Vulnerability to Financial Scamming: Victim and Family Protection

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With the growing elderly population and the prevalence of cognitive impairment, how can we protect older adults from financial scams?

Financial exploitation is one of the most prevalent forms of elder abuse and is a major public health problem.1 Older adults are more likely to have a “nest egg,” own their home, have excellent credit, and they are generally raised to be polite and trusting. Moreover, with age also comes reduced sensitivity to negative arousal cues, so even cognitively intact older adults can have functional changes that may render them financially vulnerable.2-4 Estimates by MetLife indicate that senior citizens lost $2.9 billion to elder financial abuse in 2010, and up from $2.6 billion in 2008.1,5 The Federal Trade Commission’s survey on fraud prevalence in the United States revealed that African American and Latino consumers were more likely to become victims of fraud than non-Hispanic whites.6

Given that elder financial exploitation is associated with mortality, hospitalization, poor physical and mental health, lower quality of life, loss of independence, and significant financial hardship, fighting “the crime of the 21st century” is of utmost importance. As the elderly population continues to grow and become more diverse, primary intervention strategies will benefit both elderly and minority populations.

In 2010, approximately 1 in 5 Americans aged 65 years or older fell victim to financial abuse.5 Decision-making processes to avoid elder abuse require higher-order cognitive processes that decline with age. Even cognitively intact older adults can have functional brain changes that may render them financially vulnerable. The elderly population (aged 65 and older) is projected to reach 70 million by 2030. These estimates raise concern that increased susceptibility to deception will drive reduced quality of life and loss of independence, thereby negatively impacting the health status for a large segment of the US population.3,7

Individuals with cognitive impairment are at increased risk of becoming victims of scams due to decreased awareness, overestimation of competency in financial matters, social vulnerability, and changes in perceptual speed, episodic memory, and working memory.8,9 Furthermore, individuals with Alzheimer disease (AD) are more likely to suffer the loss of twice as much money per case of financial exploitation.10 Poor decision making and greater susceptibility to scams have also been linked to mild cognitive impairment (MCI), and these vulnerabilities can emerge even prior to a diagnosis of actual MCI.11 The prevalence of individuals with AD in the US population is growing and will increase almost threefold to 13.2 million by 2050.12 Current estimates project that 1 in every 45 Americans will have AD by 2047.13 In adults with MCI and AD, structural brain changes and deterioration in cognitive capacitates such as processing speed and episodic memory exacerbate susceptibility to scams.9,14 Diminished cognitive functioning has been linked not only to greater financial victimization in old age, but to AD onset as well.15,16

Family Caregiver Burden

The disease burden of AD is associated with weakened financial capacity and financial autonomy, thereby increasing family caregiver burden.17,18 Financial capacity is crucial for independent activities in daily life; however, individuals with AD and cognitive decline often demonstrate total loss of financial capacity, which can lead to psychological burden and distress.19 Impairments in financial capacity also contribute to economic hardship, significant concerns for patient welfare, and family caregiver burden. This is particularly important in light of a recent survey of 2000 nonprofessional caregivers which found that 92% provide financial assistance for the adults they care for.20 Managing AD patients’ disease and functional independence is an expensive endeavor, and financial exploitation only exacerbates the problem. Moreover, financial mismanagement among cognitively impaired individuals is one of the greatest sources of perceived caregiver burden.

As the number of older adults diagnosed with AD is expected to rise,12 safeguards are crucial to protect this population and their caregivers from scams. The chronic burden associated with fighting a degenerative disease, lapses in memory and judgment, and caregiver fatigue are examples of why individuals with MCI or AD and their caregivers are vulnerable targets for “the crime of the 21st century.” The impact of financial scamming on older adults and their families has direct implications for clinical care, particularly as psychiatrists and other mental health experts may be in a prime position to identify at-risk individuals before financial loss occurs.

Case Vignette

“Mr Xavier” is a 76-year-old gentleman recently diagnosed with MCI who receives a phone call from someone who claims to be his grandchild. The caller is frantic and explains that they are traveling abroad and have come into health troubles. They would like Mr Xavier to urgently wire money in order to settle the emergency. Specifically, the caller indicates that they require the money in order to pay a pressing hospital bill. The caller indicates just enough information to make the situation seem plausible. The caller then turns the phone over to a “doctor” who legitimizes the story. The caller seems quite embarrassed by the medical emergency and asks Mr Xavier to keep his financial assistance a secret from other family members and friends (eg, “Don’t tell mom; don’t tell dad!”).

Synthesis of Research

The current best protection against scams is education for the elderly and their caregivers. As examples, the FBI, the Consumer Financial Protection Bureau, USA.gov, and AARP all provide guidance on protection from scams. The status quo, as it pertains to prevention of scamming, includes hotlines, “info-commercial” home-based online education, legal interventions, and public lectures by law enforcement officials. Although these approaches have been shown to be cost effective and provide rapid response, major limitations to these intervention methods are that they: 1) do not preemptively target populations cognitively vulnerable to deception; 2) are not holistic and do not incorporate caregivers; and 3) are not often accessible to multilingual populations. A priori screening for susceptibility to deception and educational interventions would minimize adverse health outcomes and high costs of care, and may provide crucial interventions to both patients and their caregivers.

It is paramount that interventions for scamming specifically target vulnerable populations. Practicing psychiatrists and other mental health care providers are well positioned to conduct cognitive evaluations, assess capacity for financial decision making, and advise in advance care planning such as setting up trusts or facilitating discussions about creating a durable power of attorney. A behavioral science-based primary intervention approach would facilitate overcoming barriers, thereby opening new horizons for reducing public health burden due to financial fraud.

Dr Getz is an instructor in the Division of Neuropsychology, in the Department of Neurology of the University of Miami Miller School of Medicine. Dr Galvin is a professor of neurology at the University of Miami Miller School of Medicine and founding director of the Comprehensive Center for Brain Health.

Acknowledgements and Funding Sources

This study was supported by grants to SJG from the American Academy of Neurology, American Brain Foundation, and McKnight Brain Research Foundation, and to JEG from the National Institute on Aging (R01 AG071514, R01 AG069765, R01 AG057681, and R01 NS101483), the Harry T. Mangurian Foundation, and the Leo and Anne Albert Charitable Trust. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

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