(Bloomberg) -- Financial exploitation costs older Americans $28.3 billion annually, with nearly three-quarters of that stolen by people the victim knows, such as family, friends or caregivers, according to a new report released Thursday.
Quantifying the cost of elder financial exploitation — defined as “the illegal or improper use of an older adult’s funds, property, or assets” by the Financial Crimes Enforcement Network — is a challenge. That’s partly because so much of it goes unreported, according to the study from AARP, done with the National Opinion Research Center at the University of Chicago.
In an estimated 88% of cases where the person knows the individual exploiting them, the victim doesn’t report the crime, the study found. That may be because they don’t want to implicate or bring shame on caregivers or family members, or may feel shame themselves.
The rate of financial exploitation has more than doubled since mid-March of 2020, exacerbated by the social isolation of the pandemic, according to a separate 2022 study by the AARP Public Policy Institute.
The losses add to a retirement-savings crisis in America, one that a recent report for the Pew Charitable Trusts said could cost federal and state governments an estimated $1.3 trillion by 2040.
The vast majority of older victims don’t get their money back, and the losses come at a time of life when many Americans may be unable to make it up by working longer — if they’re still working at all. The costs can ripple out to family, who may contribute more money to a loved one’s care, as well as to taxpayers who foot a bigger bill for services to assist victims, the report noted.
AARP said its methodology improves on previous approaches in part by using three respected data sets — from the Consumer Sentinel Network reports compiled by the Federal Trade Commission, the Internet Crime Complaint Center at the Federal Bureau of Investigation and the suspicious activities reports on financial exploitation that financial companies make to the Department of the Treasury.
The report, which studied exploitation of Americans over 60, accounted for possible duplication among data sets and used “a more nuanced methodology that corrects for underreporting rates based on the perpetrator’s relationship to the victim.” It cited a study published in the Journal of Applied Gerontology in 2020 that found that when exploitation was done by a known person, just 12.5% of cases were reported. Cases where the victim knew the perpetrator have higher average losses — $50,000, compared with $17,000 for strangers.
To contact the author of this story:
Suzanne Woolley in New York at [email protected]