Investigating Elder Fraud: Where to Begin



Mark Blangger
ACFE Research Editor

While millennials are more likely to fall victim to fraud than seniors, the financial losses they suffer are less than half of those suffered by seniors — $400 versus $1,092, respectively — with an annual loss by seniors of approximately $3 billion. The reason for the loss discrepancy: the financial stability of many elderly citizens and the types of frauds perpetrated against them. 

Many seniors are savvy when it comes to computers, smartphones and social media. Unfortunately, this knowledge also puts them in the crosshairs of fraudsters who target their phishing, fake tech support and social media scams at older adults.

However, seniors should be more circumspect of their adult children, spouses, friends, neighbors or home-care aids rather than techy fraudsters if their financial situation takes an unexpected downturn. According to an article by the National Center on Elder Abuse, a study of 4,156 seniors who experienced financial fraud implicated home-care aids in 14.9% of the cases, followed by friends and neighbors at 16.9%. But at 57.9%, family members ranked highest as the most common perpetrators of “financial exploitation of older adults (FEOA).” Seventy-eight-year-old Linda Louie’s grandchildren fall within that 57.9%. (Scroll to the bottom of the linked article to read Linda’s story.)

Because she has dementia, Linda lives with her granddaughter, Shirley, who also has power of attorney over her grandmother’s affairs. Shirley withdrew $124,000 from her grandmother’s account to buy a vacation home, but when her brother, Gene, withdrew $216,000, Shirley filed a complaint against him with the National Adult Protective Services Association (NAPSA), stating that she didn’t authorize the withdrawal. NAPSA partners with a host of organizations on aging nationwide, as well as state and federal law enforcement agencies, to thwart elder exploitation, and thanks to Shirley’s self-incriminating complaint, the association is working to remove her as Linda’s power of attorney, and police are investigating the case.

Before launching a full investigation into any type of fraud, such as the financial exploitation Linda experienced, CFEs and other anti-fraud professionals should begin by having a fraud response plan in place. The response plan should not define how an investigation, if warranted, should be conducted, but rather outline the actions to take when an allegation of fraud arises.

The number and types of fraud can vary, which means response plans will also vary and should be tailored to the industry, the types of fraud typically perpetrated within that industry and the organization. For example, when Adult Protective Services (APS) receives a report of alleged elder abuse or exploitation, the program’s response plan involves:

  • Evaluating the report to determine whether it meets statutory requirements

  • Interviewing the client, other contacts, alleged abuser(s) and reviewing certain evidence

  • Addressing the client’s emergency needs, including law enforcement protection

  • Determining whether the allegation of abuse is founded

  • If founded, developing a case plan to stop the abuse and address the client’s health and safety needs

The success of APS investigations into cases such as Linda’s is a result of the program’s response plan, which includes all aspects of the types of fraud and abuse perpetrated against older adults and how to address them when they occur.

If you’d like to learn more about recognizing the red flags of elder financial abuse, you can join our upcoming webinar, Elder Financial Exploitation: A Primer for CFEs. In the discussion, you will also explore remedies and resources available to victims of elder financial exploitation. Airs on September 27.