Financial Exploitation of Elders

Current best estimates are one-third to more than one-half of all elder abuse cases involve financial exploitation,1 which can diminish or eliminate its victims’ economic stability and quality of life. As the elder population grows, it is imperative that victim service providers expand their knowledge and services in this area. Recently, findings of a study on financial exploitation were published in the Journal of Elder Abuse and Neglect, Volume 10, Number 3/4. This research, summarized below, provides insights into the difficulty service providers can face in identifying victims of elder financial exploitation.

Financial abuse of the elderly is generally defined as a "form of financial exploitation that involves wrongful acquisitions of money or valuable objects belonging to an elderly person by friends, relatives, or caretakers." Financial exploitation is a "much broader category" involving "theft or wrongful acquisition of money or objects of value by force or misrepresentation." In their recent article, Financial Exploitation of Elders: Analysis of Risk Factors Based on County Adult Protective Services Data,2 researchers Namkee Choi, Deborah Kulick, and James Mayer report on a study that applied the terms financial exploitation and financial abuse synonymously to identify a broad category of crime, including outright extortion, as well as incidences where family members or non-relatives take advantage of impaired elders.

To identify risk factors among financially exploited elders and those who mismanaged their finances, the researchers examined records from 1989 to 1996 in which the Erie County, New York, Protective Services for Older Adults (Protective Services) were involved. The Protective Services office receives an average of 1,600 reports of elder abuse, neglect, and self neglect a year. From 1991 to 1996, reports of financial exploitation increased from 10 percent to 33 percent. The increase is credited to the agency’s public awareness campaign, implemented in the early 1990's.

The researchers compared characteristics of elders where Protective Services had intervened and characteristics of elders where the agency had not intervened. They identified a total sample consisting of 386 cases that had been reported or referred to Protective Services primarily because of alleged or suspected financial exploitation. A first study sub-sample was formed by identifying 228 cases that had been found ineligible for intervention. This sample, called the "non-intervention" group, consisted of elders who generally did not have financial problems that were serious enough to require the agency’s direct assistance, or the elders had problems that were being addressed sufficiently by relatives or others. The remaining 158 cases were designated as an "intervention" group and compared to the non-intervention group to identify risk factors. The authors looked at age, gender, report/referral source, previous Protective Services interventions, housing problems, and living arrangements. The average age in both samples was 78, about two-thirds were women, and two-thirds lived alone. The only significant difference between the two groups was that more of the intervention group experienced problems with threatened eviction from their homes, lack of heat or utilities, and other related problems, and they were twice as likely to receive continued attention from Protective Services.

The intervention group was divided into two sub-groups: those who were financially exploited and had problems with financial mismanagement because of their own physical and/or mental disability were referred to as the "financial exploitation-mismanagement group." The second group consisted of individuals who were referred initially to Protective Services because of suspected financial exploitation, but were found to have problems with financial mismanagement of money due only to their own physical and/or mental disability. These were referred to as the "financial mismanagement-only" group.

Once all groupings were set, the study variables were expanded to include the size of the elders’ social support network, housing status, assistance required with daily living activities, ability to leave home, cognitive ability, and alcohol abuse. Findings revealed that 14 percent of the financial exploitation-mismanagement group had previously received Protective Services interventions, owned and occupied their housing 29 percent more often than the financial mismanagement-only group, and had 19 percent more housing-related problems. The financial exploitation-mismanagement group needed daily living assistance 20 percent less than the financial mismanagement-only group, and had abused alcohol 12 percent less than the financial mismanagement-only group. Also, the financial exploitation-mismanagement group members were found to have less cognitive ability, but could function better in daily life. Analysis of the financial exploitation-mismanagement group revealed the following key findings:

• 83 percent experienced unexplained disappearance of funds from their bank accounts or valuables from their homes, whereas with the financial mismanagement-only group, the most common symptoms were unpaid bills and money being given away;
• More than one perpetrator was involved in about one-fourth of the cases;
• 40 percent of offenders were the son or daughter of the victim;
• 20 percent of offenders were other relatives; and
• 40 percent of offenders were non-relatives, including neighbors, apartment managers, tenants, guardians, and powers of attorney who gradually took advantage of the elders they offered to help.

Risk factors for financially exploited elders were identified. The study found that subjects who owned the house they resided in, who had a least one source of social support, who did not need assistance with daily living activities, and who were not able to understand the consequences of their choices were more likely to be exploited.

Elders who lived in rented housing, motels or hotels, those without a support network, those who required daily living activities, and those who were able to understand the consequences of their choices were less likely to have been exploited.

With the exception of the ability to understand consequences finding, the study results are important to note because they tend to contradict a common perception that older, weaker, less stable seniors are more likely to be victims of financial exploitation. Moreover, the study found that social service agencies, health care providers, home health care agencies, law enforcement agencies, and relatives were most often responsible for reporting suspected exploitation. Despite the frequent reports of funds missing from bank accounts, only a few banks and financial institutions had reported suspicious activity.

Based on the findings, the authors offer the following recommendations to help combat the problem of financial exploitation and mismanagement.

1. Include an examination of potential risk for exploitation or mismanagement in all comprehensive assessment of service needs.
2. Educate elders and their caretakers about the risks and consequences of financial abuse.
3. Provide financial management planning services to at-risk elders and their caretakers.
4. Offer preventive educational programs on premeditated, professional criminal exploitation at senior centers and community meetings.
5. Establish ongoing collaborative relationships between adult protective service agencies and financial institutions, utility companies, and insurance agents to detect and substantiate financial exploitation or mismanagement.

Despite its limitations, the findings in this study provide a valuable snapshot of this growing national problem. Since the researchers looked at data based on a limited geographical area, they warn against generalizing their findings. They also note that since New York State service laws only cover impaired, endangered, and/or dysfunctional persons, their sample was not likely to represent the entire population of financially abused elders and was likely to have been biased toward the cognitively impaired. However, any research on this problem is important as it adds to the limited body of knowledge. More research is needed to uncover the extent and nature of financial exploitation of our nation’s elders.