CFPB Updates Advisory on Reporting Elder Financial Abuse

Banks and credit unions can help take action to inform local, state or federal enforcement if they notice suspicious activity on a consumer’s account.

7/24/2019 1:00 PM

CFPB Updates Advisory on Reporting Elder Financial Abuse

Financial institutions are urged to report incidents where they expect an older adult is the target of financial exploitation, according to an updated advisory from the Consumer Financial Protection Bureau.

The advisory provides new information on reporting suspected financial exploitation based on federal and state legislative changes while addressing privacy concerns of financial institutions who may file reports with local, state and federal authorities.

“The bureau is renewing its efforts to alert banks and credit unions to elder financial exploitation as they are uniquely positioned to detect that an older account holder has been targeted or victimized, and to take action,” CFPB Director Kathy Kraninger said in a news release.

Financial exploitation has a significant impact on older populations. A 2019 research analysis from the bureau shows an average loss of $41,800 among adults over the age of 70 recorded in Suspicious Activity Reports (SARs) filed with the federal government. Seven percent of adults lost over $100,000, according to the research analysis of 180,000 reports.

The bureau’s analysis also finds that just 28% of SARs are forwarded directly to Adult Protective Services, law enforcement or other authorities by financial institutions.

As of April 2019, 26 states plus the District of Columbia require reporting of suspected elder financial exploitation by financial institutions or specified financial professionals, according to the CFPB.

While third party agencies in the accounts receivable management industry working with financial institutions are not part of the bureau’s advisory, it’s important to note trends and guidance in issues impacting consumers and report any red flags back to clients.

In its advisory, building on original recommendations issued in 2016, the CFPB notes that “banks and credit unions are uniquely positioned to detect that an older account holder has been targeted or victimized, and to take action” and offers voluntary best practices to aid financial institutions.

It also addresses financial institutions’ privacy concerns with reporting suspected financial exploitation and clarifies that doing so, in general, is not a violation of privacy provisions of the Gramm-Leach-Bliley Act (GLBA). A guidance on GLBA by eight federal regulatory agencies with authority to enforce the privacy provisions of the law also provides clarity on this issue and the CFPB’s advisory includes discussion of new laws in effect since 2016, such as the Senior Safe Act.

In the advisory, the CFPB offers several categories of voluntary best practices to help financial institutions prevent elder financial exploitation and assist when needed, including:

  • Developing and implementing internal protocols and procedures for protecting account holders from elder financial exploitation;
  • Training management and staff to prevent, detect, and respond to suspicious events;
  • Detecting elder financial exploitation by harnessing technology;
  • Reporting all cases of suspected exploitation to relevant federal, state and local authorities;
  • Protecting older account holders by complying with the Electronic Fund Transfer Act (EFTA) and Regulation E and by offering age-friendly services that can enhance protections against financial exploitation; and
  • Collaborating with other stakeholders such as law enforcement, adult protective services, and service organizations.

Overall, timely reporting of suspected elder financial exploitation is critical and the CFPB reports policymakers are seeking ways to increase and enhance these reporting mechanisms.

This advisory can also be a helpful tool for ACA members participating in financial literacy projects in their communities, such as the recent educational presentation by Denise Day, president of Day Knight & Associates, at the Washington Seniors Wellness Center before the Washington Insights Fly-In in May.

For more information on general privacy compliance under the GLBA, ACA members may visit the ACA SearchPoint website and click on the “Privacy” tab.

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