Senior Financial Abuse and Exploitation Costs Americans $36.48 Billion per Year -- 12X Previous Estimates -- According to Research Released Today from True Link Financial
SAN FRANCISCO, Jan. 28, 2015 /PRNewswire/ -- American seniors are losing $36.48 billion every year to senior fraud, exploitation and financial abuse—more than 12 times the most widely reported previous estimate. What's more, the highest proportion of these losses—to the tune of $16.99 billion a year—comes from deceptive but technically legal tactics designed to specifically take advantage of older Americans. These are just two of the key findings from the True Link Report on Elder Financial Abuse 2015 released today.
According to Shawna Reeves, Director of Elder Abuse Prevention at the Institute on Aging, "Those of us working in the field have long known that the United States is in the throes of an elder financial abuse epidemic. Unfortunately, we've lacked well-designed studies capturing the true nature and scope of the problem. This study is a game changer. Not only does it challenge the previous studies but it serves as a clarion call for further research and action."
According to the True Link data science team, which partnered with Aging in Place Technology Watch to poll thousands of U.S. adults 50-70 in an online survey in the fall of 2014, 36.9% of seniors lose money to scams, exploitation, and abuse in any given five-year period. 6.9% of the study's respondents experienced major fraud, defined as a loss of $10,000 or more. Of the seniors who experienced major fraud, the average financial loss was $52,300. Women and widows—historically seen as the most vulnerable—did not actually experience higher levels of financial loss.
To help adult children and their senior parents assess their individual risk of fraud, exploitation, and financial abuse, True Link has created a free online Fraud Risk Calculator that offers a detailed personal report, including scams to watch for and factors affecting vulnerability. That calculator can be found here, and can easily be shared with parents, siblings, and others.
Risk Equals Vulnerability Plus Exposure
The seniors at greatest risk were those who combined a source of vulnerability with a source of exposure. While memory loss contributed to vulnerability, the top vulnerability factors were related to solo financial decision-making—living alone, or not consulting with a family member before making financial decisions.
Among the top exposure factors, friendly people are more likely to be approachable and give a malfeasant the benefit of the doubt; financially sophisticated people are more comfortable making solo investment decisions; thrifty people are more likely to be attracted by bargains; and younger, urban seniors are more active and more likely to interact with strangers. Seniors described by their family as "extremely friendly" experienced four times as much financial loss as the rest of the population.
The Non-Financial Effects of Senior Financial Abuse
True Link analysts also measured the non-financial effects of financial abuse on seniors and their caregivers. Of the seniors who experienced fraud, 1.8% lost their home or other major assets as a result, 6.7% skipped medical care, and 4.2% reduced their nutritional intake for budgetary reasons. Many also suffered depression, anxiety, or loss of independence.
According to True Link estimates, 954,000 seniors are currently skipping meals due to the effects of fraud and financial abuse. "Most research on fraud focuses exclusively on the monetary losses and financial problems, but we found strong evidence that these losses can be devastating for seniors on an emotional and even physical level as well," said True Link Financial CEO Kai Stinchcombe.
Small charges add up
The largest share of financial exploitation—a whopping $16.99 billion annually—came from the use of misleading or confusing language, often combined with social pressure and tactics designed to take advantage of memory loss, to get seniors to open their wallets. This includes things like tricking someone into signing up for a subscription service when all they wanted to do was buy one product, billing people for hidden shipping and handling charges from infomercial products, or repeat phone solicitations from unscrupulous charities.
One key finding of the study is that financial exploitation is typically a progression rather than an isolated incident. It might be easy to ignore a loss of $20 a year to hidden charges or unwanted subscription charges, but any senior who lost $20 or more to financial exploitation lost an average of $2,000 a year to other scams over the course of five years. Older adults who receive one telemarketing call or more per day are likely to experience three times as much financial loss as someone who receives only occasional telemarketing calls.
As part of its ongoing tracking of predatory schemes reported by seniors and their families, True Link researchers have developed a database containing over 26,000 merchants that have been reported as scammy, predatory, or otherwise problematic.
Survey Methodology
The True Link Report on Elder Financial Abuse 2015—which was created in partnership with independent researcher Laurie Orlov and reviewed by independent experts from universities and leading nonprofits— drew from five original data sources. The first and primary source of data was an online poll of 2,096 U.S. adults age 50-70 years old, which was narrowed down to 467 respondents who identified as having some responsibility for an older adult. In addition, True Link supplemented these findings with several other sources, including an analysis of a sample of 9,008 anonymized Visa card transactions from seniors; undercover interactions with 208 abusive merchants and charities by researchers posing as vulnerable seniors; interviews with 67 True Link Financial customers about past incidents of fraud; and the 2014 True Link Financial Abuse Perceptions Survey of 7,422 Americans on perceptions of financial fraud targeting seniors.
True Link Financial, which offers products and services to help protect older adults from financial abuse and exploitation, has made the entire report—including the vulnerability calculator, an infographic, and other relevant content—available for download at https://www.truelinkfinancial.com/research.
About True Link
True Link Financial is a San Francisco, California-based financial services firm that helps seniors and their families protect themselves from fraud, exploitation, and financial abuse. The company offers tools to detect suspicious activity and block unwanted transactions, preserving seniors' independence and keeping their money safe. True Link's data science team is dedicated to building world-class tools that prevent elder financial abuse and sharing its research to aid others also working toward that vision.
Learn more at www.TrueLinkFinancial.com.
Contact:
Ryan Gerding
816-753-6222
[email protected]
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SOURCE True Link Financial
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