A handyman charms an older woman out of her life savings. A niece threatens her uncle until he rewrites his will to make her the sole beneficiary. Such stories of elder financial abuse—the illegal or improper use or withholding of an older person's assets, funds or property—are all too common.
As many as one in 10 Americans age 60 and older who live independently may have experienced some type of abuse, including financial mistreatment, according to the 2010 National Elder Mistreatment Study, a survey of 5,777 older adults funded by the National Institute of Justice and directed by clinical psychologist Ron Acierno, PhD.
Financial exploitation of older adults may happen gradually—a small "loan" here, a "gift" there. In some cases, the perpetrator may be a child or grandchild who takes advantage of a parent or grandparent's love to gain control of his or her assets. In other cases, the victim may have some psychological or physical impairment that makes him or her more dependent and vulnerable to financial abuse.
Such abuse can have devastating consequences for victims. New research led by the Stanford Center on Longevity at Stanford University suggests that a month or more after being the victim of fraud, elder victims are likely to have trouble meeting their expenses and to experience emotional and psychological problems (Findings From a Pilot Study to Measure Financial Fraud in the United States, February 2017). The study also found that many victims felt anger (75 percent), an inability to trust people (62 percent), a sense of feeling violated (57 percent), stress (56 percent) and embarrassment (50 percent). They also reported feeling "stupid," "physically ill" and even "suicidal."
"For some victims, the emotional consequences are worse than the financial loss," says Marguerite DeLiema, PhD, a postdoctoral researcher at the Stanford Center on Longevity in the Financial Security Division.
Psychologists are among those working to prevent and identify financial abuse in a variety of ways, including by conducting capacity assessments to determine a person's ability to handle finances and asking older clients about potential abuse during therapy sessions. They also are conducting research to pinpoint who is most vulnerable to such abuse, finding that it is most likely among older adults who experience isolation, loneliness or the recent loss of a loved one; who have an impairment that makes them dependent on another person; who are unfamiliar with finances; or who have a family member or acquaintance who is deeply in debt or has a substance abuse problem.
Most disheartening is that "the biggest risk factor for all forms of abuse is living with someone," says Acierno.
A complex problem
Defining financial mistreatment with precision is nearly impossible, says Acierno.
"If you have an adult child who spends two hours to get your groceries, and he keeps $2.75 in change, is that financial abuse? What if you live in his house or if he takes care of you and he feels like he should be compensated for his time or for gas for the car?" asks Acierno.
It becomes a bit fuzzy to call this financial abuse simply based on the opinion of the person who feels he or she is being taken advantage of, he says. Still, this does not mean they should not speak up and society should not investigate their complaints.
Complicating the matter further is the fact that many older victims are reluctant to acknowledge the abuse. The 2017 financial fraud study by the Stanford Center on Longevity found that older adults are less likely than younger adults to report incidents of financial fraud to authorities, even though they are more likely to be victims of such scams. In addition, a report by researchers at the Weill Cornell Medical Center at Cornell University, the New York City Department for the Aging and other organizations found that for every case of elder financial abuse that was brought to the attention of elder-protection programs and agencies, 24 cases were never reported (Under the Radar: New York State Elder Abuse Prevalence Study, May 2011).
Some victims may not report abuse because they have trouble remembering the details of the mistreatment, while others may be too afraid to report a caregiver they are dependent upon. In other instances, such as in a romantic scam, the victim might refuse to believe their relationship wasn't real, says DeLiema.
Older adults may also not report financial abuse for fear that their relatives may think they're no longer capable of making financial decisions or of living independently. And if a family member is the perpetrator, there may be a reluctance to get someone they love in trouble, says Peter A. Lichtenberg, PhD, director of the Institute of Gerontology and the Merrill Palmer Skillman Institute and professor of psychology at Wayne State University. According to a 2014 study by Janey Peterson, EdD, of Weill Cornell Medical College and collaborators of 4,156 adults ages 60 and older, 60 percent of those who committed elder abuse were family members, followed by friends and neighbors (17 percent) and home-care aides (15 percent) (Journal of General Internal Medicine, Vol. 29, No. 12, 2014).
At the same time, financial mistreatment of older adults is likely exacerbated by stereotypes about older people—such as that they're not able to remember things or cannot be trusted to make financial decisions. Such stereotypes can actually make older adults more vulnerable to financial abuse, says Lichtenberg.
"Ageism may lead health and financial professionals to ignore older adults who have any cognitive impairment, and not interview them or assess the older adult's financial practices or decisions," he says. "This at times allows a manipulative family member or professional caregiver to steal an older adult's monies."
Banks and credit card companies have taken the lead in screening for elder financial fraud. Tellers, for example, are often trained to spot such signs as young people suddenly accompanying an older adult and "helping" them withdraw more cash than normal. Automated screening detects irregular expenses or withdrawals. When abuse is suspected, financial institutions or financial advisors then alert a relative, a law enforcement agent, an elder ombudsman or adult protective services for help.
At the national level, APA has been a leader in setting best practices for assessing capacity in older adults, culminating in its collaboration with the American Bar Association Commission on Law on the "Assessment of Older Adults With Diminished Capacity: A Handbook for Psychologists." APA also worked with the Financial Industry Regulatory Authority on its e-learning course "Senior Investor Issues: Diminished Capacity" for its registered securities representatives.
At the community level, psychologists have been increasingly called upon by attorneys and elder abuse forensic center teams to conduct capacity evaluations of older adults to assess their financial decision-making skills. As part of such evaluations, psychologists assess a client's arithmetic skills and basic financial knowledge, as well as his or her ability to make informed financial decisions.
Even when work with a client doesn't directly involve financial matters—such as when an older patient is seeing a psychologist for sleep problems or depression—therapists should be asking the client financially related questions, says Lichtenberg. A good part of any patient intake, he says, is asking questions such as, "Has anyone taken your money without your permission?" Or "Do you worry about financial decisions you have recently made?" "Even if there is no abuse, it should be part of a checkup," he adds.
Psychologists should also be aware of peripheral signs of financial abuse, says Acierno. For instance, if a clinician is seeing an older client, it's a good idea to screen for abuse, says Shelly Jackson, PhD, visiting assistant professor in the department of psychiatry and neurobehavioral sciences at the University of Virginia. "You may see physical, emotional, verbal or sexual abuse," says Jackson. "If you see one form, you need to ask about the other types of abuse."
Similarly, if a patient has a history of abuse, either as a victim, perpetrator or both, chances are that violence or other forms of abuse will continue.
If a psychologist suspects that an older adult is a victim of any type of abuse, the first step is to contact the local branch of adult protective services.
Protection and prevention
When determining how to intervene, it's important to remember that many older people are perfectly capable of managing their finances and making decisions. In a special issue of the American Psychologist (Vol. 71, No. 4, 2016), Lichtenberg notes that both under- and overprotection of older adults can have damaging consequences. While it's critical to stop any financial exploitation, limiting an older adult's autonomy and control is linked to health problems and shortened longevity. In fact, research shows that age per se is not a risk factor for financial abuse (Center for Retirement Research at Boston College, Brief No. 17-1, January 2017).
One strategy that can have a protective effect is making older clients aware of specific cons, such as a home improvement fraud or an IRS impersonation scam. In one study by Susanne Scheibe, PhD, of the University of Groningen and colleagues, published in Basic and Applied Social Psychology (Vol. 36, No. 3, 2014), researchers asked a reformed con man to use telemarketing tricks to try to scam adults who were previously victims of mail fraud. Some participants were warned in advance about this particular scheme, and others were cautioned about a different scheme. While both warnings reduced the number of people who were duped outright, participants who were warned about the scam that the con man tried to pull off were more likely to refuse the scheme.
Another safeguard is to urge clients to set up a system of checks and balances that can protect them from financial fraud. For example, psychologists can encourage their clients to talk with their attorneys about naming two people as their agents when completing a financial power of attorney, rather than just one, says DeLiema.
Psychologists can also encourage their clients to seek support from trusted friends and family members. "If someone is isolated, scam artists try to get in," says DeLiema.
Assessment of Older Adults With Diminished Capacity: A Handbook for Psychologists
National Adult Protective Service Association
Elder Justice Initiative of the U.S. Department of Justice
National Center on Elder Abuse
Elder Financial Protection Network
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