The role of financial literacy in preventing elder financial exploitation

Photo by Noelle Otto

by Tim McAlpine, Founder/CEO
Currency Marketing

Elder financial exploitation, characterized by the unauthorized utilization of an older individual's resources for personal benefit, is growing. Credit unions in the U.S. and Canada, already empowered by federal, state and provincial agencies to safeguard their members' financial well-being, should consider the role and impact that a financial education program could play in enhancing those efforts. And take an additional step to expand that effort from within their institutions to the broader communities in which they operate.

Generally defined as the unauthorized use of an older person's resources for personal gain, elder financial exploitation includes taking money or property without consent, forging signatures, manipulating legal documents through deception, unlawfully using possessions, reneging on care promises and employing deceitful telemarketing tactics to extract money. According to FinCEN (The Financial Crimes Enforcement Network), the most prevalent schemes include:

• Imposter scams: Scammers frequently pose as government tax officials, coercing individuals by threatening arrest for alleged criminal activities like tax evasion.
• Romance scams: These often manifest in the form of fraudulent profiles on dating applications.
• Grandparent scams: Perpetrators convince older adults in emergency situations that immediate funds are required for a grandchild or other loved ones.

The cost to our elderly populations is substantial. The National Council on Aging reports that up to five million older Americans fall victim to exploitation annually, resulting in losses exceeding $36 billion. The Canadian government estimates up to 10% of Canadian seniors experience elder abuse each year, resulting in losses amounting to hundreds of millions of dollars. However, the costs aren't merely financial; there's also a concerning uptick in violence against seniors evident in both U.S. and Canadian data.

Guided by agencies and governments, credit unions are actively involved in identifying and reporting elder abuse. Their efforts include training staff to recognize and report instances of elder abuse or financial exploitation. FinCEN outlines potential indicators that could prompt a Suspicious Activity Report (SAR) such as:

• Unusual or erratic banking transactions, such as frequent large withdrawals or sudden NSF activity.
• Abnormal changes in banking behavior, like uncharacteristic nonpayment for services or inconsistent debit transactions.
• Attempts to transfer large sums of money or closing accounts without regard for penalties.
• Interactions involving older adults or caregivers that raise suspicion, such as excessive interest in an older adult's finances, signs of fear or submissiveness regarding financial matters, or a sudden shift in relationships towards new individuals or strangers.

At Currency Marketing, we recommend additional measures, such as empowering credit union members and staff with a comprehensive financial literacy education program. This program should cover not only fundamental financial aspects like budgeting, saving, and borrowing but also cater to the specific needs of older individuals. Topics should encompass identity theft prevention and recognizing scams.

We would also advocate that credit unions leverage their community positioning to collaborate with local organizations to offer financial education to all community members, not just credit union members. This collaborative effort not only reinforces credit unions' own campaigns against elder exploitation but also serves to fortify and promote financial well-being across the community at large.
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For more information on how our financial education program, It's a Money Thing, aims to protect the elderly, please follow the link below. I am also available for a short online demo if you would like to dig deeper.

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