What GAO Found
We found that state and local social services, criminal justice, and consumer protection agencies face many challenges as they work to prevent and respond to elder financial exploitation. For example:
•Officials in each of the four states we contacted cited the need for more safeguards to prevent exploitation by financial services providers, power of attorney agents, and paid in-home caregivers;
•Officials told us that older adults need more information about what constitutes elder financial exploitation and how to avoid it, but social services and law enforcement agencies do not always have the resources to promote public awareness in this area;
•Banks are well-positioned to recognize, report, and provide evidence supporting investigations in elder financial exploitation cases; however, many social services and law enforcement officials we spoke with indicated banks do not always recognize and report exploitation or provide the evidence needed to investigate it; and
•According to experts, collaboration between the social services system--which protects and supports victims--and the criminal justice system--which investigates and prosecutes crimes--can be an effective means of combating elder financial exploitation. However, officials in three of our four states noted that this collaboration can be difficult to achieve. These two systems do not respond to exploitation or carry out their work in the same way, so there can be difficulties communicating across disciplines and different views regarding limits on information sharing.
In many of the locations we contacted, state or local agencies are actively pursuing solutions to at least some of these challenges and there are some federal initiatives as well that could help address them. When it comes to preventing the sale to older adults of unsuitable or fraudulent investments, the Securities and Exchange Commission (SEC) and the Bureau of Consumer Financial Protection (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 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 plans to issue a report in early 2013 addressing how information about financial advisors and their credentials should be provided to older adults. To prevent exploitation by power of attorney agents and paid in-home caregivers, 13 states have adopted the Uniform Power of Attorney Act in its entirety, and Napa County, California, now requires paid in-home caregivers to submit to a background check and obtain a permit before they can be hired. (What I have enlarged and underlined was requested the most by everyone. That financial institutions be required to prove credentials not just in regard to bank trustees but because of mortgages.)
We found that law enforcement authorities in some locations have devoted resources to promoting public awareness of elder financial exploitation. For example, 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. In addition, each of the federal agencies we reviewed independently produces educational materials that could help prevent elder financial exploitation.
We also identified state, local, and federal activities encouraging banks to work with social services and law enforcement, and activities to promote and support collaboration between the social services and criminal justice systems. Illinois, for example, requires bank employees to receive training in how to report exploitation. (It's my personal opinion that it's not working or some banks are being overlooked in the program.)
Why GAO Did This Study
This testimony presents some of the results from the latest study in our body of work on elder justice issues. According to experts, the illegal or improper use of older adults' funds, property, or assets is reaching epidemic proportions in this country and has far-reaching effects on its victims and society, in general. The money older adults lose in these cases is rarely recovered and this loss can undermine both the health of older adults and their ability to support and care for themselves. One study estimated that financial exploitation cost older adults at least $2.9 billion in 2010.
Older adults can be exploited by family members and friends, home care workers, legal guardians and other fiduciaries, as well as those in the financial services industry. They also often fall prey to mail, telephone, and internet scams that offer substantial lottery or other winnings in exchange for so-called taxes or fees. Because elder financial exploitation can take many forms, combating it involves state and local agencies, and their federal counterparts, across social services, criminal justice, and consumer protection systems.
This testimony today is based on our November 2012 report, which is being released to the public today. It describes the challenges states face in combating the many types of elder financial exploitation and the actions federal, as well as state and local agencies, are taking to overcome these challenges.
For questions about this testimony, please contact Kay Brown at (202) 512-7215 or brownke@gao.gov.
A link to this article and full report here.
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