Quandary: Bankers look for best way to end elder abuse

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Bankers are often first to notice when an older adult is being bilked out of savings or retirement money by scammers and swindlers.

They’re first to see the signs — confusion about missing money or unusually large withdrawals. And when they see those indicators, they’re encouraged to report them, but they’re not required to do so.

Now, a statewide taskforce has been formed to discuss whether the state ought to make it mandatory to report suspected elder abuse.

Bankers would be required to report suspected financial exploitation of at-risk adults, defined in Colorado as those older than 60 or anyone 18 and older with a disability.

But reporting about someone’s banking activity could present a conflict for bankers who vehemently regard confidentiality as their No. 1 duty to clients. It’s an issue that could pit the rule of law against the right to privacy.

“It’s an impossibility the current committee is struggling with — trying to find a middle ground,” said Barbara Walker, Independent Bankers of Colorado executive director.

Financial fraud

Elder financial abuse is no small problem, said AARP Foundation Program Leader Amy Nofziger. Last year, the AARP Foundation in Colorado received financial-abuse reports that added up $6.6 million in the state. Some said they were cheated out of $2,500. Others had as much as $20,000 stolen.

MetLife’s Mature Market Institute reported people over age 60 were scammed out of $2.9 billion nationally in 2010.

What’s even more alarming about the numbers, Nofziger said, is that only one in six victims will report the crimes.

“That makes it harder to get a clearer picture of how big the problem is,” she said.

AARP Foundation, through its Elder Watch program, buys up the same marketing lists of names that scammers buy and a team of volunteers tries to beat the swindlers to the phone lines to warn seniors that scammers are after their money. The scammers will try every trick in the book, claiming they are a grandchild who needs to be bailed out of a foreign jail; or they pretend to be a bank examiner who needs their help catching a thieving bank teller. But the caller needs the person’s bank account number to help.

Last year, AARP volunteers made 75,000 calls to targeted seniors and received 4,500 calls from people describing various financial scams.

“We can act quickly to reports in the media,” Nofziger said. “When the tsunami hit or during the Census, we can change our script and call people to warn them of those scams.”

Encourage vs. mandate

Older clients often turn to their bankers with financial questions before family members, said John Whitten, Colorado Springs State Bank senior vice president. It only makes sense that bankers be frontline mandatory reporters, he said. He favors mandatory reporting by bankers.

“Yes, give us some guidelines,” he said. “The welfare of our customers and welfare of the elder community is an issue.”

Colorado is among the few states that do not have a mandatory reporting law, for any agency or caregiver, when it comes to elder abuse. Instead, the Colorado law stops short of the mandatory requirement and merely urges personnel of banks, savings and loans associations, credit unions and other financial institutions as those who are urged to report suspected abuse.

A few years ago, Colorado bankers developed a training manual that identifies the red flags. Signs include a customer who is worried about being evicted or institutionalized if the “caregiver” does not get paid; or if the customer is accompanied by a stranger who is encouraging the customer to withdraw money.

“Most banks, in general, try to know their customers,” said Shawn Howell, Central Bancorp executive vice president of operations. “In general, banks train employees on abuse and the red flags.”

Some states, including Florida, Georgia, Maryland and California, have made it mandatory for financial institutions to report suspected abuse.

One of the key issues raised by bankers is whether a bank would face civil or criminal penalties for violating federal laws that regulate disclosure of personal financial information, said Jenifer Waller, Colorado Bankers Association senior vice president.

“That will be a huge challenge,” Waller said. “We are trying to navigate it — we are charged with keeping all information confidential.”

Waller, who is on the statewide elder abuse taskforce, said there may be a way for bankers to file suspected abuse against at-risk adults under existing guidelines banks follow for filing suspicious activity. But, the question still remains of where the reports get filed, Waller said. She added that mandatory reporting in the state will still clash with federal legislation; therefore, laws must be changed to match.

“This one is challenging,” she said “We have to balance the law with protection of privacy — we take it very seriously.”

Walker said a law on mandatory reporting should include a fail-safe that provides immunity for a banker who did not see the signs of abuse and did not report it; or a banker who reported suspicious activity, which meant revealing personal financial information.

“We have always been concerned about mandatory reporting,” Walker said. “If we, in good faith, fail to report, that can be a significant liability.”

The scams

The senior population is especially vulnerable to scammers, Nofziger said. They are people who come from an era when a handshake meant something and trust was more easily given by instinct.

But just as the senior population is becoming savvier to the wicked ways of financial scammers, so too are the thieves becoming more sophisticated.

With 10,000 baby boomers turning 65 every day, there have been more reports of investment scams, Nofziger said.

“With the downturn in the economy, people don’t have as much saved in retirement as they thought they would,” she said. “We have seen more investment scams exposed.”

Mostly, however, it comes down to loneliness, said Lorri Orwig, Silver Key director of resource development.

“There is so much isolation and loneliness in our senior population,” Orwig said. “They are crying out in so many ways to be acknowledged. When someone calls to sell a magazine or for an opinion poll, they believe that person is their friend and it becomes easier for someone to take advantage of them because they are lonely.”

One scammer was charging a Colorado Springs man $200 to drive him to Cripple Creek and then taking gifts from him too. A banker alerted Silver Key, a nonprofit organization that offers a variety of services to seniors, to the possible fraud, Orwig said.

“We did a visit with the gentleman; he was being financially exploited,” Orwig said. “How we knew is that the man tried to write Silver Key a check for $200 for the visit.”

Silver Key has a money-management program to help people make budgets and pay their bills.

“If all of a sudden there is a lot of money missing or checks being written, this gives another set of eyes into the senior’s life to say this seems wrong,” she said.

The next step in protecting seniors, she said, is mandatory reporting, even by banks. She calls it erring on the side of safety.

“If you go with your gut,” Orwig said, “if you are thinking something sounds off and you are only urged to report it, someone might fall through the cracks.”

Falling prey

1 of every 5 Americans over age 65 was financially swindled in 2010.

Americans over age 60 were cheated out of $2.9 billion in 2010.

Colorado residents over age 60 reported $6.6 million stolen from them via financial scams in 2011.

 

The scams

Grandparent scheme

A person calls saying they are a grandchild in need of financial help, but don’t tell Mom and Dad. Caller asks for money to be wired right away.

Fake lottery/sweepstakes

Caller entices senior to buy inexpensive trinkets or magazine subscriptions in order to have their name entered in the contest. In another version, the elderly person receives an authentic-looking check, with notification they’ve already won the Jamaican lottery. The scams require the “winner” to wire back a share of their “winnings,” which will initially clear the bank but later prove counterfeit.

Discount prescription scam

Caller offers seniors prescription drugs at a 50 percent discount, but the program requires a $200 “membership fee.” Caller asks for seniors’ credit card numbers.

Credit card fraud call

Caller identifies themselves as credit card company employee inquiring about a potentially fraudulent purchase. When the senior denies making the purchase, the caller offers to reverse it but will need the verification number from the back of the credit card.

‘Help for Haiti’ hustle

Door-to-door solicitors seek donations for charitable organizations. They may also call and purport to be soliciting funds for the Red Cross.

Sources: MetLife, Investor Protection and BankRate.com

 

Resources

Colorado Springs Senior Resource Council will host its annual Healthy Living Conference Sept. 28, which will feature a discussion on elder financial-abuse prevention. Call 260-0744.

Silver Key offers the class “Money Management,” which assists seniors with budgets and bills. Call 884-2300.