The CFPB has issued a new elder financial abuse report, “Report and Recommendations: Fighting Elder Financial Exploitation through Community Networks,” and a related resource guide, “A Resource Guide for Elder Financial Exploitation Prevention and Response Networks.”

While the CFPB found that hundreds of counties around the country have developed strong, collaborative elder financial exploitation prevention and response networks, it also found that networks do not exist in most communities with only 25 percent of all U.S. counties currently having a network for addressing elder abuse issues.  In developing the report, the CFPB attended network meetings and interviewed representatives from 23 elder protection networks and various experts in the field.  In the report, the CFPB highlights “what such networks do, how they work, how they can work even better, and how they can be established.”  The report found that these collaborative networks improve the prevention, detection, reporting of, and response to elder financial exploitation.

In the report, the CFPB makes recommendations to existing networks and key stakeholders for how to develop and improve their communities’ efforts to combat elder financial abuse.  These recommendations include:

  • Professionals and volunteers working with or serving older adults, such as bankers, lawyers, law enforcement officers, prosecutors, and social workers, should create networks in communities where they currently do not exist, especially in communities with a large number of older people.  Networks should seek participation of law enforcement as network members.
  • Because financial institutions “are uniquely positioned to detect that an elder account holder has been targeted or victimized and to take action,” networks should seek to include financial institutions as members and financial institutions should seek to join and participate in local networks.
  • Networks in areas with older populations of diverse linguistic, ethnic, and racial backgrounds should seek to engage stakeholders that can serve these populations and deliver appropriate educational and case review services.

The resource guide covers the steps involved in starting and operating a network, such as the role of coordinators, finding network members, funding, and activities.  The guide also describes available CFPB resources.  In the guide, the CFPB again highlights the role of financial institutions as network participants and includes the American Bankers Association’s website as a source of contact information for local, regional and state entities to help networks seeking to partner with banks.

Earlier this year, the CFPB issued an advisory and a report with recommendations for banks and credit unions on how to prevent, recognize, report, and respond to financial exploitation of older Americans.  The advisory and report were the focus of a webinar conducted by Ballard attorneys.

As we have previously observed, elder financial abuse prevention can be viewed to fall within a financial institution’s general obligation to limit unauthorized use of customer accounts as well as its general privacy and data security responsibilities.  As a result, a financial institution that fails to implement a robust elder financial abuse prevention program could be targeted by the CFPB for engaging in unfair, deceptive, or abusive acts or practices.  In addition, a bank or credit union subject to CFPB supervision should expect CFPB examiners to look at its program for preventing elder financial abuse.  Many states have laws that address elder financial abuse.

 

The American Bankers Association has reported that on May 25, 2016, the CFPB will hold a webinar on how banks and credit unions can protect older consumers from financial exploitation.  The webinar will highlight the CFPB’s March 2016 report that contained recommendations for banks and credit unions on how to prevent, recognize, report, and respond to financial exploitation of older consumers.

On May 6, 2016, Ballard Spahr attorneys conducted a webinar, “The CFPB’s New Report on Elder Abuse and What Financial Institutions Need to Do in Response.”

The CFPB has issued an advisory and a report with recommendations for banks and credit unions on how to prevent, recognize, report, and respond to financial exploitation of older Americans.  The CFPB’s press release describes the recommendations as “an extensive set of voluntary best practices” and, in his prepared remarks, Director Cordray stated that the recommendations “are not binding regulations; they are simply suggestions we urge institutions to consider in serving their customers.”

On May 6, 2016, from 12:00 PM to 1:00 PM ET, Ballard Spahr attorneys will conduct a webinar on the advisory and report.  A link to register is available here.

While the CFPB’s recommendations are not issued as “guidance” or otherwise framed as requirements, because they represent the CFPB’s expectations for “best practices,” banks and credit unions should carefully consider the recommendations in creating and implementing programs to detect and report elder financial abuse.  Elder financial abuse prevention can be viewed to fall within a financial institution’s general obligation to limit unauthorized use of customer accounts as well as its general privacy and data security responsibilities.  As a result, a financial institution that fails to implement a robust elder financial abuse prevention program could be targeted by the CFPB for engaging in unfair, deceptive, or abusive acts or practices.  In addition, a bank or credit union subject to CFPB supervision should expect CFPB examiners to look at its program for preventing elder financial abuse.

The advisory provides a summary of six general recommendations that are described in the report with greater detail.  The report includes case scenarios illustrating various ways in which older consumers can be financially exploited and an extensive list of warning signs or risk indicators of elder financial exploitation.

The CFPB’s recommendations address the following areas:

  • Development, implementation, and maintenance of internal protocols and procedures for protecting account holders from elder financial abuse
  • Training of management and staff to prevent, detect, and respond to financial abuse
  • Use of technology to flag transactions or account activity that may signal financial abuse  (The report notes that the internal controls that financial institutions have implemented in furtherance of Bank Secrecy Act and Anti-Money Laundering compliance “include effective detection capabilities that can recognize distinct risk indicators for elder fraud.”)
  • Reporting of suspected financial abuse to relevant federal, state and local authorities  (The report notes that numerous states require financial institutions to report suspected abuse and that, in 2013, the CFPB and seven other financial regulators issued guidance to clarify that financial institutions are generally able to report suspected elder financial abuse to the appropriate authorities without violating federal privacy laws. )
  • Protection of older account holders through compliance with the Electronic Fund Transfer Act and Regulation E requirements for extending time limits and unauthorized electronic fund transfers, establishing procedures for providing advance consent to sharing of account information with trusted third parties, and offering  age-friendly services such as providing information about planning for incapacity, honoring powers of attorney, and offering protective opt-in account features.
  • Collaboration with organizations on the local, regional and state level, such as developing relationships with law enforcement and Adult Protective Services and participating in and supporting educational efforts.

 

 

The CFPB recently issued an advisory for older consumers about asset recovery companies that target older consumers who are past victims of fraud, such as bogus timeshare investments and in-home business opportunities.

The advisory describes a typical asset recovery scam as one in which the  asset recovery company contacts a defrauded older consumer claiming it can get the consumer’s money back for an upfront fee of several hundred to thousands of dollars.  Once the consumer pays the upfront fee, the company fails to perform any service that the consumer could not have done on his or her own.

The advisory provides warning signs to help consumers avoid becoming a victim of an asset recovery scam, such as requests for upfront fees to  recover money and claims of insider information and connections (when the company will do no more than submit complaints to free consumer complaint resources.)  It also provides advice about steps a consumer who believes he or she has been a victim of fraud can take, such as alerting the consumer’s bank or credit card company immediately, reporting the scam to the consumer’s local law enforcement office, and submitting a complaint to the FTC.

The CFPB indicated that it issued the advisory because its review of complaints submitted by consumers indicated that older consumer were being targeted by asset recovery scams.  Unlike the CFPB’s use of complaint data to publish misleading statistics, the advisory can play a helpful role in protecting older consumers from financial exploitation.

In October 2013, the CFPB released four “Managing Someone Else’s Money” guides for financial caregivers, particularly those who handle the finances of older Americans.  The booklets were designed for four different categories of financial caregivers: agents under powers of attorney, court-appointed guardians, trustees, and government fiduciaries, such as someone serving as a Social Security representative payee or Veterans Affairs fiduciary.

Earlier this week, in conjunction with an event about financial management for seniors and their caregivers held in Springfield, Virginia, the CFPB issued a set of the four guides specific to the state of Virginia.  The guides can be accessed on the CFPB’s website and free print copies (including bulk orders) can be ordered online.

The CFPB also plans to issue state-specific guides for Arizona, Florida, Georgia, Illinois, and Oregon.  (It seems likely that the states selected by the CFPB for state-specific guides are the states with the largest populations of older individuals.)  In addition, the CFPB will be providing tips and templates for legal and aging experts in other states to adapt the guides for their states.

The CFPB has announced that it will hold an event in Springfield, Virginia on August 17, 2015 about financial management for seniors and their caregivers.  The event will feature remarks from Director Cordray and Virginia Attorney General Mark Herring and financial caregiving experts will be in attendance to answer questions.  The event is open to the public but an RSVP is required.

On July 13, 2015, in his remarks at the White House Conference on Aging, Director Cordray indicated that the CFPB “will release an advisory later this year to help financial institutions prevent, recognize, and report elder financial abuse.”  It is possible the advisory will be issued in conjunction with the August 17 event.

The prevention of elder financial abuse has been a continuing CFPB focus.  CFPB initiatives include a guide issued in June 2014 to help operators and staff of nursing facilities and assisted living residences protect residents from financial abuse, a report issued in June 2015 on the results of a CFPB focus group study of reverse mortgage advertisements, and a consumer advisory also issued in June 2015 warning consumers about the false impressions that might result from reverse mortgage advertisements and highlighting facts consumers should consider when viewing such advertisements.

 

The Financial Services Roundtable and CFPB are joining forces in a nationwide public-private initiative to promote effective financial education.  According to an announcement posted on the Roundtable’s website, the CFPB and Roundtable plan to work together to facilitate the gathering and sharing of information about effective financial education strategies, to encourage adoption of financial education initiatives, especially in K-12 schools and in the workplace, and to protect older Americans from financial exploitation.  The Roundtable indicated on its website that the announcement followed a closed meeting of financial industry executives and CFPB officials.

The CFPB and Roundtable plan to host a series of working groups and listening sessions at various locations throughout the country to determine best practices and a path forward.

We have often commented that we consider the CFPB’s Dodd-Frank mandates to improve the financial literacy of American consumers and protect older Americans from financial exploitation deserving of industry support.  We applaud the Roundtable for partnering with the CFPB in furtherance of these worthwhile mandates.

 

Recently the CFPB joined the FDIC’s program against financial abuse of senior citizens by cooperating on the creation of a Spanish language tool for Hispanic seniors.  We have previously blogged about the CFPB’s initiatives to prevent elder financial abuse.  This new product is a Spanish-language version of a pre-existing FDIC publication in English, Money Smart for Older Adults, which is a financial resource tool that is distributed free of charge and is designed to help adults age 62 and older and their caregivers prevent, identify, and respond to elder financial exploitation.

Inaugurated in 2001, the Money Smart program is a comprehensive financial education curriculum designed to help low- and moderate-income individuals outside the financial mainstream enhance their financial skills and create positive banking relationships.  The specific, instructor-led module for senior citizens was developed by the two agencies last year, and the Spanish-language version, Money Smart Para Adultos Mayores: Prevener la Explotaciόn Financiera, is the latest offering.  A participant/resource guide and PowerPoint slides in Spanish can be downloaded from the FDIC website and can be ordered in hard copy from the CFPB website.

This effort to provide financial education to seniors for whom English is not the first language is laudable, to be sure, but it raises an obvious policy question.  In recent years the Justice Department’s Civil Rights Division has investigated, pressured, and entered into agreements with several states in connection with providing interpreters for non-English speaking litigants in the courts, not just criminal defendants but civil litigants and not just Spanish-speaking but all non-English-speaking immigrants.  If federal agencies provide assistance to Hispanic immigrants, must they also provide foreign language financial education products to other elderly people, e.g., immigrants from China, Cambodia, former Soviet republics, and so forth?  Is failure to do so discriminatory?

The CFPB has issued a new guide designed to help operators and staff of nursing facilities and assisted living residences protect residents from financial abuse.  The guide indicates that it is for administrators as well as business office staff, social service personnel, and any staff members involved in the admissions process.  It includes information about warning signs of financial abuse and steps for preventing and deterring such abuse. 

In October 2013, the CFPB released four booklets to serve as guides for financial caregivers, particularly those who handle the finances of older Americans.  The guide issued today represents the CFPB’s latest efforts directed at carrying out its very worthwhile Dodd-Frank mandate to help older Americans avoid financial exploitation. 

Another of the CFPB’s very worthwhile Dodd-Frank mandates is to develop initiatives to improve the financial literacy of consumers.  Earlier this week, Director Cordray announced that the CFPB was partnering with Rhode Island’s Office of Library and Information Services to make the state’s libraries into neighborhood centers of financial education.  The new partnership is part of the CFPB’s Community Financial Education Project, whose goal is to provide librarians with financial education resources and tools.  Director Cordray indicated that the project now includes more than 50 library systems.  

Yesterday, we conducted a webinar to assist financial institutions in developing elder financial abuse prevention and reporting programs.  In the webinar, we reviewed the Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults issued late last year by the CFPB and prudential bank regulatory agencies, surveyed state elder abuse prevention laws, explained the reporting required by federal and state laws, and discussed how to create an effective elder financial abuse prevention program to detect possible elder financial abuse and to ensure proper reporting.