News
The Financial Exploitation of America’s Senior Citizens
A 2011 study reported that each year at least $2.9 billion is stolen from older Americans
By Charlene Crowell
M
ost American families expect to enjoy retirement
after lengthy years of working and raising chil-
dren. Unfortunately for millions of older Ameri-
cans, the proverbial ‘golden years’ have become instead a
series of stressful and unexpected financial challenges.
Even worse, some unscrupulous businesses target these
older Americans for financial
exploitation.
Among the worst
financial abusers are
those who defraud
Medicare and Medi-
caid. Each year an
estimated $38.2 mil-
lion of taxpayer funds
intended to benefit the
health care needs of
seniors and poor peo-
ple is fraudulently claimed.
Unfortunately, there are many
more financial abuses.
Recently the Center for Responsible
Lending (CRL ) highlighted to the Con-
sumer Financial Protection Bureau
(CFPB) a wide range of products that are dangerous for
older Americans including payday loans, overdraft fees,
debt settlement schemes and more.
CRL advised, “More than 13 million older adults are con-
sidered economically insecure, living on $21,800 a year or
less. Senior women in particular face diminished incomes
because of lower lifetime earnings and therefore lower
Social Security and pension benefits.”
According to a 2011 MetLife Study on Elder Financial
Abuse, each year at least $2.9 billion is stolen from older
Americans. Most victims were ages 80-89, lived alone and
required some level of help with either health care and/or
home maintenance.
Among older African-Americans, the findings are even
harsher. After years of working at lower earnings, life-time
savings are often smaller, Social Security benefits are lower
and family homes often located in neighborhoods have
lower property values. With fewer
financial resources, debt becomes
more difficult to handle and resolve.
Today, the average credit
card debt for older Ameri-
can households is slightly
more than $9,000, the high-
est average balance of any
age group. As debt dimin-
ishes the financial resources
of older Americans, people
over 55 now comprise the
fastest-growing segment seek-
ing bankruptcy protection.
Although federal law protects
benefits like Social Security from garnishment by
debt collectors, this provision does not include
defaulted student loans. Retirees receiving more than
$750 each month can face up to 15 percent reduction in
benefits on defaulted loans.
For payday and overdraft loans, banks can and do seize
portions of Social Security benefits to pay related fees. The
risk of incurring multiple fees within a single billing cycle
leaves overdraft and bank payday borrowers the most vul-
nerable to escape debt traps and the loss of several hundred
dollars – if not thousands – in costs.
Earlier CRL research found that nearly a quarter of all
bank payday loan borrowers were Social Security recipi-
ents. Moreover, these customers were 1.6 times more likely
to have used a bank payday loan than other bank cus-
tomers.
For prepaid cards, the U.S. Treasury Department has
banned deposits to prepaid cards that have a line of credit or
loan agreement that triggers automatic repayment with the
next deposit.
CRL also advised CFPB that the standards for prepaid
cards should also benefit other consumer financial products
According to a 2011 MetLife Study on Elder
Financial Abuse, each year at least $2.9
billion is stolen from older Americans. Most
victims were ages 80-89, lived alone and
required some level of help with either
health care and/or home maintenance
to stem elder financial abuses.
“The federal government should ensure that federal bene-
fits are protected from debt collection even when the credi-
tor is the customer’s bank, and it should protect direct
deposits of federal benefits from high-cost loans made
through traditional checking accounts, as it has protected
these funds on prepaid cards.”
In future commentaries, other elder financial abuses
wrought by debt buying, debt settlement and reverse mort-
gages will be shared. In the meantime, now would be a
timely moment to check on older loved ones and offer assis-
tance to help them preserve all of the benefits they worked
a lifetime to earn.
Charlene Crowell is a communications manager with the
Center for Responsible Lending.
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Page 8 The Seattle Skanner
September 19, 2012