WASHINGTON NCUA and the banking regulators on Tuesday issued a new directive saying if credit unions or banks suspect financial exploitation of one of their elderly members/customers they can report the suspected abuse without violating the consumer’s privacy under Gramm-Leach-Bliley.
“Bank and credit union tellers "may be able to spot irregular transactions, abnormal account activity, or unusual behavior that signals financial abuse sooner than anyone else can," said Richard Cordray, director of the CFPB, who joined the heads of NCUA, the FDIC, Federal Reserve, and Securities and Exchange Commission during a news conference yesterday.
But credit union and bank executives have often hesitated to report their suspicions to law enforcement for fear they will run afoul of Gramm-Leach-Bliley, a 1998 bank law that repealed the Glass-Steagall Act. Among other provisions, Gramm-Leach-Bliley requires credit unions and banks to notify consumers and give them a chance to opt-out before they share information with third-parties. That often complicates matters for sharing information with outside fraud investigators, third-party caregivers and social service agencies.
The new directive comes after several recent cases of elder abuse at credit unions. In one, a credit counselor at CinFed FCU stole more than $400,000 from elderly members. In another, a handyman was convicted of using an 80-year-old member of Franklin Mint FCU’s ATM card to steal $70,000 from the elderly member. One elderly member is suing her son, who she said took out hundreds of thousands in loans in her name without her approval.
NCUA, in a new Letter to CUs, called on credit unions to ensure their staff is properly trained to spot elder abuse, the illegal or improper use of an older adult’s funds, property or assets.
The new Letter was issued to credit unions after NCUA Chairman Debbie Matz appeared on a teleconference with the heads of the Consumer Financial Protection Bureau and the banking agencies, who all agreed to ease the privacy restrictions for the purpose of fighting elder abuse. Financial abuse of the elderly is an epidemic, according to the recent Government Accountability Office, draining $2.9 billion from seniors’ accounts in 2010 alone, the banking regulators said during yesterday’s conference call.
“Older adults can become targets of financial exploitation by family members, caregivers, financial advisors, home repair contractors, and scam artists,” says Matz in the new Letter to CUs. “If you or your staff know the older adults in your membership, you may be able to spot irregular behavior or account activity.”
Today's guidance assures credit unions and banks that they can report suspicions to law enforcement agencies. The new guidance also should make it easier for adult protective services agencies investigating financial abuse to get access to bank records.
