In an effort toward protecting older Americans, a group of federal agencies announced today they are making it easier for financial institutions to sidestep an existing law and report instances of suspected abuse among their elderly clients.
With more than 50 million older Americans living in the U.S. and with the aging baby boomer generation, the mission to protect the nation’s elderly from financial exploitation has never been more important, said Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB) in announcing the new guidance to financial companies.
The agencies are directing companies to report abuse even if it means disclosing personal data about the victims, an interpretation of Gramm-Leach Bliley Act that has not before been advised.
“Unfortunately, we have seen that older Americans are all too often the victims of financial exploitation,” Cordray said. “They make attractive targets because they often have higher household wealth—whether it is in retirement savings or home equity.”
Reverse mortgages are among the types of fraud the CFPB has received complaints, a spokeswoman for the Bureau said, though the Bureau did not disclose the number of complaints it has received.
Fraudulent practices associated with reverse mortgages that the CFPB has noted include instances of forged power of attorney, where fraudsters have induced elderly individuals with cognitive impairments to appoint them with such authority.
The CFPB together with members of the Office of the Comptroller of the Currency, the Federal Trade Commission, Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration are working together in the effort to clarify privacy concerns for financial institution employees under the Gramm-Leach-Bliley Act.
The law establishes how and when a financial institution is allowed to disclose nonpublic personal information to third parties not affiliated with the institution.
Financial institutions have previously sought consumer permission before sharing personal information with authorities, offering the option for them to opt out. The new guidance directs them to report any suspected fraud without that consumer consent.
“Today’s guidance makes clear that reporting suspected elder financial abuse generally is not subject to these same concerns and does not violate the Gramm-Leach-Bliley Act,” said CFPB Director Richard Cordray.
Enabling financial institutions to share consumer information if they suspect abusive practices are underway can be key to preventing elder exploitation, as these employees may be able to spot irregular transactions, abnormal account activity or unusual financial behavior sooner than anyone else can, the agencies said.
“Financial institutions have the right to bring fraudulent or abusive activity to attention,” said FDIC Chairman Martin Gruenberg. “We wanted to join together in this guidance, as often times employees of financial institutions are best positioned to assist the elderly when they have been taken advantage of.”
Because often times seniors who fall victim to theft may be too embarrassed or too frail to pursue legal action, advocates agreed it is critical that others look out for their financial well-being and security.
“This guidance is an important initiative in protecting senior citizens from fraud and is one of the FTC’s highest priorities,” said Jessica Rich of the FTC Bureau of Consumer Protection. “Today’s announcement reminds financial institutions that the law includes common sense exceptions to allow reporting of fraud or unauthorized transactions.”
Written by Jason Oliva