How the Senior Safe Act Protects Your Finances

Few seniors know it but they have a special layer of defense against fraud: employees of financial services firms who are trained to spot and report suspected financial abuse of customers over age 65.

Although frontline employees have been asked to flag suspicious behavior to authorities for years, the Senior Safe Act of 2018 made it easier for financial institutions to work with prosecutors. “Elder fraud is a complex issue,” says Sam Kunjukunju, senior director of bank community engagement with the American Bankers Association Foundation. “The whole purpose of [the law] is to encourage a collaborative effort.”

The National Council on Aging (opens in new tab) estimates that financial exploitation costs older adults between $2.6 billion and $36.5 billion each year. Many victims never come forward. The National Adult Protective Services Association (opens in new tab) estimates that only 1 in every 44 cases of financial abuse is even reported.

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Anyone can become a victim. “We’ve seen folks living Social Security payment to Social Security payment have their entire life savings drained by a home health aid worker, and we’ve seen people who retired from financial management get convinced to wire money to a fake charity,” says Tracy Swaim, enterprise fraud manager at bank holding company HTLF (opens in new tab) in Dubuque, Iowa.

Financial institutions have been flagging more incidents since the law was enacted. In 2020, more than 36,000 reports of suspected elder financial abuse were filed by depository institutions with the Financial Crimes Enforcement Network (opens in new tab), up 49% from 2018.

Reporting incidents is one thing; successfully prosecuting them is another. One of the biggest barriers to investigating potential elder exploitation is obtaining financial records, says Joe Snyder, chair of the Philadelphia Financial Exploitation Prevention Taskforce (opens in new tab). Because the Senior Safe Act protects financial firms that report suspected abuse, the expectation is they will more willingly share documentation that can lead to prosecutions.

The goals may be sound, but not everyone feels comfortable having their financial transactions or behavior scrutinized. Generally, only supervisors are authorized to report details, and that’s after undergoing specialized training that includes protecting the customer’s privacy. A senior manager usually will contact the authorities, including law enforcement or adult protective services, if it’s warranted, says Robert Rowe, senior counsel of regulatory compliance and policy at the American Bankers Association (opens in new tab). The reporting institution may also take steps, such as truncating an account number and providing descriptions of the activity rather than the full transaction information, to help protect sensitive information. The law only covers reports made in “good faith” and doesn’t protect employees who abuse their power.

Some institutions will contact the police if they feel a customer needs immediate help. Otherwise, the matter is investigated further internally by reviewing the customer’s transaction history and the teller’s observations. For example, a teller may become suspicious if a customer withdraws a large sum of money but is reluctant to discuss it. That could be a sign of a scam artist wooing a potential victim with a cash prize that requires paying a fee first. The winner is usually told not to discuss the prize with others. A suspicious teller may follow up with the customer by phone later.

Strangers aren’t the only perpetrators of elder financial abuse. Sometimes it’s someone the victim knows, which is more damaging financially. The average loss was $17,000 when a stranger was involved and $50,000 when the victim knew the suspect, according to the Consumer Financial Protection Bureau (opens in new tab). “It’s a little different when the son is abusing his power of attorney,” says Steve Reider, president of consulting firm Bancography (opens in new tab). “We aren’t family counselors so that’s a harder area for a bank to intercede in.”

The same red flags that bank employees are trained to notice also can help family members protect loved ones. Those signs include checks written to strangers, ATM withdrawals at odd times, unpaid bills and newly drawn up financial documents that your loved one doesn’t understand.