Under the Microscope: Elder Financial Abuse and the Role of Your Credit Union

Meet Edna. She’s a very sweet 68-year-old woman who just retired from a long career as a school bus driver. She’s a mother, a grandmother, lover of cats, avid player of the lottery, community advocate and maker of the best macaroni and cheese you’ve ever tasted. She recently received a letter in the mail informing her that she’d won a lottery in the amount of $15,000 – how exciting!? But there’s a catch. The lottery company needs her to send money to cover the fees to process her winnings before they can send her a check. Edna complies. Now in addition to being the bus driver, mother and cat enthusiast everyone knows and loves, Edna has also become a victim of elder financial exploitation.

After all the good Edna has done in her life and all that she had earned and achieved in her 68 years, how is it that she has become one of many in a long line of financial elder abuse victims? It’s actually quite common – maybe more so than you think. In fact, it’s a $3-36 billion a year problem for older adults.

And yet, 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 banks and credit unions don’t know how they can be of assistance? With all these questions, it’s time we put this issue – which has caused Edna and maybe even someone you know considerable financial and emotional stress – under a microscope.

What does elder financial exploitation look like?

From your credit union’s perspective, there are some scenarios involving your older members that might tip you off to potential financial exploitation: erratic financial behavior and customer-caregiver interactions. Erratic financial behaviors might signify that the member is actively (and oftentimes, unknowingly) participating in a scam. You will likely notice big changes in the member’s financial assets, spending and withdrawal patterns and demeanor regarding transactions. 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 dating sites, if we’re talking about the romance schemes. And more recently, there are COVID-19 scams going around playing on the health fears of elders. These can claim to provide personal protective equipment or even vaccines against the virus in exchange for money.

But even more likely – and far more heartbreaking – is the fact that family members or caregivers are often the culprits behind elder financial exploitation. 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 customer 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

What role does your credit union play in elder financial exploitation?

Now that you know what elder abuse might look like – the signs and sources of abuse – it’s time to focus the microscope even further and shine the light on your role as a financial institution in a scenario like Edna’s. There are three things your credit union should do if you suspect or are made aware of elder financial abuse: train your employees on the signs, know your regulatory obligations and educate your members of the risks.

Train your employees. In many cases, elder members may not even know they are involved in a scam. Or, if they are involved with a family member or care giver who is trying to take advantage of them, they may not have the ability to speak up. That’s why training your employees to recognize the signs above is crucial to preventing elder financial abuse. Your staff may be what stands between a member and financial collapse, so show your employees what to look for and how to be an advocate for older members.

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 released guidance on this situation 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.

Seeing the Results

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 Edna had reached out to her credit union before acting on the lottery letter, or if she had been made aware of such scams before she received it, she wouldn’t have become a victim.

There’s no science to elder financial exploitation, but the formula for minimizing occurrences of these underhanded schemes is actually pretty simple. By understanding your reporting responsibilities and educating both your staff and your members on the threats of elder financial exploitation, perhaps you can have a hand in changing the results.

For questions on wire fraud, please contact our risk management team at riskmanagement@vfccu.org.

Cindy Hagan works as the compliance administrator 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.