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FDIC Issues Updates to Elder Scam-Prevention Program

The Federal Deposit Insurance Corporation on Monday announced updates to its flagship financial training program for older Americans, an exhaustive document that provides advice on avoiding common scams — including those associated with reverse mortgages.

“Money Smart for Older Adults,” developed in conjunction with the Consumer Financial Protection Bureau, presents guidelines for a workshop-style discussion about a variety of issues that can potentially affect seniors, such as contractor fraud and identify theft, as well as practical information about topics that older Americans might not know about, like automatic online bill payments and electronic banking. Since the program’s introduction in 2013, public institutions and nonprofits across the country have used the curriculum to educate seniors about their financial health.

The updated Money Smart for Older Adults program includes new information about the responsibilities of fiduciaries, a link to the Security and Exchange Commission’s page on investment advisors, and an additional section on debt collection and charity scams, according to FDIC spokesman Greg Hernandez.

Public interest in the regulation of financial planners has spiked in recent weeks after the Trump administration vowed to weaken or eliminate Labor Department regulations — slated to take effect in April — that would expand the pool of financial advisors who are considered fiduciaries, a special class of professionals that must always act in consumers’ best interest, keep detailed records, and provide clear information about fees. The FDIC’s updated information includes a definition of fiduciaries and scam-prevention advice, but did not address the current uncertainty swirling around the new rules.

The recent overhaul also does not include changes to the section on reverse mortgages, which warns older consumers about fraudsters that trick borrowers into surrendering power of attorney and then make off with lump sum Home Equity Conversion Mortgage payouts. The literature additionally encourages consumers not to deal with brokers that pressure borrowers into investing HECM proceeds into other financial products, such as annuities and long-term care insurance.

“Although reverse mortgages are legitimate products and are appropriate for some consumers, scammers also sell these products to the disadvantage of their victims,” the FDIC passage on reverse mortgage begins. 

Written by Alex Spanko