Thieves follow the money, and wealth accumulates as we age. But the aging brain is not always well-suited to financial decision-making—and that creates opportunity for financial fraud and abuse targeting the elderly.
“It’s a perfect storm,” said Elizabeth Loewy, general counsel for Eversafe, a technology firm that monitors customers’ bank and investment accounts, credit cards and credit reports for potential fraud and abuse.
Loewy has been in the frontlines of the fight against elder financial fraud and abuse for a long time. She pioneered prosecution of these cases during 29 years as an assistant district attorney in the Manhattan District Attorney's Office.
“When the office got started prosecuting elder abuse, we thought most of the cases would be physical abuse or domestic violence, but we quickly saw that it usually involved some kind of fraud or larceny,” she said.
Today, there is broad recognition that seniors are vulnerable to financial fraud that can devastate household balance sheets. Almost one in five Americans over the age of 65 has been taken advantage of through inappropriate investments, unreasonably high fees for financial services, or fraud, according to a study last year by the Investor Protection Trust, a nonprofit consumer advocacy group.
A broad range of professionals who work with the elderly are stepping up their anti-abuse efforts.
The North American Securities Administrators Association approved a rule last year requiring financial advisors to report suspected financial abuses to states’ securities regulators and adult protective services departments. The U.S. Securities and Exchange Commission recently approved new Financial Industry Regulatory Authority rules requiring its broker-dealer members to add a trusted backup contact person for all accounts and to allow members to put temporary holds on fund disbursements when financial exploitation is suspected. The new rule takes effect in February 2018. And the Investor Protection Trust is training physicians and attorneys to be on the lookout for warning signs of financial vulnerability.
“There is a good deal of progress, and it’s about time” said Loewy.
Eversafe is part of a growing tech startup sector that aims to guard against financial fraud targeting seniors using software that monitors accounts for irregular activity. The category also includes True Link, which also offers a robo-advisory service focused on management of retirement income.
More than half of the U.S. population over age 85 suffers from some level of cognitive impairment, according to research by the Center for Retirement Research at Boston College (CRR). Within that group, 27 percent suffer from dementia, and another 37 percent suffer some level of mild cognitive impairment.