Federal regulators’ announcement that financial institutions would not violate the privacy of elderly customers by reporting suspicions of financial abuse to authorities is terrific news.
It adds another layer of protection around a group that sorely needs it as a prime target for thieves.
“They make attractive targets because they often have higher household wealth, whether it is in retirement savings or home equity,” said Richard Cordray, director of the Consumer Financial Protection Bureau. “Older Americans are also more likely to experience cognitive decline, which can impair their capacity to recognize financial exploitation and fraud.”
There are two critical areas in an elderly person’s life: the professionals who take care of their health and the bank or credit union that keeps their money.
Senior advocates have enlisted the help of doctors, nurses and other health care providers to be on the alert for signs that an elderly patient is having trouble doing simple mathematical calculations or is confused when reading a simple bill or financial statement.
But employees at financial institutions may be able to flag irregular transactions, account activity or behavior that signals financial abuse sooner than anyone else can.
“Many older consumers are known personally by the tellers in their local banks and credit unions,” Cordray said.
A federal financial privacy law adopted in 1999 generally requires that a financial institution notify consumers and give them a chance to opt out before providing nonpublic personal information to a third party.
Financial institutions have expressed concern about violating the law if they report details of suspected financial abuse of an elderly customer to a third party.
“Today’s guidance clarifies that it is generally acceptable under the law for financial institutions to report suspected elder financial abuse to appropriate local, state or federal agencies,” regulators said in their announcement.
Only a “small fraction” of financial exploitation incidents among the elderly are reported, Cordray said. That’s not surprising, considering the embarrassment of victims.
But their losses aren’t peanuts, often running in the tens to hundreds of thousands.
If an investment salesperson comes to you unsolicited, ask how they got your name. And don’t give in to high-pressure sales tactics.
“High-pressure sales tactics are a common feature of investment fraud,” said the Financial Industry Regulatory Authority. “If you are being pressured to make a decision quickly, end the conversation.”
The elderly need all of us watching out for them, and that includes the institutions that they do the most business with and that they trust.