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Financial Exploitation in Aging: What to Know & What to Do

Here’s an upsetting situation that comes up a lot, and may have come up for you: is someone financially taking advantage of Mom or Dad?

It’s a pretty legitimate concern to have. To begin with, most people know that there are plenty of “scammers” out there, phoning or mailing older adults with deceptive information designed to hoodwink them out of some of their savings.

But there’s actually another form of exploitation that may be more common, and is often harder for families to address.

That would be exploitation perpetrated by a someone the older person knows and has a personal relationship with.

Sometimes the person suspected of exploitation is relatively new to the older person’s life, such as a new romantic interest, friend, or paid caregiver.

In other cases, family members become concerned that someone in the family – such as one of the older person’s children – is beginning to take financial advantage of things.

Exploitation in the context of personal relationships is often especially tricky for families to address. The older person may be quite attached to – or otherwise feel dependent on – the person that others perceive as suspicious or problematic. Or there may be concerns about stirring up family dramas and conflicts, by voicing concerns about a sibling or another relative.

People are often unsure of what exactly constitutes illegal activity, and what can be done if they are concerned about financial exploitation.

So in this article, I’ll cover the key things you should know, so that you can better evaluate and address a worrisome situation, should one arise.

Specifically, in this article I’ll explain:

I’ll also share a list of additional resources and references at the end.

Key terms to know

The financial exploitation of older adults is also known as “financial abuse.” It is considered a type of elder abuse. It may occur simultaneously with other forms of abuse, such as neglect, emotional abuse, or physical abuse.

It’s important to know that although there is some federal involvement in addressing elder abuse, the definition of what exactly constitutes elder abuse or financial abuse is mainly determined by state law. (Find your relevant local statutes here: State Elder Abuse Statutes.)

Still, here are some useful general definitions:

Definition of Elder Abuse (per the CDC): “Elder abuse is an intentional act, or failure to act, by a caregiver or another person in a relationship involving an expectation of trust that causes or creates a risk of harm to an older adult.”

Definition of Financial Abuse or Exploitation (per the CDC): “The illegal, unauthorized, or improper use of an older individual’s resources by a caregiver or other person in a trusting relationship, for the benefit of someone other than the older individual.

This includes depriving an older person of rightful access to, information about, or use of, personal benefits, resources, belongings, or assets.

Examples include forgery, misuse or theft of money or possessions; use of coercion or deception to surrender finances or property; or improper use of guardianship or power of attorney.”

State laws include criminal law statues and civil law statues. Financial abuse is often addressed in both types of statutes. Criminal activity can be investigated by law enforcement, but illegal activity that falls under civil statutes generally isn’t.

The role of “undue influence”

Another term that is important to understand is “undue influence.” Basically, we are all influenced by people we have relationships with, and this can affect the way we choose to spend our money or share our assets.

But was this influence “undue,” or otherwise “improper”? Families or others sometimes worry that an older person has been inappropriately pressured or manipulated, or perhaps taken advantage of due to memory problems or a dependent situation.

Such “inappropriate” influence can be called “undue influence.” It’s an important concept to understand for two reasons.

First of all, it’s through such manipulative interpersonal dynamics that perpetrators are often able to commit financial abuse. Second, it’s a term that is often used in state laws related to elder abuse, or sometimes to statutes related to guardianship issues.

Here is a general definition, followed by California’s definition (which was just revised in 2014):

Definition of Undue Influence (per the American Bar Association & National Center on Law and Elder Rights): “When people use their role and power to exploit the trust, dependency, and fear of others. They use this power to deceptively gain control over the decision-making of the second person.”

Definition of Undue Influence (per California State Law): “Excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.”

California’s statute goes on to specify four criteria which should be considered when determining whether a result was produced by undue influence. These include:

To summarize: financial exploitation is a subset of elder abuse, and basically means inappropriately using an older person’s financial resources, for the benefit of someone other than the older person.

Such exploitation is often – but not always — facilitated by the perpetrator using “undue influence,” in which they create some kind of manipulative dynamic that allows them to take advantage of the older person.

Examples of financial abuse

Unfortunately, there many different ways to financially exploit an older adult. It’s not possible to list them all, so instead, I’ll share two common categories to keep in mind, along with some examples.

One way to think about financial abuse is to categorize perpetrators as “predators” versus “opportunists.”

“Predators” are individuals who purposefully seek out vulnerable older adults (or sometimes any adult), with the intent to defraud them or otherwise financially exploit them. Examples of this kind of financial abuse include:

The perpetrators of predatory financial abuse do sometimes work for several days — or longer — to establish a relationship with a vulnerable older person. This New Yorker article describes the way one 89-year old woman was persuaded to send large sums of money to a scammer, after he spent a week telephoning her and led her to believe he’d become a “friend.”

For more on common predatory scams affecting older adults, see Top 5 Financial Scams Targeting Seniors, from the National Council on Aging.

Whereas “predators” are purposefully out to defraud or exploit others, “opportunists” are those who end up financially exploiting an older person because…well, the opportunity arose, usually due to a relationship between the older person and the one who ends up exploiting the situation. Examples of this type of financial abuse might include:

Such “opportunistic” abuse can be committed by family members, paid in-home care providers, or even trusted people outside the home, such as financial advisors or spiritual advisors.

Financial abuse is also sometimes committed by newer friends or romantic interests, who may take advantage of a lonely older person’s generosity or interest in maintaining the relationship. Some such new romantic interests appear to be “predators” who actually seek out vulnerable targets, whereas others seem to be “opportunists.” (Of course, suspicion or resentment of an older person’s new relationship does not always mean that abuse or even manipulative situations are occurring.)

The difficulty, of course, with these examples is that plenty of common situations may fall into gray areas.

If an adult child is living with and perhaps assisting an older parent, and the parent seems appreciative and wants to give that child extra money, is that exploitation? Or just a natural expression of appreciation?

If an older woman gets re-married late in life and agrees to send large sums of money to her new husband’s adult child, is that exploitation? Or just her exercising her autonomy and right to give money to whomever she chooses?

If your older father has made your sister, who lives near him, a joint owner on his bank account, and your sister starts using money from that account to cover what she says are her expenses in assisting your father, is that legit?

It’s easy to see how different people may have different perspectives on such a situation. Although in some cases it may seem quite clear that what happened is financial abuse of an older person, other situations will be murkier and will be challenging to sort out.

How to know if someone is at risk

One of the biggest risk factors for financial abuse is having some form of cognitive impairment, whether mild or more substantial such as Alzheimer’s disease or a related dementia.

Obviously, having problems with memory or other aspects of thinking makes one more vulnerable to deceit and misuse of one’s funds.

That said, it’s critical to realize that even “mentally sharp” older adults can easily fall prey to financial exploitation. That’s because plenty of factors other than memory play a role in making an older person vulnerable.

Here are some of the key factors that increase the risk of exploitation:

Although one might assume that it’s mainly wealthy older adults that get financially abused, one research study found that poverty was associated with financial exploitation too.

In short, financial exploitation can happen to almost any older adult, but being lonely, isolated, and/or dependent on others makes an older person especially vulnerable. Cognitive impairment also increases the risk of financial exploitation.

What to do, if you suspect the financial exploitation of an older adult

If you suspect that your older parent — or another older person — is being financially exploited, it’s important to take action.

According to the National Adult Protective Services Association, signs of potential financial abuse include:

In general, any and all forms of elder abuse — including financial abuse — should be reported to your local Adult Protective Services (APS) office. (More on APS below.) You can use the Eldercare locator online to find your local APS office.

But there are also other actions you can consider taking. Exactly what to do will depend somewhat on the circumstances, the evidence you have found so far, the older person’s relationship with the perpetrator, and your relationship with the older person.

Here are some steps to consider taking:

The US Department of Justice’s Elder Justice Initiative also maintains a handy “Report Abuse” page, which includes an interactive “roadmap” questionnaire to help you identify specific authorities to which you can report financial abuse: Find Help or Report Abuse.

Most states also require individuals in certain positions to report suspected elder abuse, including financial exploitation. Health providers are often mandated reporters, and in some states, financial professionals are as well.

Of course, you are likely to be facing one or more of the following challenges:

In short, if you suspect that an older person is being financially exploited, what’s most important is to do something.

Be as respectful as possible of the older person’s feelings and autonomy, but do try to find out more, try to delay any spending if possible, and report your concerns to the appropriate authorities.

In general, Adult Protective Services (APS) is the key social service agency to call, when you suspect financial abuse or any other kind of elder abuse. That said, APS offices are locally operated, so different agencies may take slightly different approaches to investigating concerns.

If you are not sure whether certain activity constitutes financial elder abuse, check your local state statutes, and/or consult an attorney.

How to reduce the risk of financial exploitation in aging

As is often the case, when it comes to financial exploitation, an ounce of prevention is worth a pound of cure.

The challenge, however, is that taking steps to reduce the chance of exploitation often requires older adults to do two things that most find difficult.

  1. Realize that they are at risk. This is tough because most of us have trouble imagining a time when we might become vulnerable, gullible, or cognitively impaired. It can be distressing to think about, plus the known age-associated tendency towards optimism makes it even harder to imagine such situation.
  2. Consider giving up some privacy and autonomy. Basically, to reduce the risk of financial exploitation, you have to be willing to do things like letting others periodically review your financial activity, and under some circumstances, overriding what you are trying to do.

Understandably, many people are reluctant to give others the ability to review their decisions and intervene in their autonomy.

Still, such sacrifices are probably necessary, to significantly reduce one’s risk. And if done carefully and thoughtfully, it should be possible to still help an older person maintain some privacy, dignity, and autonomy.

Here are a few specific steps to consider, to reduce the risk of financial exploitation:

Professionals such as one’s financial advisor or an attorney (preferably one experienced with age-related legal issues) can also help advise as to the best way to protect oneself and thoughtfully empower others to intervene if it seems warranted.

Last but not least, I would recommend embarking on a series of “planning ahead just in case” conversations with one’s family or close friends.

Just as we recommend that older adults talk to family about what kind of medical care they would want, if too ill to decide, we should also encourage people to talk about how their family could intervene, if they get worried about potential financial exploitation.

Helpful Resources 

Here are some of the resources I found especially helpful, in researching this article:

I also learned a lot from interviewing attorney Candace Heisler, JD, who is a nationally recognized expert on the prosecution of elder abuse. Listen to the podcast episode here:

070 – Interview: Addressing & Preventing Financial Exploitation in Aging

Remember, financial exploitation is common and can happen even to older adults who are “mentally sharp.”

So if you’re concerned about possible financial abuse, please take action, either by investigating further or by taking one of the other steps I describe above. If ever in doubt, Adult Protective Services can help you think through your next steps.

And don’t forget: if you’re an older adult, take sensible steps to reduce the risk of financial abuse. Your aging brain will optimistically think it can’t happen to you. But it could, because it happens to lots of older people!

So, be proactive and take steps to allow others to help if it becomes necessary. This will make things easier for your family, should a concerning situation arise, and can help protect your money so that it does what it should do, which is be there for YOU.


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