Safeguarding Elders From Financial Abuse
The Maine Reporting Project for Financial Institutions
The elderly grandmother invited her granddaughter and great-granddaughter to live with her while they were having some hard times. While she was there, the granddaughter began to access funds in her grandmother’s account. The eventual result was financial ruin of the grandmother. In the aftermath, as she sorted out with investigators what had happened and prepared to move in with another relative because she had lost her house, her overriding concern was that she would not be able to see her great-granddaughter again.
This sad and ironic case is not unusual. Similar to what often happens in child or domestic abuse situations, the victim still wants to have contact with the abuser and still cares about that person. “Blood is thicker than water,” says Seth Blodgett of the Maine Attorney General’s office. “Elders dependent on others to take care of them are at the mercy of the caregiver. They worry what will become of them if something happens to the caregiver.” We hear about identity theft, telemarketing theft and door-to-door scams. But often, financial theft of elders is done by the person who feeds them and gives them their medicine.
Financial exploitation is a dramatically underreported crime, with an estimated 84 percent nationally going unreported. Why is it so heavily unreported? Sometimes the elder is confused or unable to understand what is happening. But quite often, they see or suspect what is taking place and are ashamed that their trusted caregiver would do this. They are dependent on the caregiver and have a false sense of loyalty toward them. They fear institutionalization if that relationship is disrupted. They are in denial and blame themselves. They fear retaliation. Research shows that victims are more likely to die in the decade following abuse than someone who has not been a victim.
Nancy Kelleher of AARP notes that most people don’t know that financial abuse is frequently a precursor of gross abuse and neglect. “If you look at extreme cases of physical neglect and abuse, it almost always started with financial abuse,” she said. Blodgett agrees that financial exploitation is just one piece of elder abuse, usually commingled with emotional abuse. “It’s a crime of opportunity. The money is there and if the wrong person is chosen to be the caregiver, they see an open checkbook.”
Follow the Money
Maine’s fast-growing elderly population makes them a huge target for financial exploitation, because they hold such a large percentage of the wealth. According to the American Bankers Association, older adults own 77 percent of the country’s financial assets and have $1.6 trillion in spending power. And their numbers are growing. Between 2000 and 2030, Maine’s over-65 population will more than double, from 118,000 to 397,000. Today, that group makes up 14 percent of the state’s people; by 2030, that number will be 22 percent.
Citing the fact that in Maine, the over-65 population holds 80 percent of the wealth, Kelleher calls it a “follow the money” deal. “Maine’s elderly population is growing rapidly. People are retiring here, bringing their nest eggs along with them. They are at risk.”
The dollar amounts are significant, even considering the small percentage of financial exploitation cases that get reported. The Department of Health and Human Services’ Adult Protective Services (APS) gets 300 reports annually of adult financial exploitation. Since July 2001, APS has referred more than $2 million in substantiated cases to the Office of the Attorney General for investigation. The average reported loss is $39,000.
Financial exploitation is also expensive for Maine taxpayers. Says Kelleher, “Once grandson goes through all of Grandma’s money, she has to go on Medicaid. The grandson got the money, but the people of Maine end up paying for Grandma’s care the rest of her life.”
Maine Reporting Project
Preventing abuse of elders and dependent adults takes enormous cooperation between financial institutions, social services and law enforcement. The financial institutions, working in concert with the Department of Heath and Human Services’ Office of Elder Services, the Attorney General, AARP and the Maine Alzheimer’s Association, have developed The Maine Reporting Project for Financial Institutions. The goals of the project are to prevent financial exploitation through educating employees and customers of financial institutions and to increase the voluntary cooperation between the financial community and APS program.
The Department of Health and Human Services’ Office of Elder Services produced a reference manual for the project, aimed at training front- line employees of financial institutions on how to prevent, detect and report financial exploitation. It recommends that financial institutions develop an internal protocol, or process, for screening and reporting suspicious cases of financial exploitation. Suspicious cases are reported to APS, which has a mandate to receive and investigate reports of suspected abuse, neglect or exploitation of incapacitated and dependent adults. The Maine Association of Community Banks Web site (www.mecb.com) provides the text of these complete training materials and the banking associations recently organized two trainer sessions to begin to put this program into place.
While financial institutions are in a unique position to have early, and often the only, knowledge of financial exploitation, bankers are trained from their first day on the job to safeguard customer privacy. Provisions under Maine confidentiality statutes carry a $5,000 civil money penalty per intentional violation. According to Lori Desjardins of Pierce Atwood, banks would like nothing more than to be able to raise the alarm bell if they suspect something fraudulent. “But banks are so well trained from a legislative and regulatory standpoint that customer privacy is of utmost importance, they need specific guidelines on when to make a report.”
Banks are coming around to the fact that it is all right in limited circumstances to report their suspicions, as long as certain protocols are followed. In a three-step process, a suspicious bank employee reports suspected exploitation to a bank supervisor who is designated as the contact with APS. Once alerted, the bank supervisor calls APS and makes a report. APS takes it from there with an investigation and possible intervention from the Attorney General’s office. Good faith reporting on the part of the bank carries civil immunity and the bank’s identity as a reporter is not disclosed. Still, this is a sharp turn in the direction the banks have typically followed and banks face both reputational and financial risk in the reporting of suspicious behavior.
Desjardins says “If you get it right, great. If you’re wrong, the wrongly accused customer can probably figure out where the accusation came from and is almost certain to close the account and tell everyone they know. They may even go to the newspaper and tell them what the bank reported about their private accounts.” This is the reputational risk. Financial risk is also present. Civil immunity in making a good faith report does not prevent someone from filing a lawsuit anyway. When that happens, a bank can have some significant defense costs to pay as the case works its way through the judicial system.
Blodgett points out that banks can unfortunately be sued for anything that they do. If they report and get it wrong, they may be sued. But if they fail to take the proper steps to protect customer funds, they can be sued for that as well. The financial institutions training manual prepared by the Bureau of Elder Services even states: “It may be possible … for financial institutions or employees who blatantly fail to detect or report financial exploitation to be held civilly liable.”
Training Is Key
So what is a bank to do? Train, train and retrain. Customer-contact personnel who understand financial exploitation and can spot warning signs can make a large impact on the detection of these crimes before they devastate the victims. The training manual gives case studies, detection techniques and customer service tips to be used by bank trainers in heightening awareness of front-line personnel. Consumer education is used by some banks to speak directly to customers about safeguarding their assets. Other banks design customer services geared to elder needs, such as visiting elders in social settings or at their home. Bank practices such as flags for unusual activity, enhanced verification systems and protected accounts can also safeguard elder accounts.
“This is an important responsibility to place on the shoulders of tellers and customer service representatives who are constantly being trained with new information, regulations and forms,” says Desjardins. Kelleher agrees, but underlines the significance of banks being in the forefront of this issue. “They have established relationships with customers and want to help them protect themselves. They just have to report it and then let APS and the police do their job. The bank may not know when they send that report on Mrs. Jones that it’s the 10th call APS has had on Mrs. Jones.”
Blodgett also sees training as the key to prevention. “If bank employees can learn to spot identifying indicators and have protocols in place for reporting, it will help,” he says. “But the training manual is not enough. This training needs to be done time and again and reinforced constantly, from the top down.”
Through cooperative ventures such as the Maine Reporting Project for Financial Institutions, advocates for the elderly hope to begin to address the problem. “It’s kind of the last dirty secret in America,” says Kelleher. “People go on Oprah and air their dirty laundry all the time. But 84 percent of this abuse goes unreported. We haven’t been very good at pointing the finger at this.”
Law enforcement has also developed programs that dovetail with the project. The Police Academy is now doing a three-hour instructional unit on elder abuse. In addition, the Elder Service Officer Training Program trains Elder Service Officers (ESOs) in elder abuse and financial exploitation. Blodgett would like to see more joint training with banks and law enforcement. Law enforcement ESOs would go into the bank along with Adult Protective Services staff to train bank employees. Then if there’s a problem, the bank has the name and face of an officer with whom they can discuss their suspicions.
“Banks have an awful lot of things to be responsible for, between customer relations and homeland security, and it’s hard to take on another responsibility,” says Nancy Kelleher. “But hopefully this program will give banks the tools to help get a handle on this problem in a simple and straightforward way.”