Financial Literacy for Senior Citizens: Protection from Victimization

Transcription

1 National Coalition for Family and Consumer Sciences Education Financial Literacy for Senior Citizens: Protection from Victimization WHITE PAPER Abstract: In light of the recent economic crisis, the elderly as well as the Baby Boomer Generation, are becoming targets of unethical practices to separate them from their fiscal assets. Family and Consumer Sciences (FACS) professionals have the expertise and placement within society to make a difference through education as well as public policy changes. One prime example includes financial education for the elderly and concerned family members or caregivers through Cooperative Extension Service Programs. These FACS professionals play a vital role in the education process within communities, state legislatures, and financial institutions. Therefore, the FACS profession has the resources and ability to alleviate many of these issues. As a vast generation of baby boomers begins to retire, the need for enhanced financial literacy, with emphasis on prevention and intervention programs among older individuals, is a necessity. It is assumed that with age comes wisdom, but sophisticated financial scams and dishonest tactics prove to overcome wisdom, luring elder investors into poor financial decisions. Statistics show that baby boomers today control more than $13 trillion in assets is which more than 50 percent of total U.S. household investment assets (Securities and Exchange Commission s Office of Compliance, 2008). Projections also show that nearly one in every six Americans will be 65 or older by the year 2020 (Securities and Exchange Commission s Office of Compliance, 2008). As Figure 1 illustrates, by the year 2030, nearly 20 percent of the U.S. population will be ages 65 and older. Also, according to the Securities and Exchange Commission (SEC), approximately five million senior citizens fall victim to financial abuse each year and to address this major problem, the SEC organized a Seniors Summit to raise awareness of this very issue (Securities and Exchange Commission, 2008). Family and Consumer Sciences (FACS) must play a proactive role in educating senior citizens in regard to wise investment as well as in protecting them throughout their employment and retirement. Older people have long been a profitable market for the unscrupulous financial services industry because of the assets they have accumulated. One article in USA Today indicated that while people 60 and older make up 15 percent of the U.S. population, they account for about 30 percent of fraud victims (Chu, 2006). It is also important to note that the number of fraud victims may even be higher due to the fact that many do not report suspected fraud out of shame and embarrassment and fear that they may be seen as unfit to handle their own finances. In 2005, consumers 50 and older comprised one-third of total fraud and one-fifth of all identity theft complaints among those who reported their age (Chu, 2006). To compound the problem, the current financial crisis is fueling a frenzy of aggressive and unethical sales tactics. According to the North American Securities Administrators Association (NAASA), one of the top 10 threats to investors is

2 Percent Figure 1: U.S. Population % % % 13.2% Year Source: Ithaca College Geology Institute (n.d.) Lesson Plans of Aging Issues senior investment fraud. Seniors have built up a lifetime of savings and thus continue to face investment fraud by con artists who are peddling investments that are either fraudulent or unsuitable for the elder s particular financial needs (North American Securities Administrators Association, 2005). Another result of the looming financial disaster was seen in the popularity of phishing and identity theft, where advances in technology proved to be extremely innovative. One article by the USA Today acknowledged this fact by indicating that the number of malicious programs circulating on the Internet tripled to more than 31,000 a day in mid-september, coinciding with the sudden collapse of the U.S. financial sector (Acohido and Swartz, 2009). Protecting senior citizens from such financial victimization is critical. If the elderly population does not have an advocate, potentially millions of older people could become dependent on other family members or government assistance. Senior citizens have life skills that have served them well; however, due to the volatile market and the enormous amount of money that is at stake, they must be protected. FACS professionals have the expertise and placement within society to make a difference through education and public policy changes. One prime example within the profession is cooperative extension agents. Cooperative extension agents are educators who provide educational programs in FACS. As stated by Kato, They act as community resource people, spokespeople, and community educators in all areas of family and consumer sciences (Kato, 2008, p.185). They possess a common set of skills and aptitudes not to mention the unique talent for working with people; therefore, they can develop the ability to influence, motivate and train others utilizing patience and creativity. FACS professionals can educate the elderly population, as well as concerned family members, through the Cooperative Extension Service Programs, like the Texas AgriLife Extension Service out of Texas A&M. FACS extension agencies play a vital role within communities as well as state legislatures. Agents could hold workshops on how to perform free credit reports, tips on purchasing items online, and keys on how to protect personal information such as social security numbers. Law enforcement has acknowledged identity theft as the fastest growing crime in the nation, and the elderly appear to be a prime target (Texas Tech University, Red to Black, 2009). The 2007 Javelin report indicated that old school tactics were primarily used by criminals to steal identities, as opposed to old higher-tech approaches (Weston, 2009). As highlighted in Figure 2, in percent of the incidents were due to lost or stolen wallets while 23 percent of victims were shoulder surfed while conducting a transaction (the thief watched over the victim s shoulder as the victim punched in a PIN or used a credit card) (Weston, 2009). Therefore, educating and reinforcing these simple prevention tactics regarding identity theft can be accomplished through extension agents. It is also important to note that this type of education could also be considered as a supervised service learning project presented to high school students via FACS courses such as Consumer Economics or FCCLA chapters ( Such a service project would prove to be ideal in building a bridge between generations. Fortunately, FACS professionals do not have to reinvent the wheel when it comes to resources and research related to financial literacy and identity theft. One example of an excellent resource that extension agencies can utilize is Texas Tech s Red to Black Web site, which provides examples of prevention measures that can be taken in order to prevent identify theft. Examples of these simple actions include the following: (Texas Tech University, Red to Black, 2009). Shred all documents with personal information, to include bank statements, receipts, canceled checks, credit card offers, medical bills, and insurance documents. Keep your PINs in a secure place away from your checkbook, ATM, or debit cards. Do not carry your social security card in your wallet or purse, as these items can be stolen. Ensure that password protection exists for credit cards, bank accounts and phone accounts.

3 Be careful with whom you share your personal information, especially your social security number. Do not give personal and financial information over the phone. Receive a free credit report once every four months from one of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. By utilizing each agency once per year, one can rotate agencies every four months. ( Carefully review financial statements Figure 2: Methods Criminals Used to Steal IDs 8% Other 7% Data breaches 12% Victimized online 33% Stolen or lost wallets Extension agents and other FACS professionals not only could educate, but also initiate public policy changes that prevent the victimization of the elderly. One such example of a policy change includes requiring mandatory reporting of elderly financial abuse by financial institutions. Such legislation would provide banks with immunity from liability for reporting suspected elderly financial abuse. Other legislation could encourage legislators to strengthen the laws against all types of elder abuse, particularly financial abuse, as well as the legislation to enhance sentencing guidelines for crimes committed against seniors. One example of such legislation is H.R. 448: Elder Abuse Victims Act of 2009 which is awaiting approval by the Senate as of October The principle of the bill is to protect seniors in the United States from elder abuse. This bill proposes to do so by establishing specialized elder abuse prosecution and research programs as well as activities to aid victims of elder abuse; thus providing training to prosecutors and other law enforcement related to elder abuse prevention and protection, not to mention establishing programs that provide for emergency crisis response teams to combat elder abuse (Govtrack.us, 2009). A particular interest for FACS professionals includes grants to eligible entities in order to establish programs to facilitate and coordinate programs for victims of elder abuse. If this bill passes, FACS educators would seem to be a logical choice for these grants, hence by being involved with public policy development such as H.R. 448, benefit both the profession as well as society. In addition, FACS financial planners prove to be the ideal educators when addressing the fraudulent role of scam artists of the elderly. FACS educators could provide invaluable training and education to banks and other financial institutions that would then play key roles in prevention and intervention. Fortunately some organizations have seen the need to educate the public. One such organization, called BITS (Note: BITS is not an acronym, but at one time stood for Banking Industry Technology Secretariat ), has developed what it calls a fraud prevention toolkit which protects the elderly from financial 17% Victimized by family members 23% Shoulder surfed Source: Weston, L. (2009) Tough Times are Ripe for ID Theft fraud and exploitation through education and awareness about abuse and exploitation against the elderly (BITS, 2006). The BITS toolkit covers topics such as: types of abuse and scams; development of internal awareness and training program; working with state and federal agencies; and consumer awareness and education. FACS professionals could play a vital role in the development of internal awareness and training programs for numerous institutions. The BITS toolkit outlines a guide for use by financial institutions when creating awareness and detection programs to protect the elderly and vulnerable from fraud and financial exploitation. FACS educators and financial planners prove to be ideal for utilizing such a toolkit, particularly in aiding in the program design and employee training which could be taught through various mediums to include one-on-one training as well as online courses. As emphasized by BITS, the customer contact staff within financial institutions are in a unique position to identify potential abuse of fraud victims, and as a consequence appropriate training is the key to early detection of the financial elderly abuse. Educating the customer staff to signs of abuse is essential, which FACS professionals are ideally suited. Signs of abuse or financial exploitation of elderly vulnerable adults include, but are not limited to (BITS, 2009): Sudden changes in accounts or practices, such as unexplained withdrawals of large sums of money. Recent changes in authorized signers on a vulnerable adult s financial institution signature card, particularly additions. Withdrawals of funds using an ATM card, particularly repetitive withdrawals over a short period inconsistent with prior usage patterns or at times, or on days, that appear unlikely to have been done by the customer.

4 Abrupt changes in a will or other financial documents. Unexplained disappearance of funds or valuable possessions. Substandard care being provided or bills unpaid despite the apparent availability of adequate financial resources. Discovery of a vulnerable adult s signature being forged for financial transactions or for the titles of his or her possessions. Sudden appearance of previously uninvolved relatives claiming their rights to a vulnerable adult s affairs and possessions. Excitement about winning a sweepstakes or lottery. Lastly, FACS educators can and should play a key role in educating elders as well as caregivers. One of the most important aspects when educating the public is to evaluate the situation or identify areas that need to be addressed. The National Foundation for Credit Counseling, or NFCC, has developed a true / false quiz that helps one assess their own financial literacy when it comes to identity theft as well as provides guidance. This quiz is truly unique in the fact that it provides real-life scenarios such as If my caller ID shows that the call is coming from my bank, I can feel safe about answering any questions they ask or It is best not to use a password that I can easily remember, or use the same password for all accounts. (NFCC, n.d.). After answering these questions, the Web site will then calculate one s risk of becoming a victim of identity theft or other financial scams. FACE educators could provide this quiz in a more traditional style to those who many not have internet access. Also interpreting results of the quiz to the elderly or caregiver is another avenue which needs to be explored by FACS professionals. Understanding how and why responses are correct or incorrect is imperative to the learning process which the FaCS critical thinking process provides. To conclude, senior citizens have acquired the life skills that typically have served them well; however, due to the volatile market and the enormous amount of money they obtain, they must be protected. The elder market presents a special set of risks and issues that must be properly addressed. Prevention only comes with a basic understanding of families as well as financial expertise. FACS, with its multidisciplinary approach, has the unique ability to be an advocate for multitudes of senior citizens.

5 References Acohido, B. and Swartz, J. (2009, January 29). Data scams have kicked into high gear as markets tumble. USA Today. Retrieved February 2, 2009, from computersecurity/ hackers-data-scams_n.htm BITS Fraud Protection Toolkit: Protecting the Elderly and Vulnerable from Financial Fraud and Exploitation (2006). Retrieved January 31, 2009, from Publications%20Page/bitstoolfeb06.pdf Chu, K. (2006, February 5). Financial scams expected to boom as boomers age. USA Today. Retrieved February 2, 2009, from baby-boomers-usat_x.htm Govtrack.us.(2009). H.R. 448: Elder Abuse Victims Act of Retrieved April 9, 2009, from bill.xpd?bill=h Ithaca College Geology Institute (ICGI), Lesson Plans of Again Issues: Creative Ways to Meet Social Studies Standards, Participation in Government. (n.d.). The Baby Boomers and Social Security. Retrieved April 9, 2009, from Kato, S. (2008) Foundations of Family and Consumer Sciences. Careers Serving Individuals, Families and Communities. Tinley Park, IL: Goodheart-Wilcox. National Foundation for Credit Counseling (NFCC), (n.d.). Protect Your ID Now. Retrieved on April 10, 2009, from North American Securities Administrators Association, Inc (2005). NASAA s 2005 Top 10 Threats to Investors. Widmann: If it sounds too good to be true, it usually is. Retrieved February 1, 2009, from current_nasaa_headlines/2719.cfm Securities and Exchange Commission (2008). Seniors. Retrieved January 31, 2009, from Securities and Exchange Commission s Office of Compliance Inspections and Examinations, North American Securities Administrators Association, and Financial Industry Regulatory Authority. (2008). Protecting Senior Investors: Compliance, Supervisory and other Practices used by Financial Services Firms in Serving Senior Investors. Retrieved February 2, 2009, from seniors/seniorspracticesreport pdf Texas Tech University, Red to Black. Prevention and Recovery. Retrieved April 9, 2009, from identity_theft.php Weston, L. (2009) Tough Times are Ripe for ID Theft. Retrieved April 9, 2009, from FinancialPrivacy/tough-times-are-ripe-for-ID-theft.aspx?page=1 National Coalition for Family and Consumer Sciences Education Financial assistance provided by the Association for Career and Technical Education Opportunity Fund Grant. Written by Ericka Hendrix Texas Tech University ericka.hendrix@ttuhsc.edu 1410 King Street, Alexandria, VA