By Lorenzo Cruz
Financial exploitation of the elderly population is a growing and widespread problem domestically and globally. It is difficult to comprehend that an individual would deliberately prey upon senior citizens for significant monetary gain, but financial exploitation has become a pervasive problem frequently costing seniors billions of dollars worldwide. On June 15, World Elder Abuse Awareness Day, bankers are encouraged to join WBA in raising awareness to help prevent the financial exploitation of elders across the country.
What to Look For
Often, criminals devise deceptive schemes to disguise the criminal activity that seniors often fall victim to. Some of the common frauds affecting seniors include romance scams, government impostor scams, friend impostor scams, and online shopping scams. Fraud reports filed with the Federal Trade Commission (FTC) reported that seniors’ losses totaled $600 million in 2020. The costliest schemes were romance scams with reported losses of $139 million in 2020. However, the vast majority of elder financial exploitation goes unreported.
What is more disconcerting is that sometimes the criminal masterminds could be the durable power of attorney (POA) like a family member or close friend. A family member is the perpetrator in over 60% of these financial abuse cases, according to a University of Southern California study. The National Council on Aging (NCOA) estimates that approximately 10% of Americans above the age of 60 have succumbed to some form of elder abuse. Several of the warning signs to be on the watch out for related to financial abuse are sudden changes in seniors’ personal finances, uncharacteristic bank withdrawals, checks written out as loans or gifts, lost property, and unpaid bills.
Seniors can protect their finances by maintaining accurate financial records, never providing personal information over the phone, getting a second opinion on financial matters from an attorney or financial advisor, and selecting a trustworthy person to assist in managing personal finances. If family or friends suspect financial elder exploitation, talk to the victim about the possibility of fraud and report suspected abuse to adult protective services, law enforcement, and banks. While banks are restricted from sharing specific account information, they can review potential abuse and report suspicious criminal behavior.
Actions WBA is Taking
Last July, South Carolina Governor Henry McMaster signed a law to protect vulnerable adults from fraudulent financial transactions. The new law allows financial institutions and financial service companies to decline, delay, or report transactions that are suspected of elder financial abuse for vulnerable adults 55 years or older. At that time, South Carolina joined 31 other states that passed similar legislation.
In the Badger State, the Wisconsin Bankers Association (WBA) pursued a similar path to protect seniors from this insidious crime wave and reintroduced an elder financial exploitation bill in 2021. SB 19/AB 46 and SB 20/AB 45 co-authored by State Senator Pat Testin and State Representative John Macco provided financial institutions and securities companies with the tools to better protect their vulnerable adults and senior customers from fraud and abuse. The bills would allow financial institutions and securities companies to pause transactions suspected of financial elder fraud and would allow them to collaborate with the customer, a trustworthy list of individuals, and law enforcement to determine if the transactions should be approved. While the potential elder abuse transaction is on hold, the remaining funds in the account would still be available for other transactions. The bills also would permit reporting requirements, provide liability protections, and allow refusal of POA in suspected elder fraud cases.
As the elder fraud legislation moved through the legislative process, WBA’s advocacy efforts saw mixed success on the bills before the state legislature. WBA actively lobbied the issue and passed the elder fraud legislation in the assembly on a bipartisan vote with an overwhelming majority. Unfortunately, the bill stalled in the Senate Committee on Financial Institutions and Revenue. Despite falling short on passing an elder financial exploitation law in Wisconsin, WBA made tremendous progress on the issue. WBA’s government relations team remains committed to enacting legislation that would provide banks with the tools needed to protect seniors from costly fraud. Passage of the elder financial exploitation legislation remains a high priority for WBA during the next legislative session, which begins in January of 2023.