Financial elder abuse is becoming more prevalent as aging baby boomers swell the ranks of the retired. Senior citizens can easily become confused by information bombarding them on the internet, and they are frequently too trusting when scam artists contact them with fantastical and unrealistic investment opportunities.
According to reporting in Forbes Magazine on elder financial abuse, 5% of seniors reported losing money to scams in 2014, resulting in average losses of $30,000, with across-the-board losses of $69 billion that year alone. In any given five-year period of time, 37% of seniors are affected by some form of financial abuse. Of those who were victims of fraud, 1.8% lost their homes, 4.2% skipped meals as a result and 6.7% stopped receiving medical care.
It is estimated that 954,000 senior citizens who have been exploited suffer from a loss of independence, depression and anxiety. Many more cases may go unreported, as the elderly are frequently the targeted victims of family members and caretakers.
What kinds of scams target the elderly?
Many of the worst financial fraud cases occur when brokers illegally boost commissions or inappropriately invest their clients’ money without their knowledge. Some broker-dealer abuses can include:
- Churning, in which a stockbroker generates excessive trading on the client’s account, boosting commissions but then also creating investment losses due to added broker fees and poorly timed trades
- Misappropriation, where a broker sells the client’s accounts and then keeps the proceeds
- Unauthorized trading, where the broker executes trades without the client’s permission
- Misrepresentation and omission, in which the broker intentionally withholds information from the client
- Unsuitability, in which the broker gives recommendations that are inappropriate to the client’s objectives
Investment schemes often target senior citizens by promising hefty financial returns on securities investments like oil and gas leases, limited partnerships, stocks and bonds.
What measures can prevent elder abuse?
There should be a set of checks and balances that trusted advisors and family members can put in place to protect and oversee the financial transactions that seniors make, such as through automated billing and deposits, the use of credit and not cash, the creation of a trust and possibly the appointment of a guardian.
For residents of Orange County and throughout California, having a knowledgeable legal team who are skilled in the area of securities law and investment litigation can help victims of fraud to recover their losses and obtain a just settlement for their claims.