Director of the Consumer Financial Protection Bureau
World Elder Abuse Awareness Day
June 14, 2012
WASHINGTON, D.C. – Thank you so much for having me here with you. The events of today highlight a problem that we at the Consumer Financial Protection Bureau work on constantly – the issue of elder financial abuse. And I am pleased to be here at the White House, especially since no sitting president has ever before spoken out on this issue, so thank you for your support and your shared concern.
As the past few years have revealed all too clearly, financial products have the potential to wreak havoc on every individual consumer and the broader American economy. Older Americans are no exception, in fact, in many cases they are the specific targets of unfair, deceptive and abusive financial practices. According to one study, in 2010, older Americans lost at least $2.9 billion to the silent crime of financial exploitation, and it is estimated that for each case that is actually addressed by an agency or a program for victims, 42 others go unrecognized. We all know that our economy is in the process of recovering from the worst financial crisis since the Great Depression. We will not tolerate practices that intentionally exploit older Americans.
The new Consumer Bureau was created with the mission of making financial markets work for consumers. Our mission is critical, for consumer credit and other financial products and services play a major part in all of our lives. We are talking here about mortgages, credit cards, student loans, bank accounts, debit cards, debt collection, credit reports, payday loans, and many other matters that help shape the ways and means of how we manage our affairs. In all of these consumer markets, we are working to ensure fairness, transparency, and accountability. In a free market that works properly, consumers should be able to make direct comparisons among competing products, and they should not have to worry about being victimized by unfair, deceptive, or abusive practices.
We also work diligently to educate, engage, and empower consumers. We want to make sure that consumers receive the information they need – information that is accessible and provided in plain language – in order to make the best financial decisions for themselves and their families. Essential to this objective is that prices and risks are made clear upfront and that key information is not hidden from consumers or buried deep in the fine print.
While we work on behalf of all consumers, the legislation that created our new agency expressly recognized the needs of seniors when it comes to financial protection. The legislation requires that we have an office specifically devoted to this mission. Our Office for Older Americans is headed by my esteemed colleague, Skip Humphrey. Skip and his team have a singular focus on improving the financial lives of our growing numbers of seniors. We now have 50 million older Americans in this country, and many more reach retirement age every day. By the year 2030, one out of five Americans will be 65 or older. Moreover, in order to help older Americans, we must also reach out to the millions of Americans who are positioned to be the guardians and protectors of their aging parents.
We want to make sure that the older Americans of today and tomorrow are aware of what has been called both a hidden epidemic and the signature crime of the 21st century: elder financial abuse. The amount of money stolen from seniors has risen sharply in recent years. Skip served as the attorney general in Minnesota, as I did in Ohio. Get us together and we can tell you horrifying stories about these crimes – people looted of their pension benefits, or talked into investing much of their life savings in endless varieties of fraudulent schemes. We have both heard the heartbreaking stories of older Americans who have lost their entire life savings to a fraudulent lottery or sweepstakes scam, causing them to experience the nightmare of becoming destitute and being placed in a nursing home at the expense of American taxpayers. I recall the man who brought me a four-inch stack of mail, which his elderly mother had received just in the past month after she had signed up for one of the phony sweepstakes offerings.
Many seniors have routines, and their predictable patterns make them easier targets for predators. They can be lonely or overly trusting, and we now have many methods by which perfect strangers can communicate with them, often anonymously or posing as someone they are not. Seniors may be dependent on caretakers who are able to access their finances. Abusers often assume that the victim will be too embarrassed or too frail to pursue legal action against them, and unfortunately that assumption is too often proven to be correct.
We need to work together to stop this from happening. With many older Americans suffering from some degree of cognitive impairment, it is even more essential that they have someone on their side, someone who will stand up for them and fight for them. The Bureau is taking action: today we are announcing an initiative to help older Americans make good, responsible decisions when they choose their financial advisors.
Our initiative will evaluate how financial advisors obtain certifications that designate them as the best advisors for older Americans. We want to know where these designations are coming from and whether or not older Americans and their families can easily find out which designations are legitimate. Let me say clearly that the misuse of these credentials constitutes elder financial abuse. And we also want to know more about the most common ways that older Americans are exploited and what kind of financial education is available to them as they choose their financial advisors.
We will use the information we collect to inform policy making processes. We want to know what is working and what is not, so that we can fix what is not working. Older Americans need to be able to take comfort in the fact that their financial advisor is actually looking out for their best interests. Right now, we know that too often the opposite is the case – some of these people call themselves “experts” in senior finances after having received only a few hours of inadequate training. We need to distinguish between the true experts and those engaged in predatory conduct. This kind of accountability is essential to protecting our seniors.
In addition to older Americans, Congress also directed our new Consumer Bureau to focus on protecting servicemembers. For us, that group includes all veterans, so we will also look specifically at fraudulent and deceptive practices targeted at older veterans and military retirees. We see a growing problem centered around “Aid and Attendance,” which is a V.A. benefit that provides in-home assistance for low-income, severely disabled veterans. Veterans are being advised to transfer their money into irrevocable trusts in order to reduce their savings to a low enough level to qualify for Aid and Attendance. This often works out poorly as they may be denied eligibility but in the meantime have lost legal access to their own retirement funds.
We are also concerned about military pension buyout schemes. Military retirees are offered lump-sum cash payments in return for surrendering their rights to their pension payouts. These schemes are usually very bad deals for the retirees. We want to collect information on all of these kinds of financial practices.
Another part of our mission to stand up for Older Americans is our promotion of best practices for educating older adults about how to manage their personal finances. We are currently developing guidelines for programs in senior financial education and counseling. We are coordinating these efforts with our partners in federal, state, and local governments all across the country. And our reach is even wider because, in addition to government officials, we are also collaborating with private and non-profit organizations that have the wisdom and on-the-ground experience that come from being in direct contact with older adults on a day to day basis.
Not only do we want older Americans to know how best to manage their finances, but we also are developing a program that will raise awareness about the warning signs of fraud and exploitation. It is important that seniors and those around them – financial professionals, service agencies, caregivers, family members, and friends – be capable of identifying the common indicators of financial abuse.
Sometimes the indicators are obvious – property and belongings are missing or bills are going unpaid. Sometimes they are more subtle – withdrawals that fly under the radar, a suspicious signature here and there. It is important for trusted individuals to plan ahead for the potential incapacity of an older person they care for and can protect. Those individuals should create powers of attorney, trusts, or joint accounts. These mechanisms allow them to keep tabs and be vigilant monitors of how the senior’s money is being spent.
During my time in local government, we recognized that newly unpaid property tax bills were a red flag that seniors were in danger of losing their homes and needed help. We went out of our way to work with them in a very personal manner to help them rectify their situations and remain in their homes.
We need to reach out to the caretaker generation – people like myself with an elderly parent. My father is 94. He grew up during the Great Depression and he has always been remarkably self-sufficient, both before he got married at age 38, and for the past 32 years as a widower. Those in our generation need to take time to learn the best ways to detect problems that are emerging as our parents and other older Americans we know undergo changes through the aging process – changes that are natural and inevitable and cannot just be wished away. In their golden years, it is all the more important that we hold ourselves to the venerable command of honoring our fathers and our mothers. If we really love them, then we should do the work of figuring out how to protect them and their hard-earned money – money that they have scraped to put together over the course of a lifetime of hard work – against scams, frauds, and other abuses.
When prevention does not work, and when people are unable to protect themselves, we will use our powers to go after financial service providers who prey on seniors by violating federal consumer laws. Everyone who is willing to partner with us to do that is a worthy ally in this noble cause. We will work with state attorneys general, insurance commissioners, legislators, and all other relevant federal and state officials to protect our older Americans.
At the Bureau, we take an “all of the above” approach to protecting the nation’s consumers, and especially to protecting older Americans. The silent crime of financially exploiting the elderly is widespread and it is devastating. It is critical for us to act. The generation that rebuilt and sustained this nation out of a devastating Depression, the dark hours of World War II, and the anxious fears of the Cold War deserve our care now in their turn. And so I look forward to working with all of you here today, as we find the means to provide that care and show ourselves to be worthy heirs of their great achievements. Thank you.