Elderly people across the U.S. may suffer financial abuse at the hands of friends, family members, sales people and financial services employees. Federal law includes some provisions to prevent elderly abuse, but most aspects of the problem fall under state jurisdiction. Most states, and many city and county governments, have established hotlines for people to report suspected instances of elder abuse.
The Vulnerable Elder Rights Protection Program
Congress passed the Older Americans Act in 1965, to address the need for social programs to assist people over the age of 60. In 1992, Congress passed an amendment to the OAA, called the Vulnerable Elder Rights Protection Program. This sought to establish rules to help detect and prevent all forms of elder abuse. In 1996, the American Association of Retired Persons launched a nationwide awareness campaign that warned of the dangers of financial abuse through fraudulent telemarketing.
Types of Financial Elder Abuse
Financial elder abuse often involves close family members who gain access to the victim's financial information. Some elderly people add family members to bank accounts for emergency purposes, only to have the relatives withdraw all of their funds. Other people commit fraud by faking elderly relatives' signatures on stolen checks. Sales people often pressure elderly people into paying over the odds for goods and services. Some financial services employees open long-term annuities that have significant withdrawal penalties and durations that make them inappropriate products for very elderly people. Sales people receive large commissions for selling these long-term annuity products.
Effects of Financial Elder Abuse
Victims of elderly abuse lose money that they need to pay for day-to-day expenses, long-term care costs and nursing home expenses. Many families lose inheritance money when their elderly relatives are conned into giving money to crooks. Other elderly people tie up all of their money in annuity products that have little or no death benefits for their beneficiaries in the event that they die before receiving a return of premium through monthly income payments.
Preventing Financial Elder Abuse
Investment firms require sales people to attend annual compliance training that covers the topic of elderly abuse, and employees are encouraged to report instances of abuse to senior managers. The Securities and Exchange Commission and state regulators fine and bar sales people from the industry if they encourage elderly people to make poor investment choices. Sales people must keep notes of customer interactions to support their investment advice. Elderly advocate groups encourage family members and friends to take an active role in helping aged relatives with their finances to minimize the chances of abuse when they go in search of other people to help them with their financial affairs.
Elder Finance Issues
Most people do not like to discuss their financial affairs with friends and family members. Some elderly people refuse help and then fall victim to diseases such as Alzheimer's that limits their abilities to make sound decisions. Financial planners recommend setting up estate accounts during retirement with provisions for trusted friends or family members to handle financial affairs if illness or diminished mental capacity prevents the account owners from making sound decisions.