In furtherance of section 1013(g)(1) of the Dodd-Frank Act, which requires the CFPB to facilitate the financial literacy of individuals aged 62 and older, the CFPB has launched an investigation into the financial exploitation of senior citizens. “The silent crime of financially exploiting the elderly is widespread and it is devastating. It is critical for us to act,” said Richard Cordray, Director of the CFPB, at an event marking World Elder Abuse Awareness Day at the White House on June 14, 2012.
As part of this new study into elder abuse, the CFPB published a request for information on June 19, 2012 seeking public input on scams perpetrated against the elderly as well as other related data. Written comments are due on or before August 20, 2012.
While financial scams have long been in existence, scams against senior citizens have increased as the economy has struggled. Two studies over the past three years have drawn attention to this phenomenon. For one, a 2011 study by Metlife Mature Market Institute found that Americans aged 60 and up were cheated out of at least $2.9 billion in 2010, reflecting a 12 percent increase from 2008. Another study by the nonprofit Investor Protection Trust found that one out of every five Americans over the age of 65 had been financially swindled in 2010.
The primary perpetrators of such exploitations are family members, advisors, planners, and other persons in a position of trust. Scammers recognize what research has proven, that as people age the ability to understand and make effective financial decisions declines. “Many seniors have routines, and their predictable patterns make them easier targets for predators,” Cordray said. What is more, the likelihood for senior citizens to fight back is low because they feel responsible and embarrassed.
Thus, in an effort to combat financial exploitation of senior citizens, the CFPB is seeking input from the public to learn more about senior finance issues and abuse including an evaluation of financial adviser certifications and designations and what resources are available for seniors to help them make informed decisions about financial advisers. The Bureau also would like information regarding specific types of fraudulent, abusive and deceptive practices that target older Americans, older veterans and military retirees, as well as the effectiveness of current financial education and counseling available to the elderly. In addition, the Bureau is requesting information about fraud involving military retirement and pension funds. The Bureau will use the information gathered to determine the best way to prevent financial abuse against the elderly and to initiate financial safeguards to protect them.