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U.S. banks working to guard seniors from rising financial abuse

By Daniel Uria
U.S. banks, urged by federal and local governments, have taken more action in recent years to protect seniors from scammers. File Photo by John Angelillo/UPI | <a href="/News_Photos/lp/39201a3049c97ca531377f4ddd013dfe/" target="_blank">License Photo</a>
U.S. banks, urged by federal and local governments, have taken more action in recent years to protect seniors from scammers. File Photo by John Angelillo/UPI | License Photo

Jan. 31 (UPI) -- Elder financial abuse in the United States has more than doubled in the last five years and U.S. banks are taking steps to protect vulnerable seniors.

Last year, banks reported a record 24,400 suspected cases of abuse to the Treasury Department, an increase of nearly 15 percent from 2017, stats from the department's Financial Crimes Enforcement Network show. Seniors are frequently targeted by scammers for wealth accrued over their lives and vulnerabilities presented by loss of mental and physical abilities.

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In the past decade, federal and local governments have encouraged banks to do something about it.

A growing issue

Some 70 percent of all deposits in U.S. banks are made by customers 50 and older, according to American Bankers Association data.

A 2011 MetLife study found senior victims account for nearly $3 billion of annual losses. More research by the Securities and Exchange Commission last year found elderly victims lose $109 million annually in New York state.

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"We have had banks all across the United States become a lot more involved in working to protect our older adults, because our older adults make up a bulk of our consumers," Sam Kunjukunju, ABA director of banker community engagement, told UPI.

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He said the net worth of households headed by those 65 or older totals more than $17 trillion. In the coming years, the pool of seniors potentially available to scammers is expected to rise, as the U.S. Census Bureau estimates 1 in 5 Americans will be senior age by 2030.

"That's a 5 percent shift on a national level and given these considerations we know that scammers are targeting older adults a lot more," Kunjukunju said. "Given that, we have had banks all across the United States become a lot more involved in working to protect our older adults."

Despite the growing threat and steadily increasing numbers of reports, instances of elder financial abuse remain under reported. The National Adult Protective Services Association says only about 1 in every 44 cases is reported. Kunjukunju said victims are often too embarrassed, humiliated or a afraid to speak up.

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"Definitely there's a lot of under-reporting that's going on, particularly because older adults may be afraid to come out to talk about this specific situation, if they were abused by someone they know very closely, they might not want to infringe on or challenge that relationship in any way. They might be afraid of issues of backlash and things of that nature," he said.

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Common examples

Scammers tend to target seniors to exploit their lack of tech knowledge or declining cognitive abilities.

"Risks of exploitation definitely are tied to cognitive and physical changes," Kunjukunju said. "If an individual is disabled, has dementia or they are socially isolated, they are much more vulnerable and more at risk."

According to NAPSA, 90 percent of abusers are family members, or other trusted people in the victim's life. This type of abuse usually comes in the form of abusing joint bank accounts, power of attorney or access to the victim's debit card or checks to withdraw funds without their consent.

Abuse can also be compounded with other forms of physical or emotional mistreatment, in which the abuser threatens physical harm, withholding medical services or manipulating them into paying for bills or other expenses.

Officials say many prevalent scams involve creating a ruse to encourage seniors to withdraw a large sum of money and transfer it to the scammer. These types of scams include falsely advertising services such as home repairs, creating fraudulent charities or seeking sums as "tax payments" on earnings from a nonexistent lottery or sweepstakes prize.

Another common scam of this type is the so-called "grandparent scam," in which a scammer calls an elderly person claiming their grandchild or other loved one is in jail or held hostage, and demands some form of payment for their release. The scams also often look to exploit urgency by threatening harm against a loved one if they inform authorities or relatives.

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Seniors are also often targeted by phishing emails that look to obtain access to sensitive banking information, identity theft including opening fraudulent credit cards and Medicare scams, which the National Adult Protective Services Association states are the costliest in terms of the dollar amounts.

There are also a number of "professional" scams, which seek to coerce elderly Americans into making fraudulent or unwise investments. These include pyramid schemes and pressuring seniors into taking out inappropriate "reverse mortgages" or other loans and using equity that won't mature until the victim is 90 or 100 years old.

Fighting back

In recent years, financial institutions and various levels of government have acted to empower employees to identify and prevent various forms of fraud.

Kunjukunju said some banks train employees to recognize various types of scams and help potential victims identify suspicious activity, like unusually large withdrawals that could indicate trouble. Employees also are now better taught how to report fraud to law enforcement and Adult Protective Services.

"On the one hand, there's internal training for bank staff, tellers, etc. to understand exactly what's going on in terms of the landscape and how to identify, detect and report on it," he said. "Externally, there's a lot of work that's going on to educate the community -- about how to defend yourself, how to protect yourself and how to be aware about what are the major issues."

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The federal government is also developing new laws and guidance to urge more banks to protect seniors.

Regulatory agencies say reporting abuse doesn't violate federal privacy laws, which require banks to explain information-sharing to customers and safeguard sensitive data. Still, some states have implemented policies that give banks more power to act on seniors' behalf.

Texas enacted the Elder Financial Protection Act in 2017. It gives banks power to contact authorities or a trusted third party if they suspect financial exploitation. It also gives them the option of a 10-day hold on vulnerable accounts if a report is made.

"A customer that comes in and says, 'I want to wire $10,000 to the Caribbean' -- if that's an unusual transaction for that customer -- the bank now has the authority under Texas law to place a hold on that account. It's a pause law," Celeste Embrey, deputy general counsel at the Texas Bankers Association, told UPI.

Embrey said Texas had laws for mandatory reporting of suspected abuse, but the older laws only allowed banks to act if there was an ongoing relationship between a victim and abuser. That has been fixed.

"Texas law did a really good job of protecting people from financial abuse from people with whom they have an ongoing relationship, but [authorities'] hands were tied if there was no ongoing relationship -- yet that's where we see the most financial exploitation happening," she said.

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Last May, President Donald Trump signed the Senior Safe Act, allowing banks to report suspected abuse without fear of being sued -- on the condition they provide proper training to their employees.

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