By Mariano Scialpi
Senior citizens have found themselves in the cross-hairs of scammers and fraudsters throughout the United States. Financial exploitation occurs when a person misuses or takes the assets of a vulnerable adult for his/her personal benefit. This exploitation frequently occurs without the explicit knowledge or consent of a senior or disabled adult, depriving him/her of vital financial resources for his/her personal needs. New data has shown that senior citizens become increasingly vulnerable to all forms of frauds as they age. This data is concerning for a class of people that hold “83% of the wealth in America.”
The numbers are even more alarming in the securities industry where the AARP recently reported “victims lose $3 billion annually or more than $120,000 per household.” The losses reported by the AARP symbolize the life savings of a generation who can longer work to maintain a household. The Investor Rights Clinic has represented many seniors who have lost their life savings due to financial exploitation. Although the work the Clinic performs provides essential relief to victims of exploitation, changes in policy are necessary to protect a vulnerable class of citizens.
Before 2018, the numbers from the AARP report were aggravated by the lack of statutory language protecting whistleblowers in the industry. Luckily, in May, senior citizens could applaud the first anniversary of the Senior Safe Act (SSA). SSA, a federal program modeled on a program by the same name in Maine, has attempted to empower financial service providers to “identify warning signs of common scams and help prevent senior citizens from becoming victims.” More specifically, the act “addresses barriers financial professionals face in reporting suspected senior financial exploitation or abuse to authorities.” The act addresses these barriers by allowing broker-dealers the opportunity to train their employees on how to detect and report “senior financial exploitation.” Broker-dealers who train their employees are provided immunity provisions from liability in any civil or administrative proceeding, particularly regarding violations of privacy requirements.
Although the SSA represents an important step towards protecting elderly citizens, a lot more can be done in terms of policy. One financial advisor advocates for quizzing clients over 60 on their decision-making abilities. Basic tests might be a simple way to ensure that senior citizens are fully aware of the decision they are making regarding their finances. One thing is sure, financial exploitation of the elderly is a problem that will not go away in the future, and only Congress has the power to protect its constituents from further abuse.