MADISON, Wis. — Credit unions may soon be able to leverage new technology in the fight against elder financial abuse.
The Senior Sentry project from the Filene Research Institute's i3 innovation program is examining how elder members' transactions and banking behavior patterns can be tracked via core systems to detect possible instances of financial exploitation, sending alerts to staff.
"We are trying to create something to help credit unions be more proactive in this area," said George Hofheimer, Filene's chief research and innovation officer, who noted that elder financial abuse cases are growing.
The aging of America and a still-recovering economy are leading to near-epidemic numbers of cases of elder financial exploitation.
According to a MetLife study, about $3 billion is lost annually by older Americans to the problem and the losses went up during the financial crisis.
Hofheimer said that while credit unions do a good job of detecting potential instances of elder financial abuse through their front-line staff, having technology in the arsenal significantly enhances the ability to detect this crime. "Staff are trained to look for queues - certain behaviors," said Hofheimer. "Say a new person suddenly is associated with the elder member and this person acts suspiciously. Or, the elder comes in with someone new and may look timid and afraid to speak."
But Hofheimer noted that staff can't dig into the daily and weekly transaction data that often reveal signs of elder financial exploitation.
While Senior Sentry is still in development, trials of the system have been conducted with CU core systems. Senior Sentry may turn out to simply be a list of parameters - transaction types that the core system can be programmed to watch for - to detect potential instances of elder financial abuse, much like core systems today are programmed to detect different types of fraud.
Hofheimer said, however, that existing fraud and BSA monitoring systems are not adequate for purposes of identifying most instances of elder financial abuse, since elder financial exploitation occurrences often do not resemble typical fraudulent financial activity.
Red Flags Raised
Hofheimer gave the example of an ATM withdrawal made in the early hours of the morning. "That would not be detected by current fraud monitoring systems, but it should raise a flag for older members. Or, for instance, a fairly large ATM withdrawal from an older member who does not make big withdrawals, as well as an excessive amount of withdrawals in a day or a week."
Hofheimer said Senior Sentry fraud detection parameters are closely based on the behavioral and transaction patterns of the elderly. The i3 team has developed an initial set of parameters - including numerous out-of-sync check numbers, changes to account beneficiaries and large wires - and tested them in an early pilot at Belco CU.
Sandra Sagehorn-Elliott, SVP and COO at the $2.4 billion Denver-based credit union, and an i3 team member, said the technology widened the CU's elder abuse detection net, and in six weeks the tool detected several cases of elder financial exploitation. The credit union followed up, and in most cases was able to prevent the fraud from happening again.
Senior Sentry spotted one member taking out a loan for two cars in one week, according to Sagehorn-Elliott, as well as an 87-year-old woman making an ATM withdrawal at 1 a.m.
"That obviously was not the member. So we pulled the security camera footage and it turned out to be a 20-year-old male getting the money," she said.
Belco called the member and alerted her to the activity, which had happened more than once. "She did not want to follow up because the person we saw on the video must have been a relative, maybe a grandson," said Sagehorn-Elliott. "But we told her we were sending her a new PIN and told her to be careful in giving out her PIN number. Since then, these withdrawals have stopped."
Hofheimer said Senior Sentry's final form is still under review by the i3 team. The focus has been on producing something that is not costly for credit unions to implement and could simply leverage tools they already have in place, such as SQL server reporting services. The service could also be delivered, as well, via a special debit, credit or prepaid card, he said.
The Right Set Of Parameters
The key is coming up with the right set of parameters to detect elder financial exploitation, and then giving the CU, and perhaps the member, the ability to add to and adjust those.
"We are just trying to determine the best solution for this, but we know there has not been much innovation in the area of elder financial abuse detection, so there is a clear opportunity," said i3 team member Soma Sarkar, EVP and COO of the $327 million CU of New Jersey in Ewing, who said the group has received a great deal of inquiries from within the financial services industry, including the CFPB.
Melanie Stern, senior program officer at the National Federation of Community Development Credit Unions, which runs webinars and provides education on elder financial abuse, said a solution such as Senior Sentry is needed by credit unions.
"I think the tool serves two purposes, not only does it help the credit union detect more cases of fraud committed against elder members, it also lets staff know that preventing elder financial abuse is a priority at the credit union," said Stern. "That alone will step up vigilance."
Though Senior Sentry should help credit unions detect and stop more cases of elder financial abuse, it still does not address the biggest issue many see with this crime - the thieves are often family members or caregivers.
"This can be very frustrating, and discouraging," said Bellco's Sagehorn-Elliott, who added her CU often finds the elder member unwilling to take strong action against a family member to ensure the problem stops and the perpetrator is properly dealt with by authorities.
"We want to see the elder member actually take ownership of the problem, and take the steps necessary to protect themselves. But often we see our efforts here are futile."
