What Is Elder Financial Abuse?

Elder financial abuse is a specific form of a more general crime, the crime of financial abuse. Financial abuse is defined in California's Elder Abuse and Dependent Adult Civil Protection Act (Welfare & Institutions Code section 15600 et seq.) as "occurring when any person or entity takes, secretes, appropriates or retains real or personal property of an elder or dependent adult with the intent to wrongfully use or defraud, or who assists in doing so." Elder financial abuse is, of course, the perpetration of this crime against elder citizens and dependent adults, who may be especially vulnerable due to physical or mental incapacity.

            Common Elder Financial Abuse Scenarios:

·      Misappropriation of income or assets - Perpetrator obtains access to an elder's Social Security checks, pension payments, checking or savings account, credit card or ATM, or withholds portions of checks cashed for an elder.

·      Charging excessive rent or fees for service - Perpetrator charges an elder an excessive rent or unreasonable fees for basic care services such as transportation, food, or medicine.

·      Obtaining money or property by undue influence, misrepresentation, or fraud - Perpetrator coerces an elder into signing over investments, real estate or other assets through the use of manipulation, intimidation or threats.

·      Improper or fraudulent use of the power of attorney or fiduciary authority - Perpetrator improperly or fraudulently uses the power of attorney or fiduciary authority to alter an elder's will, to borrow money using an elder's name or to dispose of an elder's assets or income.

·      Pigeon drop - Perpetrator claims to have found a sum of money and offers to split it with an elder provided the elder first withdraws an amount equal to his or her share as a sign of good faith.

·      Fake accident ploy - Perpetrator convinces an elder that the elder's child has been seriously injured or is in jail and needs money for medical treatment or bail.

·      Telemarketing and mail fraud - Perpetrator persuades an elder to buy a valueless or nonexistent product, donate to a bogus charity or invest in a fictitious enterprise.

·      Fake prizes - Perpetrator tells an elder that he or she has won a nonexistent prize and either asks the elder to send a check to pay the taxes on this nonexistent prize or obtains the elder's credit card or checking account number to pay for shipping and handling charges for the prize.

·      Unsolicited work - Perpetrator arrives unexpectedly at an elder's residence and offers to perform work for a reasonable fee; after starting the work, the perpetrator insists that the elder pay more than originally agreed before the work will be completed.

Legal Issues

California Law regarding Elder Financial Abuse:

California has adopted the Elder Abuse and Dependent Adult Civil Protection Act (Welfare & Institutions Code section 15600 et seq., or the "Act").

The Act defines "financial abuse" as occurring when any person or entity takes, secretes, appropriates or retains real or personal property of an elder or dependent adult with the intent to wrongfully use or defraud, or who assists in doing so. It protects both elders 65 and over, and dependent adults. A "dependent adult" is a California resident between the age of 18 and 64 who has physical or mental limitations that restrict his or her ability to carry out normal activities, or to protect his or her rights.

The Act defines reporters of possible abuse as either "mandated" or "non-mandated."

"Mandated reporters" include any person who has assumed full or intermittent care or custody of an elder or dependent adult, regardless of compensation or license, elder or dependent adult "care custodians," health care practitioners, employees of Adult Protective Services and law enforcement officers. Failure of mandated reporters to report is a misdemeanor.

All other persons, including financial institutions and their employees as such, are "non-mandated" reporters, if they know, or reasonably suspect an elder or dependent adult has been, or is in the process of becoming, a victim of abuse of any kind.

The Act provides that a non-mandated reporter of known or suspected elder or dependent adult abuse shall not incur civil or criminal liability as a result of a report, unless it can be proven that a false report was made and the person knew it was false.

Non-mandated reporters, like financial institutions and financial institution employees, have only two reporting options to be within the qualified safe harbor of the Act: to report to either county Adult Protective Services (APS), or a local law enforcement agency, including a prosecutor's office.

In addition, non-mandated reporters should be able to show that reports have been made upon reasonable suspicion. "Reasonable suspicion" includes " . . . an objectively reasonable suspicion that a person would entertain, based upon facts that could cause a reasonable person in a like position, drawing when appropriate upon his or her training and experience, to suspect abuse." The kind of training contained in this guide is critical, not only to teach line staff to recognize and act appropriately to signs of financial abuse, but to be able to articulate the specific reasons for the suspicion.

Sometimes a customer may wish to carry out a transaction even though financial institution staff have expressed concern or made a report to APS. Before processing the transaction, office staff should consult closely with a senior manager and/or legal counsel to evaluate available options, including giving the customer a written warning and/or refusing the request.

Those readers with responsibility for designing or managing a program for reporting of financial abuse of elders, or dependent adults, should always work closely with their own counsel and operations risk management staff to tailor the approach to the institution's own procedures and risk considerations.

Federal law regarding suspicious activity reports

In addition to reporting suspected elder abuse to Adult Protective Services, financial institutions may be required to file a Suspicious Activity Report (SAR) with the federal government. Federal law (31 U.S.C. 5318(g)) requires financial institutions to file SARs in the instances noted below. Federal law also prohibits notifying any person involved in the transaction that the financial institution has made a report. The SAR must be made promptly after detecting any known or suspected violation of law or regulation involving the following:

1.    Insider abuse involving any amount. An SAR would be required if a financial institution employee, director, officer, or agent committed or aided the commission of suspected financial elder financial abuse.

2.    Violations aggregating $5,000 or more, where a suspect can be identified. An SAR would be required if one or more financial elder financial abuse transactions aggregating $5,000 or more are conducted through the financial institution AND a suspect can be identified.

3.    Violations aggregating $25,000 or more, regardless of whether a suspect can be identified. An SAR would be required if one or more financial elder financial abuse transactions aggregating $25,000 or more are conducted through the financial institution, even if no suspect can be identified.

4.    Transactions aggregating $5,000 or more that involve potential money laundering or violations of the Bank Secrecy Act. An SAR would be required if one or more transactions aggregating $5,000 are conducted in order to disguise funds or assets derived from financial elder financial abuse.

Preventing Elder Financial Abuse – Be Aware – You Can Prevent Elder Abuse

The following tips may be useful to you in helping you be more aware of and preventing elder financial abuse:

·      Use direct deposit for all checks.

·      Do not leave valuables in plain view.

·      Sign your own checks and do not sign "blank checks," even for family members.

·      If someone is helping you to manage your finances, get a trusted third person to review your bank  statement.

·      Don't sign anything without reading it carefully.

·      Do not lend any money in return for a general promissory note.

·      Do not sign over money or property to anyone in return for care, even a family member or friend, without  having the agreement reviewed by an attorney.

·      Establish a relationship with the personnel at your bank.

·      Cultivate friends of all ages so you maintain a strong support network.

·      Become familiar with resources in your community designed to help older people and their families.

·      Execute a Power of Attorney that will grant financial decision-making power to a trusted friend, relative or attorney. Make sure you know and trust this person. A Power of Attorney can be as limited or as broadly defined as you wish and can be revoked at any time. Give your bank a copy of this.

·      Put all financial instructions in writing and be specific.

·      Keep accurate and complete financial records of all transactions.

·      Gather all important documents together (wills, insurance policies and bank account information) and tell someone you trust where these documents are kept.

·      Never give out credit card numbers over the phone unless you placed the call.

·      Never give out your Social Security number or bank account number over the phone.

·      Don't make donations to charities you don't know.

·      Get several estimates before you have any work done to your home.

·      Do not pay for any work in advance of its completion and remember that all contractors must be licensed by law.

·      Do not pay cash to persons you hire.

·     If something seems "too good to be true" (such as being told that you won a prize for a drawing you did not enter, or that someone can get you a 100% return on your investment), it is probably a scam.