The vexing problem of defining financial exploitation
| Date | 05 January 2015 |
| Pages | 63-78 |
| Published date | 05 January 2015 |
| DOI | https://doi.org/10.1108/JFC-05-2014-0026 |
| Author | Shelly L. Jackson |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
The vexing problem of dening
nancial exploitation
Shelly L. Jackson
Institute of Law, Psychiatry and Public Policy,
University of Virginia, Charlottesville, Virginia, USA
Abstract
Purpose – The purpose of this paper was to study the vexing problem of dening nancial
exploitation. Advocates and practitioners in the eld who have been battling nancial exploitation are
pleased to observe the increased attention that nancial exploitation is receiving at all levels of society.
With this increased attention, however, there has been a conation of terms used to describe nancial
exploitation, resulting in some confusion about what constitutes nancial exploitation.
Design/methodology/approach – Fully recognizing that denitions serve different functions, this
paper identies three main purposes of a denition and then describes the myriad ways nancial
exploitation has been dened in the research literature, by organizations, and in civil and criminal
statutes.
Findings – Financial exploitation has been dened in multiple ways within and across categories.
Furthermore, the denition has expanded over time. This paper proposes the need for greater
denitional clarity around the concept of nancial exploitation, and argues that at a minimum a
distinction must be made between nancial exploitation and nancial fraud.
Originality/value – This is the rst paper to comprehensively review the myriad ways in which
nancial exploitation has been dened in the literature, by organizations and within state civil and
criminal statutes.
Keywords Financial abuse, Financial fraud, Older adults, Elder abuse, Research, Review,
Financial exploitation, Statutes, Denitions, Elderly
Paper type General review
Introduction
Financial crimes are distinct from property crimes (robbery, burglary and motor vehicle
theft) and encompass a nearly endless list of possible actions that might include bribery,
fraud, embezzlement, identity theft, money laundering, mortgage fraud, racketeering,
securities fraud, tax fraud and white collar crimes such as Ponzi schemes and securities
fraud (Gottschalk, 2010). When the victim of these nancial crimes is an older adult, the
offense is sometimes referred to as nancial exploitation. Financial exploitation is
dened as the illegal or improper use of an elder’s funds, property or assets (NCEA,
1998). Financial exploitation is a frequent form of elder abuse (Acierno et al., 2010;Lachs
and Berman, 2011;Laumann et al., 2008), yet nancial exploitation differs in signicant
and meaningful ways from other forms of elder abuse (Acierno et al., 2010;Jackson and
Hafemeister, 2011;Pittaway et al., 1995;Post et al., 2010). A nationally representative
study found that in the past year, 5.2 per cent of adults aged 65 years and older living in
the community had experienced nancial exploitation by a family member (Acierno
et al., 2010), which are the most frequent perpetrators of nancial exploitation (Holtfreter
et al., 2014).
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
Financial
exploitation
63
Journalof Financial Crime
Vol.22 No. 1, 2015
pp.63-78
©Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2014-0026
Financial exploitation has been dubbed by some experts as the Crime of the 21st
century. Opportunities for nancial exploitation have increased with nancial and
market diversication, greater levels of economic activity and a vast array of nancial
products and services with many delivery channels and technological developments
(Wilson, 2012). It is estimated that older adults lose $2.9 billion annually (MetLife, 2011),
an estimate that fails to take into consideration the emotional, psychological and health
consequences associated with nancial exploitation, or the additional costs associated
with social services, healthcare and legal services (Deem, 2000;Dong and Simon, 2013;
Szanton et al., 2008). Additional costs are incurred by society (Moore and Schaefer, 2004)
and family members (Bond et al., 1999), who must now support many of these nancial
victims, and the loss of wealth transfer to the next generation (Langbein, 1988).
Similar to nancial crimes, nancial exploitation is a rubric which encompasses a
host of illegal and improper nancial actions (Conrad et al., 2010;Hafemeister, 2003;
Jackson and Hafemeister, 2012;Johnson, 2003). Improper actions might include
duplicitous arrangements for the management of assets (e.g. older person’s income
being absorbed into family nances), improper use or transfer of assets (e.g. demanding
transfers, moving in uninvited), abuse and misuse of nances (e.g. signing forms
without understanding, family using funds without the older adult’s knowledge) or
prioritizing nancial gain over care of an older person (e.g. providing “care” for the older
adult when it is contraindicated).
Given the wide variety of actions represented by the term nancial exploitation, it is
not surprising that nancial exploitation has been variably referred to as nancial
abuse, nancial elder abuse, nancial fraud, duciary, economic or material abuse,
nancial mistreatment, personal or commercial nancial elder abuse and just plain
exploitation. These terms are often used interchangeably implying a singular meaning.
The diversity of terms used to describe nancial exploitation has contributed to
confusion over what characterizes this type of action.
Hafemeister (2003, p. 386) wrote his seminal paper on nancial exploitation that
nancial exploitation is poorly dened in part because it is hard to dene.
Unfortunately, little progress has been made in dening this concept in the intervening
years (Lowndes et al., 2009). However, dening nancial exploitation is not just an
academic exercise. Vague denitions leave nancial exploitation difcult to identify,
investigate, prosecute, study and prevent (Dessin, 2005;Hafemeister, 2003;Payne, 2011).
The purpose of this paper is to explore the various ways in which nancial exploitation
has been dened and to distinguish nancial exploitation from nancial fraud, with an
eye toward improvements in theory building and intervention. It should be noted that
this paper focuses on actions that result in economic gain or benet to the offender rather
than the use or misuse of assets to control another individual, as observed in the context
of intimate partner violence (Fawole, 2008;Stylianou et al., 2013).
The purpose of a denition
Denitions may differ depending on their intended purpose. There are three main
purposes for which a denition is used (Friedrichs, 2010):
(1) polemical;
(2) typological; and
(3) operational.
JFC
22,1
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