Bill to protect seniors against financial fraud heads to Senate

As older Americans are increasingly the target of financial fraud, a bill to project against senior scams is headed to the Senate for a vote after having been passed by the House.

By some estimates, one in five seniors 60 and older will be victimized by financial exploitation, though many adults aren’t on the lookout for scams and many, for a variety of reasons, don’t report they’ve been swindled.

“Financial exploitation of seniors is elder abuse and, tragically, about twenty percent of senior investors fall prey to financial fraud, losing an estimated $2.9 billion annually,” said Rep. Ann Wagner (R-MO), chair of the Financial Services subcommittee on Capital Markets.

Wagner’s bill, The Financial Exploitation Prevention Act, aims to protect older Americans from financial fraud and was recently unanimously passed in the House and now heads to the Senate.

“It will provide our vulnerable investors with an important layer of protection to help make sure that they receive the hard-earned savings that they have built up over the years,Rep. Ann Wagner (R-MO), chair, Financial Services subcommittee on Capital Markets

“It will provide our vulnerable investors with an important layer of protection to help make sure that they receive the hard-earned savings that they have built up over the years,” she said. “ I hope the Senate takes up this bill immediately so vulnerable investors have the protections they deserve.”

Eric Pan, president and CEO of the Investment Company Institute in Washington, said the bill “would enable mutual funds and their transfer agents to better protect seniors by delaying the redemption of securities, if there is reasonable belief that financial exploitation has occurred.”
Mutual funds, Pan said, “are key to building financial security for the majority of households in the U.S., and around a third of those are seniors.”

Financial fraud bill is an 'important step'

The bipartisan bill “is an important step to protecting seniors and vulnerable adults from manipulation and elder fraud by enhancing safeguards around redemptions,” Pan said.
The bill, however, applies mostly to open-ended investment firms, such as mutual fund managers. It would require them to delay their responses to redemption requests from older customers if they believe the person is making the request because they’re being financially exploited.

If passed by the Senate, the regulation would codify an existing Financial Industry Regulatory Authority rule that has existed since 2017, allowing companies to delay redemption for up to 25 days if they have concerns about financial exploitation,

More common, perhaps, is the type of fraud in which a criminal posing as a family member convinces an elderly person to withdraw funds from their bank or local ATM to cover some apparent emergency, or for bail money. Attempts to pin responsibility on banks for fraud of this type have been stymied as the institutions fear liability.

The Consumer Financial Protection Bureau has a guide to urge financial institutions to report suspected exploitation of older adults, yet just 26 states mandate reporting. California, for example, has the Elder Abuse and Dependent Adult Civil Protection Act, which requires employees of financial institutions to report suspected elder financial abuse to a state agency. Failure to report suspected financial exploitation may make the financial institution liable, both criminally and civilly.

Mandatory reporting requirements rare

California, though, may be the exception. Most states have no mandatory reporting requirement though most encourage voluntary reporting of suspected elder abuse. In Illinois, for example, only trustees or licensed public accountants are required to report suspected elder fraud and bank employees are exempted only if a bank employee is a trustee or a licensed public accountant.

“Reporting requirements lack uniformity among the states,’” according to a recent report by Vedder Price, a Chicago-based business law firm. “While the vast majority of states have instituted some form of reporting requirement, some states have stricter reporting requirements than others.”

Today there are more than 57 million citizens age 62 or older. The U.S. Census Bureau predicts that, by 2050, this number will reach nearly 90 million.

“With increasing regularity, older Americans are the targets of scams, fraud and theft,” the Vedder Price newsletter said. “And, indeed, elder financial exploitation has been called ‘the crime of the twenty-first century.’”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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