The CFPB’s Office of Financial Protection for Older Americans has issued a new report on combating elder abuse. Titled “Suspicious Activity Reports on Elder Financial Exploitation: Issues and Trends,” the report draws on a non-public data derived from Suspicious Activity Reports (SARs) filed with federal regulators from 2013 to 2017.
This data became available to the CFPB because, in 2013, FinCEN introduced electronic SAR filing with a designated category for “elder financial exploitation.” This development followed a 2011 advisory in which FinCEN emphasized SARs as a mechanism by which financial institutions, such as banks and money services businesses (MSBs), could combat elder financial exploitation (EFE). The 2011 advisory did not define the term EFE, but the CFPB’s newly published study describes EFE as “the illegal or improper use of an older person’s funds, property or assets.”
The study’s key findings are as follows:
- Financial institutions reported over 180,000 suspicious activities targeting older adults since 2013, totaling over $6 billion ($1.7 billion in 2017);
- MSBs have filed an increasing share of EFE SARs, accounting for 58% of SARs filed in 2017, compared to just 15% in 2013;
- Nearly 80% of EFE SARs involved a monetary loss to older adults and/or to the financial institution filing the SAR, though older adults’ monetary losses ($34,200 on average) were more common and greater than filers’ losses ($16,700 on average);
- Among older adults who lost money, one-third were ages 80 and older, while adults ages 70 to 79 had the highest average monetary losses;
- Monetary losses were more common and greater when the older adult knew the suspect;
- Types of suspicious activity varied significantly by SAR filer, with a large percentage of EFE SARs filed by MSBs reporting scams (i.e., schemes involving the transfer of money to a stranger), while the majority of EFE SARs filed by depository institutions were not categorized as scams;
- More than half of EFE SARs involved a money transfer, and 44% involved either a checking or savings account, although checking or savings accounts had the highest average monetary losses ($48,300 per EFE SAR);
- The suspicious activity reported in a SAR took place, on average, over a four-month period; and
- Fewer than one-third of EFE SARs indicated that the filer reported the suspicious activity to a local, state or federal authority.
Importantly, the study describes financial institutions as being “uniquely positioned” to address EFE, calling on MSBs and banks to play a more active role in preventing losses to older persons. In particular, the fact that MSBs and depository institutions generally reported differing types of EFE presents opportunities for tailoring interventions based on the type of activity that a given type of financial institution sees on a regular basis. The study suggests a few practical steps for potential loss prevention. For example, MSBs could provide conspicuous warnings about scams, while depository institutions can improve fraud detection technology. The study notes that a number of states have laws that allow banks to implement transaction holds when staff observe financial exploitation, and such statutes often provide immunity for institutions and staff that take protective steps within proscribed timeframes.
Likewise, the study describes the relatively low rate at which suspected EFE was reported to adult protective services, law enforcement or other authorities as a “missed opportunity.” So, financial institutions should consider whether it may be appropriate to expand reporting procedures for instances where EFE is suspected, keeping in mind that state laws vary as to when protective steps may be taken and what types of actions are permissible.