Protecting Against Financial Abuse of the Elderly
Financial abuse of senior citizens is a serious and growing problem. The Baby-Boomer generation is turning 65 at the startling rate of 10,000 per day. That means more than 79 million Americans will retire (or become old enough to retire) over the next decade. This generation of seniors controls more than $40 trillion in assets. It is a marketplace increasingly vulnerable to fraud and financial abuse.
Studies show that the experience of a lifetime does not mean seniors are mentally or emotionally equipped to make sound decisions concerning money matters. Yet the risks are high, because seniors do not have the chance to start over or recuperate if they make serious mistakes about credit and debt once they are on a fixed income. In fact, the research shows that seniors perform poorer on tests of financial reasoning than teenagers who are better known for risk-taking behavior. Seniors, for example, may borrow at higher interest rates, without doing the math that tells them what they will owe. They incorrectly estimate property values and their own net worth. And they seem willing to pay higher fees to lenders.
And yet, seniors on fixed income have less margin of error for these common mistakes.
Fortunately, California has strong consumer protection laws in place to deter and to penalize financial abuse of the elderly. The California Civil Code, the California Welfare & Institutions Code, and the California Finance Code can all be used to protect seniors against fraud and deception. Some of these laws were originally passed in the legislature to protect seniors against undue influence of unscrupulous caregivers. But a good lawyer can apply these laws to transactions for the sale of goods and services, or even financial products like loans and accounts. That means such laws can be used against a fraudulent car dealer, dentist, hearing aid provider, home improvement contractor, nursing home provider or mortgage lender who may be taking advantage of an elderly person’s naivete, obsolete information, poor health or confusion.
One area of common financial abuse is in the senior community and care industry. Retirement communities and nursing homes have long seen some regulation with regard to negligence and standard of care issues. But many people don’t realize that California consumer laws protect seniors against financial abuse as well. Nursing homes and retirement community living has become Big Business. Wall Street investment – largely private equity money – is invading the community service model. Even the difference between faith-based groups and for-profit corporations is thinning. With that change in ownership comes a change in attitude and management. The temptation to increase profits all too often results in less care or a lower quality of care. Nursing homes and retirement communities all too often bury financial elder abuse right in the small print of the senior living contracts.
Most providers are adequate and some are excellent in filling important needs for seniors and society. But, as with any industry, there is fraud and abuse in the system. When nursing home care is substandard, those on the receiving end of inadequate treatment are some of the most vulnerable among us.
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