Elder financial exploitation is the crime of the 21st century. The elderly are attractive targets for scam artists since elderly people often have a fixed income and other liquid assets as well as cognitive decline and other health issues. This type of abuse robs the elderly of their dignity and quality of life.
Banks play a vital role in preventing and responding to this type of elder abuse. They are uniquely positioned to detect that an elder account holder has been targeted or victimized and to take action.
The Impact of Elder Financial Exploitation
One evening in June of 2012, a mom (widow) called her daughter to report the good news: she had received a phone call that an armored truck was on its way to deliver $5 million to her! The daughter knew this was a scam and asked her mom several times to go back into the house. As the evening grew dark, the daughter became concerned about her mom’s safety. The daughter lived 90 miles away, so she called the police where mom lived (a small town of 1,300 people). After the policeman escorted mom back inside, he questioned her about this armored truck that never showed up. He called the daughter to report what he had learned.
The mom had originally sent $2,000 to an address in Mexico via Western Union for the “taxes on the money.” The man called a couple days later to report he had not received the money; he would need her to send another $2,000 if she wanted to receive the $5 million she had won. The mom went back to Western Union and sent him another $2,000. This happened a third time before she called the daughter about her good news.
This prompted the daughter to investigate her mom’s banking activity. As a result of estate planning done years before, the daughter had the authority to take action to protect her mom’s assets. The investigation took several months, and in the process, the daughter learned several important things. First, that her mother suffered from dementia. Second, that her mother had lost over $18,000 to various scam artists and their schemes.
Scams and cybersecurity threats are everywhere. We’ve compiled a list of the most recent ones.
The Purpose of the Senior Safe Act
The Senior Safe Act (Act), a federal statute, was enacted in 2018 to encourage the reporting of Elder Financial Exploitation (EFE) by financial institutions to the appropriate authorities while establishing immunity for those financial institutions at the same time.
To establish immunity, the report to the authorities must adhere to the following:
The Act does not mandate either reporting or training; however, it does provide additional protection against liability. The Act also does not preempt state law unless it provides greater protection to the financial institution. As of April 2019, 26 states plus the District of Columbia mandate reporting of suspected EFE by financial institutions.
Financial Institutions and the Prevention of Elder Financial Abuse
The Consumer Financial Protection Bureau (CFPB) recommends that financial institutions file Suspicious Activity Reports (SARs) when it suspects financial exploitation of an older adult has occurred. In February 2019, the CFPB issued a research report based on a study of 180,000 SARs filed from 2013 to 2017. The CFPB found that adults who sustained a loss and were over the age of 70 had lost an average amount of $41,800, with 7% of adults losing over $100,000. In addition, the CFPB’s analysis revealed that less than one-third of EFE SARs filed also reported the activity directly to Adult Protective Services (APS).
The CFPB urges financial institutions to take action when they suspect an older adult has been subject to, or a victim of, Elder Financial Exploitation. Institutions can do this in the following ways:
The CFPB’s research underscores the prevalence of EFE and the devastating financial harm that it is causing nationwide. Timely reporting of suspected EFE remains critically important and can lead to effective responses and limitation of losses, which is why financial institutions play a vital role in preventing and responding to elder financial abuse.
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