CFPB issues report on financial elder abuse

Last week, the Consumer Financial Protection Bureau issued a report on the issues and trends revealed by reports of suspicious activity relating to elder financial exploitation.

Last week, the Consumer Financial Protection Bureau issued a report on the issues and trends revealed by reports of suspicious activity relating to elder financial exploitation (EFE). In addition to reviewing the data provided through SARs, the bureau recommended steps that financial services institutions can take to protect older consumers.

Since April of 2013 both depository institutions and money servicing financial institutions have been required by federal law to report suspicious activities through “suspicious activity reports” (SARs). According to the report, SAR filings regarding seniors quadrupled from 2013 to 2017. In 2017, financial institutions filed 63,500 SARs related to $1.7 billion in suspicious activity. One third of all victims were 80 years old or older. Overall, the average loss reported by seniors was $16,700. Victims between age 70 and 79 had an average loss of $45,300.

According to the CFPB, it is likely that many incidents go unreported, meaning this number represents only a small fraction of actual victimization of seniors. The report notes that while many financial institutions are filing SARs, fewer than one-third of these SARs are reported to law enforcement or adult protective services. According to the Bureau, “this is a missed opportunity to increase investigation and prosecution and make it more likely that victims will receive appropriate services.”

The type of reported EFE activity varied depending on the reporting institution. The report classifies suspicious activities as either scams or non-scams. Scams include transfers of money to a stranger for a promised benefit that the older adult did not receive. Non-scams include activities such as theft by family members, account takeovers, and identity theft. At depository institutions, non-scam activities see the bulk of reporting, whereas scam activities are more prevalent at money services businesses.

The report also made specific recommendations. First, for money services businesses, the bureau recommended blocking money transfers to people who previously aroused suspicion, providing conspicuous warnings about current scams on money transfer forms, and improving training for all agents to ensure they are complying with anti-fraud programs and controls.

For depository institutions, the bureau suggested improvements in fraud detection technology to reflect the transaction patterns most prevalent when older account holders become victims. They could also promote use of alerts on checking and savings accounts and could offer services to enable trusted relatives and friends to help detect elder financial exploitation.