Elder and dependent adult fraud protection bill awaits Governor’s signature to become law

SACRAMENTO, Calif. – On Thursday, the California Legislature approved Senate Bill 278 (SB 278) which aims to improve elder and dependent adult financial abuse protections by clarifying the requirements for banks and other financial institutions to respond to potential fraud.

"Today we take an important step toward underscoring what steps a bank or credit union should take to protect against senior scams, which, unfortunately, are occurring all too often," detailed the bill's author, State Senator Dodd. "My bill says in plain language that if an institution or advisor knows or should have known that an elder or dependent adult is subject to financial abuse – and repeatedly fails to act – they may be held accountable for assisting in the abusive activity. When adopted it will serve as an up-front scam prevention policy for California banks and credit unions."

According to State Senator Dodd's Office, financial elder abuse cases or increasing statewide and financial institutions, such as banks and credit unions, are uniquely positioned to detect and thwart fraudulent actions and current state law is unclear on the expectations for these organizations to take action.

The bill requires financial institutions to create an emergency financial contact program for covered accountholders, which includes elderly or dependent adult customers, and delay a covered transaction that meets all of the following criteria:

• The transaction in question is $5,000 or more, including cash withdrawals
• The elder or dependent adult interacts with one or more employees of a mandated reporter of suspected financial abuse in the process of requesting, initiating, or completing the transaction
• The transaction is requested, initiated, or completed in California

Transactions that meet those above requirements can be delayed by three business days by financial institutions or entities and the accountholder, as well as their emergency financial contact, will need to be contacted over the suspected financial abuse.

Under current law, financial institutions can avoid legal liability by claiming no knowledge of fraud and the above policies that would be required by SB 278 are expected to support victims of financial abuse in meeting their burden of proof explained State Senator Dodd's Office in a press release about the bill's passage.