Suspicious Activities Reports (EFE SARs), a database of EFE reports made by financial institutions to the Department of the Treasury.
Also noted in the report, of the $28.3 billion in estimated annual EFE losses, only $7.8 billion of stolen funds are reported to authorities due largely to fear of embarrassment or not wanting to get their caregiver or family member in trouble. That means $20.5 billion is stolen each year but likely never reported to authorities.
Interestedly timed, the Securities and Exchange Commission’s Office of Investor Education and Advocacy (OIEA) recently unveiled a public service campaign that encourages older investors to never stop learning when it comes to protecting their hard-earned money and investing for their future. Additionally, NASAA, the SEC, and FINRA hosted a webinar on June 15, 2023, which also so happened to fall on World Elder Abuse Awareness Day.
To read the complete report, click here.