If we’ve said it once, we’ve said it a million time: those who attempt – and often succeed – at scamming senior citizens of their savings are the worst of the worst when it comes to already unsavory, immoral fraudsters. Despite regulators’ attempts to take these operations out of commission, one in five older Americans report being the victims of financial exploitations either by ne’er-do-wells or family members.
While shutting down operations that target the elderly is one step in protecting these consumers, the Consumer Financial Protection Bureau believes that stronger safeguards from financial institutions are also part of the equation.
Today, the Bureau issued an advisory and set of “best practice” recommendations [PDF] that financial initiations should consider adopting to assist in preventing exploitation.
“Elder financial exploitation has been called the crime of the 21st century and deploying effective interventions has never been more important,” according to the CFPB. “Older people are attractive targets because they often have assets and regular income. These consumers may be especially vulnerable due to isolation, cognitive decline, physical disability, health problems, or bereavement. Elder financial exploitation robs victims of their resources, dignity and quality of life—and they may never recover from it.”
Nearly 17% of seniors reported that they have been the victim of financial exploitation, from stranger scams like off-shore lottery schemes or the grandparent’s scam, to those perpetrated by those who are close to them, such as family members or caregivers, the CFPB reports.
In a specific case provided by the Bureau, a Minnesota pastor allegedly persuaded a man suffering from Alzheimer’s and Parkinson’s diseases to allow him to manage the man’s finances.
Over time, the pastor allegedly made 130 withdrawals from the elderly man’s account, totaling about $25,000. He was later convicted of the theft.
An Indiana home care worker was charged with nine felonies for her part in allegedly bilking $125,000 from a 79-year-old woman who suffered from dementia.
According to prosecutors, the caregiver stole the funds through transactions on multiple credit cards, checks drawn on a savings account and cashed certificates of deposit. A bank fraud analyst was the first to detect the unusually large credit card charges, and the analyst called Indiana Adult Protective Services.
While those cases centered on someone who was relatively close to the victim, other scams are larger operations.
For example, an Oklahoma woman reported receiving mail and phone calls telling her that she had won a sweepstakes and would get prizes if she sent money to collect her winnings.
The woman ultimately sent as many as 90 checks a month with payments ranging from $50 to $2,000. The scheme was only stopped after the woman asked a bank employee how she could send a large amount of cash through the mail.
In all, the CFPB’s report estimates the annual losses tied to elder financial exploitation ranges from $2.9 billion to $36.48 billion.
In an effort to prevent such devastating financial losses, the CFPB is turning to financial institutions.
“With their opportunities for face-to-face transactions, banks and credit unions are well-situated to protect older Americans from financial exploitation,” the CFPB states. “Financial institutions are also uniquely suited to detect and act when an elder account holder has been targeted or victimized, and are mandated to report suspected elder financial exploitation under many states’ laws.”
The CFPB recommends that financial institutions consider:
• Train staff to recognize abuse: Training should cover the warning signs of financial exploitation and appropriate responses to suspicious events.
• Use fraud detection technologies: This includes using predictive analytics to review account holders’ patterns and explore additional risk factors that may be associated with elder financial exploitation.
• Offer age-friendly services: They can also offer age-friendly account features such as opt-in limits on cash withdrawals or geographic transactions, alerts for specific account activity, and offer view-only access for authorized third parties.
• Reporting suspicious activity to authorities: Financial institutions should promptly report suspected exploitation to relevant federal, state, and local authorities, regardless of whether reporting is mandatory or voluntary under state or federal law. Banks and credit unions can work closely with local Adult Protective Services and law enforcement to enhance prevention and response efforts, including expediting document requests and providing them at no charge.
by Ashlee Kieler via Consumerist
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