Letter to the Editor: Proposed elder abuse bills will not fix problem
Nobody disputes financial elder exploitation is a significant problem that needs to be addressed. The disagreement is in how best to solve it.
Significant time and effort, with input from multiple agencies and organizations, has gone in to addressing the financial elder abuse issue with no easy solutions on how to protect vulnerable seniors. The authors of bills SB 428 (AB 482) and SB 429 (AB481) and the bills’ supporters believe that banks and financial professionals are best suited to “protect” you from financial elder abuse. Yes, Banks. Not your loved ones, trusted advisors, or your own legally documented agents (with the safeguards built into the current statute). Banks. Internet searches relative to banks reveal the following:
Searching “Wells Fargo Fraud Violations” shows violations including fraudulently opening up accounts in their customer’s names and charging fees. They were fined $185 million by the US Consumer Financial Protection Bureau in 2018 and are facing another $3 billion settlement with the Justice Department and the Securities and Exchange Commission.
Searching “Bank of America Fraud Violations” shows they admitted to violating mortgage-backed security laws by failing to make accurate and complete disclosures to investors, leading to a $245 million settlement with the Securities and Exchange Commission.
Searching “US Consumer Financial Protection Bureau Enforcement Actions” produces pages and pages of actions against financial institutions for violations of law.
The question is: Are financial institutions best suited to protect consumers from financial abuse? The authors of the bill believe that banks should be given broad power if you are 60 or over. There are no guidelines or requirements for training on the identification of financial abuse. In addition, there is no liability or consequence to banks if they mistakenly claim financial elder abuse has occurred. The burden of proof falls to you, your loved ones, trusted advisors, or your legally documented agent to prove that financial elder abuse is not occurring. During that time your assets may be frozen thereby triggering fees, causing delays that can lead to loss of benefits and resulting in adverse effects to your financial health/ creditworthiness. Other considerations include:
Will the bank reimburse you for fees/ NSF check problems caused by them?
Will the bank reimburse you for the costs of proving your position that financial abuse is not happening?
How does one prove that something is NOT happening?
Will the bank pay for your fees or lost benefits caused by delays in resolving the issues?
The banks will continue to be allowed to refuse to honor your power of attorney if an untrained bank teller believes abuse is taking place. Although current law allows this, the current law also provides safeguards that demand a written explanation to the customer, and holds banks liable for wrongfully refusing to honor a power of attorney. The new law wipes all of that out if the bank can make a claim that it believed, even wrongly, that financial elder abuse was taking place.
The result of any legislation should be to solve a problem. We can all agree that many people with the right intentions are trying to solve the elder abuse issue. That is a very good thing. The concern is that these bills as written are the wrong solution for the financial elder exploitation problem. As an elder law attorney, I believe the bills are going to have the unintended consequence of creating (not eliminating) financial problems for elders.
The proposed legislation falls short of protecting vulnerable seniors from financial abuse.