Financial Elder Fraud Steals $3B a Year — Congress is Fighting Back

WISCONSIN (CoinChapter.com) — New congressional legislation will attempt to help avoid financial elder fraud, which totals $3 billion a year. If passed, a law currently before the Senate would combat financial ill-treatment — a recurrent threat to older adults and other vulnerable people.

The bill allows companies that offer mutual funds and similar pooled investments. In doing so, the companies step in when they detect an illegal transaction involving an adult 65 years of age or older or a younger person with disabilities financially.

The measure is a carbon copy of one that passed the House of Representatives in 2021 but was defeated in the Senate. According to AARP research, the average cost of exploitation is $120,000.

The Bill Gears Towards Investment Companies

In short, the legislation would permit so-called registered, open-ended investment companies, or their agents, to postpone a requested redemption of a security or fund for up to 25 days. These companies can include exchange-traded funds, hedge funds, mutual funds, some annuities, and other pooled investments.

The law gives administrative authorities, courts, and regulators the right to postpone payments further. It would apply to those aged 65 or younger. The Insured Retirement Institute says,

“Bad actors are constantly coming up with new methods to exploit existing law. The legislation would provide people on the front lines to help avoid exploitation.”

The Financial Exploitation Prevention Act of 2023, introduced by Representative Ann Wagner, R-Mo., was passed last month by the House with unanimity of support from both parties. But it is still being determined if or when the bill will be brought up as it is currently awaiting review by the Senate Banking Committee.

Family Members are the Main Culprits Behind Elder Fraud

Family members take twice as much money as strangers. Elderly persons with cognitive difficulties are more susceptible to exploitation and may experience up to a twofold increase in theft compared to those without these problems.

According to Marve Ann Alaimo, a partner at the law firm of Porter Wright Morris & Arthur:

“The financial industry is waking up and catching on that there are a lot of people out there who are vulnerable to financial exploitation in general, especially at a time when many transactions are made over the phone or online. Ms. Alaimo added, “The aging population is ready for it.”