Inheritance impatience seems to be getting the best of family members, friends and caregivers, who are also the ones perpetuating a growing percentage of elder financial fraud—a national scourge that now totals $36.5 billion in lost funds every year, according to the National Council on Aging.
Family, friends and caregivers commit nearly 81% of the financial fraud perpetrated against elders in Arizona and 67% of elder financial fraud in New York. At a minimum, familiar faces are responsible for at least half of senior financial fraud across the country, adult protective services agencies reported.
“Among the things that keep me up at night … is the fact that every day there are bad people out there targeting the elder community,” said Securities and Exchange Commission Chairman Jay Clayton at a Thursday roundtable devoted to the topic of preventing elder financial abuse.
“I worry about the fraudsters who are constantly thinking of new ways to try to rob our parents, our grandparents and anyone who has a 401(k) plan or some kind of retirement plan,” and cheat them out of their hard-earned money, he said.
Clayton, the nation’s top securities cop, said he felt compelled to take over his own grandmother’s finances after his grandfather died. Clayton saw his grandmother’s vulnerability and the scam artists that began circling.
His grandparents “had a portfolio and not a huge amount of money, but I will tell you the number of charlatans that approached her over time was substantial,” he said. “That said, if she had not been invested in our capital markets, her retirement would have been materially much less comfortable and more stressful. These are the types of considerations that have formed my thinking.”
The number of Americans aged 65 and older who report being victimized by financial fraud is one in five, but that number is likely much higher, since only one in 44 cases of financial abuse is ever reported to the authorities, a recent MetLife study found.
“While the commission is actively pursuing bad actors and returning money, prevention is critical,” Clayton said. “Let’s be clear. Even if we get them their money back, taking two to three years to get them their money back is too long.”
State agencies that collect information on senior financial abuse are reporting a marked upswing of fraud by familiar faces, said Lori Delagrammatikas, the executive director of the National Adult Protective Services Association (NAPSA), who also spoke at the SEC roundtable.
“I have to say that most adult protective service cases are a result of family member fraud, ranging from power of attorney abuses to misuse of credit cards,” she said. “We see soup to nuts from outright theft to sweetheart scams on a regular basis,” she said.