By all accounts, the elderly are vulnerable targets for financial scammers. Americans are living longer, cognitive impairment rates are rising, and many observers describe today's seniors as generally trusting and unsuspicious.

All this makes for fertile territory for those looking to bilk seniors out of their money, a racket that amounts to nearly $3 billion annually, by one estimate. But that likely only scratches the surface, as experts say most cases go unreported.

'POSITION OF TRUST'

So much is unknown about the scope of the problem, and it is undeniable that elder financial abuse takes on many forms, but the available quantitative and empirical evidence indicates that the primary culprits are members of the victim's family. "A lot of this comes about from the position of trust," says Daniel Bernstein, chief regulatory counsel at MarketCounsel, an advisor compliance consulting firm.

In February, Kathleen Quinn, executive director of the National Adult Protective Services Association, appeared before the U.S. Senate Special Committee on Aging, testifying that on the order of 90% of reported abuse cases involve a family member.

"Sadly, and too many -- shockingly, the vast majority ... of reported elder abuse is committed by the older victim's own family: adult children, grandchildren, nieces and nephews, and sometimes siblings," Quinn said in her written testimony. "Much of the rest is perpetrated by trusted friends, neighbors, caregivers and even attorneys and clergy."

CHANGING DYNAMICS

Advisors say that elderly investors can be especially vulnerable when the decision-making dynamic of the household suddenly shifts, such as on the occasion of the death of a spouse.

"We see it quite a bit when someone becomes a widow or a widower," says Katie Coleman, a financial advisor with Siena Wealth Advisory Group.

Often the perpetrators resort to squeezing an elder relative or acquaintance because they've gotten into some kind of financial trouble themselves. Page Ulrey has been a dedicated elder abuse prosecutor in King County, Washington, since 2001, and says that a specific affliction crops up again and again in the cases she encounters.

"Many of the perpetrators in our cases have a gambling addiction. I believe there is a strong connection between gambling and elder abuse," Ulrey says.

"Some victims also rely on the perpetrator for care, and are afraid if they cooperate they are going to lose this person from their lives and end up in a nursing home or a long-term care facility," she adds.

SUBTLE FORM OF ABUSE

Of course, it's not all desperate children or caretakers who are down on their luck or drowning in gambling losses. Joseph De Sena, president of Siena Wealth Advisory Group, observes a subtler form of elder exploitation that might not be as clear cut as a child coercing money from a parent, but could nonetheless necessitate the involvement of authorities.

"There is another type of abuse, and it's where family members know that their parents need a higher level of care, but refuse to provide that level of care because it would cost more and they would inherit less," De Sena says. "That becomes a very tricky issue to deal with, especially if the children are powers of attorney, and if that starts to be noticed, you need to get social services involved."

FREE LUNCH, 'BIG PROBLEM'

Even if relatives and trusted friends account for the lion's share of elder abuse, there is no shortage of unscrupulous financial professionals who market and recommend products clearly unsuitable for older investors.

One of the classics is the luncheon or dinner seminar, where older investors are invited out with the promise of a free meal, which is accompanied by a sales pitch, often for variable annuities that Eleanor Blayney, the CFP Board's consumer advocate, says seniors have "no business buying."

"The free lunch seminar is a very big problem," Blayney says.

"A lot of these take place at the best steakhouses in the community, and these are people who enjoy getting out," she says. "They don't understand that it isn't free at all, that they're being sold something, and giving out information that they shouldn't be at this event."

Kenneth Corbin is a Financial Planning contributing writer in Washington and Boston.

This story is part of a 30-day series on better serving seniors.