The Senior$afe Act: A Commonsense Plan to Help Protect American Seniors from Financial Fraud

      Earlier this year, a senior citizen in Vassalboro intended to wire funds from his account at Maine Savings Federal Credit Union to an out-of-state location, supposedly to bail out a relative who was in jail.  Something about this transaction didn’t sound right to the teller supervisor at the credit union.  She questioned the customer, who told her he had gotten a call from an “official” at the jail, who had instructed him not to speak to anyone about the transaction.   
      Fortunately for this senior citizen, the supervisor had received training through Maine's innovative Senior$afe program, a collaborative effort by Maine’s regulators, financial institutions, and legal organizations to educate bank and credit union employees on how to identify and help stop financial exploitation of older Mainers.  The supervisor was able to spot this as a scam, and her quick thinking saved this senior from falling victim to it.   
      According to the Government Accountability Office, financial fraud targeting older Americans is a growing epidemic that costs seniors an estimated $2.9 billion annually.   As the Chairman of the Senate Aging Committee, protecting seniors from financial exploitation and fraud is one of my top priorities.  The Senior$afe program, pioneered by Maine Securities Administrator Judith Shaw, serves as the model for bipartisan legislation that I recently introduced with my colleague and the Ranking Member of the Aging Committee, Senator Claire McCaskill of Missouri.  The Senior$afe Act of 2015 would put in place a commonsense plan to help protect American seniors from financial fraud. 
      Over the past two and a half years, our Committee has held 15 hearings – six since January -- examining how fraudsters find and exploit their victims and what can be done to stop them.  The frauds we have highlighted have ranged from the infamous “Jamaican Lottery Scam,” that reached its height in 2013, to the notorious IRS phone scam that burst onto the scene this spring, and, more recently, to the shady practices of the pension advance industry.  Sadly, not all scammers are strangers to their victims.  In too many cases, the senior is exploited by someone he or she knows well.   
      Although the different scams we have examined differ in scope and structure, one factor is common to all – the fraudsters need to gain the trust and active cooperation of their victims.  Without this, their schemes would fail.  That is why it is so important that seniors recognize as quickly as possible the red flags that signal potential fraud.   
      Unfortunately, many people do not see these red flags.  Sometimes they are simply too trusting, but, just as often, they miss the flags because the swindlers who prey on them are extremely crafty and know how to sound convincing.  Whatever the reason, a warning sign that can slip by a victim might trigger a second look by financial service representatives trained to spot common scams and who know enough about a senior's habits to question a transaction that doesn’t look right.  In our work on the Aging Committee, we have heard of many instances where quick action by bank and credit union employees, broker-dealers, and investment advisors has stopped a fraud in progress, saving their customers untold thousands of dollars.   
      Regrettably, federal laws with the important intention of protecting consumer privacy can make it difficult for financial institutions to report suspected fraud to the proper authorities.  The Senior$afe Act would clarify these laws to encourage banks, credit unions, investment advisors, and broker-dealers to report suspected financial fraud targeting senior citizens to regulators, law enforcement, or adult protective services agencies. 
      A key feature of our bill is the liability protection it provides: financial institutions and their employees are protected from lawsuits so long as employees are trained in how to spot and report suspected financial exploitation, their reports are made in good faith and on a reasonable basis, and they report to the proper authorities.  With the Senior$afe program in place, bank tellers all over the country will know how to respond when they are confronted with a situation like the one faced by the Vassalboro credit union supervisor.   
      Combating financial abuse of seniors requires regulators, law enforcement, and social service agencies at all levels of government to work collaboratively with the private sector.  Financial institutions occupy a critical nexus between fraudsters and their victims and can play an important role.  Their employees, if properly trained, can be the first line of defense protecting our seniors from these fraudsters.  The Senior$afe Act encourages financial institutions to train their employees and shields them from lawsuits when they make good faith, reasonable reports of potential fraud to the proper authorities.