Standing with seniors: How banks can combat elder financial exploitation
Even as Pew Research suggests that millennials will outnumber them as early as next year, baby boomers represent a major demographic in America today. The U.S. Census reports that by 2029, they will compose more than 20 percent of the nation’s total population.
This aging group also represents one of the wealthiest generations in American history. Nielsen studies estimated as early as 2012 that this 50 and older demographic would control nearly 70 percent of our nation’s disposable income. While boomer wealth has come to pass, there is a darker side to control—that is, the lack of it—that some have when it comes to financial predators.
Simply put, reported instances of elder financial exploitation are on the rise. The Consumer Financial Protection Bureau (CFPB) has attempted to track the losses and its estimates range wildly, somewhere between $2.9 and $36 billion per year. This significant spread is caused mainly by the difficulties in determining actual abuse cases versus innocent changes in a customer’s normal banking behavior, such as covering an unexpected home repair or sudden increase in medical costs.
Many times, actual abuse instances are difficult to track and prove. While dedicated fraudsters and scammers specifically target the elderly, more often those closest to this vulnerable generation—such as children or other family members—take advantage when the opportunity presents itself. Whether it’s fraudsters, scammers or opportunistic family members, these abusers tend to follow the money.
While better protection is needed, regulations can vary from state to state. And since this is not a federally managed problem, the burden of identifying and reporting tends to fall to financial institutions. This makes sense, as banks are often in a better position internally and externally to identify and help mitigate potential exploitation.
How to spot red flags
Two points of detection at financial services organizations can make a difference in protecting seniors; customer-facing staff on the front line and operations employees on the back.
Tellers possess a front row seat to behavioral changes and pattern differences that often crop up when someone takes advantage of a senior. Members of this elderly demographic tend to be loyal to routine; they usually visit the branch on certain days of the week or a specific time of the month, usually to conduct the same transactions. Changes in these patterns could potentially serve as warning signs. Maybe they withdrawl more, visit the branch more frequently or are accompanied by a family member or a caregiver when none of these behaviors were the case previously.
Consider these statistics from Georgia:
- The average age for elder abuse is 65.
- One in six Georgians will experience some kind of financial abuse in their lifetime.
- There is a one in five chance of being considered an at-risk adult, such as those 18 and older with disabilities. This also includes the elderly, which make up nearly 20 percent of adults in Georgia.
- Georgia is the tenth fastest growing population of those 65 and older.
- Those required to report their activity in the state include physical or occupational therapists, day care personnel, coroners, medical examiners, emergency personnel, clergy and bank employees. The penalty for failing to report is one year in jail or a $1,000 fine.
- And: 90 percent of abusers are typically children or family of the abused.
Often, the actions front-line staff can take are as simple as asking basic customer service questions: “How’s everything going?” “What’s new since I last saw you?” This can open the door for conversation that either confirms everything’s fine or triggers a series of red flag behaviors that may indicate something’s amiss. Watch for when the elder account holder:
- has a change in demeanor
- becomes frustrated or possibly angry
- prefers to speak with another teller, or
- leaves most of the account decision making and control up to a family member or caregiver.
The back office steps up
Back-office personnel have the ability to view an account over its lifespan and more precisely pinpoint erratic account patterns. For instance, a person’s balance may start to gradually decrease after someone starts living with them or they add a new person to their account. A common warning sign at this level: frequent overdraft charges, which can indicate that someone else is withdrawing money as soon as it gets deposited into the account.
ATMs represent one of the most vulnerable points of abuse because there is no need to interact with tellers to withdraw substantial amounts of cash daily or over multiple days. Operational staff can monitor such pattern changes and flag unusual behavior to help curb this abuse and protect a customer’s financial health.
From suspicion to mitigation
Elder abuse is a very sensitive subject so training is everything. Educate staff on the prevalence of this kind of crime, the danger signals to look for that identify abuse and the right steps to help rectify or report the situation internally.
Arm the board of directors with statistical data and fact-based evidence so every employee from the top down can get the information can they need. Each area of the bank needs to look for elder abuse and respond in different ways based on job description.
Ensure the bank understands on a regulatory level what examiners look for in fraud prevention. While not technically required at this point for banks to have policies or procedures in place (or even conduct staff training on elder abuse), regulators strongly encourage it. All financial institutions should have a process in place for reporting suspicious activity.
Sadly, elder financial abuse and exploitation are more pervasive than ever. The growth of a crime trend that will only accelerate. But in such emergent situations, financial professionals rank among the first responders. And while elder abuse may get worse before it gets better, the increasing awareness holds promise.
When banks adopt best practices to identify, mitigate and report this type of abuse, the industry benefits and takes on a crucial role in stopping these predators. Many of us will be old someday. Regardless, we need only imagine ourselves in an abused elder’s shoes to feel how real their need for protection is—and so moved, on it.
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