Markets In Action

Elder Fraud bill signed into law, heightening senior protections

The threats to the financial security of American seniors are numerous:

Telemarketing scams; email fraud; exploitation by caregivers and family members; signature fraud and forgery; cognitive decline and dementia; and the list goes on.

It’s estimated that seniors lose more than $3 billion per year to financial exploitation, based on media reports. Even that towering number understates the full scope of the losses, since far too many incidents go unreported to even the authorities: according to the National Adult Protective Services Association, only 1 in 44 instances of fraud is reported.

With more than 10,000 Americans turning 65 years old each day until 2030, that disturbing trend is only likely to increase, with growing numbers of seniors and their families affected.

The good news is that policymakers in Washington are moving the ball forward on senior investor protection. On October 18, President Trump signed into law the Elder Abuse Fraud Prevention and Prosecution Act (S. 178), legislation sponsored by Senators Charles Grassley (R-Iowa) and Richard Blumenthal (D-Conn.). The new law is a significant step forward in the fight to protect seniors against abuse and exploitation.

Grassley and Blumenthal’s bipartisan bill is aimed at making it more difficult for unscrupulous actors to exploit vulnerable seniors by, among other things, strengthening law enforcement’s ability to investigate and bring charges in elder fraud cases. It also amends the federal criminal code definition of telemarketing fraud to include email marketing fraud. (The full text of the law is available online here.)

“This is good news for seniors and their loved ones,” Grassley said in a statement. “For our fellow Americans who are living out their Golden Years after a lifetime spent in the workforce, raising a family, paying taxes, serving their community and making America a better place for the next generation, this new law makes it harder for criminals to treat them as their golden goose.”

“By raising awareness, improving prevention and increasing prosecution, this bipartisan victory will help combat the unconscionable nationwide scourge of elder abuse for years to come,” Blumenthal said in a written statement to the Hartford Courant.

Heightening awareness of elder financial abuse and strengthening protections for vulnerable seniors is a top policy priority for financial industry leaders. In a March 2017 letter of support to the bill’s sponsors, Andy Blocker, SIFMA’s executive vice president for public policy and advocacy, praised the bill as “common-sense legislation” that would:

“… significantly expand education, prevention and prosecution tools to reduce crimes against seniors. The Elder Abuse Prevention and Prosecution Act increases training for federal investigators and prosecutors, equips each judicial district with one prosecutor having expertise with elder abuse cases, supports state efforts and interstate initiatives to combat elder abuse, and overall strengthens the ability of our justice system to respond when elder abuse is identified, including when broker-dealers report suspected abuse.” 

Progress is also being made in the regulatory space to better protect senior investors. In February 2018, amendments to FINRA Rule 4512 and new FINRA Rule 2165 will go into effect.  Together, these rules provide broker-dealers with additional tools to help protect their senior clients. Specifically, FINRA Rule 2165 provides broker-dealers with the ability to temporarily pause a disbursement so that an investigation into suspicious activity can take place before a client’s funds leave the account.

SIFMA has led the way in calling for greater protections for seniors, and more needs to be done. The financial industry continues to strive to improve its own best practices and customer service in order to protect clients and their families—but there are important policy measures at the state and federal level that would help. Project Invested detailed many of those policy interventions to halt senior financial abuse.

In recent years, progress on key issues in the nation’s capital has been stymied by gridlock and partisan disputes. The passage and signing of the Elder Abuse Fraud Prevention and Prosecution Act and the implementation of FINRA Rules 2165 and 4512 are a welcome example of how policymakers can work to achieve positive results for Americans. Here’s hoping we see more such results soon on other key priorities.


Further reading

The most common senior financial abuse, and investor protections that stop it 

Senior Safe Act leaders 2017 investor protection agenda 

Financial scammers target vulnerable seniors – here’s what to look for 

How to prevent senior financial abuse