The likelihood that a senior who has been the target of financial exploitation will be targeted again is high, and the incidence and financial impact of elder financial abuse may be worse than previously thought, according to the 2016 “Safeguarding Our Seniors Study” commissioned by Allianz Life Insurance Co. of North America.
Allianz originally commissioned the study in 2014 and canvassed family and friends of seniors in an attempt to determine the extent of elder financial abuse. That study revealed that about 20 percent of respondents reported knowing an elder who had been the victim of financial abuse.
In the repeated study this year, Allianz polled 1,000 family and friends who are in a caregiving role to an elderly person or who soon will be. The data showed more than one-third of caregivers (37 percent) said the elderly person they care for has experienced abuse or exploitation resulting in a financial loss. This increase may be the result of either increased fraud activity, an increased awareness by those closest to the situation, or both.
Respondents also revealed that elder financial abuse is often not an isolated event. Forty percent of caregivers said their elderly charge has experienced financial abuse more than once.
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“What’s really disheartening is that even after there has been a discussion to raise awareness with the senior, they often still fall for the fraud,” said Katie Libbe, vice president of consumer insights for Allianz Life.
Libbe said cognitive decline is at play in some cases — 45 percent of caregivers noted the elderly person they care for shows signs of dementia — but often seniors with no signs of dementia fall prey to repeated fraud attempts. In some cases, a generational propensity to trust the government and institutions can lead to fraud, such as the widespread IRS phone scam, said Libbe. In addition, elder financial abuse is often perpetrated by family members, which increases the likelihood of repeated attempts of fraud.
For seniors who are experiencing cognitive decline or signs of dementia, the impact of financial abuse is often magnified. According to the study, 34 percent of seniors with signs of dementia experienced financial abuse compared with 24 percent with no cognitive decline, and the average loss is 28 percent higher for those who have symptoms of mental decline.
The average financial loss reported in this year’s study was $36,000, up 20 percent from the 2014 study which found financial losses averaged about $30,000. Nearly half of respondents characterized this type of loss as either “major” or “financial ruin” for the victim. Caregivers also are affected by elder fraud, with 90 percent saying they compensated for the elder’s loss in some way.
“It’s clear that elder financial abuse is becoming more commonplace, and unfortunately, it also appears to be greater than we thought in both scope and impact,” said Allianz Life President and CEO Walter White in a press release. “We’ve also learned that the damaging effects of abuse extend well beyond the seniors themselves to their caregivers. We believe the financial services industry, government, and the general public need to join forces to bring greater awareness to this issue and help reverse this troubling trend.”
While publicity around fraud perpetrated by strangers is prevalent, often financial exploitation is committed by somebody the senior knows.
Some friends or family members wouldn’t classify their activities as elder financial abuse, said Libbe. For instance, someone who drives their elderly family member to multiple doctor appointments might feel justified in using that person’s credit card to pay for gas and other items to compensate for their time. This type of compensation may be acceptable to the elderly person, but it should be transparent and all parties should be aware that it is happening to avoid suspicion and accusations.