CFPB urged to protect elderly from pandemic scammers

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WASHINGTON — As the coronavirus pandemic continues to make Americans economically vulnerable, lawmakers and consumer advocates are calling on the Consumer Financial Protection Bureau to protect older Americans from financial scams.

Earlier this week, House Republicans warned CFPB Director Kathy Kraninger in a letter that the CFPB’s guidance on financial abuse of older adults has not been updated since 2013. And other consumer advocates are calling on the agency to give financial institutions better tools to protect customers against scams related to the pandemic.

“In light of the evolving nature of the coronavirus, there is an increased level of fear and subsequent vulnerability to fraudulent schemes,” senior Republicans on the House Financial Services Committee, led by Rep. Patrick McHenry, R-N.C, wrote. “We are particularly concerned that bad actors will use this as an opportunity to take advantage of seniors.”

Earlier this week, the CFPB included a warning about scams in a blog post on how consumers can protect themselves financially during the pandemic.

“Be cautious of emails, texts, or social media posts that may be selling fake products or information about emerging coronavirus cases,” the CFPB said in the blog post.

The CFPB published guidance in 2013 on elder financial abuse noting that a bank's familiarity with its older clients may help it spot possible instances of exploitation. Scammers may compel victims to transfer funds via a checking account, credit card or other means in exchange for the false promise of a service or good.

In 2019, the bureau updated its data on suspicious activity reports related to elder financial exploitation, which found that such filings had quadrupled between 2013 and 2017.

Yet the 2013 guidance has not been updated since then. With many senior citizens isolated in their homes to protect themselves from the coronavirus, consumer advocates say they are particularly vulnerable to scammers that try to contact them by phone and that the CFPB should try to crack down.

“Use the authority of their national agency to have somebody with authority go on television, on radio, digital ad buys … to actually do significant penetration to alert the general public that these abuses are happening now and are going to take place,” said Aracely Panameño, director of Latino affairs at the Center for Responsible Lending.

Some news outlets have reported scammers using robocalls to falsely claim to be offering coronavirus test kits. The Federal Deposit Insurance Corp. also has issued alerts this week following reports that scammers have tried to use the agency’s name to target individuals.

The bureau's 2013 guidance said financial institutions are well-positioned to "spot irregular transactions, account activity, or behavior.”

“Prompt reporting of suspected financial exploitation to adult protective services, law enforcement, and/or long-term care ombudsmen can trigger appropriate intervention, prevention of financial losses, and other remedies,” the agency said.

Quyen Truong, a partner at Stroock and former CFPB assistant director, said that recommendations by the Centers for Disease Control and Prevention for people to stay home, as well as travel restrictions imposed by the U.S. government, put older Americans at a greater risk to be targeted by scammers.

Truong noted a common scam when a bad actor impersonates an older person's close family member on the phone and requests monetary assistance.

“As people shelter in place ... for long periods, there might be scams demanding large payments to deliver goods and other support to homes,” Truong said. “And because friends and family may be separated due to travel restrictions, there are more opportunities to request funds to aid loved ones, a favorite type of scam on the elderly."

Panameño said she has already seen a number of cases in which older Americans were targeted through door knocking and phone calls by people fraudulently claiming that they were conducting coronavirus testing.

“We also anticipate that there will be more significant attempts as the government talks about providing cash assistance to families,” Panameño said. “We are anticipating … and trying to get ahead of the scams that will promise ‘I can give you your money now but you have to give me $300 now.’”

Some advocates say that the CFPB could empower financial institutions to protect older Americans from scams, particularly those involving fund transfers.

Lauren Saunders, associate director at the National Consumer Law Center, said Congress could also pass legislation "clarifying that payments induced by fraudsters are covered by protections against unauthorized charges."

"The consumer's bank should reimburse the consumer and then be entitled to recover from the institution to which the payment is sent," Saunders said.

The FDIC said recent scams targeting consumers have used the names of actual FDIC employees.

“The messages might ask you to ‘confirm’ or ‘update’ confidential personal financial information, such as bank account numbers," the agency said. "In other cases, the communication might be an offer to help victims of current or previous frauds with an investigation or to recover losses.”

Odette Williamson, a staff attorney at the NCLC, said the CFPB should empower banks to delay or prevent transactions induced by fraud in the midst of the pandemic.

The CFPB data of suspicious activity reports pointed to money transfers as the most common way fraudsters try to induce elderly vicitms to send them money.

“If I am an older adult and come in and want to transfer money to a scammer … these banks have the power to delay or reject those transactions,” Williamson said.

But Truong warned that as coronavirus-related scams continue, the CFPB still doesn't have enough data to arm financial institutions with the tools needed to detect fraud.

“One of the shortcomings that we have here is there has not been a lot of systematic data gathering regarding the types of scams that may be deployed in this type of situation,” Truong said. “The Republican letter to Director Kraninger was asking for that kind of data, but we don’t have extensive data on this.”

Truong said that the agency could help financial firms identify possible scams through the collection of data.

"Regulators including the CFPB potentially could facilitate identification, reporting and prevention of elder financial exploitation by gathering data on these scams, sharing the data, patterns and trends, providing suggestions to financial institutions on how to identify and report them, and possibly establishing safe harbors for reporting and for delay of fund disbursements in case of suspected scams,” Truong said.

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CFPB Elder fraud Coronavirus Patrick McHenry Fraud Money transfers Enforcement