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Reportedly, there are over 60 million Americans age 62 or older. Unfortunately, there is an article in the newspaper almost every day about some senior citizen who has fallen victim to a scam or in some other way has been fleeced out of a good part of their savings. Recently the CFPB issued an advisory for financial institutions on preventing and responding to elder financial exploitation. One suggestion made is to periodically train employees. While we have trained on this topic in the past, it is a good idea to refresh our knowledge on this topic so that we can adequately protect our customers.
Background
Generally, the senior citizen’s financial institution is a part of the conduit of the loss because that is where the person’s money is. While financial institutions generally do not have a legal responsibility to protect their customers from fraudulent activities, they do have a quasi-fiduciary obligation. Bank staff should be on the lookout for anyone abusing their elderly customers and report their concerns to the bank’s Security Officer.
What is Elder Fraud and Financial Exploitation?
Elder fraud is an act targeting older adults in which attempts are made to deceive with promises of goods, services or financial benefits that do not exist, were never intended to be provided, or were misrepresented. Financial exploitation is the illegal or improper use of an older adult’s funds or property.
What to Watch For
First, you should attempt to detect any erratic or unusual banking transactions or changes in banking patterns, such as:
frequent large withdrawals, including daily maximum currency withdrawals from an ATM;
sudden non-sufficient fund activity;
uncharacteristic attempts to wire large amounts of money; and
closing of CDs or other accounts without regard to penalties
Second, you should be on the lookout for elderly customers who appear to be under the dominance of another person (off topic, but several of the following points are also a good indicator of human trafficking).
You should look for:
- a caregiver or other individual who shows excessive interest in the older adult’s finances or assets, does not allow the older adult to speak for himself or is reluctant to leave the older adults side during conversations;
- the older adult shows an unusual degree of fear or submissiveness toward a caregiver, or expresses a fear of eviction or nursing home placement if money is not given to a caregiver;
- the financial institution is unable to speak directly to the older adult despite repeated attempts to contact him or her;
- a new caretaker, relative or friend suddenly begins conducting financial transactions on behalf of the older adult without proper documentation, the older adult moves away from existing relationships and toward new associations with “friends” or strangers;
- the older adult’s financial management changes suddenly, such as through a change of power of attorney to a different family member or a new individual, or the older adult lacks knowledge about his or her financial status or show a reluctance to discuss financial matters.
- Third, you need to know that elder financial abuse is not just a deposit issue. Lenders and other operational staff all should be aware of the red flags, signs and reporting requirements as the financial exploitation of the elderly can occur at any stage of their banking relationship.
If you suspect that one of the Banks elderly customers is being abused, it is always appropriate to notify the Security Officer to explain your concerns. Remember, privacy issues will dictate with whom the bank can discuss the issue.
Please keep in mind the state of Tennessee has an Adult Protective Services Hotline. Abuse can be reported by telephone at (888)277-8366.
For more information see:
FinCEN’s Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation
Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults
FDIC and CFPB joint publication:
Money Smart for Older Adults
CFPB’s Advisory for financial institutions on preventing and responding to elder financial exploitation
