Hyden, Miron & Foster, PLLC Law Blog

Thursday, February 18, 2016

Stopping Elder Fraud

What can be done about the financial exploitation of the elderly?

As the life expectancy continues to rise, elders are faced with increasing challenges. One of the most difficult problems these individuals face is the potential of dementia. Moreover, many retirees are forced to manage their own retirement funds as traditional pension plans are becoming rare. This puts many retirees at risk for elder fraud and the problem is going to get worse as more of the baby boom generation heads toward retirement.

In fact, since 1950, the percentage of the population age 65 and over has risen consistently; by 2030, the figure will hit 20 percent. As more people reach the age of 60, complaints of fraud also continue to rise. The statistics are glaring: there were 65,000 fraud complaints by people 60 or older in 2010; in 2014 the number was over 170,000. Furthermore, according to the insurance industry, the cost of fraud in 2010 had reached $2.9 billion.

What is elder fraud?

Elder fraud involves the financial exploitation of the elderly and comes in many nefarious forms, whether small scams by telemarketers or fraudulent schemes conducted by people who are close to the elderly person. There are increasing reports of caregivers, family members and financial advisors who are taking advantage of the elderly by skimming savings or churning investment accounts.

The Role of Financial Professionals

The problem is compounded by the fact that only half the states have mandatory reporting rules for when financial professionals suspect fraud directed at the elderly. Now, however, state security regulators are joining forces in an effort to make it mandatory for financial advisors to report suspected cases of elder fraud. The Financial Institution Regulatory Authority (FINRA), and the Securities Industry and Financial Markets Association (SIFMA) have floated a number of proposals that would require advisors, their supervisors and the firms that employ them to alert state regulators and adult services groups when they suspect fraud.

There has been push back by industry groups who argue that these requirements would expose advisors to liability if they miss fraud, and that regulators are not equipped to handle more oversight. Ultimately, what is needed is more clarity as new or existing regulations need a suitable enforcement mechanism. In the meantime, if you or a loved one is the victim of a financial scam, speak with a qualified elder law attorney.

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