Elder financial exploitation, one type of elder abuse, can occur in conjunction with, and might lead to other types of elder abuse.exploitation of older adults can take many forms and perpetrators can include family members, friends, legal guardians, paid caregivers, and strangers. Table 1 provides some examples. Older adults are particularly attractive targets for financial exploitation by unscrupulous individuals. As a group, older adults tend to possess more wealth than those who are younger because they have had a longer time to acquire it. In addition, the incidence of Alzheimer’s disease and other dementias that undermine judgment increases with age. Moreover, financial capacity—the capacity to manage money and financial assets in ways that meet one’s needs—generally declines with age, and this decline may go unaddressed until it is too late. State and local agencies in the social services, criminal justice, and consumer protection systems in each state are at the forefront of efforts to prevent, detect, and respond to elder financial exploitation. Seven federal agencies whose missions correspond to the state and local social service, criminal justice, and consumer protection systems are positioned to contribute to state and local efforts in this area: AoA, CFPB, Justice, FTC, FinCEN, SEC, and the Postal Inspection Service (see fig. 1). At the state and local level, APS agencies investigate and substantiate reports of suspected elder abuse, including financial exploitation and, if the client agrees to accept help, can arrange for services to secure their safety and meet their basic needs. APS can also refer cases to law enforcement agencies or district attorneys for criminal investigation and prosecution. Whether an elder financial exploitation case comes to the attention of criminal justice authorities through referral from APS or some other means, law enforcement agencies and district attorneys can exercise broad discretion when deciding if a case warrants any action on their part. State-level consumer protection agencies—such as banking, securities, and insurance regulators—conduct examinations to ensure that rules to protect consumers are followed and take enforcement actions against institutions that break the rules. State attorneys general may also prosecute cases or respond to consumer protection inquiries. Although combating elder financial abuse is explicitly included in the mission of only one federal agency, CFPB’s Office for the Financial Protection of Older Americans (Office for Older Americans), it is implicit in the mission of others that work to combat elder abuse, protect consumers or investors, or prevent fraud (see fig. 2). Federal legislation has established a foundation for the federal government to assume a leadership role in combating elder abuse, including elder financial exploitation, and basis for greater coordination across federal agencies in this area. The Older Americans Act of 1965 (OAA) requires AoA to develop objectives, priorities, policy, and a long- term plan for facilitating the development, implementation, and continuous improvement of a coordinated, multidisciplinary elder justice system in the United States; promoting collaborative efforts and diminishing duplicative efforts in the development and carrying out of elder justice programs at the federal, state, and local levels; establishing an information clearinghouse to collect, maintain, and disseminate information concerning best practices and resources for training, technical assistance, and other activities to assist states and communities to carry out evidence-based programs to prevent and address elder abuse, neglect, and exploitation; working with states, Justice, and other federal agencies to annually collect, maintain, and disseminate data on elder abuse, neglect, and exploitation, to the extent practicable; establishing federal guidelines and disseminating best practices for uniform data collection and reporting by states; conducting research on elder abuse, neglect, and exploitation; and carrying out a study to determine the extent of elder abuse, neglect, and exploitation in all settings. Pub. L. No. 111-148, tit. VI, subtit. H, 124 Stat. 119, 782-804 (2010) (codified at 42 U.S.C. §§ 1320b-25, 1395i-3a, and 1397j-1397m-5). The EJA was enacted as part of the Patient Protection and Affordable Care Act, which was signed into law on March 23, 2010. o annually collect and disseminate data regarding elder abuse, neglect, and exploitation of elders in coordination with Justice;o develop and disseminate information on best practices and provide training for carrying out adult protective services; o conduct research related to the provision of adult protective o provide technical assistance to states and others that provide or fund the provision of adult protective services; o establish 10 elder abuse, neglect, and exploitation forensic centers, in consultation with Justice, that would (1) conduct research on forensic markers for elder abuse, neglect, or exploitation, and methodologies for determining when and how health care, emergency, social and protective, and legal service providers should intervene and when these cases should be reported to law enforcement; (2) develop forensic expertise regarding elder abuse, neglect, and exploitation; and (3) use the data they have collected to develop, in coordination with Justice, the capacity of geriatric health care professionals and law enforcement authorities to collect forensic evidence, including evidence needed to determine if elder abuse, neglect, or exploitation has occurred. § 2042(a)(1)(C), 124 Stat. 794 (codified at 42 U.S.C. § 1397m-1(a)(1)(C)). § 2042(a)(1)(D), 124 Stat. 794 (codified at 42 U.S.C. § 1397m-1(a)(1)(D)). § 2042(a)(1)(E), 124 Stat. 794 (codified at 42 U.S.C. § 1397m-1(a)(1)(E)). Grants to state and local governments for demonstration projects that test methods and training to detect or prevent elder abuse or financial exploitation; and An Elder Justice Coordinating Council and an Advisory Board on Elder Abuse, Neglect, and Exploitation to develop priorities for the elder justice field, coordinate federal activities, and provide recommendations to Congress. Currently, the Elder Justice Coordinating Council consists of the following federal agencies: Consumer Financial Protection Bureau, Corporation for National and Community Service, Department of Health and Human Services, Department of Housing and Urban Development, Department of Justice, Department of Labor, Department of the Treasury, Department of Veterans Affairs, Federal Trade Commission, Postal Inspection Service, and Social Security Administration. Coordination among federal agencies is also a feature of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which established CFPB, requiring it to coordinate its consumer protection efforts of older CFPB’s Office for Older Americans is adults with other federal agencies. charged with facilitating the financial literacy of seniors on protection from unfair, deceptive, and abusive practices and on current and future financial choices. According to officials in the four states we visited, financial exploitation of older adults by financial services providers, power of attorney agents, and in-home caregivers is particularly difficult to prevent. 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. Individuals who present themselves as financial planners may adopt a variety of titles and designations. In some cases, privately conferred designations—such as Certified Financial Planner®—require formal certification procedures, including examinations and continuing professional education credits, while other designations may merely signify that membership dues have been paid. Designations that imply expertise in advising older adults have been a source of particular concern among state securities regulators, according to the North American Securities Administrators Association (NASAA). Older adults may lack information to distinguish among the various senior specific designations. Indeed, in 2011, we reported that there is some confusion about what these titles mean and the level of skill required to obtain them. Exploitation by “Senior Specialist” Calling himself a senior financial advisor, an insurance agent licensed in California met an 89-year-old partially blind, intermittently confused man at a senior center. The agent persuaded him to invest about $250,000 in a flexible premium deferred annuity, warning him not to let anyone talk him out of it. As a result, the man was left with no penalty-free access to his entire life savings for the next 11 years, while the agent earned a commission on this transaction. To earn about $16,000 more in commissions, the agent then convinced the man to move half the amount invested in the annuity into unregistered stock, which cost the man a surrender fee of about $10,000. The stock turned out to be worthless, leaving the man with a fraction of what he had when he met the agent. Attempts by the man’s nephew to retrieve his uncle’s money were unsuccessful. The nephew reported the insurance agent to the California Department of Insurance, which eventually revoked the agent’s license, but local police did not pursue the older adult’s case. While the insurance agent faced no criminal charges in this case, he was later sentenced to 3 years in prison for defrauding another older adult. Another concern is that older adults may be fooled by investment 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. SEC, the Financial Industry Regulatory Authority (FINRA), and NASAA examined 110 firms that sponsored free lunch seminars from April 2006 to June 2007 offered in seven states and found that 63 seminars used misleading advertising and sales materials, 25 seminars resulted in unsuitable recommendations, and in 14 seminars there were fraudulent practices used, such as selling fictitious investments. Preventing the sale of unsuitable or fraudulent investments to older adults is difficult.features that might not provide its intended benefit during the investor’s lifetime. Older adults also can be sold what they believe to be legitimate investments, but are actually completely fraudulent products that hold little or no value. Investment Fraud Using a “Ponzi” Scheme The founder and president of a real estate and financial consulting firm convinced around 200 individuals—about one-third of whom were older adults—to invest in real estate projects that failed to generate any significant revenue. He also convinced them to obtain reverse mortgages on their homes, and to invest the proceeds with his firm. The investments turned out to be a “Ponzi” scheme. Specifically, the perpetrator paid distributions to some investors from others’ deposits; misled investors with false amortization schedules; and used investors’ money to pay for his Porsche, mortgage, and other personal expenses. The scheme was reported to FINRA, investigated by the FBI, and prosecuted by the Eastern District of New York U.S. Attorney’s Office, which sought sentencing enhancements for targeting the elderly. Victims lost over $12 million. They also reported irreplaceable financial losses, emotional distress, feelings of betrayal and disbelief, and various physical symptoms as a result. SEC has developed some educational materials and SEC and CFPB have conducted research related to investment fraud that targets older adults. For example, SEC has published a guide for older adults that counsels them to check their investment adviser’s disciplinary history, lists warning signs of fraud, and provides information on where to go for help. SEC also provides a link to a FINRA website that provides consumers with the required qualifications, including educational requirements, of the designations used by securities professionals. 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. CFPB plans to issue a report in early 2013 to Congress and the SEC that will address providing information to older adults about financial advisors and their credentials. In June 2012, the CFPB issued a public inquiry for information about elder financial exploitation, including a question on what resources older adults have to determine the legitimacy, value, and authenticity of credentials held by investment professionals.expects to share its results in 2013. Older adults can use a legal document referred to as a financial power of attorney to appoint another person (an agent) to manage their finances should they become incapable of doing so. Having a financial power of attorney enables an older adult (a principal) to choose the person who can legally make these decisions for them, when needed. Powers of attorney are easy for anyone to create, can vary in specificity and format, and do not require legal assistance or a court for execution. Each of the four states we contacted has a law that helps prevent misuse of powers of attorney by specifying the responsibilities of agents and, in at least one, penalties for misuse. However, powers of attorney can be forged or perhaps otherwise improperly obtained without a principal’s knowledge or consent and an agent can easily use the principal’s money for his or her own benefit. For this reason, many state and local officials we interviewed in the four states were concerned about misuse of these instruments. For example, one Pennsylvania official described power of attorney documents as a “powerful, simple, and dangerous tool.” A month after an elderly man with dementia and his wife agreed to add their daughter’s name to their bank account, the daughter convinced her mother to sign a document providing her financial power of attorney. When the woman signed, she was in the hospital for a broken hip and a stroke and later claimed she was heavily medicated. Over the next 3 months, the daughter placed the deed to her parent’s home in her name, wrote checks on their account totaling nearly $600,000 that were never questioned by the bank, and attempted to withdraw about $500,000 more. When the woman’s son discovered what had been happening, he had the bank stop payment on the $500,000 and asked the local district attorney to investigate. The daughter was charged with numerous counts of theft, pled guilty, and was sentenced to 3 years probation. The deed was transferred back to the woman and although the prosecutor sought restitution, the $600,000 was not recoverable—it had been used to pay off the daughter’s mortgage, country club membership, and other bills. Some APS and criminal justice officials we spoke to indicated that stronger state power of attorney laws could help prevent elder financial exploitation by agents. For example, Pennsylvania officials said that current state laws have been ineffective at (1) creating practices to monitor the activities of power of attorney agents and (2) encouraging banks to question power of attorney documents they find questionable. In California, law enforcement officials noted that notaries were not always held accountable for their role in signing power of attorney documents. To help strengthen state laws designed to prevent misuse of financial powers of attorney, the Uniform Law Commission has developed the Uniform Power of Attorney Act, which explicitly defines the duties of the power of attorney agent, including fiduciary duties such as acting in good faith and keeping careful records; allows a third party to refuse to honor a power of attorney agreement if there is a good faith belief that the principal may be subject to abuse, and requires the third party to report to APS; allows co-agents to be appointed for additional third-party oversight; and imposes liability on agents who violate the law. According to the Uniform Law Commission, 13 states have adopted the entire Uniform Power of Attorney Act. Others have enacted various other power of attorney laws. For example, New York requires an agent to provide a full accounting to APS when it is investigating a report that the principal may be in need of protective or other services or the victim of abuse or neglect. If it is not provided within 15 days, APS can commence a special proceeding to compel the production of the information. Illinois has added safeguards for principals to its law and created additional court remedies for violations of the law. However, according to the Uniform Law Commission, a number of states have made no changes to laws governing powers of attorney since the Uniform Power of Attorney Act was published. Powers of attorney are generally regulated under state, not federal, law; however, AoA and CFPB are providing some information to states and power of attorney agents to help prevent power of attorney abuse. The AoA-supported National Legal Resource Center co-sponsors trainings for states on the adoption of the Uniform Power of Attorney Act. Furthermore, the CFPB is developing a guide to educate “lay fiduciaries”—including guardians and agents under powers of attorney—about their responsibilities, and is planning to develop several state-specific lay fiduciary guides, scheduled for release in 2013. There are limited safeguards to protect older adults from abuse by guardians, who are granted authority by a state court to make decisions in the best interest of an incapacitated individual concerning his or her person or property. While guardians can play a key role in managing the assets of these older adults, we have noted in past reports that guardians are only subject to limited safeguards that could protect these older adults from financial exploitation. For example, local officials in California noted that it can be hard to determine whether a person applying to be a guardian is doing so to further his ward’s best interests. We have also reported that few states conduct criminal background checks on potential guardians. Moreover, we have noted concerns with weak court oversight of appointed guardians, as well as poor communication between the courts and federal agencies that have enabled guardians to chronically abuse their wards and/or others. Exploitation by in-home caregivers was also cited by local APS officials, police, and district attorneys we spoke to as a type of abuse that is difficult to prevent. These caregivers range from personal care aides who provide non-medical assistance such as helping with laundry and cooking, to home health aides who check an older adult’s vital signs or assist with medical equipment. In-home caregivers may be employed by a private company approved to provide services via a state’s OAA program or independently hired by older adults or their families. Caregiver services may also be covered under a state Medicaid program if the individual is eligible for Medicaid. Older adults may rely on and trust in-home caregivers, and some caregivers have used that relationship to exploit their clients. 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. As the population ages and public policies encourage older adults to remain in their homes for as long as practical, there will be an increased need for in-home caregivers. OAA Title III-B provides funding for in-home services, such as personal care, chore, and homemaker assistance. subject to limited, if any, background checks. A California law enforcement official told us that caregivers suspected of exploiting older adults sometimes have a history of theft. While the Medicaid program requires states to develop and implement home care provider qualification standards, there is no federal Medicaid requirement for criminal background checks. According to the National Conference of State Legislatures, while many states have required agencies to conduct background checks before employing in-home caregivers who are paid by Medicaid or with other state funds, these laws vary greatly in their breadth and scope and the amount of flexibility afforded the agencies when they use the checks to make hiring decisions. Napa County, California recently 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. While background checks for in-home caregivers help flag potential abusers, an AARP study has found that states do not always use all available federal, state, and local criminal data systems. For one, the implementation cost may discourage their use. Moreover, their effectiveness in reducing elder abuse, in general, is unproven. As required by the Patient Protection and Affordable Care Act of 2010, the Centers for Medicare and Medicaid Services implemented the National Background Check Program that encourages states to adopt safeguards to protect clients of in-home caregivers. This voluntary 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. The results of this program could provide data on the effectiveness of background checks in preventing elder abuse, including elder financial exploitation. State and local authorities in the four states we visited told us current safeguards are not always sufficient to prevent exploitation by those older adults depend on for assistance. Although states are generally responsible for laws and regulations regarding these issues, the OAA directs the federal government to disseminate information about best practices to prevent elder abuse, including elder financial exploitation. According to our analysis, there is a role for the federal government to provide more information and guidance to prevent these types of elder financial exploitation. Experts and federal, 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.officials told us that it is difficult for them to reach many older adults with this message and that they have little funding to promote public awareness. For example, in one California county officials reported that due to budget cuts, they had lost many positions that involved educating the public about elder financial exploitation. However, APS and law enforcement Each of the seven federal agencies we reviewed independently produces and disseminates public information on elder financial exploitation that is tailored to its own mission. For example, SEC produces information to educate investors about fraud prevention, including an investment guide for older adults. FTC publishes information to protect consumers, and AoA disseminates information to help reduce elder abuse, including elder financial exploitation. (See table 2 for examples of the types of information provided by each of these agencies.) These seven agencies have also worked together at times to increase public awareness of elder financial exploitation. For example, each year FTC and the Postal Inspection Service collaborate on community presentations during National Consumer Protection Week. However, although the OAA calls for a coordinated federal elder justice system, which includes educating the public, the seven agencies we reviewed do not conduct these 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. Similar calls for coordination were raised when the EJCC held its first meeting on October 11, 2012, to begin implementing its mandate to coordinate federal elder justice activities and develop national priorities. As EJCC Chairman, the Secretary of HHS stated that combating elder abuse—which includes elder financial exploitation—is an “all-of-government” effort and that federal programs are not organized in a strategic way, which decreases their effectiveness. One expert noted that there is a clear need for a strategic, multi-faceted public awareness campaign on elder abuse. An official from the Financial Services Roundtable added that many agencies are trying to focus on awareness and education, but their efforts appear unorganized and uncoordinated. According to state and local officials we spoke with in four states, effectively investigating and prosecuting elder financial exploitation requires special skills and knowledge, which APS workers, law enforcement officers, and district attorneys sometimes lack. For example, APS officials noted that some case workers have little background or training in investigating financial crimes, and would find it difficult to respond to these cases. Local law enforcement officials also noted that they receive little training on elder financial exploitation and need additional training to build expertise. In addition, we were told that some prosecutors and judges are reluctant to take on cases of suspected elder financial exploitation because of competing priorities and limited resources, a continuing belief that elder financial exploitation is primarily a civil issue, or a view of older adult victims as unreliable witnesses. State and local officials in the four states we reviewed are attempting to increase their expertise. For example, some state and local officials told us they attempt to acquire investigative expertise through formal and on- the-job training, by dedicating units or staff to investigate suspected cases of elder financial exploitation, or by contracting for assistance from certified fraud examiners or other forensic accountants. However, state and local officials also told us that funding constraints limited their ability to build this additional expertise. Moreover, officials and experts told us that in order to more effectively allocate their limited resources, state and local entities would need more information about which practices have proven to be most effective for investigating, as well as preventing, elder financial exploitation. AoA and Justice have developed some resources that could be used to help state and local agencies build expertise in identifying, investigating, and prosecuting elder financial exploitation (see table 3). Under the EJA, HHS is authorized to develop and disseminate best practices and provide training for APS workers, and AoA-supported resource centers compile information about elder abuse in general for easy access. However, information pertaining specifically to elder financial exploitation topics—such as mass marketing fraud, power of attorney abuse, or investment fraud—may be dated or more difficult to find because it is intermingled with other materials.National Center on Elder Abuse (NCEA) has compiled a list of elder abuse training materials from a variety of sources, but we could find no quick and clear way to identify which trainings cover financial exploitation. For example, AoA’s Additionally, Justice officials told us that it would be beneficial for more training to be available to prosecutors of elder abuse. Justice has identified providing training and resources to combat elder abuse as a strategy to achieve its objective of preventing and intervening in crimes against vulnerable populations. Justice officials indicated that they are developing an elder justice prosecution website that could serve as a resource and help build expertise. The website is expected to consolidate training materials in use across the country, primary litigation materials from local district attorneys, and information from relevant academic centers, such as the University of California at Irvine and Stanford University. However, it is unclear when this project will be completed, as Justice officials are waiting for materials from local district attorneys. As a result, prosecutors and other law enforcement officials currently do not have access to these materials. The OAA requires AoA to develop a plan for promoting collaborative efforts to support elder justice programs at all levels. Officials we met from state and local social service and criminal justice agencies in three of the four states we reviewed said that while collaboration between their systems is important for combating elder financial exploitation, collaborating can sometimes be difficult because the two systems differ in the way they respond to exploitation and carry out their work. Specifically, APS focuses on protecting and supporting the victim, and criminal justice focuses on prosecuting and convicting exploiters. However, according to experts, by working together, APS, the criminal justice system, and other Experts have partners can more easily accomplish both of these goals.noted that some type of multidisciplinary response to elder abuse— including elder financial exploitation—is prudent because of the complex nature of the problems faced by victims and the wide variety of responses required to help them and to prosecute exploiters. In each of the four states we reviewed, local initiatives helped bridge the gap between APS and criminal justice agencies. In some locations APS, criminal justice agencies, and other public and private entities have formed groups that meet periodically to develop awareness activities, foster information sharing, and discuss and resolve individual cases. Some multidisciplinary groups discuss elder abuse broadly, such as elder abuse task forces in some Pennsylvania counties and multidisciplinary groups in New York City. Others concentrate on financial exploitation specifically, such as the Philadelphia Financial Exploitation Task Force, and Financial Abuse Specialist Teams in some California counties. Although multidisciplinary groups responding to elder financial exploitation already exist in each of the four states we visited and elsewhere, forming and sustaining these groups continues to be challenging, according to law enforcement officials in one state we visited and experts. Busy schedules and competing priorities make it difficult for some participants to attend meetings regularly, and a group’s focus influences how extensively members are willing to participate. For example, in one location officials told us that when the primary focus of their group shifted from prosecuting cases to providing services, participation by law enforcement officials declined. Collaborative efforts can also be undermined by a history of poor interaction between member organizations, differences in systemic understanding of elder financial exploitation, difficulties communicating across disciplines, different understandings of limits on information sharing, unclear roles, and failure to address the group’s long-term survival.relevant promising practices in this area could help promote creation of such groups—particularly when resources are limited—and ensure their success. However, information on Federal agencies have made some efforts to promote and inform collaboration between the APS and criminal justice systems in states. However, agencies have taken few steps to compile or disseminate promising practices in creating or sustaining multidisciplinary groups responding to elder financial exploitation, even though the OAA requires AoA to develop and disseminate information on best practices for adult protective services. AoA and Justice have offered a small number of grants to states to combat elder abuse or other crimes that require or encourage collaborative efforts such as multidisciplinary teams (see Table 4). AoA’s Elder Justice Community Collaborations program offered over 40 $10,000 grants, along with technical assistance and training, from 2007 to 2010 for the purpose of setting up elder justice coalitions. These coalitions, which included members across a broad range of disciplines, were required to create an elder justice strategic plan for their community, including plans for continuation beyond the grant period. This program was the only one we identified that was created specifically for the purpose of setting up new coalitions; other grants either allowed funds to be used for that purpose or required a coalition to be in place to implement the grant-funded initiative. 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 FBI’s Internet Crime Complaint Centercomplaints from victims of all ages about online fraud alone, with reported losses of about $485 million. 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 target older adults, is particularly difficult for them. For example, coordinating with law so state enforcement authorities in other jurisdictions is labor intensive,and local officials are often unable to pursue these cases themselves. Furthermore, even though various federal agencies have the authority to investigate and prosecute interstate and international scams (see fig. 3),local law enforcement officials told us there is not enough information available on whom they should contact when they need to refer a case to the federal level. They indicated that the lines of communication between local and federal agencies tend to be informal, based on whom local law enforcement officers know in a federal agency. Providing accurate contact information is consistent with Justice’s strategic objective for fiscal years 2012-2016 to strengthen its relationships with state and local law enforcement. Justice officials told us they believe that local officials know which federal officials to contact about international and interstate cases, but state and local law enforcement officials told us that 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 addition to not knowing whom to contact, state and local law enforcement officials in the four states we reviewed 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, 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. FTC’s Consumer Sentinel Network database (Consumer Sentinel) collects consumer complaint data and aims to be an information-sharing tool to enable state and local law enforcement to become more effective. Justice officials said they encourage individuals and state and local authorities to file a complaint of suspected fraud to either the Consumer Sentinel or the FBI’s Internet Crime Complaint Center. However, while some state Attorneys General were familiar with the FTC database, local law enforcement officials we spoke with did not say that they reported cases to it or used its data. One official said he did not find the Consumer Sentinel database useful because law enforcement officials are not familiar with it. FTC officials explained that while they have made attempts to get state- level offices to contribute to the Consumer Sentinel, barriers such as reservations about data sharing, obsolete technological infrastructure, and severe budgetary cutbacks have kept the numbers of contributors low. When state officials do not contribute to the Consumer Sentinel, the information in the database does not give a national picture of the extent of cross-border scams. As a result of this—in addition to the impact of some law enforcement officials not using the system—it may be more difficult to combat these scams, and officials at all levels may not have the information they need to target their resources appropriately. According to state and local officials, banks are important partners in combating elder financial exploitation because they are well-positioned to recognize, report, and provide evidence in these cases. Indeed, frontline bank staff are able to observe elder financial exploitation 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. There are state efforts and bank policies to help bank employees recognize exploitation. In Illinois, all state-chartered banks are required to train their employees on what constitutes elder financial exploitation. State and local agencies in California and Pennsylvania provide information and training to banks to help them recognize elder financial exploitation. Most of the six banks we spoke with had a policy for periodically training employees on identifying elder financial exploitation. In addition, these banks had a system in place that routinely monitors bank transactions for unusual activity and can help identify exploitation. Banks may also help report suspected elder financial exploitation to local authorities. Training initiatives, such as Illinois’ program, encourage bank employees to report exploitation. Most of the six banks we spoke with had procedures in place for frontline employees to report suspected elder financial exploitation to bank management. Some of these banks also had internal units that are dedicated to receiving staff reports of elder financial exploitation and referring them to the proper authorities. Notwithstanding such efforts, APS and criminal justice officials told us elder financial exploitation is generally underreported by banks.the training they receive, bank staff may not be aware of the signs of elder financial exploitation or know how to report it. In addition, in five of the six prosecuted cases we reviewed in depth, there were missed opportunities for banks to raise questions about transactions. For example, in one case, bank officials did not take any action in response to repeated withdrawals of large amounts of money that were not typical for Despite that customer. Bank officials said they do report suspected elder financial exploitation, but also emphasized that banks are not law enforcement agencies. Officials said their primary responsibility is to protect customer assets and privacy and ensure customers have access to their funds. In addition, a banking association representative told us that even though federal privacy laws do not prohibit banks from reporting suspected abuse, banks are concerned that they will be held liable if they report suspected exploitation that is not later substantiated. Three federal agencies—CFPB, AoA, and FinCEN—are positioned to encourage banks to identify and report elder financial exploitation, either due to the agency’s mission or via proposed or existing activities. The CFPB is the primary federal consumer protection regulator with respect to a variety of financial institutions, including banks. The Dodd-Frank Act authorizes the CFPB to protect consumers, including older adults, from abusive practices committed in connection with the offering or provision of consumer financial products or services. In a November 2011 congressional testimony, the Assistant Director of CFPB’s Office for Older Americans said the agency has a unique opportunity to help enhance, coordinate, and promote efforts of a variety of groups, including financial services providers. While the federal government generally requires banks to train employees on a variety of issues, such as money laundering, physical bank security, and information security, we could find no similar requirements for banks to train employees to recognize and report elder financial exploitation. However, AoA is considering collaborating with one large national bank on a project to encourage bank training on elder financial exploitation. Banks are also required to file Suspicious Activity Reports (SAR) with FinCEN to alert them of potentially illegal bank transactions that involve, individually or in the aggregate, at least $5,000, which could include elder financial exploitation. In February 2011, FinCEN issued an advisory to banks that described elder financial exploitation, provided potential indicators of elder financial exploitation, and requested the use of a specific term (“elder financial exploitation”) when applicable in SAR narratives related to this activity. Bank records can help investigators track an older adult’s use of funds over time and detect irregularities. APS officials in Pennsylvania told us that although Pennsylvania state law grants APS access to bank records, they are often denied access on the basis of federal privacy laws or the bank’s policies. APS officials from California, Illinois, and New York also reported that they are denied access to bank records for the same reasons. As a result, investigators are unable to obtain the information necessary to investigate suspected exploitation, identify perpetrators, stop further exploitation from occurring, or obtain restitution for victims. Bank officials told us the federal government could help clarify bank roles and responsibilities related to privacy and financial exploitation of older adults. There are two federal laws that generally protect the privacy of consumer banking records: the Right to Financial Privacy Act of 1978 (RFPA) and the Gramm-Leach-Bliley Act.must meet to safeguard customer banking information. The RFPA generally prohibits financial institutions, including banks, from providing any federal governmental authority with access to copies of information in any customer’s records without first providing notice to the customer. Because a government authority is defined in RFPA to include only federal agencies and officials, however, it should not prevent banks from reporting possible financial exploitation of older adults—or providing bank records to—state APS. Each establishes standards that banks The Gramm-Leach-Bliley Act generally prohibits financial institutions, including banks, from disclosing nonpublic personal information to third parties including, but not limited to, federal governmental authorities. Nonetheless, the act has a number of general exceptions permitting disclosure, such as: to protect against or prevent actual or potential fraud, unauthorized transactions, claims, or other liability; consistent with the RFPA, for an investigation on a matter related to public safety; or to comply with a properly authorized civil, criminal, or regulatory investigation, subpoena, or summons by federal, state, or local authorities. The NCEA and experts have called for more data on the cost of elder financial exploitation to public programs and for trend data on its extent. According to our analysis, these data could help determine what government resources to allocate and how best to prevent and respond to this problem. According to one Utah official, quantifying the impact of elder financial exploitation in that state helped that state’s legislators understand the importance of combating this problem and convinced them to simply decrease, rather than eliminate, state APS funding altogether.undertaken such a study. However, according to our analysis, no other state has Similarly, data on the extent of elder financial exploitation over time could help state and local APS, as well as law enforcement agencies, assess the effectiveness of their efforts to combat it. The OAA and EJA both require the federal government to take steps to collect and disseminate data on all types of elder abuse, yet the studies federal agencies have funded in this area have produced little data on its extent over time, as we previously reported, or on its cost. Several federal agencies do collect administrative data on the number of complaints submitted by consumers or criminal cases that sometimes involve elder financial exploitation (see table 5)—data that could help state and local APS and law enforcement authorities determine what resources to allocate and how best to prevent and respond to this problem. Each agency publishes material containing a range of administrative data from its system that is available to the public. FTC, for example, publishes statistics from the Consumer Sentinel on the number and types of complaints, amount of losses, and characteristics of victims. While the number of reported incidents of elder financial exploitation in each agency’s system represents only a portion of all cases that actually occur in a given period and geographic area, the number over time could provide an indication of fluctuations in the extent of certain types of elder financial exploitation. Data from the Consumer Sentinel could be of particular interest to state and local APS and law enforcement authorities, because over half of the consumer complaints reported to this system involve financial exploitation through fraud. Individual complaints can be directly reported to the Consumer Sentinel by victims or others on their behalf. Cases reported to the FBI Internet Crime Complaint Center and non-governmental organizations, such as the Council of Better Business Bureaus, are also added to the complaints in the Consumer Sentinel. Currently, however, the Consumer Sentinel does not receive any of the complaints reported to any of the law enforcement or consumer protection agencies in 38 states. Moreover, less than half the complaints in the Consumer Sentinel contain the age of the victim because FTC does not require complaints to include this information or other indicators of whether the case involved elder financial exploitation. FTC officials told us the agency does not require complaints to include the age of the victim because of concerns regarding privacy and the potential burden this might place on individual complainants. In contrast, SARs in the FinCEN system will soon all be clearly identified when a filing institution reports suspected elder financial exploitation. In 2011, we found that state-level APS data could provide useful information on the extent of elder abuse, including elder financial exploitation, over time. We recommended that AoA work with states to develop a nationwide system to collect and compile these data.officials told us they have initiated discussions with states about establishing such a system, but have been unable to develop a comprehensive plan for implementing one due to a lack of funding. Elder financial exploitation is a multi-faceted problem spanning social service, criminal justice and consumer protection systems of government. As a result, combating it is challenging and requires action on the part of not only many state and local agencies, but also multiple agencies at the federal level. Each of the seven federal agencies we reviewed is working to solve this problem in ways that are consistent with its own mission. However, the problem is large and growing. It calls for a more cohesive and deliberate approach governmentwide that, at a minimum, identifies gaps in efforts nationwide, ensures that federal resources are effectively allocated, establishes federal agency responsibilities, and holds agencies accountable for meeting them. The EJCC has recognized that combating elder abuse, including elder financial exploitation, is an effort that requires federal agencies to work together. A clearly articulated national strategy is needed to coordinate and optimize such federal efforts to effectively prevent and respond to elder financial exploitation, and the EJCC can be the vehicle for defining and implementing this strategy. In the current economic climate, state and local APS and law enforcement agencies will find it increasingly difficult to cope with growing numbers of cases without a national strategy attuned to their need for information and guidance on preventing and responding to elder financial exploitation, as well as additional data on its extent and impact. In addition to working together to build a national strategy to combat elder financial exploitation, there are a number of ways individual federal agencies could better support state and local APS and law enforcement agencies. For example, Justice has identified providing training and resources to combat elder abuse as a strategy to achieve its objectives of preventing and intervening in crimes against vulnerable populations. Without easily accessible information and guidance tailored to the needs of prosecutors nationwide, they may continue, given limited resources, to make such cases a low priority. Similarly, many cases cross jurisdictions and could involve multiple victims or have perpetrators located in other countries. These cases may not be investigated or prosecuted unless state and local law enforcement have better information on the process for contacting the federal government regarding these cases or the ways in which the federal government could provide support. Without information to correct banks’ misconceptions about the impact of federal privacy laws on their ability to release bank records, APS and law enforcement agencies will continue to find it difficult to obtain the information they need from banks to investigate suspected cases of elder financial exploitation. Moreover, without educating bank employees nationwide on how to identify and report suspected elder financial exploitation, many cases will continue to go unreported, uninvestigated, and unprosecuted. The CPFB is positioned to provide additional information to banks, as part of the agency’s consumer protection regulatory function and dedication to protecting the financial health of older Americans. Finally, to fulfill its mission of protecting consumers against unfair, deceptive, or fraudulent practices, the FTC established the Consumer Sentinel Network database to enhance information-sharing and support law enforcement at all levels. The Consumer Sentinel could serve as a valuable source of data on the extent of some types of elder financial exploitation nationwide and as an important resource for law enforcement authorities as they identify, investigate, and prosecute cases. The Consumer Sentinel’s usefulness in this area, however, will continue to be limited until the number of contributors to it is increased and complaints are required to include the age of the victim or other indicators of whether the case involved elder financial exploitation. In the absence of the latter, it is difficult to determine the number of financial exploitation complaints that involve older adults, which in turn makes any Consumer Sentinel data contributed less useful to state and local APS and law enforcement agencies. To coordinate and optimize federal efforts to prevent and respond to elder financial exploitation, we recommend the Secretary of HHS, as chairman of the Elder Justice Coordinating Council, direct the Council to develop a written national strategy for combating this problem. This strategy should include a clear statement of its purpose and goals and indicate the roles and responsibilities particular federal agencies should have in implementing it. The strategy could address, among other things, the need to identify and disseminate promising practices and other information nationwide that can be used by state and local agencies to prevent exploitation, educate the public, and help state and local agencies collaborate, investigate, and prosecute elder financial exploitation; ensure coordination of public awareness activities across federal agencies; and collect and disseminate better data nationwide to inform federal, state, and local decisions regarding prevention of and response to elder financial exploitation. To develop expertise among prosecutors and other criminal justice officials, we recommend the Attorney General establish timeframes for and take the steps necessary to launch the elder justice prosecution website that Justice has begun to construct. To facilitate investigation and prosecution of interstate and international elder financial exploitation, we recommend the Attorney General conduct outreach to state and local law enforcement agencies to clarify the process for contacting the federal government regarding these cases and the ways in which the federal government could provide support. To encourage banks to identify and report suspected elder financial exploitation and to facilitate release of bank records to APS and law enforcement authorities for investigating this activity, we recommend the Director of the Consumer Financial Protection Bureau develop a plan to educate banks nationwide on how to identify and report possible elder financial exploitation; and develop and disseminate information for banks on the circumstances under which they are permitted, under federal privacy laws, to release relevant bank records to law enforcement and APS agencies. We provided a draft of this report to the seven federal agencies that we reviewed for their comments. CFPB concurred with our recommendations and agreed that a collaborative and coordinated effort by federal agencies can help optimize strategies to combat elder financial exploitation (see appendix XVI). CFPB further noted that financial institutions can play a key role in preventing and detecting elder financial exploitation, and that CFPB is collecting information on financial institution training programs and considering how best to help institutions that request this information. HHS indicated in its general comments that our recommendations are consistent with what it heard during the inaugural meeting of the EJCC, and added that it looks forward to working with Congress to continue implementing the EJA (see appendix XVII). In an e-mailed response, FTC’s Bureau of Consumer Protection noted that the Consumer Sentinel database provides law enforcement with access to millions of consumer complaints. FTC added that the database has no required fields, and expressed its belief that if consumers were required to provide detailed personal information as a condition to filing a complaint, they might refuse to do so, thereby decreasing the overall effectiveness of the system. FTC explained that almost 48 percent of all fraud complaints in 2011 included the voluntary submission of age, and that nearly half of its non-individual data contributors do not submit age information in the data they provide to FTC. Given the potential for the Consumer Sentinel database to support and enhance state and local law enforcement agencies’ response to elder financial exploitation, particularly interstate and international cases, we continue to believe that FTC should study the feasibility of requiring that all complaints to the Consumer Sentinel database include the victim’s age or another indicator of whether the complaint involves elder financial exploitation. In doing so, FTC can examine different options, including the use of a check box similar to the one that FinCEN has included in its SARs. We are sending copies of this report to the seven agencies we reviewed, relevant congressional committees, and other interested parties. We will also make copies available to others upon request. The report is available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7215 or brownke@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix XVIII. Mission To develop a comprehensive, coordinated, and cost-effective system of home- and community- based services that helps elderly individuals maintain their health and independence. How agency prioritizes elder financial exploitation Strategic goal of ensuring the rights of older people and preventing their abuse, neglect, and exploitation. Coordination with other agencies Works with state aging agencies to help them develop statewide plans conduct research on and develop information on best practices for Adult Protective Services (APS), Through NCEA, partnered with Treasury on its Go Direct financial Partnered with Treasury and the Financial Services Roundtable on a provide technical assistance to toolkit for training financial institutions on elder financial exploitation Worked with the SEC on several Seniors Summits that brought establish centers to conduct research, develop expertise, and improve law enforcement’s ability to combat elder financial exploitation agencies together to discuss elder financial exploitation Chairs the Elder Justice Coordinating Council, a collaborative body of federal agencies created under the EJA to recommend federal policies to combat elder abuse and ways federal agencies should coordinate to implement these policies. Contact information Call: (202) 619-0724 Co-leads an informal interagency workgroup that helps facilitate federal elder justice activities. On April 16, 2012, AoA became part of the Administration for Community Living, which also includes HHS’s Office on Disability and Administration on Developmental Disabilities.

Summary: Elder financial exploitation is the illegal or improper use of an older adult's funds or property. It has been described as an epidemic with society-wide repercussions. While combating elder financial exploitation is largely the responsibility of state and local social service, criminal justice, and consumer protection agencies, the federal government has a role to play in this area as well. GAO was asked to review issues related to elder financial exploitation. This report describes the challenges states face in (1) preventing and (2) responding to elder financial exploitation, as well as the actions some federal agencies have taken to help states address these challenges. To obtain this information, GAO interviewed state and local social service, criminal justice, and consumer protection officials in California, Illinois, New York, and Pennsylvania--states with large elderly populations; officials in seven federal agencies; and various elder abuse experts. GAO also analyzed federal strategic plans and other documents and reviewed relevant research, federal laws and regulations, and state laws. Officials in each of the four states GAO contacted identified the need for more safeguards and public awareness activities to help prevent elder financial exploitation. They also noted that it is difficult to prevent exploitation by individuals such as financial services providers, power of attorney agents, guardians, and paid in-home caregivers. Although states have primary responsibility for combating elder financial exploitation, the federal government could disseminate information on model power of attorney legislation, for example, to help states better safeguard against power of attorney abuse--one type of federal activity authorized under the Older Americans Act of 1965. In addition, experts and state and local officials told GAO that many older adults need more information about what constitutes elder financial exploitation in order to report and avoid it. The seven federal agencies GAO reviewed have undertaken activities to increase public awareness of elder financial exploitation. While some experts observed that a nationwide approach to educating the public is needed, federal public awareness activities are not currently conducted as part of a broader coordinated approach, which GAO believes could help ensure the effective use of federal resources. The Elder Justice Coordinating Council, which held its first meeting in 2012, could be the vehicle for developing and implementing a coordinated national strategy. The Council is composed of officials from federal agencies and is charged with developing national priorities and coordinating federal elder justice activities. Experts and officials in each state GAO reviewed indicated that difficulty 1) gaining expertise, 2) sustaining collaboration between law enforcement and adult protective services agencies, and 3) obtaining data hinders their response to elder financial exploitation. As with prevention, many federal agencies have individually taken steps to address these challenges that are in line with their own missions. For example, the Department of Justice (Justice) has begun to construct a website that contains training and other materials prosecutors can use to build their expertise in investigating and prosecuting elder abuse, which includes elder financial exploitation. However, there are gaps in federal support in some areas. For example, law enforcement officials in each of the four states GAO reviewed indicated that it is not clear how they should obtain the federal support they need to respond to interstate and international cases. Justice can provide this information, in keeping with its priority to strengthen its relationship with state and local law enforcement. Similarly, the Federal Trade Commission's (FTC) Consumer Sentinel Network database compiles incidents of financial exploitation reported to it by many sources around the country but receives incidents from state government agencies in only 12 states. The database would be of greater use if FTC obtained incidents from more of the states and contained an indicator that the incident involved an older adult. Federal agencies should develop a written national strategy addressing challenges GAO identified, facilitate case investigation and prosecution, and improve data, among other things. The Consumer Financial Protection Bureau and the Department of Health and Human Services supported GAO's recommendations. FTC did not believe it is necessary to examine the feasibility of requiring victim's age in complaints. GAO maintains the importance of its recommendation.