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Because We Will All Age...... A Primer on the Prevention of Elder Financial Exploitation and Abuse
Source: NAFCU Compliance Blog
Written by Shari R. Pogach, Regulatory Paralegal
June 26, 2017

Did you know that June 15 has been designated World Elder Abuse Awareness Day? I didn't, that is, not until I attended the third global summit conference held here in Washington, DC, on the 15th. While it seems as though the "Millennials" get all the attention these days, it's also important to remember that a significant portion of our population is getting older. Some statistics shared by some of the summit speakers: one in six of the population in Pennsylvania is over the age of 65; by 2019 there will be more people over the age of 60 than under the age of 18 in North Carolina; and over 80 million of the U.S. population will be over 60 by 2050.

According to an article in the Federal Reserve System's Consumer Compliance Outlook: First Issue 2017, "roughly one in 10 seniors have suffered financial, emotional, physical, or sexual abuse or neglect in the past year, according to one study, with financial abuse occurring the most." And as people get older, they may develop cognitive impairments, making them prime targets for financial exploitation. Banks and credit unions are considered key players in helping to prevent and respond to elder financial abuse due to:

  • Knowing their customers and members;
  • Personal or face-to-face interaction with older consumers making transactions;
  • The ability to detect suspicious account activity;
  • Mandated to report suspected elder financial exploitation under many states' laws;
  • BSA reporting.

In some cases financial institutions have raised concerns about state and/or privacy laws prohibiting them from disclosing a consumer's financial records to authorities and uncertainty as to the best way to proceed. The article, Combating Elder Financial Abuse, looks to address these types of issues with a review of federal privacy laws, regulatory guidance and sound practices that can be adopted to help protect elderly customers and members from financial abuse.

Some community banks and credit unions are developing special programs oriented to providing age-friendly or safe banking products and services to their older clientele. The National Community Reinvestment Coalition (NCRC) has a dedicated section on its website with information and recommendations on providing age-friendly or safe banking to protect older adults. During the summit, a panel from the North Carolina State Employees' Credit Union (SECU) discussed their credit union's impressive program to protect and educate its senior members. As it is mandatory in North Carolina to report any witnessed senior exploitation, SECU (North Carolina) has worked to educate its staffers on spotting and reporting potential abuse, as well as developing an estate planning and essentials program to help older members establish an affordable estate plan to help protect their economic future. SECU (North Carolina) is willing to share its expertise with other institutions, simply send an email to: admin@ncsecu.org.

As a reminder, here are some additional resources on developing best practices and responses to elder financial exploitation:

During the summit, a speaker who was a former New York prosecutor talked about a former case of elder financial exploitation. The case was never brought to trial and sadly the victim died within a year of the abuse coming to light. The speaker noted that in most instances older victims are extremely embarrassed about being victimized and although it can't be proven to be a direct cause, in most cases the victims die shortly thereafter.

And, remember folks, we are all aging as you read this.

Fees for Unauthorized ACH Returns
July 28, 2016

As part of NACHA’s ongoing efforts to improve ACH Network quality, an Unauthorized Entry Fee of $4.50 per item was approved with an implementation date of October 3, 2016. The new rule is expected to improve ACH quality by reducing the incidence of ACH debits that are returned as unauthorized.

Under the new rule, an Originating Depository Financial Institution (ODFI) will be assessed a fee for each ACH debit that is returned as unauthorized (return reason codes R05, R07, R10, R29, and R51). As a means of compensating the Receiving Depository Financial Institution (RDFI) for a portion of the costs associated with handling unauthorized transactions, the fee collected from the ODFI will be credited to the RDFI. Over time, it is expected that RDFIs will experience reduced costs as a direct result of a reduction in unauthorized ACH transactions. The assessment, collection and disbursement of the unauthorized entry fees will be facilitated by the Federal Reserve.

Recognizing the potential significant impact of this rule change on ODFIs, in particular, FedACH Services will begin a “soft implementation” of the changes on August 1, 2016. Federal Reserve billing statements for August and September 2016 (received in September and October, respectively) will provide ODFIs and RDFIs with an early glimpse at their unauthorized return item volumes; however, no fees will be assessed during the “soft implementation” phase.

On October 3, 2016, the unauthorized entry fee of $4.50 per item will be implemented, and ODFIs will see the fees on their November 2016 Federal Reserve billing statements for October data.

If you have any questions or concerns, please contact Karen Clabough at 615-232-7957 or kclabough@volcorp.org.

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