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Financial crime, sometimes referred to as Financial Abuse or Financial Exploitation, is a growing epidemic in the United States, posing a threat to both individuals and society. Understanding of the scope of problem has been hampered by a lack of valid statistics although progress is being made in ascertaining the extent of the problem. Although people of all ages are vulnerable, elders are often targeted by predators and experience greater losses than younger victims.
Financial crimes and exploitation may be committed family members, acquaintances, predators, and professionals and takes many forms, including:
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Scams include:
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- Predatory Lending: The use of lending practices that are unfair or abusive, such as convincing borrowers to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions. Common forms that target elder older adults include home equity loans and "payday loans" (see "Under the Radar" for developments in "payday loans"" that are overpriced or that borrowers don't need or can't afford.
- Mass-Marketing Fraud: The Department of Justice defines "mass-marketing fraud" as any fraud scheme that uses one or more mass-communication methods – such as the Internet, telephones, the mail, or in-person meetings – to fraudulently solicit or transact with numerous prospective victims or to transfer fraud proceeds to financial institutions or others connected with the scheme. Schemes generally fall into two categories: (1) schemes that defraud numerous victims out of comparatively small amounts, such as several hundred dollars, per victim; and (2) schemes that defraud comparatively less numerous victims out of large amounts, such as thousands or millions of dollars per victim.
- Money Muling: A type of money laundering in which a person receives money from a third party into their bank account and transfers it to another one or takes it out in cash and gives it to someone else, obtaining a commission for it. Even if money mules are not directly involved in the crimes that generate the money (e.g. on-line fraud, drugs, human trafficking), or aware of what is happening, they are accomplices and may therefore be criminally liable.
Reports
- Sweepstakes, Lottery and Prize Scams. (2018, June). Better Business Bureau study of how "winners" lose millions through an evolving fraud. The report is authored by Steve Baker, editor of the Baker Report, who also authored CEJC's blog post Awash in a Sea of Fraud: No Guns, No Action. The report found that:
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- Transnational Scam Predators and Older Adult Victims: Contributing Characteristics of Chronic Victims and Developing an Effective Response. (2018). This article by Dr. Erik Lande and Debbie Deem appeared in the December, 2018 edition of the Federal Journal of Federal Law and Practice.
- Recommendations and Report for Financial Institutions on Preventing and Responding to Elder Financial Exploitation. (2016). Report by the Consumer Financial Protection Bureau’s Office for Older Americans that highlights best practices to assist banks and credit unions with their efforts to prevent elder financial abuse and intervene effectively when it occurs.
- “Federal Government Has Taken Some Steps but Could Do More to Combat Elder Financial Exploitation” (2013, May) (Publication No.GAO-13-626T). This report indicated that “Older adults are being financially exploited by strangers” Financial exploitation includes mail, telephone, or Internet scams; unscrupulous financial services professionals; and untrustworthy in-home caregivers. The General Accounting Office (GAO) visited local law enforcement authorities in the four states and found that these states were investigating and prosecuting the a growing number of cases involving interstate and international mass marketing fraud.” The GAO has identified “several ways the federal government is, or could be, supporting state and local efforts to combat elder financial exploitation.” U.S. Government Accountability Office.
- ELDER JUSTICE: National Strategy Needed to Effectively Combat Elder Financial Exploitation” (2012, November). (Publication No. GAO-13-110). To write this report the GAO interviewed state and local social service, criminal justice, and consumer protection officials in four states with large elderly populations. The GAO found the need for more safeguards and public awareness activities. U.S. Government Accountability Office.
Legislation
- Senior Safe Act. The Act provides immunity from prosecution for financial institution employees and financial institutions for disclosing suspected elder financial exploitation in some instances. It was signed into law on May 24th, 2018.
- Criminal and Adult Protection Financial Exploitation Laws in the United States: How Do the Statutes Measure Up to Existing Research? Study analyzing the literature on financial exploitation and the laws of all fifty states to determine which states included proactive approaches to addressing financial abuse and identfiy states needing improvement. See: Hansen, K., Hampel, J., Reynolds, S., & Freeman, I. (2016). Criminal and Adult Protection Financial Exploitation Laws in the United States: How Do the Statutes Measure Up to Existing Research? Mitchell Hamline Law Review, 42(3). https://open.mitchellhamline.edu/mhlr/vol42/iss3/3
Resources
- Resources for Financial Institutions. Banks, savings and loans, investment advisors and brokers, and other providers of financial services can play a key role in preventing financial crimes and exploitation and holding perpetrators accountable. As of July 1, 2020, financial advisors and brokers have been added to the list of mandated reporters in the state. For information on resources for financial institutions in California and beyond, click here.
- Consumer Sentinel. This online database operated by the Federal Trade Commission and available to law enforcement, cmpiles consumer reports about fraud, identity theft, and other consumer protection topics. Each year it publishes annual reports on the data. 2019 Sentinel Data shows that:
- There were 1.7 million fraud complaints;
- Losses were $1.9 billion, an increase of $293 million from the previous year;
- Most complaints were about imposters, including romance scams and scammers representing themselves as employees of the Internal Revenue Service or the Social Security Administration;
- 33% of those losing money were in their 20s; and
- Older consumers are victimized less often but lose more.
- Model Civil Provisions on Elder Financial Exploitation was produced by the National Center for Victims of Crime, in collaboration with the American Bar Association and with support from the Huguette Clark Family Fund for Protection of Elders. “Elder financial exploitation is insidious and pervasive and has serious implications for its victims’ financial, emotional, and physical well-being. Although exact statistics are unknown, it is widely agreed upon by experts in the field that elder financial exploitation is underreported to investigatory agencies such as Adult Protective Services or law enforcement. Thus, it is also unlikely that victims pursue any civil remedies. This report discusses barriers to the civil justice system, and proposes some recommendations for overcoming some of those barriers.”
- White Paper: Roundtable on Serving Victims of Elder Financial Exploitation was produced by the National Center for Victims of Crime with support from the Huguette Clark Family Fund for the Protection of Elders. During the Roundtable in November 2014, “Over thirty nationally-recognized experts in the field, including representatives of various government and law enforcement agencies, physicians, lawyers/judges, professors, financial services professionals, regulators, executive directors of national and local victim-oriented organizations, and policy analysts gathered in Washington, D.C. to address the gaps and to proffer concrete steps to help those affected by elder financial exploitation. The document generated “focused on 3 areas: 1) Direct Victim Services, 2) Public Policy, and 3) Justice System”; and generated five recommendations to help combat Elder Financial Exploitation.
- National Guidelines to Implement the 2013 Federal Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults was developed by the Philadelphia Corporation for Aging and the National Adult Protective Services Association with support from the Huguette Clark Family Fund for the Protection of Elders. This document provides APS workers with the information, documentation, and sample tools they need for requesting information from financial institutions in abuse investigations.
- The Baker Report is a free, comprehensive weekly email update on current national and international scams, trends, arrests, and convictions. It is edited by Steve Baker, the former Director of the Federal Trade Commission’s Midwest Region. It is intended for professionals, family members and victims.
- Resource on Money Mules. Europol has published a poster and a flyer, available in six languages, with tips on how to avoid becoming a money mule.
- Pocket Guide on Elder Investment Fraud and Financial Exploitation. Checklist created by Baylor College of Medicine’s Texas Consortium for Geriatrics Education and Care for healthcare professionals and others that describes common red flags of financial exploitation, financial capacity, and the types of referral that may be needed.
- Senior Abuse Financial Tracking and Accounting (SAFTA) Toolkit. Developed by the International Association of Chiefs of Police, the toolkit provides law enforcement and other elder justice professionals with a simple method for displaying suspicious financial patterns to facilitate the prosecution of suspected financial exploitation of older adults.
- Memorandum on Financial Institution and Law Enforcement Efforts to Combat Elder Financial Exploitation. Memo issued jointly by the Consumer Financial Protection Bureau, the Department of Treasury, and the Financial Crimes Enforcement Network (FinCEN) on August 30, 2017 describing how Suspicious Activity Reports can aid law enforcement investigations of elder financial exploitation cases and encouraging coordination among law enforcement agencies, financial institutions, and adult protective service agencies.
- Elder Financial Exploitation Guide for States. Template developed by the National Center on Law & Elder Rights (NCLER) that can be customized to include state-specific laws and procedures.
Promising Practices
- Sussex Victim Support Program. This program in Sussex England assigns Victim Support case workers in the Sussex Police to work with vulnerable victims who have been systematically targeted by criminals. Workers help victims with tasks like contacting creditors to take control of her finances and also to seek help through Citizens’ Advice.
‘It was like a drug addiction’... Widow’s warning after losing £100,000 in ‘romance fraud’ |
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‘It was like a drug addiction’... Widow’s warning after losing £100,000 in ‘romance fraud’
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In the News |
- Cyber Actors Use Online Dating Sites to Conduct Confidence/Romance Fraud and Recruit Money Mules. (2019, August). Public Service Announcement produced by the FBI.
- Stranger Danger: New Robocall Scam Where Crooks Imitate Voices of Loved Ones Using Deepfake Technology to Trick You Into Sending Cash. (2019, August). The Sun. A News UK Company.
- Thefts From Seniors in Assisted Living Topped $117K, UMN Researcher Finds. (2019, July). Twin Cities Pioneer Press.
Links to More Information
On CEJC's Website:
- Undue Influence Toolkit Page
- Victims of Crime Act
- CEJC Advocates Academy Webinar Recording: International Financial Crimes
- CEJC Advocates Academy Webinar Recording: What's New in Undue Influence
- CEJC Advocates Academy Webinar Recording: State ID Theft Coalitions
- CEJC Advocates Academy Webinar Recording: Civil Remedies for Empowering Victims of Elder Financial Exploitation
- National Innovations
- Elder Justice Blog: Unpacking Undue Influence
- Elder Justice Blog: Awash in a Sea of Fraud: No Guns, No Action