“Helping Banks Flag Fraud Against Seniors”
New York Times | By: Elizabeth Olson
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Dawn Shaw, a retired legal secretary in northern Maine, made two stops weekly without fail. One was her church. The other was her local bank, where she swapped stories about her children and their families with the branch manager.
Gradually, Ms. Shaw, a widow, began showing signs of confusion, prompting the manager to check her account. The manager found an automatic monthly withdrawal had recently been set up. She knew Ms. Shaw did her banking in person, not electronically, so she notified Ms. Shaw’s nearest daughter, Cathy. They discovered someone had used Ms. Shaw’s banking information to steal her money.
“It wasn’t a lot of money,” said Ms. Shaw’s other daughter, Judith M. Shaw, who is the administrator of the Maine Office of Securities. “But it made me realize why it is important for front-line bank employees to identify red flags early.”
It was not only her meticulous mother who was being defrauded. In the last decade, Judith Shaw said, there has been a steady rise in financial fraud against older people in Maine. Her mother’s experience a few years ago prompted this idea: Encourage state officials to start a pilot program that would train bank employees to recognize suspicious activity, like sudden large transfers, in exchange for greater protection from legal liability for reporting it.
In early 2014, hundreds of employees at Maine’s banks and other financial institutions began learning how to recognize unusual account activity that might indicate fraud or financial exploitation.
The pilot program went so well that one of Maine’s senators, Susan M. Collins, introduced legislation to take it national. The result, the Senior Safe Act, which became law in May, gives banks that accept such training more certainty that they would not be punished for disclosing account information to the authorities. Without that protection, banks and their employees run the risk of being sued by clients, or fined or penalized by regulators.
“As baby boomers hit their milestones and retire, there’s been a growing focus on what we can report,” said Robert G. Rowe, associate chief counsel for the American Bankers Association. “The law gives us safe harbor to report suspicious activity.”
The act is too new to have a national track record, but in Maine, Ms. Shaw said that since 2014, reports to her office about seniors being exploited financially jumped to a total of 70 — from zero.
“That may not seem like much nationally, but it’s a lot for a small state like Maine,” she said.
Retirees across the country are increasingly the targets of various financial frauds. One in five older consumers say they have been the victim of some form of financial abuse, according to the Consumer Financial Protection Bureau.
Despite efforts to combat it, instances of fraud abound. The Federal Trade Commission, for example, received 2.7 million reports of it in 2017. That figure covers only some of the varied kinds of fraud that can drain a person’s bank account, and makes it impossible to know the overall amount of victims’ losses.
True Link Financial, a financial services firm for older people, pins the cost to older consumers at $36.5 billion annually.
As customers age, they become a prime target for fraud, experts say, because they can have a lifetime of savings sitting in their accounts. More than 60 percent of bank customers are older than 50, and they hold 70 percent of deposit balances, according to a 2017 survey by the American Bankers Association.
Frauds involving bank accounts come in many forms, including check washing, the practice of erasing and substituting different information on a check; duplicating checks; unauthorized debit charges; and submitting fake checks for deposit, said Laurel Sykes, chief risk officer at Montecito Bank & Trust, a large private bank in California.
“One of our customers, a retired professional, thought he was hired as an I.T. worker from home. He gave up his banking credentials so he could get the promised paycheck deposited. But it never happened,” Ms. Sykes said. “He asked us about it, and we had to tell him that it was a scam.”
Another popular way to access customer accounts, Ms. Sykes has found, starts when a person selling an item on a service like Craigslist receives a check for an amount larger than the asking price.
“Then the buyer calls and says, ‘I paid too much, send me back $100, or $400,’” Ms. Sykes said. “They try to get the customer’s banking information that way.” Wiring money can be another way to obtain a person’s account information.
The bank, on California’s affluent central coast, also has seen a major uptick in check fraud, with more than five times as many fraudulent check cases reported so far in 2018, compared with the same period of 2014, she said.
“It’s been a heartbreaking year,” she said.
As they see more fraud directed at older customers, banks are stepping up their warnings, monitoring and education efforts. First Financial Bank in Abilene, Tex., for example, certifies its employees as “fraud busters” after they are trained to recognize potentially fraudulent actions.
More active steps, including the education of customers, are likely to spread under the Senior Safe Act, as banks tackle the reluctance that many older people have to report fraud. Noel A. DeSantis, an assistant district attorney in Philadelphia who specializes in financial crimes against seniors, said older people can be ashamed and afraid to admit they are victims.
Ms. DeSantis prosecuted one case in which an 87-year-old Philadelphia woman suddenly withdrew $600, which was most of her savings, from her bank branch. Accompanying her at the bank was a younger woman whom the teller did not recognize.
“The teller knew the account holder and was concerned she wasn’t acting normally, but she said she wanted the money. So he had to give it to her,” Ms. DeSantis said. The teller alerted the bank manager, who preserved the video of the transaction.
Later, when the customer reported the episode to the police, the video was used as evidence to convict the woman who accompanied her.
“Bankers are often the first to recognize the signs of fraud or financial exploitation,” said Larry Santucci, who follows the issue for the Federal Reserve Bank of Philadelphia. Unexplained withdrawals, wire transfers or debit transactions, certain transfers to new accounts or checks issued to new and unusual recipients can all be telltale behaviors, he said.
Montecito Bank & Trust and other large institutions try to thwart frauds that empty accounts by using automatic tools and software to flag problematic transactions, like account balances that suddenly decline.
But for many banks, personal relationships with clients are still crucial. Only 38 percent of baby boomers bank online, according to the banking association’s 2017 survey data. The older segment of customers routinely makes their own deposits, withdrawals or visit their safe deposit boxes, so they get to know bank personnel.
More banks are holding events to tell customers about the newest approaches that thieves use. In Montana, the Bank of the Rockies regularly holds “Conversations About Cons,” at community centers, nursing homes and assisted living homes.
Jennell Huff, a customer service representative at the bank, said she helped start the program three years ago after an incident in which forged checks were used to overdraw a retired couple’s account.
“We hold round tables where we sit down with people and let them ask questions and tell them about new trends in scams,” she said. “Most of them are pretty gun-shy now about these scams, and we have seen a decrease overall in financial fraud.”
Some banks distribute educational fliers at their branches, and employees even sit down with customers to question them when they are making large withdrawals or foreign money transfers so they can think over what they want to do.
Even so, said Ms. Sykes in California, “Sometimes such scams can be difficult for people to accept.”