Maryland banks and credit unions are likely to be among the first to notice that an elderly customer is being financially exploited by a con artist or an unscrupulous relative.
So it makes sense that these institutions take part in an effort to protect older Marylanders from being ripped off. Thanks to a new state law, they will.
Starting in October, banks and credit unions here will be required to report suspected financial exploitation of Marylanders age 65 and up. They must convey their suspicions within 24 hours by phone to Adult Protective Services — part of the state's Department of Human Resources — or law enforcement and must follow up in writing. Financial institutions that fail to do so will face a penalty of as much as $5,000.
Financial institutions usually aren't keen on more regulation. But many are on board in this case, saying the mandate will raise awareness of a serious problem.
"The more people are aware that this is an issue, the better it is for most people," says Bob DeAlmeida, president of Hamilton Bank in Towson.
He adds, "I have a father who is 85 and, quite frankly, he has been taken before on some issues and it scares me all the time."
Some of the statistics about elder financial abuse are scary. Many other states already have such a reporting mandate, and it's about time Maryland joined them.
It's difficult to know precisely how widespread elder financial abuse is in Maryland because not all victims report the abuse — especially if the perpetrator is a family member or caregiver. Adult Protective Services in Maryland last year investigated 982 cases of financial exploitation, which accounted for about 15 percent of its investigations.
Elder financial exploitation is a national problem — and an expensive one.
The Investor Protection Trust found in a 2010 survey that one in every five Americans over the age of 65 had been financially swindled. A MetLife Mature Market Institute study last year found than older Americans lost $2.9 billion to elder financial abuse, a 12 percent increase in three years.
And the problem is still growing.
"Big time," says Don Blandin, president of the Investor Protection Trust. "Not only as the population ages, but as we also shift the responsibility of one's financial future to individuals."
Seniors are targeted because they are where the money is.
"Seventy percent of the wealth in this nation is in the hands of people 50 years of age and older," says Del. Benjamin Kramer, a Montgomery County Democrat who sponsored the legislation. "That's not lost on the con artists and scammers."
Often older adults are more vulnerable to this type of fraud because they are isolated, with no one looking out for them, or in poor health and less likely to scrutinize financial transactions as they once did.
The MetLife study found that strangers perpetrated slightly more than half of the reported cases of elder financial abuse, while family, friends and neighbors were the culprits about one-third of the time. But banking officials and aging experts in Maryland say perpetrators tend to be relatives and caregivers.
"The classic scenario is a woman in her 80s who has a son still living at home who has some kind of alcohol or drug dependency problem," says Jeffrey Myers, an assistant attorney general with the Maryland Department of Aging.
Maryland passed a law more than a decade ago that allowed financial institutions to voluntarily report elder financial abuse without running afoul of bank privacy laws. Making the reporting mandatory will prompt institutions to pay closer attention to the problem, Myers says.
Around 20 states require the reporting of such cases, including California since 2007. By the end of 2010, California banks reported that more than 26,000 cases of potential elder abuse had been turned over to authorities, Kramer says.
Some financial institutions say they already watch out for suspicious activity and will intervene.
DeAlmeida of Hamilton Bank says that last week an elderly customer wanted to close a certificate of deposit before maturity and take home his $100,000 — in cash. He says the teller sent word to a superior and bank officials talked the man out it. The bank also alerted the man's son, who is on his father's account.
Dorothea Stierhoff, spokeswoman for MECU, says the Baltimore credit union has referred cases of suspected elder financial abuse to authorities. MECU also last fall updated its software program to recognize potential elder abuse, she says.
Of course, adults can do anything they want with their cash and poor money management is not the same as financial exploitation.
But that's where training comes in. The new law requires financial institutions to train staffers to recognize the signs of financial abuse.
Myers says signs include large wire transfers; lots of electronic withdrawals by, say, an 85-year-old who never used an ATM before; steep drops in account balances that the elderly person can't explain; or customers who seem afraid of the person who brought them to the bank.
It's likely that some older customers are not going to like this extra attention. DeAlmeida already anticipates that some will tell the bank to mind its own business.
"I would rather err on the side of caution," he says. "If we get yelled at, we get yelled at."