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How To Prevent Elder Financial Abuse

How To Prevent Elder Financial Abuse.

Article By : Patrick Mansfield | U.S. Gov Connect
How To Prevent Elder Financial Abuse

Houston, Tx. — The Consumer Financial Protection Bureau (CFPB) recently released a report and an advisory that contained recommendations for credit unions and banks on ways to recognize, prevent, report and respond to the financial exploitation of older Americans. Financial exploitation is the most common form of elder abuse, which entails the improper or illegal use of a person's property, funds or assets.

Elder finance abuse continues to be a major concern, costing seniors billions of dollars per year. It is hoped these recommendations from the CFPB will give financial institutions better practices, tools and resources for protecting older consumers more likely to become victims of financial abuse. 

It has been reported almost 20 percent of seniors have been victims of elder financial abuse, but few of these matters ever come to the attention of a consumer finance advisory or protective services.

Older consumers make attractive targets for financial abuse as they tend to have equity in their homes or significant assets.

Seniors attract scam artists as they regularly receive a pension or Social Security and may not have a full understanding of those resources.

Senior Americans can be vulnerable because they are often isolated, are in cognitive decline, and have physical disabilities and other health issues.

Consumer finance advisory organizations find that seniors that are victims often are not even aware of it, or maybe too embarrassed or fail to report it. There has been strong advocacy for banks and credit unions to uniquely position themselves to look out for seniors, creating programs and taking actions that protect them.

As they are conducting direct, often face-to-face, contact with seniors, helping them manage their finances, banks, and credit unions are in strategic positions to monitor and protect senior citizens from financial exploitation. Older adults on average have IRAs, checking and savings accounts, bonds, and other assets. They rely on tellers for their primary resource for banking. These financial advisers and institutions are better prepared to detect and act when senior account holders could be victimized or targeted. Under many state laws, banks and credit unions are required to report elder financial abuse.

In 2013, the CFPB partnered with seven regulatory financial bodies to clarify provisions that argue banks and credit unions have to report suspected elder financial abuse to appropriate authorities without necessarily violating privacy provisions in any federal banking laws.

The current actions of the CFPB are the first time any federal regulator has released a comprehensive set of voluntary best practices for banks and credit unions to use to fight this problem. The CFPB also provided an in-depth study of financial exploitation, case scenarios, and recommendations for prevention and response to elder financial abuse.

These included:

The staff that manages finances should be trained to recognize, prevent and respond to senior abuse. They should know warning signs and appropriate responses to suspicious events.

Banks, credit unions, and other financial institutions should have advanced fraud detection solutions. Their systems should seek out suspicious account products and activity associated with elder fraud risk, including predictive analytics that review patterns, behavior and additional factors associated with elder finance abuse. It is not unusual for signs to not match conventionally accepted patterns of suspicious activity. Nevertheless, given any individual account holder's regular behavior, finding the unusual should not be difficult.

Banks and credits unions should have programs in place that offer age-appropriate services. Plans and programs have to be in place to protect seniors, even advocating consumers to plan for incapacity. There should be opt-in limits on cash withdrawals and geographic transactions. They should offer view-only access to authorized third parties and immediate alerts for specific types of account activity. A good safety measure would have seniors provide advance consent before sharing account information if there appears to be any sign of risk, even with a relative or friend.

Any sign of suspected exploitation should be reported to the relevant state, local or federal authority. Financial institutions should be working with Adult Protective Services, consumer finance advisory boards, and law enforcement to enhance prevention and response efforts. There also has to be expedited transmission of requested documents, and this should be done so at no charge to the consumer.
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