Virginia Seniors May Be Losing Over $3 Billion A Year to Elder Fraud

Virginia – Last year, the Comparitech Research Group set out to uncover the true cost of elder fraud in the US by analyzing and extrapolating data from government reports and registries. With the vast majority of elder fraud cases in the US going unreported, the group estimated that around 5 million seniors in the US were subject to elder fraud each year. This resulted in potential losses of over $27 billion.

This year, with new figures, findings indicate that elder financial abuse in the US could be even more prevalent and costly than first thought. Comparitech now estimates that 7.86 million cases of elder fraud occur in the US annually resulting in $148 billion in losses.

Elder fraud, also called elder financial abuse or elder financial exploitation, is defined as the misappropriation or abuse of financial control in a relationship where there is an expectation of trust, resulting in harm to the elderly victim.

More than 334,000 scams and financial abuse cases targeting the elderly are reported to authorities every year, and most experts agree that’s just the tip of the iceberg. Our estimates show $6.3 billion in damages are reported to authorities, but the real figure likely dwarfs that amount when factoring in unreported elder fraud.

To calculate the full scope of the problem, Comparitech aggregated data from multiple studies on elder fraud in every US state, including the number of reports to authorities and average loss per case. We then used those numbers to estimate the total number of cases and total damages in each state, adjusted for the proportion of unreported cases.

Due to a lack of accurate reporting in every state from Adult Protective Services, the group has used averages from other states to fill in the gaps for the number of cases reported and the dollar amounts lost. You can find more about how the research was conducted in the methodology section. Although not definitive, this exploratory study examines the potential cost and prevalence of elder abuse based on estimations, statistics, and hypotheses. It is an exploratory study to highlight the need for further research in this area.

Key findings

Only 1 in 23.5 incidents of elder fraud are reported to authorities, according to a 2011 report from the New York City Department for the Aging and Cornell University. Here are some of the key findings at a national level, based on that figure:

• More than 1 in 10 elderly people in the US fell victim to elder fraud in the last year
• Nearly 8 million incidents of elder fraud occur every year in total
• Average loss per case is $17,869, calculated by averaging the mean reported loss from these organizations:
  • $34,200 – Financial Crimes Enforcement Network
  • $12,833 – Federal Bureau of Investigation, Internet Crime Complaint Center (IC3)
  • $6,575 – State Adult Protective Services or Law Enforcement
• In all 50 states, losses due to elder fraud total $148.6 billion each year
• Deposit accounts were the most common product involved with elder fraud cases (57.9%), followed by debit cards (26.2%) and credit cards (6.9%)
• The IC3 report shows an average of 25.3% of internet crimes relate to those over 60 but the same age group accounts for almost 35% of the $ amount lost

Given the exponential rise of phone scams over the past few years, we surmise that the ratio of unreported to reported cases could well be much higher. Phone scams often target the elderly.

Top 5 US states for elder fraud in total losses

1. California

The most populous state in the nation loses the most money to elder fraud, according to our estimates. California lost nearly $15.9 billion to elder financial exploitation, impacting almost 8 percent of the elderly population. That’s about 685,000 cases in total.

California is home to 7.96 million over 60s.

2. Florida

As expected in the state with the highest percentage of senior citizens, Florida has one of the highest estimated number of elder fraud reports, almost 650 million in total. That’s 11.2 percent of elderly people. Losses amount to $13.7 billion in a year.

Florida is home to 5.77 million over 60s.

3. Texas

Another big state, Texas lost almost $11.6 billion to elder fraud in the last year. 12 percent of elderly people in the state fell victim, for an estimated 616,583 incidents in all.

Texas is home to 5.14 million over 60s.

4. New York

Of the 4.48 million over 60s in the Empire State, we estimated that almost 10 percent are affected by financial exploitation each year. The cost of these cases is over $7.8 billion.

5. Pennsylvania

Just over 11 percent of over 60s in Pennsylvania are estimated to have been victims of elder fraud, which amounts to more than 360,000 cases and losses of $6.8 billion.

According to the state’s APS report, 16.7% of perpetrators for all cases of abuse and exploitation were family members.

Pennsylvania is home to 3.23 million over 60s.

VIRGINIA

• APS Report – 31,436 reports received, 74% related to over 60s and 13% related to financial exploitation = 3,024.
• Crime Statistics – 6,618 cases of financial crimes against the over 65s. The highest rates were for false pretenses (42.11%) and credit card/ATM fraud (19.28%). These figures aren’t included in our overall scores due to the potential overlap between FinCEN and IC3.
• Cost of Crimes – Breakdown of cost of crimes so worked out the average cost per case to then gain an understanding of the amount lost to people over 65. Total loss of $36,734,482 (across the crimes covered – doesn’t include intimidation and counterfeiting). This means the average case lost $6,380.84 (5,757 crimes when excluding intimidation and counterfeiting). Figures used to determine average lost to APS and LTCO cases.

Tips for preventing elder fraud

Despite the worrying prevalence of elder financial exploitation, there are some simple steps seniors and their friends, caregivers, and relatives can take to prevent fraudulent activities. We’ve listed 10 of these below:

• Plan ahead to ensure your assets are fully protected and your wishes will be followed. You might want to talk to a financial advisor or an attorney to find the best options for you.
• Always shred bank statements and receipts as well as unused credit cards before you throw them away.
• Never discuss your financial information with anyone you don’t know or trust. This includes giving someone your bank details, Social Security Number, and any other financial information over the phone.
• Order a copy of your credit report every year to make sure it’s accurate and that there aren’t any accounts on there that you don’t recognize. You could also sign up for identity theft protection so professionals are constantly monitoring your accounts for suspicious activities.
• Thoroughly check credentials and references before you hire anyone and don’t give workers access to your financial information. For example, you may want to lock up your account statements, checkbook, and other sensitive documents while others are in your home.
• Look out for charity fraud hoaxes by doing thorough research into the charity, not responding to solicitations for donations, not sending any of your bank details or mailing cash, and discussing the charity with your friends and family first.
• Never pay taxes or fees to collect lottery “winnings” or sweepstakes.
• Pay for things using your debit or credit card so you have a paper trail of all the transactions you’ve made.
• Trust your gut. If something doesn’t feel right – tell someone. And if you do feel threatened or intimidated (or you’re concerned for an elderly person you know), contact your local Adult Protective Service.
• Finally, don’t be afraid to say “no.” This is your money and you’re entitled to say how you want to use it.