Elder financial exploitation (EFE) is “the illegal or improper use of an older adult’s funds, property, or assets.” Perpetrators range from family members and other people a victim knows (“known others”) to professional criminals. Through this kind of exploitation, many victims are stripped of a significant part of their retirement savings; declines in mental and physical health are also a consequence. Getting restitution is nearly impossible, and re-earning that money takes time, which many older victims do not have.
Getting at the true financial scope of this immense problem has been elusive in part because many victims never report EFE due to shame and embarrassment. In fact, the tendency to not report an incident may be greatest when the perpetrator is related to the victim.
This report, using a first-of-its-kind methodology to measure the annual financial cost of EFE in the United States, finds that victims over age 60 lose $28.3 billion each year. It concludes that the lion’s share of total losses–about 72% ($20.3 billion)—arises from fraud by people the victim knows, compared with losses from stranger-perpetrated incidents (28%, $8 billion).
Approximating annual financial losses due to EFE is difficult—as evidenced by the extreme range of estimates from previous attempts: $2.9 billion, $36.5 billion, and $273.5 billion. Part of the issue is that there is no single national data set for EFE costs, so some previous studies may have relied on reporting mechanisms that included overlapping data, whereas others used only partial or incomplete data.
For this report, AARP collaborated with National Opinion Research Center (NORC) at the University of Chicago to provide the most comprehensive, accurate, and up-to-date analysis of EFE losses experienced by adults over the age of 60, the definition of older adult used by several federal agencies. It improves on past approaches in three ways: (1) using three highly regarded data sets, (2) accounting for possible duplicate cases across data sets, and (3) employing a more nuanced methodology that corrects for underreporting rates based on the perpetrator’s relationship to the victim.
The majority of this paper is a detailed discussion of methodology, including a review of other studies.
This analysis provides a starting point for further work on the costs of EFE and underscores the need for data development. To better prevent the financial exploitation of older adults, it is necessary to understand the problem in full and act on that understanding.
The report concludes that, first, we must provide federal funding to states to mandate and standardize data collection procedures of Adult Protective Services (as the General Accountability Office has recommended in the past). This would enhance the picture of EFE. Second, we must tailor evidence-based intervention strategies based on perpetrator type.
The true cost of EFE extends far beyond the $28.3 billion. With a victim’s funds depleted, family caregivers are even more likely to incur costs to provide care. The financial industry loses billions of dollars each year to EFE, for which consumers ultimately pay. Taxpayers bear an increased burden in the form of the public programs and other resources needed to assist those victims who are financially devastated.
And then there are the truly human impacts, which other research has begun to identify, such as on older adults’ mental and physical health. Thus, this analysis serves as a starting point, providing an up-to-date and reliable baseline on which forthcoming measures of EFE, and solutions for it, can build.