«The New York State Cost of Financial Exploitation Study June 15, 2016 Page 1 of 94 The New York State Cost of Financial Exploitation Study Yufan ...»
Loss of individual assets and property and the negative health and lifestyle effects triggered by these losses represent the most devastating aspects of financial exploitation. However, these losses can also be the most challenging to quantify. Inspired by the promising work conducted in Utah, the OCFS research team worked with local APS workers to collect specific, quantifiable information on the value of assets taken in verified cases of financial exploitation across the 31 participating districts. These documented losses were then used to estimate district and statewide losses, as well as the potential magnitude of victim losses if both reported and unreported cases of financial exploitation were taken into account.
The ultimate objective was to gather key baseline data regarding the financial and the non-financial costs of financial exploitation, data not previously collected in New York State on a systematic basis statewide. It is hoped that the collection of this data will assist in the development of policy and practice recommendations and to inform future decisions regarding allocating resources for prevention and intervention to protect vulnerable adults.
This report describes the context and findings behind the New York State Cost of Financial Exploitation Study. Background information on financial exploitation is provided in Chapter 1, with particular attention paid to those studies that laid the foundation for the research design and estimation approaches used in the current report. Chapter 2 describes the research design and data collection tools developed to address each of the study objectives listed above, while specific findings are shared in Chapters 3 and 4. Finally, Chapter 5 considers the implications of these findings for adult protective services and offers data-driven recommendations for enhancing both research and practice.
Page 16 of 94 Chapter 1: Financial Exploitation While media stories tend to focus on the dangers faced by elderly adults living alone, financial exploitation can affect anyone, regardless of age, gender, race/ethnicity, living situation, or socio-economic status. Who perpetrates the abuse, the tactics used to deprive victims of their resources, and the financial costs associated with these acts can also vary considerably.
What is financial exploitation?
Definitions of financial exploitation differ from jurisdiction to jurisdiction, but generally share a core set of characteristics. The first of these pertain to who experiences financial exploitation. Victims of financial exploitation are typically identified as having one or more vulnerabilities, such as advanced age or disability, which impede their ability to protect themselves from harm. Second, financial exploitation occurs when an individual behaves in a fraudulent, unauthorized, or otherwise improper manner that serves to deprive another of his/her financial assets and property. New York State’s approach encompasses both of these aspects, defining financial exploitation as the “improper use of an adult’s funds, property, and/or resources by another individual” (Social Services Law, Section 473 (6) (g)), and authorizing adult protective services for vulnerable adults over the age of 18 who are “unable to protect themselves from abuse, neglect, financial exploitation, or other harm.”
Commonly reported acts of financial exploitation include:
APS investigated and determined that Mary’s accounts were jointly held with her son Sam. Sam admitted to withdrawing over $13,000 from the shared account for his own personal use, stating that he needed the cash to cover his living expenses.
Mary ultimately removed Sam from her accounts, but refused to press charges against her son.
Who is at risk of financial exploitation?
While financial exploitation can happen to anyone, certain groups are at greater risk.
Media accounts, national awareness campaigns, and scholarly research all highlight the vulnerabilities of seniors (Choi, Kulick, & Mayer 1999; Coker &Little, 1997; Cooper, Selwood, Blanchard, Walker, Blizard, & Livingston, 2009). Having had a lifetime to acquire and save, older adults tend to possess more financial assets and property than younger age groups, making them attractive targets for financial exploitation (U.S.
Government Accountability Office, 2011). They are also more likely to have characteristics that make it easier for perpetrators to coerce and/or deceive them. Many seniors depend on others for health care and daily living support, circumstances which can diminish an individual’s capacity and/or willingness to report misbehavior. The presence of cognitive deficits, such as memory loss, Alzheimer’s, and dementia may also embolden would-be perpetrators.
It is important to note, however, that not all victims of financial exploitation are elderly.
The presence of cognitive impairments and other disabilities can also place younger adults at risk. Between 2011 and 2014, nearly one-quarter of all New York State APS reports, including allegations of financial exploitation, involved an alleged victim who was between the ages of 18 and 59. Other states report similar findings, with between one-quarter to one-third of recent APS referrals involving younger adults (Missouri DOH, 2011; New Mexico, 2014).
APS investigated and found that Tom frequently experienced delusions as a result of his mental illness. Thinking he was a wealthy NBA player with money to spare, Tom would willingly hand out his SSI cash to others when asked. APS stepped in and became the payee for Tom.
Tom’s followers have since disappeared.
Who are the perpetrators?
Incidents of financial abuse frequently involve individuals who play a significant, trusted, role in vulnerable adults’ lives (Broken Trust, n.d.; National Center on Elder Abuse, 1996; Quinn, 2000). Several reasons for this have been hypothesized. The need for assistance with daily living tasks may open the door to financial exploitation by creating circumstances in which caregivers and other helpers are given access to and oversight of a vulnerable adult’s resources. Emotional ties may also make victims more susceptible to the influence of family members and other relatives. However, as Anna’s case (see page 20) demonstrates, perpetrators can also be strangers who use techniques like sweepstakes and home repair scams to con victims into parting with their resources.
According to the National Adult Protective Services Association, perpetrators of financial
exploitation often include:
Page 19 of 94 Anna Anna, aged 65, was excited when she received the phone call telling her she was the grand prize winner in a national sweepstakes. The sweepstakes worker told Anna that once her information had been verified, she would be able to claim her $4 million prize. To make that happen, Anna would need to pay a small processing fee. Following the instructions given to her by the sweepstake worker, Anna wired $40,000 to the location specified. Anna never heard from the sweepstakes company again, and eventually contacted her local APS office for help. APS investigated and referred the case to both the District Attorney’s and New York State Attorney General’s offices. However, APS was informed that prosecution was unlikely, as county and state officials would not be able to criminally prosecute if the scammers were from another county or out of state.
How often do incidents of financial exploitation occur?
While available data on financial exploitation suggest the problem is widespread, the United States does not have a national system for tracking and reporting on cases of financial exploitation (National Institute of Justice, 2015). Consequently, there are no national statistics on the prevalence of financial exploitation among vulnerable adults.
Rather, estimates of the size of the problem are typically derived from research
conducted on elderly populations. For example:
The National Center on Elder Abuse (1998) estimated that approximately 500,000 seniors over the age of 60 experienced abuse and/or mistreatment during the year, with nearly one-third of these cases involving some form of financial exploitation.
A 2010 survey of seniors found that 6.5 percent of interviewees had been financially exploited by a stranger and 5.2 percent had been exploited by a family member (Acierno, Hernandez-Tejada, Muzzy, & Steve, 2010).
How often do incidents of financial exploitation go unreported?
These studies likely underestimate the true scope of financial exploitation. The same vulnerabilities that make individuals attractive targets for abuse can also make it difficult to detect incidents when they occur. Some victims, like Tom, may simply be unaware that their resources have been misappropriated. Others, like John and Jay (see page 21), may be isolated and unable to report their abuse. Shame, dependency, and loyalty toward perpetrating friends and family members may also discourage victims from seeking help (Brookdale Center for Healthy Aging, n.d.). Indeed, past research on elder abuse indicates that victims rarely report their abuse, with most referrals coming from third party sources such as hospitals, health care providers, and other concerned citizens (Hafemeister, 2003).
Page 20 of 94 John & Jay After spending years in foster care, three developmentally disabled brothers, John (18), Mike (19), and Jay (23), were adopted. APS and law enforcement were called in when one brother, Mike, died at home under suspicious circumstances. An investigation revealed that the surviving brothers lived in crowded and inappropriate conditions, as well as appearing undernourished. The adoptive parents were suspected of exploiting the brothers for their adoption subsidies, SSI/Social Security Administration (SSA) incomes, and money from lawsuits about blood lead levels.
APS immediately removed John and Jay from the home, and worked with the New York State Office for People With Developmental Disabilities (OPWDD) to place them in a group home. The brothers did not want to return to their adoptive home, and guardians were appointed.
Aware of these dynamics, several parties have attempted to quantify the magnitude of the under-reporting problem.
The National Elder Abuse Incidence Study (National Center on Elder Abuse, 1998) compared adult abuse referrals made to local APS to incidents brought to the attention of other sentinel agencies (e.g., law enforcement, financial institutions, hospitals, and elder care providers). Findings suggested that only one out of every 10 elder abuse cases (including physical, emotional, and financial abuse) was referred to APS.
Similarly, a 1998 study of elder abuse in domestic settings estimated that only one in every 14 incidents of elder abuse was reported (Pillemer & Finkelhor, 1998).
As alarming as these numbers are, recent research from New York State suggests that the gap between reported and unreported incidents of financial exploitation may be considerably larger. In a one-of-a-kind study funded by OCFS, researchers compared incidents of financial exploitation referred to APS, law enforcement, and other authorities to survey responses gathered from New York State seniors (age 60 and older). Survey responses indicated a much higher rate of financial exploitation than official records, with self-reported cases outnumbering formal referrals by approximately 44 to one (Lifespan, et al., 2011). Moreover, the researchers concluded that this estimate likely undercounted the number of undetected incidents occurring in the real world, as only seniors capable of participating in the phone survey were included in the self-report study.
Consequently, the experiences of seniors with serious cognitive and or physical impairments were likely missed in the data collection process, even though these
What are the consequences of financial exploitation?
The consequences of financial exploitation can be far-reaching, impacting individuals, families, and communities. On an individual level, victims may experience a range of negative psychological, physical, and fiscal outcomes. Exploited individuals may become fearful, depressed, and anxious. Relationships with family members and trusted others may be damaged or lost. Victims’ health and independence may also be compromised when depleted resources make it difficult for victims to pay for basic needs such as housing, food, and medical supplies. On a family level, relatives may be forced to take on new financial burdens in order to care for an exploited loved one, and inheritances may be diminished or lost.
Public expenditures may also be incurred, as social programs and health care services are accessed to supplement and/or replace lost assets. Many of these impacts are long lasting, as victim losses are rarely recouped (U.S. Government Accountability Office,
2012) and replacement services may be needed for years after the financial exploitation has ended.
How much does financial exploitation cost?
Despite widespread recognition of the negative fiscal consequences of financial exploitation, only a handful of studies have attempted to attach a price tag to such cases. Using a unique approach built around cases reported in the media, MetLife (The MetLife Mature Market Institute, 2009; 2011) estimated national losses to seniors each year are in the billions. To arrive at this number, the research team collected and reviewed incidents of financial exploitation appearing in scholarly articles and media accounts between April and June 2008, and again between April and June 2010.