Elder Financial Abuse: Why Does it Happen, and How Can Credit Unions Spot It?

By Mary Sroufe, Attorney at Law

In 2010, more than one quarter of the vulnerable adult abuse complaints received by the Washington state attorney general were regarding financial abuse. It was the most reported form of vulnerable adult abuse.

Why does it happen? Simple: it is lucrative and relatively low-risk. In the U.S., people over the age of 50 control 70 percent of the wealth, and many of them do not know it. Many seniors bought their houses (or other assets) many years ago and are unaware of the appreciation these assets have undergone. This makes seniors an excellent target, simply for financial reasons.

In addition, seniors tend to be vulnerable, often depending on others for help with daily living—sometimes formally by hiring caregivers, but even more often informally by asking for help with errands, house maintenance, transportation and the like. Every one of these needs in an opportunity for an enterprising criminal to gain the trust of the senior or gain information necessary to perpetrate identity theft.

Advances in technology such as online banking have also made it much easier for a bad actor to gain access to funds not belonging to them, and technology has made it much more complicated for a senior member to manage his or her financial affairs. In today’s technology environment, a bad actor can gain access to a member’s online account, either through identity theft methods or by conning the member into grating access, and remove stunning amounts of money in the blink of an eye.

That covers why professionals perpetrate elder financial abuse, but sadly, this type of abuse is also committed by loved ones. Spouses, children, grandchildren and trusted friends have all been known to exploit senior members financially. Motivations range from needing money to support a drug habit to wanting to “protect” the inheritance of one family member over another.

The signs of financial abuse include sudden changes in legal documents granting access to the senior’s funds and transactions that are not in keeping with that member’s established patterns. Questionable transactions could be withdrawals to help people with stories that are too good to be true, loans for vehicles the member will never drive, ATM transactions at unusual locations for your member, and in-person transactions directed by another person when your member seems frightened or confused.

Credit unions should also be alert to changes in their member’s behavior, such as confusion, fear, or avoidance where the member previously did not seem confused, fearful or avoidant. Suspicious behavior in a party accompanying the member includes vague explanations for the transaction in question, aggressiveness when asked about the transaction, unwillingness to let the member speak for him or herself, and unwillingness to allow credit union staff to speak to the member alone.

Of course, credit union staff should use caution in evaluating a potential abuse situation. None of these signs in isolation is a positive indication of elder financial abuse. The credit union must consider the whole circumstances to make an accurate judgment. Every one of these suspicious circumstances can occur in a legitimate transaction.

Interested in Learning More?

All credit unions have members who are victims of elder abuse, but what is the credit union’s role? How can credit unions help their members while still staying within the boundaries of privacy and legality? Mary Sroufe, attorney at law and former director of compliance services for the Northwest Credit Union Association (NWCUA), will lead a breakout session at the NWCUA’s 2012 Convention and Annual Business Meeting entitled, “What You Need to Know about Elder Abuse.” The session, scheduled for 2 p.m. on Thursday, Oct. 4, will feature a frank discussion of credit union options and resources, including learning to recognize the signs of elder abuse, the boundaries for intervention, and some outside-the-box solutions.

Online registration for Convention, scheduled for Oct. 2-4 in Vancouver, Wash., is available now, with discounted registration options open until Friday, Sept. 14, 2012. Visit the Association’s dedicated Convention website for more information.

 

Questions? Contact Training Programs Coordinator Yuri Jung: 206.340.4817, yjung@nwcua.org.

Posted in Business Solutions, Industry Insight, MAXX Annual Convention, Strategic Link.