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New TCUL and REAL Solutions Initiative
Wednesday, March 20, 2013 7:20 AM

The Texas Credit Union League (TCUL) and its REAL Solutions program have joined forces in developing a new initiative to promote awareness of elder financial abuse and exploitation (EFAE) in the financial services industry.

The National Center for Elder Abuse defines elder financial exploitation as “the illegal or improper use of an elder’s funds, property, or assets.” Because seniors are more likely to have more money in their accounts, they are especially vulnerable to exploitation by unscrupulous caregivers, family members, friends, or people with whom the elder conducts business.

An estimated $2.9 billion was stolen from seniors as a result of elder financial abuse in 2010, according to a MetLife Mature Market Institute study. The study noted that reported instances of financial theft from seniors grew by 12% between 2008 and 2010. That is generally regarded as an underestimation, because the vast majority of cases never get reported.

Many elder Americans are fearful and ashamed of their abuse, and to complicate matters, they are frequently impaired by diminished mental capacity—especially financial capacity. Experts predict this problem will likely intensify as the Baby Boomer generation ages, representing an enormous concentration of wealth after a lifetime of working and investing. Credit unions need to be prepared to deal with members who may be victims of abuse and exploitation.

“If credit union personnel are trained to identify EFAE, they can then report suspected cases to appropriate authorities, as required by statute, with a greater degree of confidence,” says Paula Upchurch, director of TCUL’s REAL Solutions program.

Red flags regarding abuse may include unusual, suspicious, or stepped-up activity by the accountholder on his/her own or in conjunction with another person who could be coercing the accountholder to make transactions they would not normally make, such as:

  • Transactions made outside the credit union, such as numerous ATM transactions that the accountholder would normally come inside the bank to make. This includes transactions made at unusual hours (for instance, late at night), in contrast to their normal banking hours.
  • Unusual or accelerated debit card activity, out of the norm for this accountholder
  • Closing CDs without regard to penalties
  • Frequent or large wires, which might start off small but grow in amounts over time as the scammer or abuser gains confidence
  • Online banking activities: new online accounts with accelerated activity
  • Lines of credit with accelerated activity or in which the credit is always maxed out
  • Home equity line of credit with previous little activity which is always maxed out
  • New loan applications for purchases that might be unusual for certain elders
  • Stepped up NSF activity
  • Numerous checks written when the account has usually only a few checks written, or many out-of-sequence check numbers
  • Unusual changes in account beneficiaries
  • New or unusual types of transactions via powers of attorneys
  • Change of address for monthly statements but not a change of home address
  • Change in marital status by widows/widowers, in combination with other red flags
  • Unusual or suspicious ACH transactions
  • New co-signer on the account, in conjunction with other red flags
  • Banking by mobile phone, in conjunction with other red flags

“Credit unions can play a critical role in helping to reduce elder financial abuse and exploitation,” adds Mike Delker, TCUL senior vice president of Credit Union Relations.  Frontline staff members are the first defense in identifying suspicious activity.”  

Computerized analysis of unusual activity is an important starting point for identification. Also, various BSA and fraud system providers have indicated their intention to develop these critical systems for the purpose of monitoring account activity. This monitoring would generate alerts about suspicious activity and enable early detection of EFAE.

Paula Upchurch indicated that REAL Solutions will be developing more information and training modules that support credit unions and serve their members in this important matter.

REAL Solutions is a statewide partnership between the National Credit Union Foundation and TCUL. It is supported by grants from the Texas Credit Union Foundation and Friends of Consumer Freedom.