Federal and state laws work in tandem to prevent, investigate, and report elder financial abuse. Many state agencies work with federal support. Adult Protective Services (APS) is a non-profit, federally-mandated organization that investigates reports of elder abuse, including financial exploitation.
Every state has different statutes that apply to the prosecution of elder abuse. The American Bar Association Commission states: “Some states criminalize acts defined as adult or elder abuse; other states use definitions in criminal law that may vary from these definitions. The criminal laws of each state will define many additional acts as crimes that are not covered under the elder or adult abuse laws.” Despite these differences, an abundance of federal laws addressing elder abuse makes it possible for local agencies to respond to elder financial abuse, no matter which state.
Laws Against Undue Influence
Each state has its own definition of undue influence. According to the American Bar Association, undue influence most often occurs in the course of estate planning, and therefore largely concerns the elderly population.
Undue influence may:
- Deprive an elderly person of a choice or overcome that person’s free will.
- Preclude the person’s exercise of free and deliberate judgment.
- Coerce an elderly person into doing something that they would not have done without undue influence.
New York law specifically states that “Any person who receives a copy of or an original supported decision-making agreement and has cause to believe the decision-maker is being abused, physically coerced, or financially exploited by a supporter, may report the alleged abuse, physical coercion, or financial exploitation to adult protective services.”
Nursing Home Requirements
Every state has an ombudsman, who advocates for the rights of nursing home residents. States may make their own laws concerning staffing and budgeting. For example, as of 2022, New York law requires that “every residential health care facility shall spend a minimum of seventy percent of revenue on direct resident care, and forty percent of revenue shall be spent on resident-facing staffing.”
Federal Agencies and Elder Financial Abuse
At the federal level, the Department of Justice oversees the prosecution of elder crimes and collects data relevant to elder financial abuse. The Department of Justice, the FBI, the Federal Trade Commission, and the Securities and Exchange Commission are instrumental in identifying and punishing elder financial abuse.
The Department of Justice (DOJ) and the Elder Justice Initiative
The Department of Justice regularly files criminal and civil actions on behalf of the elderly.
- For instance, in the US v. American Health Foundation civil complaint, the DOJ charged three nursing homes with providing “grossly substandard skilled nursing services” between 2016 and 2018.
- In the criminal case US v. Mark Alan Thomas, a federal grand jury charged an attorney with abusing his power of attorney to steal more than $800,000 from an elderly woman with dementia.
According to the DOJ’s Elder Abuse Initiative, an individual guilty of financial or material exploitation of an elderly person might be charged with the following:
- Elder Abuse
- Fraud (credit card, tax, or Medicaid)
- Identity Theft
- Money Laundering
- Obtaining a Signature by Force, Fraud, or Coercion
- Residential burglary
The Elder Abuse Prevention and Prosecution Act and the Data on Elder Financial Abuse
The Elder Abuse Prevention and Prosecution Act of 2017 addresses the need for more data on elder abuse. In 2022, the EAPPA Report announced a slew of new Federal initiatives and tools to combat elder financial abuse.
- The Internet Crime Complaint Center (IC3) allows the elderly to report fraud they encounter online to the FBI. The FBI also runs the Recovery Asset Team (RAT), which contacts financial institutions to freeze funds of victims so that they cannot be transferred to scammers. According to the EAPPA Report, IC3 processed 1,988 complaints from 2021 to 2022, and RAT succesfully froze $375,587,452–a success rate of 76%.
- The Elder Justice Initiative promoted the Senior Abuse Financial Tracking and Accounting (SAFTA) in 2021. SAFTA is a forensic accounting tool that Adult Protective Services and law enforcement use to detect suspicious financial patterns.
Elder Financial Exploitation and FinCEN
Various federal agencies are involved with anti-fraud efforts that help protect the elderly from unnecessary financial losses. For instance, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) combats money laundering. Under the Bank Secrecy Act, financial institutions like broker-dealers are required to submit Suspicious Activity Reports (SARs) to FinCEN.
FinCEN reports have helped stop Ponzi schemes and money laundering operations that targeted the elderly. In 2021, FinCEN reported that financial institutions filed 72,000 SARs related to elder financial exploitation.
The Federal Trade Commission and Scams Targeting the Elderly
The Federal Trade Commission (FTC) issues Consumer Alerts once it identifies scams that target the elderly. The agency has determined the following scams are more likely to target elderly victims:
- Romance Scams – Unfortunately, the romance scam category reports the highest amounts of losses for the elderly. In the course of these scams, the scammer manipulates the elderly person into sending large amounts of money using the pretense of a romantic relationship,
- Family Imposter – In a family imposter scam, an elderly person might receive a call from someone claiming to be a family member who needs a quick wire transfer. High-pressure tactics persuade the victim to send money before they realize the caller is a fake.
- Tech Support Scams – These scams feature a cold caller who claims to be calling to renew a subscription to an electronic device. They may also appear in the form of a pop-up that gives the scammer remote access to a computer. Once they have access to the device, the fraudsters demand payment in exchange for fake repairs.
- Investment Scams – Elderly people may be lured into a free “investing seminar” in which a scammer pitches a supposedly low-risk investment scheme, often with a real estate angle. Eventually, the scammers attempt to persuade the elderly to pay a significant fee for their “proven” investment strategies. Red flags of investment scams include guarantees of high returns with little to no risk.
How Can I Protect Myself from Elder Financial Exploitation and Abuse?
Awareness of relevant federal and state agencies is key.
- For local resources, the Eldercare Locator and the Adult Protective Services site can direct you to relevant state agencies.
- In addition to local agencies, you can report to the National Elder Fraud Hotline: 1-833-372-8311.
- Scam victims should report online predators to IC3 via their online form: https://www.ic3.gov/Home/ComplaintChoice/default.aspx/
No matter where you are in the U.S., take a stand against elder financial abuse and access all the assistance available through state and federal agencies.