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Kiplinger's Personal Finance: Someone to watch over your finances
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Kiplinger’s Personal Finance

Kiplinger's Personal Finance: Someone to watch over your finances

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The same red flags that bank employees are trained to notice also can help family members protect loved ones.

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,” said Sam Kunjukunju, with the American Bankers Association Foundation. “The whole purpose of [the law] is to encourage a collaborative effort.”

The National Council on Aging estimates that financial exploitation costs older adults between $2.6 billion and $36.5 billion each year. Many victims never come forward.

“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,” said Tracy Swaim, with Heartland Financial USA 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, 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, said Joe Snyder, chair of the Philadelphia Financial Exploitation Prevention Taskforce. 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, with the American Bankers Association.

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 by reviewing the customer’s transaction history and the teller’s observations.

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.

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.

Send questions to moneypower@kiplinger.com. Visit Kiplinger.com for more on this and similar money topics.

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