PA legislation seeks to protect victims of financial exploitation

Financial institutions that suspect a customer is a victim of financial exploitation would have the ability to alert trusted family members and authorities while halting suspicious transactions under legislation that cleared a Pennsylvania House committee.

Rep. Joe Hogan (R-Bucks) held a hearing on fraud targeting seniors in March where the representatives of a Bucks County-based bank testified that tens of thousands of dollars are transferred fraudulently each week.

“We can try to raise awareness about these scams and these frauds. But we also have an opportunity here as legislators to provide some sort of protection as well,” Hogan said during the House Commerce Committee meeting on Tuesday.

Hogan is the prime sponsor of legislation that explicitly authorizes banks and fiduciaries to report suspicious activity involving an older adult or care dependent adult’s accounts to the local area agency on aging and law enforcement.

The bill also allows financial institutions to provide information regarding the report with a person associated with the victim to assist in preventing or remedying the suspected exploitation.

Under the bill, banks would be able to halt transfers or transactions to allow a determination whether they are legitimate or fraudulent and to seek a court order to extend the freeze if necessary.

An amendment passed unanimously in the committee on Tuesday reduced the period banks could halt a transaction from 15 to 7 days and reduced the length of an extension from 25 to 15 days. It also eliminated the requirement for the Department of Aging to develop a training program.

House Bill 2064 passed with a 24-1 vote and now goes to the full House for consideration.

Without legislation that gives banks a role in preventing financial exploitation, financial institutions and fiduciaries must defer to the wishes of their clients, Teresa Osborne, the Pennsylvania advocacy director for the AARP, said.

Although Osborne said the AARP and other senior organizations support the passage of such a law in Pennsylvania, the AARP has objected to the language of H.B. 2064 citing amendments that weakened the protections and conflicts with the state’s Older Adult Protective Services Act.

For example, H.B. 2064’s requirement for financial institutions to notify a trusted family member about reports of suspected fraud clashes with a provision of the Older Adult Protective Services Act that prohibits protective services agencies from disclosing reports of suspected abuse, Osborne said.

Financial exploitation of older adults and those who depend on others for care has been a focus of state government and law enforcement in recent years.

The state attorney general’s office created a Senior Protection Unit in 2006 that investigates and prosecutes those who cheat, deceive or abuse older Pennsylvanians. The unit also educates the public on how to recognize fraud and avoid becoming a victim.

Gov. Tom Wolf signed Act 48 in 2021 that criminalized financial exploitation by a family member or another person in a position of trust and created enhanced penalties of up to five years in prison for fraud of less than $2,000 and up to 20 years for fraud exceeding $500,000. The law also gives the attorney general jurisdiction to prosecute financial exploitation of more than $20,000.

In 2022, the Department of Aging created a four-person Financial Abuse Specialist Team to identify, prevent and mitigate fraud against older adults. The team grew out of a pilot program that began in 2020, when the department hired a retired state trooper with expertise in financial exploitation investigations, to serve as “a shared resource” for Pennsylvania’s 52 area agencies on aging.

Hogan’s bill is similar to legislation introduced by Rep. Brian Munroe (D-Bucks), who said he personally experienced the frustration of financial exploitation when thousands of dollars were drained from his mother’s bank account over the course of two years.

“And one phone call could have put a stop to it,” Munroe said. “With one phone call to law enforcement, to the area agency on aging, hopefully to me, and we would have saved her tens of thousands of dollars.”

Munroe said he was pleased to see Hogan’s bill advance but noted that similar legislation has been proposed for more than a decade without passing.

“Similar legislation like this has died a slow death of perfection, meaning that just a continuous attempt to get the perfect language has caused inaction,” Munroe said. “And every day seniors are being defrauded.”

Rep. Chris Rabb (D-Philadelphia), who cast the single vote in opposition to the bill, questioned Hogan about what organizations he had consulted, asking if local legal aid agencies had been involved.

Hogan said he was aware of the AARP’s concerns and he is working with the group to resolve them through amendments he expects to introduce on the House floor.

Osborne said that in addition to concerns about the amendment eliminating the training requirement and shortening the time disbursements could be held, the AARP believes any Pennsylvania legislation should more closely track model legislation provided by the North American Securities Administrators Association. Laws based on the model bill have been enacted in 37 states, according to the association.

Commerce Committee Chairperson Scott Conklin (D-Centre) said the bill has strong support from the banking community “expressing their desire to have more influence over what they see as red flags and fraud taking place and their inability to actually take action on it fast enough.”

From Pennsylvania Capital-Star