Elder Financial Abuse is Real, and On the Rise!
in Compliance & Regulatory
By: Nicola Foggie, NJCUL Senior Vice President, Compliance and Regulatory Affairs

It’s not Halloween, but if you like being scared (or in this case, horrified!) the Consumer Financial Protection Bureau (CFPB) recently released a report on financial abuse of older consumers. Since 2013, financial institutions have reported to the federal government over 180,000 suspicious activities targeting older adults, involving a total of more than $6 billion. The reports provide unique data on these suspicious activities, which can enhance ongoing efforts to prevent elder financial exploitation and to punish wrongdoers.

The Bureau’s report also presents the findings of a study of elder financial exploitation Suspicious Activity Reports (EFE SARs) filed with the federal government by financial institutions such as banks, credit unions, and money services businesses between 2013 and 2017. This is the first public analysis of EFE SAR filings since the Financial Crimes Enforcement Network (FinCEN), which receives and maintains the database of SARs, introduced electronic SAR filing with a designated category for “elder financial exploitation” in 2013. The findings provide an opportunity to better understand the complex problem of elder financial exploitation and to identify ways to improve prevention and response.

Here's some advice to financial institutions from the CFPB on preventing and limiting losses due to EFEs:

  • Improve fraud detection technology to reflect transaction patterns most prevalent when older account holders become victims;
  • Utilize machine learning to obtain specific and timely information indicating such fraudulent activity;
  • In addition to filing EFE SARS, report suspected EFE to relevant law enforcement agencies, which can increase investigation and prosecution;
  • Work collaboratively with local law enforcement and other service providers through community response networks;
  • Work collaboratively with regulators and policymakers to identify and consider any changes needed to enable depository institutions to hold transactions while investigating suspicious activity, for example, establish time frames for the transaction holds and provide immunity for institutions and staff who take protective steps.
  • Promote use of alerts on checking and savings accounts;
  • Offer services to enable trusted relatives and friends to help detect EFE.

The Bureau’s report shows the growing concern of elder financial abuse in this country. In 2015, the State of New Jersey’s Legislature worked to address the issues by passing S3128, which established the New Jersey Task Force on Abuse of Persons who are Elderly or Disabled”.  The task force’s focus “concerned the abuse, neglect, and financial exploitation of persons who are elderly or disabled”.  In 2018, the State passed several more bills addressing elder financial abuse and exploitation, which included S3167 that reinforced the crime and consequences of financially exploiting the elderly.

Credit unions should be aware, while these statutes were put in place to aid financial institutions in the protection of their elder members/customers from criminals by giving them the legal protection to share financial and private information with law enforcement and state officials, compliance with these statutes appears to be voluntary. In 2015, a case was brought against Wells Fargo Bank (see Lucca v. Wells Fargo Bank). The Bank’s customer, an 82 year old woman, fell victim to a telephone scam.  The woman wired a total of $330,000 to unknown persons, who had persuaded her to repeatedly send them money. She did not know their identities. 23 transfers were involved, and although the Wells Fargo Bank’s personnel had suspicions about what was going on, the bank did not report the situation to either adult protective services or law enforcement. You might be surprised to know the judgment in this case favored the bank. What this case tells us is that although a financial institution in the State of New Jersey can make the ‘choice’ to report elder financial abuse to appropriate law and/or state authorities, at least in this case, the New Jersey Courts held that Wells Fargo Bank did not have an “affirmative duty to report”.   

The difference between banks and credit unions continues to be crystal clear. While the Lucca vs. Wells Fargo Bank case has been litigated and a decision rendered in favor of the bank, it seems to me that the while the bank won by the letter of the law, its customer did not. I’m left to wonder at what point in those 23 transactions could the bank have stopped this scam in its tracks. Guess we’ll never know.

Click here for more information about credit unions and how to join.

If you know or suspect an elder adult is being taken advantage of, or has been a victim of financial crimes, click here for the State of New Jersey’s Senior Safety site.

Click here for the full CFPB Report.

Looking for compliance and audit solutions? Contact NJCUL’s Nicola Foggie at nfoggie@njcul.org.