Elder Justice: Federal Government Has Taken Some Steps but Could Do More to Combat Elder Financial Exploitation
Released: 2013-05-16T00:00:00

Letter

Elder Financial Exploitation Can Take Many Forms

Older adults are being financially exploited by strangers who inundate them with mail, telephone, or Internet scams; unscrupulous financial services providers; and untrustworthy in-home caregivers (see table 1 for more details). For example:

Mass marketing scams: Local law enforcement authorities in the four states we visited indicated that investigating and prosecuting the growing number of cases involving interstate and international mass marketing fraud, which often targets older adults, is particularly difficult for them. Interstate or international mass marketing scams include “grandparent scams,” which persuade victims to wire money to bail “grandchildren” out of jail or pay their expenses, and foreign lottery scams that require victims to pay sizeable sums before they can receive their winnings. In 2011, the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center received over 300,000 complaints from victims of all ages about online fraud alone, with reported losses of about $485 million.

Exploitation by financial services professionals: Older adults may consult with a variety of financial professionals, such as financial planners, broker-dealers, and insurance agents. However, older adults, similar to other consumers, may lack the information to make sound decisions about choosing a financial services provider and protecting their assets from exploitation. As a result, they may unknowingly put themselves at risk of financial exploitation. Older adults can be sold what they believe to be legitimate investments but are actually fraudulent products that hold little or no value, or may be fooled by financial professionals who use questionable tactics to market financial products, such as “free lunch seminars” at which financial professionals seek to sell financial products to older adults during a free meal.

Exploitation by in-home caregivers: Local officials cited exploitation by in-home caregivers—who range from personal care aides who provide non-medical assistance to home health aides who may check an older adult’s vital signs—as a type of abuse that is difficult to prevent, in part because these older adults may rely on and trust their caregivers. For example, a caregiver may be given access to an older adult’s ATM or credit card to help with banking or grocery shopping, and later be found withdrawing money or purchasing items for themselves.

Federal Agencies Are Helping States Combat Exploitation in Various Ways

We identified a number of ways the federal government was supporting or could further support state and local efforts to combat elder financial exploitation.

Local law enforcement officials we met with indicated it is not clear how they should obtain the federal support they need to respond to interstate and international mass marketing fraud cases. Justice officials told us they believe that local officials know which federal employees to contact; however, state and local law enforcement officials told us it would be helpful to have more specific information. Cases that local officials do not refer to a federal agency due to a lack of correct contact information may not be investigated or prosecuted by either federal or local authorities. In our November 2012 report, we recommended that the Attorney General conduct outreach to state and local law enforcement agencies to clarify the process for contacting the federal government in these cases and the ways in which the federal government could provide support. Justice agreed with this recommendation, and in December 2012 held a meeting to begin identifying points of contact both within and outside the Department, such as FBI field offices, US Attorneys’ offices, the Internet Crime Complaint Center, and FTC’s Consumer Sentinel database. Justice noted that it will develop an implementation plan and timeline to initiate outreach to the appropriate state and local agencies.

In addition to not knowing whom to contact, state and local law enforcement officials in the four states we visited told us that they are concerned that federal agencies do not take enough of the cases that are referred to them. For example, a law enforcement official from California described a case of widespread interstate check fraud, expressing frustration with federal agencies that would not provide any support when he requested it. Federal officials, on the other hand, told us that they cannot take all cases referred to them by state and local law enforcement and that they must prioritize their caseload to make the best use of their limited resources. Justice and FTC officials said they tend to focus on larger cases in which many victims were affected or a significant amount of money was lost, and Justice’s U.S. Attorneys also apply regional priorities, such as the vulnerability (including age) of the victim, when determining which cases to take. Even if federal agencies choose not to take a case a state or local agency refers to them, Justice officials told us that consistent referrals of cases by state and local authorities allow them to identify patterns or combine several complaints against the same individual into one case.

Federal agencies have made some efforts to provide safeguards to prevent exploitation by financial services professionals, which was cited as a challenge by public officials in all four states we visited. When it comes to preventing the sale to older adults of unsuitable or fraudulent investments, SEC and CFPB have each taken steps to help older adults avoid being exploited. SEC and CFPB have conducted research related to investment fraud that targets older adults, and in August 2012, SEC released a study on financial literacy among investors and stated the agency’s desire to develop a strategy for increasing the financial literacy of certain groups, including older adults. Further, there is a link on SEC’s website to Financial Industry Regulatory Authority (FINRA), information consumers can use to check a financial services provider’s qualifications and to understand the many designations used by securities professionals. CFPB also issued a report in 2013 addressing how information about financial advisors and their credentials should be provided to older adults.

To prevent exploitation by in-home caregivers—also identified as a challenge by officials in the four states we visited— the Patient Protection and Affordable Care Act of 2010 required the Centers for Medicare and Medicaid Services to implement the National Background Check Program, which encourages but does not require states to adopt safeguards to protect clients of in-home caregivers. This program provides grants to states to conduct background checks for employees of long-term care facilities and providers, such as home health agencies and personal care service providers. As of November 2012, 19 states were participating. According to the National Conference of State Legislatures, many states require agencies to conduct background checks before employing in-home caregivers who are paid by Medicaid or with other state funds. These laws, however, vary greatly in their breadth and scope and in the amount of flexibility afforded the agencies when they use the checks to make hiring decisions. For example, Napa County, California, has initiated an innovative paid in-home caregiver screening initiative. Before in-home caregivers can work in that county, they must submit to a background check and obtain a permit annually.

Other federal efforts are broader in scope rather than focusing on a particular type of elder financial exploitation, such as those covering public awareness, banks, collaboration among agencies, and data collection.

State and local officials told us that older adults need more information about what constitutes elder financial exploitation in order to know how to avoid it. At the state level, the Pennsylvania Attorney General’s Office has published a guide on how seniors can avoid scams and fraud, and in Cook County, Illinois, the Senior Law Enforcement Academy within the Sheriff’s Department instructs older adults in how to prevent elder financial exploitation. At the federal level, each of the seven federal agencies we reviewed independently produces educational materials that could help prevent elder financial exploitation. However, these seven agencies do not conduct their activities as part of a broader coordinated approach. In previous work, we found that agencies can use limited funding more efficiently by coordinating their activities and can strengthen their collaboration by establishing joint strategies. The need to increase coordination of efforts to promote public awareness in this area was discussed in 2012 at a high-level multi-agency meeting on elder justice. One participant observed that federal efforts to promote awareness are unorganized and uncoordinated, and one expert noted that there is a clear need for a strategic, multifaceted public awareness campaign. In our November 2012 report, we recommended that the federal government take a more strategic approach to its efforts to increase public awareness of elder financial exploitation. HHS has begun to act on this recommendation, as described below.

In our November 2012 report, we could identify no federal requirements for banks to train employees to recognize or report elder financial exploitation, even though they are well-positioned to identify and report it because they are able to observe it firsthand. For example, a bank teller who sees an older adult regularly is likely to notice if that individual is accompanied by someone new and seems pressured to withdraw money or if the older adult suddenly begins to wire large sums of money internationally. However, many social services and law enforcement officials we spoke with indicated banks do not always recognize or report exploitation or provide the evidence needed to investigate it. AoA is considering collaborating with one large national bank on a project to develop bank training on elder financial exploitation. In addition, financial institutions are required to file Suspicious Activity Reports (SARs) of potentially illegal bank transactions that involve, individually or in the aggregate, at least $5,000 with FinCEN, which has issued an advisory to banks that describes elder financial exploitation and its potential indicators. Our November 2012 report recommended that CFPB develop a plan to educate bank staff on elder financial exploitation. CFPB concurred with our recommendation and has begun to share information on currently available training programs with banks and industry associations.

Federal agencies have taken some steps to promote and inform collaboration between the social services and criminal justice systems in states, which officials in three of the four states we contacted for our November 2012 report identified as a challenge. These two systems do not respond to exploitation or carry out their work in the same way. The social services system protects and supports victims and the criminal justice system investigates and prosecutes crimes. As a result, there can be difficulties communicating across disciplines and different views regarding limits on information-sharing. Yet due to the nature of elder financial exploitation, collaboration can be an effective means to facilitate case investigation and prosecution. We identified a number of local initiatives to help bridge the gap between social services and criminal justice agencies. For example, in some Pennsylvania and New York counties, multidisciplinary groups meet to discuss and help resolve all types of elder abuse cases. The Philadelphia Financial Exploitation Task Force and financial abuse specialist teams in some California counties, on the other hand, concentrate only on elder financial exploitation cases. At the federal level, a few grants from AoA and Justice to combat elder abuse or other crimes have required or encouraged collaboration, such as the use of multi-disciplinary teams, in states. In our November 2012 report, we recommended that the federal government take steps to help state and local agencies collaborate. HHS has begun to act on this recommendation, as described below.

FTC’s Consumer Sentinel Network is an online database that houses millions of consumer complaints available to law enforcement. Sentinel’s roster of 28 current data contributors includes 12 state attorneys general, the FBI’s Internet Crime Complaint Center, and the Council of Better Business Bureaus. More than 2,600 users from over 2,000 law enforcement agencies worldwide use the system to share information, prosecute cases, and pursue leads.

FTC (2012) Consumer Sentinel Network Data Book for January - December 2011. decrease the numbers of people who submit complaints. It additionally said that it may be possible to determine if a complaint involves elder fraud using other information in the complaint. We maintain the importance of our recommendation to FTC.

Elder financial exploitation is a complex, nationwide problem, and combating it effectively requires a concerted, ongoing effort on the part of states and localities. It also requires support and leadership at the federal level. Each of the seven federal agencies we reviewed is working to address this problem in ways that are consistent with its mission. However, preventing and responding to elder financial exploitation also calls for a more cohesive and deliberate national strategy. This is an opportune time for the federal government to be looking at elder financial exploitation, because the Elder Justice Act of 2009 has established the Elder Justice Coordinating Council (EJCC)—a group of federal agency heads charged with setting priorities, coordinating federal efforts, and recommending actions to ensure elder justice nationwide—which has recently begun to examine these issues. The EJCC can be the vehicle for defining and implementing such a national strategy. To this end, in our November 2012 report we recommended that the EJCC develop a written national strategy for combating elder financial exploitation. Among other things, this strategy should ensure coordination of public awareness activities across federal agencies; promote agency collaboration; and promote investigation and prosecution of elder financial exploitation. The EJCC held an official meeting on May 13, 2013. Its working group presented a number of recommendations, including ones that focused on enhancing interagency collaboration, strategically promoting public awareness, and combating financial exploitation. Next steps will include receiving public comments and drafting a federal agenda for elder justice activities for EJCC consideration.

Chairman Terry, Ranking Member Schakowsky, and Members of the Subcommittee, this concludes my statement. I would be happy to answer any questions you might have.

Contacts and Acknowledgments

For questions about this testimony, please contact Kay Brown at (202) 512-7215 or brownke@gao.gov. Contacts from our Office of Congressional Relations and Office of Public Affairs are on the last page of this statement. Individuals who made key contributions to this testimony include Clarita Mrena, Eve Weisberg, Monika Gomez, Brittni Milam, and James Bennett. Contributing to our November 2012 report were Andrea Dawson, Gary Bianchi, Jessica Botsford, Jason Bromberg, Alicia Cackley, Paul Desaulniers, Holly Dye, Eileen Larence, Jean McSween, Chris Morehouse, Claudine Pauselli, Almeta Spencer, Kate Van Gelder, and Craig Winslow.

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