The CFPB’s New Guide to Elder Financial Exploitation

Elder financial exploitation among seniors is not something that is necessary new. However, it is something that we are growing more aware of as a society. During February of 2019, the Consumer Financial Protection Bureau (CFPB) issued a report entitled: Suspicious Activity Reports on Elder Financial Exploitation: Issues and Trends which is eye opening. Here are some of the key takeaways from the report.

A SAR is a suspicious activity report. These reports are compiled by the Financial Crimes Enforcement Network (FINCEN) which receive data from financial institutions and money service businesses (MSB). Financial institutions include banks, broker/dealers, and other financial institutions. MSBs include non-depository agencies like check cashing agents, those who issue travelers checks, or the post office to name a few.

This report details the trends associated with the number of SARS which occurred between 2013 and 2017. The details should concern all of us who have parents and grandparents. Some of the highlights include:

Filings between 2013 and 2017: Total filings were 176,700. However, it is worth noting that 63,500 of these filings occurred in 2017. These filings represent only financial institutions.

It is believed this number represents less than two percent of the total percent of actual incidents. This is because many believe there is a much higher rate of exploitation. When combined with the U.S Census Bureau data showing an estimated population of more than 71 million adults over the age of 65, there could be millions of victims unreported.

Filings by MSBs increased significantly during the study period as well. In fact, this market showed the largest increase of SARs reporting, in fact, the total for MSBs increased from 15 percent in 2013 to 58 percent in 2017.

Monetary Losses Reported in Elder Financial Exploitation SARs

The amount of money which was reported lost or was attempted to be stolen was equally as eye-opening. The data shows that in 2014, actual losses and attempts totaled $1.7 billion dollars. However, in 2017, the report shows that $6 billion was reported in attempts and losses in financial exploitation directed towards seniors.

Unfortunately, only a small percentage, 15 percent report there were attempts without a monetary loss being involved. Fortunately, in some cases, fund transfers were successfully recovered either through blocking, rescission of the transaction, or a full refund without a financial loss to either the victim, or the financial institution.

More than one-quarter of all SARs did result in a loss of a senior’s funds while in 80 percent of all cases, either the victim or the financial institution reported some type of direct monetary loss. To compound this devastation, the amounts lost by the reporting agency were typically far less than the amount lost by the victim. On average, a senior lost an average of $34,200 while the filing institution lost an average of $16,700. It was further reported that at least seven percent of the reports resulted in a victim losing more than $100,000.

This report does not contain good news for those who are over the age of 70. In fact, the report states clearly there is every reason to believe that at least 40 percent of all SARs were for seniors over the age of 80 with the age group of 70 to 79 suffering the most significant dollar amount of losses. Just slightly more than one-half of the reports involved strangers; the balance of the SARs were filed due to exploitation by a person known to the victim.

Patterns in Elder Financial Exploitation SARs

Common suspects in MSB filings were strangers to the victim. Unfortunately, seniors may be more isolated from family and friends and spend a great deal of time on their own. The most common types of scams they fell prey to included:

  • Victims of Romance Scams – in many of these cases, MSBs notice that a senior has suddenly started wiring funds overseas. When the victim is questioned about these wires, they indicate they are sending money to someone whom the victim was introduced to online. MSBs are good at catching this type of scheme if the victim repeatedly goes to the same branch to send funds.
  • Exploitation by Family Member or Other Trusted Fiduciary – this often occurs when a person has a financial power of attorney. Unfortunately, one of the problems with this type of exploitation is it is often reported by another family member unless a bank teller repeatedly sees the same person coming to the bank making unusual withdrawals.
  • Theft by Person Acting as a Caregiver – this type of scam is generally caught by a financial institution when they see unusually large checks payable to a person who has a different last name. Once checking with the account holder, they learn this person is a caregiver and the victim was unaware of the transactions.
  • Victim Acts as a Money Mule – in most cases, these victims are participating in “flipping.” This means they are getting funds in and sending out nearly the same amount in a wire to the same location the incoming funds originated. Transactions are normally conducted through MSBs rather than banks.

New Insight Elder Financial Exploitation

Unfortunately, while the number of suspicious activity reports have been filed, few of them are reported to local law enforcement or elder abuse agencies. The data contained in these reports could be used to help protect our senior population from further exploitation if it was shared with the appropriate law enforcement and social services agencies.

Another key takeaway from the report indicated there is a strong belief that if the data which has been compiled was used properly, it would help develop strategies to help ensure protection of our most vulnerable seniors.

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