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AML/CFT AML Training Customer Due Diligence Financial Crime Financial Elder Abuse Fraud Prevention Check Fraud Financial Elder Abuse Fraud Trends

Elder fraud: Preventing elder financial exploitation at your institution

Terri Luttrell, CAMS-Audit, CFCS
May 30, 2024
Read Time: 0 min

Elder fraud prevention and education

Learn strategies for recognizing and reporting elder fraud and exploitation. 

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Takeaway 1

Elder abuse, exploitation and fraud continue to rise as the baby boomer generation ages.

Takeaway 2

Learn to recognize common types of elder abuse and the red flags that may accompany them.

Takeaway 3

Education and reporting are key to preventing this type of fraud, so know your state's policies. 

Threat to seniors

What is elder fraud?

As the global population of individuals aged 60 and over is projected to increase by 38% between 2019 and 2030, elder abuse and elder financial exploitation (EFE) are becoming increasingly prevalent issues. This demographic shift, particularly in the developing world, brings attention to the unique challenges older persons face, including those related to human rights and financial security. Elder fraud, a severe form of EFE, continues to grow at an alarming rate. If it hasn't already, it is likely to impact your client base or family in the near future.

The National Adult Protective Services Association defines EFE as the misuse or theft of assets belonging to a vulnerable adult for another person's benefit, often occurring without the senior's explicit knowledge or consent. This type of exploitation can significantly deplete financial resources, impacting victims' quality of life through deception, coercion, harassment, duress, and threats.

By the numbers

Elder fraud statistics

Financial crime against the elderly is expected to rise as the baby boom population ages. The FBI’s IC3 2023 report highlighted that elder financial exploitation reached over $3.4 billion in 2023, an 11% increase from 2022. However, the National Adult Protective Services Association suggests that 79% of EFE cases go unreported due to victims' fear, shame, and embarrassment, often exacerbated by the fact that the perpetrator is frequently a family member or close associate.

The National Council on Aging estimates the annual cost of elder fraud to be closer to $36.5 billion. FinCEN's analysis from June 2022 to June 2023 found approximately $27 billion in reported elder suspicious activity, with 80% involving money transferred to strangers for unreceived benefits and 20% involving trusted persons, often adult children.

Older Americans hold 70% of the deposited wealth in the United States.  In what’s now being referred to as the “age wave,” approximately 10,000 baby boomers are turning 65 every day until 2030, creating an even larger pool of potential victims for fraudsters and scammers.  This leaves many seniors in a financial nightmare during the sunset of their lives; some are even left destitute.  These crimes take an emotional toll on the victims as well, with victims often becoming depressed with intense feelings of shame and fear.  Unlike young adults, seniors do not have years to recoup their losses. Financial hardship, embarrassment, and loss of trust can lead to serious medical complications and even contribute to premature death.

How can your financial instiution prevent elder financial exploitation?
Get the latest information from FinCEN.

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Prevalent schemes

Types of elder fraud

Elder fraud can manifest in several ways, including:

  • Misappropriation of income or assets: Unauthorized access to social security checks, pension payments, or bank accounts.
  • Obtaining money or property by undue influence or fraud: Coercing victims into signing over assets.
  • Improper use of power of attorney: Fraudulently altering wills, borrowing money, or disposing of assets.

In 2023, the FBI identified the most common elder fraud types as tech support scams, personal data breaches, confidence and romance scams, non-payment and non-delivery scams, and investment scams. The costliest types included investment scams ($1.2 billion), tech support scams ($590 million), and business email compromise scams ($382 million).

Red flags

FinCEN guidance on recognizing elder fraud

Financial institutions should utilize FinCEN's red flag guidance and report suspicious activities to state Adult Protective Services (APS). Under the Senior Safe Act of 2018, banks and credit unions are protected from legal action when reporting elder abuse. The red flag guidance includes the following typologies.

 Erratic or unusual banking transactions:

  • Frequent, large withdrawals, including daily maximum withdrawals from ATMs.
  • Sudden NSF Activity.
  • Uncharacteristic nonpayment for services, which may indicate a loss of funds or access to funds.
  • Debit transactions that are inconsistent for the customer.
  • Uncharacteristic attempts to wire large sums of money.
  • Closing of CDs or accounts without regard to penalties.

A caregiver or other individual who:

  • Shows excessive interest in the elder’s finances or assets.
  • Does not allow the elder to speak for himself.
  • Is reluctant to leave the elder’s side during conversations.

An older customer who:

  • Shows an unusual degree of fear or submissiveness toward a caregiver.
  • Shows fear of eviction or nursing home placement if money is not given to a caretaker.
  • Is never available to speak directly with the financial institution despite repeated attempts to contact them.
  • A new caretaker, relative, or friend suddenly begins conducting financial transactions on behalf of the elder without proper documentation.
  • Moves away from existing relationships and toward new associations with other “friends” or strangers.
  • Suddenly changes their financial management, such as through a change of power of attorney to a different family member or a new individual.
  • Lacks knowledge about their financial status or shows a sudden reluctance to discuss financial matters.

FinCEN further clarifies that when filing a SAR on elder financial exploitation, staff should check the applicable box in the Suspicious Activity Information section of the SAR form and include the term “elder financial exploitation” in the narrative.  In addition, victims of elder financial exploitation should not be added to the SAR as a subject; instead, all available information should be added to the narrative.

Senior Safe Act

A safe harbor for reporting suspected cases

Most states require mandatory reporting of elder abuse to APS. Institutions should refer to interactive maps from sources like Eversafe.com to understand specific state laws. The Senior Safe Act also encourages reporting and staff training to increase awareness and deter elder abuse. Financial institutions have safe harbor, so be sure to follow all reporting requirements for FinCEN and your state.

Banks and credit unions are uniquely positioned to help protect this vulnerable population from elder fraud. Anti-money laundering and fraud monitoring software can help you alert customers to changes in their financial behavior, such as spikes in outgoing wire, ACH, or cash activity. Each financial institution should monitor for EFE, report to their state’s APS, and file SARs as needed.

This World Elder Abuse Awareness Day and throughout June, Abrigo will continue to share resources that fight this serious crime against our elderly and disabled customers and loved ones. Reporting must be encouraged to stop the growth of financial elder exploitation from paralleling the growth of our senior population. 

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About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.