2010 Law Aims to Thwart Elder Financial Abuse (USA)

Money & the Law: 2010 law aims to thwart elder financial abuse

January 14, 2012 JIM FLYNN

SPECIAL TO THE GAZETTE

It’s well recognized that financial abuse of the elderly is a serious and growing problem. Deceit, threats and intimidation are all tools of the trade when manipulating an elderly person into transferring funds or property to someone else.

In 2010, the Colorado Legislature took a small step in the direction of addressing this problem. Senate Bill 10-042, which has now gone into effect, requires financial institutions — meaning banks, savings and loans and credit unions — to offer customers who are “at-risk” adults the opportunity to sign an information release consent form.

This form, when signed, will allow a financial institution to turn over account records to law enforcement and social services agencies when the financial institution suspects its customer is a victim of financial abuse.

Before the passage of Senate Bill 10-042, financial institutions could, if they wanted to, offer this service. Now, however, they must offer the service to all customers they know to be at-risk adults.

Distressing as this is to some of us, the Colorado Legislature considers anyone 60 or older to be an at-risk adult. Adults can be at risk at an earlier age if they suffer certain impairments.

A major premise behind this law is that financial institutions are in a good position to detect elder financial abuse. In that regard, a fundamental principle of banking has historically been: Know your customer. And, going back a few years, financial institutions did know their customers, and were keenly observant of changes in a customer’s faculties, circumstances and finances. Whether this is still true in an age of more computers and fewer employees is open to debate. 

In all events, however, financial institutions are prohibited from disclosing customer information to third parties absent a customer’s consent. So, what Senate Bill 10-042 has tried to do is open the door for more people to give release of information consent. Once a consent form is signed, it remains in effect until revoked.

Under instruction from the Colorado agencies that regulate financial institutions, these institutions are now sending out consent forms to existing customers they know to be at-risk adults. After this initial mailing, they must go through a similar notification process annually. Financial institutions must also offer customers who meet the definition of an at-risk adult an opportunity to sign a consent form at the time a new account is opened.

Signing the consent form is voluntary but, from my perspective at least, there is no good reason not to do so.

Senate Bill 10-042 does not obligate a financial institution to be on the lookout for adult financial abuse or even to report it if it is suspected, notwithstanding the existence of a consent form in its files. Although there are legal theories that make it risky for financial institutions to take a head-in-the sand approach to the problem of elder financial abuse, the major burden for detecting and reporting such abuse remains with friends and family. 

Unfortunately, friends and family are often the source of the abuse.

SOURCE:     The Gazette
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