In the latest Weekly Wright Report:
Helping Families Help Themselves: A New Law Aims to Allow Virginians to Protect Their Loved Ones from Financial Abuse
By: Thomas J. Moran
Elder financial abuse has become all too common. We’ve all heard horror stories of an elderly relative or acquaintance being scammed by a door-to-door home improvement operation that takes a hefty deposit and disappears after doing little to no work. In other cases, someone close to an elderly person will abuse their position of trust by diverting funds from bank accounts or to influence estate planning efforts. The decline in mental capacity that often comes with age, coupled with unfamiliarity with technological advances can make the elderly attractive targets for unscrupulous actors. According to the National Council on Aging, financial exploitation causes an estimated $28.3 billion in losses to our elderly community every year.
The growing need to protect the elderly and those otherwise unable to look after their own financial affairs sometimes finds itself in tension with financial privacy laws. Nobody wants the government to poke around in their financial affairs unnecessarily, and there are strong laws that punish financial institutions for irresponsibly disclosing personal financial information. For some time, states have provided exceptions to banks, credit card companies, and other financial service providers who suspect elder financial abuse to disclose it to a government entity. For example, the Maryland Financial Institutions Code requires a financial institution to report suspected financial exploitation to “the adult protective services program in a local department of social services” and prohibits liability for filing an abuse report.
With no disrespect to the hardworking and dedicated people who work in social services, the reality is that many local government agencies are understaffed and otherwise low on resources. This unfortunately means that reports are not always processed or investigated as soon as we would like — a big problem when financial abuse can hit hard and quick.
With HB 692/SB 174, codified this summer at Va. Code § 6.2-103.2, Virginia seeks to enlist families and loved ones in the fight against elder financial abuse. An “elderly or vulnerable adult” may now submit a list of trusted persons to his/her bank, broker, or other financial institution at any time. When the financial institution has reasonable cause to suspect that the customer is a victim or target of exploitation, it may contact any of the listed persons, provided they are not suspected to be the perpetrator. As an emergency measure, the financial institution may also contact any person “known by the financial institution…to be reasonably associated with an elderly or vulnerable adult, including a family member,” but only if none of the listed persons can be contacted and the customer is unable to provide a trusted contact. The new code section also provides extensive provisions relating to training employees to spot exploitation and to report it to authorities when suspicions arise.
The extent of the information provided by the financial institution to a trusted person “may” be limited to a disclosure that there is reasonable cause to suspect financial exploitation, without any of the information or details that the financial institution used to arrive at its conclusion. The use of “may” suggests that the financial institution can disclose additional information to a trusted person if it sees fit to do so, but it is not required to. At the very least, the law allows those who are most motivated to stop financial exploitation—an elderly person’s relatives and friends—to receive a “heads-up” that something fishy is happening.
Fortunately, many times a head-up is all that is needed to stop exploitation in its tracks. It’s common to hear, “if I had only known that something like this was going on, I could have stopped it immediately!” from the relatives or loved ones of a victim. Of course, knowing that money was lost in the past is cold comfort. With this new law, it is now easier for family members to get the information they need to steer their vulnerable loved ones away from exploitative situations and bad actors when that information is fresh and able to be acted upon.
If you have a loved one in Virginia who is elderly or in mental decline and you are concerned about their ability to protect their financial independence, please consider having them speak to their financial institutions about establishing a list of trusted people to be contacted if financial exploitation is suspected. It may allow you to effectively stop financial abuse before it reaches a ruinous level.
If you have experience with establishing a list of trusted people under the new law, or if you or your loved one has been the target of financial abuse, I’d like to hear from you. Feel free to contact me at (804) 362-9434 or tmoran@wcslaw.com.