PE: AARP Throws Granny Under the Bus

S.K. Bhattacharya

There is nothing wrong with being a successful business, and the AARP should be credited for being just that. But there is something unsavory about being in the business of duping the elderly. What is poorly understood is that there are eight entities linked to the AARP label, of which five are taxable, for-profit companies. To put it crudely, the non-profit part of AARP is a front. Its primary function is to sell stuff to old people via AARP Services, Inc.-- and to blackmail congress, which it does.

If any single business lobby—yes, business lobby—stands as an obstacle to entitlement reform, it is the American Association of Retired People [AARP]. There is nothing wrong with being a successful business, and the AARP should be credited for being just that. But there is something unsavory, at least, about being in the business of duping the elderly. Dissimulating—even to the elderly—is not illegal, nor should it be. A government powerful enough to prevent the AARP from duping old people is a more powerful government than any of us should want. There is no evidence that the AARP is technically breaking the law. But what they are doing is exploiting the elderly for a fast buck while lobbying—consistently—for the massive expansions of the federal government.
Let's start with this statement from the AARP's website:

Barry Rand is chief executive officer (CEO) of AARP, the world's largest nonprofit, nonpartisan membership organization dedicated to social change and helping people 50 and over to improve the quality of their lives. Mr. Rand is a dynamic leader and change agent who brings to AARP a proven track record of leading both multibillion-dollar businesses and smaller, private equity-driven businesses. He has served as chairman and chief executive officer of Avis Group Holdings, CEO of Equitant Ltd., and executive vice president, Worldwide Operations, at Xerox Corporation. He serves as chairman of the Board of Trustees of Howard University.

That's a a heavy-hitting resume for the head of "a non-profit, non-partisan nonprofit, nonpartisan organization that helps people 50 and over improve the quality of their lives," isn't it? It should be a clue. It is. Barry Rand is the CEO not only of a non-profit organization, but a very profitable organization that is also called the AARP.
The AARP, in principle, is a 501(c)(4) tax-exempt non-profit association. The (c)(4) designation is reserved for "Civic Leagues, Social Welfare Organizations, and Local Associations of Employees;" the key constraint upon its operation is that its net earnings must be devoted exclusively to charitable, educational, or recreational purposes. What is poorly understood—particularly by the elderly—is that there are eight entities linked to the AARP label, of which five are taxable, for-profit companies: AARP Insurance, AARP Services, Inc., AARP Global Network LLC, AARP Properties LLC, and AARP Financial, Inc. The profit-making and non-profit AARP entities are not only linked by their name—there is a great deal of overlap among boards of directors.
This is not illegal, but it is clearly unethical, in so far as these companies are using AARP's reputation as a neutral advocate for the elderly to sell stuff to the elderly. Given that only the Catholic Church has a larger American membership, the AARP's endorsement is to the old-people market as a Papal indulgence is to sinners.
To put it crudely, the non-profit part of the AARP is a front. The non-profit arm, as advertised, "provides a wide range of unique benefits, special products, and services for our members." If you join the AARP for a low annual membership fee, you get discounts on hotels and cruises, and lots of magazines and newsletters about graying gracefully and staying spry. You can even listen to AARP radio and watch AARP TV—in Spanish, too!
But the media organs are the loss leaders: The revenue comes from the massive mailing list and the AARP name, which it licenses to for-profit companies—health insurers, in particular. In other words, it uses advocacy for the elderly as a sales tool. And indeed, AARP does conduct useful research and provide useful services to the elderly. But this is not its primary function. Its primary function is to sell stuff to old people via AARP Services Inc., which is not only a profit-making company, but a very profitable one: supplemental health insurance, discounts on prescription drugs, entertainment and travel packages, long-term care insurance, and automobile, home and life insurance, anything old people like—that's what AARP sells. If you want to speak to the elderly, sell anything to the elderly, or get the elderly to vote for you, the AARP is the gatekeeper. This gives AARP an almost unrivaled power to blackmail Congress—which it does.
The profit and non-profit parts of AARP combined amount to an organization that in 2009 enjoyed gross receipts of $2.2 billion. The NRA—the second-largest officially non-profit advocacy group—is only one-eighth this size, financially speaking. The highest-spending lobbyists in Washington are, in descending order, the US Chamber of Commerce, General Electric, the American Medical Association, the American Hospital Association, the Pharmaceutical Research and Manufacturers of America, and the AARP. They are all business lobbies, whether or not they claim non-profit status. Only the AARP, however, has managed to persuade the public that it is not.
There can be no entitlement reform unless a barrier is placed between the AARP and the legislative process, and so far, no politician has figured out how to do this without looking as if he is throwing granny under a bus. This is an immensely difficult problem: The elderly cannot be disenfranchised, nor can the AARP be deprived of its First Amendment rights.
There is only one realistic solution to this. Parents have a responsibility to protect their children. They also have a responsibility to protect their parents. Just as it is up to parents to protect their kids from exploitation by industries that are fundamentally unconcerned with their welfare, it is up to parents to protect their parents from exploitation by the AARP. It is even more difficult to persuade stubborn, aging parents to listen than it is to get through to recalcitrant teenagers. But it must be done. How? I suggest they follow the AARP's advice. In its eldercare literature, it advises children to:

• Talk to your parents about scams that target the elderly.
• Educate yourself on current scams.
• Warn your older family members not to sign any forms or documents without reviewing the materials with another family member or attorney.
• Contact the media and the police about any fraudulent activity.
• Close any bank or credit card accounts that were involved in a scam.
• It is also important to remember not to blame your parent or older relative for falling victim to financial fraud. Be sure to explain to them what happened and the steps they can take to prevent against future scams.