Elder Financial Abuse: Steps for Prevention

Kate is a former executive secretary from the Pennsylvania area. She spent 10 years caring for her late husband, before finding purpose in taking care of hospice dogs. She was just an ordinary woman leading an ordinary life. But, my oh my, did that ordinary life take a twisted turn.

As a widow, Kate wasn’t on dating sites or seeking out romance, but she was active on Facebook. That’s where she found the profile of a man named Tony. Actually, Tony had sent her a friend request and while she usually ignored requests from strangers, something made her accept. But that would be a mistake, one which would lead her down the path to financial fraud.

Unfortunately, financial elder abuse is more so than you think. In fact, it’s a $3-36 billion a year problem for older adults. Yet, you’ve probably never heard of Kate and her story. So why is it that only a small number of incidents are reported annually? Is it because the victims don’t recognize that they’ve been scammed? Is it because they don’t know how to utilize their financial institutions’ resources to help them recover, or at least do damage control after the fact? Is it because financial institutions don’t know how they can be of assistance? Let’s take a look at some of the steps your credit union can take to help prevent elder financial abuse.

Step 1: Prepare Your Front Lines, Make Staff Aware

Raising awareness of financial elder abuse starts with strong education at the credit union level. Educating staff to recognize different warning signs such as confusion, new companions with elder members, sudden large transfers and other transactions that are out of the ordinary, could be the difference between a member participating in a scam or saving them from fraud. Let’s look back at Kate for a moment. After several months of getting to know Tony and his children, Tony asked if Kate could send him a $100 Visa gift card for his daughter. Kate had never purchased a gift card before, but did so at Tony’s request. And after the first, Tony kept asking for more. Then, he simply started asking for sums of money for a variety of reasons, which Kleinert obliged. This type of atypical activity for any of your members can raise a red flag. If your staff is educated on these signs to watch for, they can help protect members’ finances based on their suspicion. Here are some specific behaviors to look for:

• Frequent large withdrawals, including daily maximum currency withdrawals from an ATM
• Sudden non-sufficient funds activity
• Complaints of (or confusion about) stolen or misplaced credit/debit cards or checkbooks
• Uncharacteristic nonpayment for services, which may indicate a loss of funds or access to funds
• Inconsistent debit transactions
• Opening new joint accounts
• Uncharacteristic attempts to wire large sums of money
• Closing of CDs or accounts without regard for penalties
• Far-fetched explanations of why money is needed or was spent

If any of these behaviors begin to manifest, it’s helpful to know that there are several scams that specifically target the older population – social security, IRS, tech support, lottery and romance schemes. These can be conducted via email, over the phone or even through dating and social media sites, if we’re talking about romance schemes like the one that befell Kate. It’s also important to note that family members or caregivers are more often the culprits behind elder financial exploitation than you might think. This is the case in a majority of elder financial exploitation cases. If you have an older member, you might see evidence of financial exploitation in direct interactions with the caregivers or in the interactions between the caregiver and the member. These can include:

• The appearance of a new caregiver or “friend”
• A caregiver or other individual shows excessive interest in the elder's finances or assets, does not allow the elder to speak for him/herself or is reluctant to leave the elder's side during conversations
• The elder 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 caretaker
• The financial institution is unable to speak directly with the elder, despite repeated attempts to contact him or her
• A new caretaker, relative or friend suddenly begins conducting financial transactions on behalf of the elder without proper documentation
•  The member moves away from existing relationships and toward new associations with other "friends" or strangers
• Abrupt changes in a will or other financial documents or transfer of the person’s assets to a family member, acquaintance or care provider without a reasonable explanation
• The elderly member lacks knowledge about his or her financial status, or shows a sudden reluctance to discuss financial matters

While your staff may notice these red flags, that doesn’t always mean the member will be willing to listen. This is why it’s important to keep them informed. There are resources, such as Money Smart for Older Adults, that provide a free curriculum for staff to better educate members and caregivers on scams.

Step 2: Know Your Role in Protecting Members

Now that you know the signs of elder financial abuse and what it might look like, it’s time to shine the light on your role as a financial institution in a scenario like Kate’s. Implement operational protocols. By utilizing transaction holds or pauses, your credit union causes a delay, which buys time for further investigation. Another protocol to put in place is having trusted contacts. This idea designates a trusted person to receive fraud alerts without giving up account control. If there had been a trusted contact on Kate’s account, such as one of her sisters, they would’ve had the chance to talk to her about the situation before it went too far and cost her more than $39,000. This option adds an extra level of security for suspicious transactions happening on the member’s account. Speaking of suspicious activity, your credit union should always file a SAR when warranted. In scenarios like Kate’s, be sure to use the “Elder Financial Exploitation” category to report the suspected abuse.

Leveraging AI and technology for analytical insights. In a world full of technology and AI, it’s also important to use these tools to your advantage. Credit unions can implement new technology and monitoring systems such as AI-driven behavior analytics tools and historical analysis. By leveraging this technology, your credit union can monitor for anomalies like changes in spending, new devices or high-risk withdrawals, as well as compare current activity against past patters to spot deviations – both crucial tools for preventing financial elder fraud.

Know your regulatory obligations. As part of the Economic Growth, Regulatory Relief and Consumer Protection Act, financial institutions are able to report suspected cases of elder financial exploitation to law enforcement and still be in compliance with the Gramm Leach Bliley Act. This means your credit union can share personal information on behalf of the member without their consent if there is a real belief that elder financial abuse is taking place. The NCUA provided guidance for scenarios like these in 2013 as part of their 13-CU-08 release. In the release, the NCUA also encouraged all credit unions to ensure that their policies and procedures lined up with state and federal requirements when reporting elder financial abuse. To do that, it’s crucial that your institution understands what the reporting standards are for your state and makes them part of your process. In addition, utilize state and local agencies as partners in protecting your members.

Educate your members of the risks. Financial literacy encompasses all types of financial education for members, including that of elder financial abuse. They also need to be aware of the risks of this kind of exploitation for themselves as older members or as family members or friends of older individuals. Share information about the multitude of scams going around and host seminars (live or virtual) to talk about elder financial exploitation and let members ask questions. The most important part of educating your members on elder financial abuse is keeping the idea top of mind, so they never lose sight of the very real risks that could come to them.

Step 3: See the Results, Make a Difference

Now that we’ve put elder financial exploitation under the microscope, studying the scenarios, schemes, signs and so-very-important role of your credit union, the goal is to change the outcome and lessen the number of members this may impact. Perhaps if Kate had known more about scams like hers or reached out to her financial institution before acting on Tony’s repeated requests for money, she may not have had to endure such a hardship.

There’s no science to elder financial exploitation, but the process for minimizing occurrences of these underhanded schemes involves only a few simple steps. By understanding your responsibilities and educating both your staff and your members on the threats of elder financial exploitation, you may be able to change the results and make an actual difference.

Cindy Hagan works as the VP of compliance and fraud risk for Vizo Financial Corporate Credit Union. In this role, she administers and coordinates the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) program within the organization to ensure compliance with federal regulations, the NCUA and the industry standards of the FFIEC’s BSA/AML examination manual. She also provides compliance consulting and training services to credit unions.