On July 29, North Carolina Gov. Pat McCrory signed the Financial Exploitation of Older Adults bill, which requires all financial institutions to report when they suspect someone 65 or older, or a disabled adult over 18, is being financially exploited. It also protects the liability of those making the good faith report. Financial institutions may also ask members or customers to provide a list of trusted persons who could be contacted if fraud is suspected.
The legislation, which passed both the Senate and House unanimously, was supported by SECU, the North Carolina Credit Union League, the North Carolina Attorney General’s office, the North Carolina Bankers Association and others. It takes effect Dec. 1.
Sara Trexler, senior vice president/trust services at the $26.7 billion State Employees’ Credit Union in Raleigh, N.C., said the legislature authorized a task force in 2011 to recommend changes that would help combat financial abuse against seniors.
The nation’s second largest credit union had previously worked with the state attorney general and secretary of state back in 2007 and 2008 when it started its own reporting initiative and created training programs for employees.
Because SECU was ahead of the curve, the attorney general’s staff invited SECU to join in the task force’s pilot effort and share its training knowhow.
And, the task force called upon SECU’s expertise when revising the bill. For example, the law at first allowed any person to make a report, but financial institutions were specifically added to make it clear they were mandatory reporters sheltered from liability.
North Carolina is the fifteenth state to include financial institutions among those who are mandated to, or voluntarily can, report cases of financial abuse involving the elderly. Several states also require training of financial institution employees.
Trexler said financial abuse against senior citizens is increasingly drawing more attention, similar to the way domestic violence and child abuse gained prominence. Branch employees tend to know members well, she said, and notice when their cash patterns change.
“A typical scenario would be somebody mowing the grass and offering to do it on a regular basis,” Trexler said. “Soon, that person is cashing $500 checks every week. Employees wanted to know what to do. The attorney general’s office actually helped us and we also partnered with Adult Protective Services.”
In another case, a member began asking to withdraw $500 in cash each week. The second time it happened, the teller cautioned her that it was not a safe practice.
“It turned out she lived next to a halfway house, and residents there were walking her to the branch and waiting for her to get cash to give to them,” she said. “She thought they were her friends.”
Branch employees attempted to alert a family member, but when failed, they contacted the Adult Protective Services offices.
Next Page: Scammers' First Stop
Lauren Waley, the NCCUL’s director of legislative and regulatory affairs, said over the past couple years there have been a number of attention-grabbing headlines about seniors getting scammed, in some cases involving millions of dollars. Joint account holders are sometimes found to be the perpetrators.
“It may be a family member or a caregiver who comes into the branch with them,” Waley said. “The older person may not be comfortable making such a large withdrawal but they’re feeling pressure. You see from the expression on the member’s face that this may not be right. The law now puts a sense of liability on law enforcement to follow up with these things.”
Financial institutions are the first stop for criminals, Waley said.
“Having their involvement is vital. There’s definitely a balancing act imposing additional compliance burdens and doing what’s right. North Carolina is pretty progressive in what we implemented,” she said.
The new law also clarifies the ability of Protective Services to access financial records. Legislators kept in the bill a requirement that access to such records must be obtained by a subpoena or court order.
“The financial world is very attuned to the issue of financial privacy,” Trexler said. “Training is needed to educate people to the fact it’s okay to raise your hand and say, ‘Somebody should check on this person.’ But there’s a balance between providing help and still protecting financial information.”
With the law in place, the next step is to prepare staff at credit unions throughout the state. The league is sponsoring a train the trainer event in October, which will be conducted by the Consumer Financial Protection Bureau.
Whaley said materials are readily available to educate both staff and members, like the Money Smart for Older Adults program developed by the FDIC and CFPB. A quick check on the Money Smart web site offers an idea of what legislation such as North Carolina’s new law is aimed to prevent: schemes directed at veterans, identity theft, medical identity theft, scams that target homeowners, planning for unexpected life events and being financially prepared for disasters.
The league is also looking to expand the event to include speakers from North Carolina financial institutions, the Office of the Attorney General, the State Bureau of Investigations Crimes Investigation Division, the North Carolina Department of Health and Human Services, and representatives from local law enforcement agencies. Whaley said.
The task force will continue its work until May 2015 or until it issues a final report. The goal is to improve the law based on actual experience.