Erika Flavin of Willow Grove, PA, remembers the humiliation, the embarrassment, the sadness.
In January, Grove told the Senate Special Committee on Aging about a “phony” lawyer who managed to convince her older adult parents to send him more than $80,000 to bail out their “grandson” who had been arrested in a DUI that resulted in an accident. The trusting couple, both in their late 70s, complied without question. But there was no grandson in jail. They had been duped, and once the lawyer had bilked them out of all their life savings, he disappeared.
Stories like Flavin’s have become all too common as elder fraud, scams, exploitation and abuse aimed particularly at seniors—who represent an increasingly large sector of the population—have skyrocketed in recent years. According to the Senate Special Committee on Aging, older Americans lose approximately $3 billion each year to an ever-growing number of financial scams.
“Elder financial exploitation is a national crises,” says Marci Lobel-Esrig, founder and general counsel of SilverBills, a bill paying service for seniors that she started in 2014 after noticing her elderly aunt was driving to her car dealer to drop off a check every month.
Lobel-Esrig knew there had to be a better way for that bill to get paid. In her case, fortunately, there was no abuse. For many others, financial abuse happens at the hands of family members or friends as cognitive decline occurs, leaving them vulnerable. These older adults are exploited, bank accounts drained, credit cards used without authorization, property deeds transferred without them really understanding or authorizing the moves. For others, financial elder fraud happens at the hands of strangers.
Seniors make sweet and lucrative targets. The average net worth of families headed by those aged 65 to 74 was $1.07 million in 2016, including primary residences, compared with $692,100 for all households, according to the Federal Reserve. Americans over the age of 50 currently account for 77 percent of financial assets in the United States, according to the Securities Industry and Financial Markets Association (SIFMA). In June, the SEC hosted its fifth World Elder Abuse Awareness Day summit to share information and shed more light on the issue.
A recent National Academy of Medicine article examined age-related changes in interpersonal trust behavior and found that older adults demonstrate a positivity bias that “may lead to a great likelihood of victimization due to excessive trust affording to individuals and groups.” In other words, older adults tend to become more trusting, which can lead to financial exploitation, health care fraud and digital deception.
“Grandparent scams,” such as the one experienced by Erika Flavin’s parents, are just one example of elder financial exploitation prosecuted by the Department of Justice. Others include lottery phone scams, romance scams, IRS imposter schemes and guardianship schemes.
The Consumer Financial Protection Bureau estimates that in 2017 seniors experienced 3.5 million incidents of financial exploitation, including fraud perpetrated by strangers or theft by caregivers and family members. Adults ages 70 to 79 are estimated to have lost an average of $43,300 in each reported case of financial abuse.
Enter FinTech, the financial technology industry, with tools aimed at helping families, adult children and seniors to monitor their finances and protect their assets.
“When I sit in my parents’ home, they get an average of four to five fraud calls a day,” says Evin Ollinger, founder of JoinGolden.com, a financial services app that essentially uses repurposed technology for millennials, such as is used for Mint.com, to help families and/or seniors track bills, government benefits and alert for possible fraud.
There’s a lot of distrust built in and around senior financial health. “We have to create a way for people to start trusting,” says Ollinger.
Golden cannot access the accounts, but the app does daily checking of the data in the accounts and will send alerts for bill paying and for anything that seems unusual.
“I think the word epidemic is overused, but not with respect to elder fraud,” says Liz Loewy, co-founder and chief operating officer of EverSafe, a firm that monitors bank and investment accounts, credit cards and credit data for clients.
“Skipped checks, patterns changes—changes in food spending is a big one for us because if it goes up it could mean that there’s an aide who is buying food for the senior—and buying one for me, one for you. If food spending goes down, it could be a sign of age-related issue,” says Loewy, former Chief of the Elder Abuse Unit in the Manhattan District Attorney’s office and co-counsel on the famous Brooke Astor case, involving the philanthropist’s son and his attorney swindling millions from her as she was living with Alzheimer’s until her death at age 105 in 2007.
“We’re really not just looking for fraud, but changes of financial abuse or age-related issue—isolation, depression. We alert for upcoming unpaid bills. We alert for things related to convenience, like rate changes, bill amount changes,” Loewy says.
The fintech goal is to use technology to help keep people more independent, enable them to age at home and keep their money safe so that it lasts as long as they need it. Creating a sound financial network should be viewed as a safeguard.
“When we go and visit banks and credit companies, there has never been an appointment where we don’t hear someone say my mother, father, the person next door, aunt, uncle, everyone has a story like this,” says Lowey.
For some, embracing new technology in our fraud-flooded world may be difficult. Lowey argues, “It’s so much easier to have a service let you know what’s going on. I’m a huge advocate as technology serving as a caregiver tool. We’re all going to be old and we all want to have our money!”