Financial elder abuse—broadly defined as the illegal or improper use of the funds, property, or assets of people 60 and older by family, friends, neighbors, and strangers—costs older people and their families billions of dollars. But how many billions? That's subject to debate.
When Consumer Reports recently reported on elder financial fraud, Lies, Secrets, and Scams: How to Prevent Elder Abuse, we used the number $3 billion. It comes from a study published in 2011 by the MetLife Mature Market Institute, in collaboration with the National Committee for the Prevention of Elder Abuse and the Center for Geronotology at Virginia Polytechnic Institute and State University. We rounded up from that study's estimate of $2.9 billion annually (see page 2 of the download).
The MetLife study's methodology involved reviewing news articles mentioning elder financial abuse committed by strangers; family, friends, and neighbors; and the business sector, as well as Medicaid and Medicare fraud.
We chose that figure because a number of experts we interviewed thought it was a credible figure. But they—and an author of the study—admitted to us when we first reported it a couple of years ago that the figure probably represents the tip of the iceberg. The figure is probably far larger than that.
Other, Much Higher Estimates
At the other end of the scale, TrueLink, a company that provides account-monitoring software for elders and their families, has projected that financial elder abuse costs families more than $36 billion a year, 12 times the MetLife estimate. TrueLink arrived at its estimate by surveying family caregivers of older people. TrueLink CEO Kai Stinchcombe says that abuse committed by strangers—the main topic of our article—is more than $29 billion.
The TrueLink study used a broad definition of financial elder abuse. It included exploitation (about $17 billion), in which fraudsters operate openly, claiming victims' consent; examples are quack weight loss or dietary products, work-from-home schemes, hidden shipping and handling or subscriptions, and misleading financial advice. It also included a loss of $12.76 billion from criminal fraud (anonymous con artists and identity thieves), and $6.67 billion from abuse by caregivers: family members, and others exploiting a trusting relationship.
These figures were compelling, especially given that TrueLink consulted experts from the respected Financial Fraud Research Center at the Stanford Center on Longevity. When I spoke with Martha Deevy, director of the center's financial security division, however, she noted that she and her colleagues didn't write the survey. "We gave them input regarding how to frame the questions," she said. "We believe the challenge with the TrueLink numbers was the way they extrapolated and generalized across the population and think that should have been questioned in a peer-reviewed journal."
On the other hand, Deevy noted, the MetLife results may have been too conservative. "I think they leaned on the pieces of evidence they could authentically count," she said. "But people misrepresent how much they lost. A large percentage of victims are not reporting at all."
A problem with both estimates, Deevy says, is that there's no standardized way to define fraud types. She and her colleagues are working on a taxonomy that she hopes will be used by all professionals who deal in the field, including researchers; law enforcement; consumer protection advocates; and adult protective services workers.
More on Financial Elder Abuse
Combine the dilemma of defining financial elder abuse with widely divergent estimates of incidence, and you've got a crime that's difficult to put one's statistical hands around. The Investor Protection Trust says the likelihood that a senior has been financially victimized is 1 in 5. Another recent estimate, published last year in the Journal of General Internal Medicine, puts the figure at 4.7 percent of seniors, about 1 in 20. Any way you look at it, that's a lot of older people who have or will fall victim of financial fraud.
Another reason for the discrepancy in estimates is the myriad sources of data. There are many different places where seniors and their caregivers can report fraud, including AARP's Fraud Watch Network (877-908-3360); the Consumer Financial Protection Bureau's Office of Financial Protection for Older Americans; FTC; Senate Special Committee on Aging, local police, and local Adult Protective Services offices through the National Center on Elder Abuse. No central database on elder fraud has yet compiled and crunched all the numbers.
And of course, many people don't report the crime at all. The FTC says 1 in 24 financial elder abuse crimes ever get reported, while a study done in New York State in 2011 said it's 1 in 44. (See, there's even a discrepancy there!)
A Big, Amorphous Number
When we finally had to pin down a number for our headline, we ended up going with the more-conservative figure from MetLife, rounding up to $3 billion. Though the article focuses on financial exploitation at the hands of strangers, the headline encompasses abuse by all types of con artists, including family members and people the senior knows. When discussing stranger-initiated abuse, we couldn't arrive at a figure that made sense to us. Experts I consulted through a listserve used by professionals in the elder-abuse prevention and treatment community couldn't agree on a figure themselves. However, several professionals I interviewed said they were comfortable with saying it was in the "billions."
The point of this difficult exercise is that no really one knows how big the problem is. But clearly, it's huge. And until seniors feel comfortable reporting their victimization—and there's a standard way to define it and a central place to report it—we'll never know the total impact. Here's hoping that day comes, so the individuals working to help victims and prevent the crime can get the attention and resources they deserve.
