Personal Finance: Widespread Elder Fraud Sparks Responses

In  2006, on a visit to his grandmother, Philip Marshall encountered a harrowing scene: He found his grandmother, the philanthropist and socialite Brooke Astor, living in cold, dirty conditions and isolated from her friends by her son — Philip's father — Anthony Marshall.

Anthony, he felt, had been attempting to rob his mentally ailing mother of millions of dollars.

And after the sensational case went to trial, the elder Marshall was convicted of grand larceny and other criminal charges.

The high-profile case, and others like it, have helped cast a spotlight on elder fraud. But signs show — even as more alarms about the problem sound, and responses spring up — that the elder fraud remains acute.

According to a 2016 survey by Allianz Life Insurance Co. of North America, 37% of active caregivers said the elder in their care has experienced financial abuse or exploitation with a loss. In 40% of those cases, it happened more than once.

Are you getting the most out of IBD? Our Getting Started Guide can help!

"It's an epidemic," holds Philip Marshall, a professor at Roger Williams University, who is now a national advocate for fighting elder fraud.

And most often, the perpetrators are family members. Indeed, in a 2015 survey, the highest percentage — 71% — of financial advisors surveyed at Merrill Lynch Wealth Management, cited a client's child as the potential culprit when elder abuse was suspected. The second most likely potential perpetrators were caregivers, followed by anonymous fraudsters.

Experts say seniors who are socially isolated and/or in mental decline can be especially susceptible. The abuse can leave victims traumatized as well as financially harmed, or even ruined. Consider: A 2015 survey by True Life Financial reveals that U.S. seniors lose $36.48 billion annually to elder financial abuse.

Though some experts fear the problem could worsen — since more than 10,000 Americans turn age 65 daily — there is increasing pushback from many quarters. Experts cite efforts to combat the elder fraud — legally, educationally and/or operationally — coming from government, universities, the business sector and nonprofit groups.

And among these sectors, finance has been taking a prominent role. As Nick Nichols, vice president of DST Systems (DST), points out, "the financial community is in the best position to catch the fraud. They see transactions at the point of execution." DST develops record-keeping software for financial services and health care companies.

An expanding number of rules and laws require bankers and/or broker-dealers and investment advisors to report elder fraud cases to authorities. But beyond heeding requirements, the financial sector is also adopting new ways to thwart fraud. In the latter case, programs range from training bank tellers and call-center operators to detect suspicious activity to using new technology that spots and flags irregularity.

Explains Corey Carlisle, executive director of the American Bankers Association Foundation, "Bankers are stepping up in this area because their interests are aligned with that of their customers. When you rob from customers, you're robbing the bank."

Among the various training and educational programs: The ABA Foundation's instructional Safe Banking for seniors offering helps bankers educate clients and caregivers about elder fraud. And AARP's online Bank Safe program teaches staff at financial institutions how to detect and stop fraud.

For consumers, AARP offers a free online Fraud Watch Network, that informs about scams, provides a scam-tracking map and provides fraud prevention tips, among other features.

In addition, "many financial firms have adopted new technology that detects unusual activity in an account, such as a sudden, large payout. The system would alert the account holder and could delay the transaction from being carried out," says Carlisle, of the ABA Foundation. For customers, some banks also offer View Only accounts in which people not named on an account can monitor it and be alerted to problems.

Beyond banking, various other organizations and entities address financial elder abuse. Examples include the nonprofit Investor Protection Trust, which offers an Elder Investment Fraud and Financial Exploitation Prevention Program. And the National Adult Protective Services Association has a National Institute on Elder Financial Exploitation. NIEFE's mission: to serve as a clearinghouse for information and initiatives relating to elder financial abuse and create a national response to it, said its executive director, Betty Malks.

But beyond organizations, seniors themselves, and their friends and family, can take protective steps to avoid elder fraud. Among experts' recommendations:

• Discuss financial issues with the family. If possible, hold periodic meetings to air money issues and concerns. And don't sign anything you don't understand.
• Pick a financial caregiver who manages his or her own money well, not someone who is struggling financially. But don't choose your home caregiver.
• Carefully screen workers before hiring them.
• To avoid being scammed, consult someone you trust before giving money or your ID to a caller.