Banks are fine-tuning their technology to help the victims of elder abuse.
As readers of MarketWatch’s Moneyologist column know, the practice of scamming seniors has gotten out of control — some 17% of senior citizens have reported they’ve been victims of financial abuse, with the average senior losing about $120,000, amounting to losses of more than $3 billion in the U.S. each year, according to the Consumer Finance Protection Bureau (CFPB).
(Other financial institutions have noted the number could be even higher, given that the abuses are not always detected or reported).
Now, banks are stepping up to better protect seniors, developing new technologies that promise to cut down on financial abuse among their aging customers.
Wells Fargo & Co. (WFC, -0.46%) began using new software for detecting abuse in some seniors’ wealth-management accounts during the first quarter of 2016 and is gradually rolling the technology out to more accounts.
The technology closely tracks the investing behavior of the individual who owns the account and starts to recognize his or her unique habits, said Jimmie Lenz, the chief technology risk officer for Wells Fargo’s wealth investment management division.
Elder financial abuse often has its own set of signs, according to a report issued by the CFPB in March 2016.
These include suddenly insufficient funds or overdraft fees, activity in previously inactive accounts, change of address on an account, opening a new joint checking account or adding a joint owner to an existing account, an increase in total monthly cash withdrawals compared with historical patterns and electronic bill payments to new vendors.
The Wells Fargo software can pick up on fraudulent or unusual behavior, even for small deviations in investing behavior, Lenz said.
That can be particularly useful for detecting elder abuse, since abusers often try to make small withdrawals from a senior’s account over time, Lenz said.
A thief who steals a credit card, in contrast, is more likely to make large withdrawals or purchases to steal as much money as possible before the card is canceled.
The pattern of financial transactions for elder abuse cases, however, is often times different.
For example, when Wells Fargo began using the new software, it detected that one account holder had written more than 100 checks over the course of one year, totaling $180,000, to several individuals who didn’t seem to be associated with him.
Wells Fargo was able to investigate the checks further and turn the case over to its elder abuse group within Wells Fargo advisers, who will decide if the bank should contact law enforcement or the account holder’s family members.
The American Bankers Association began giving awards to banks that have shown superior efforts in protecting older Americans in 2014, recently giving Utah-based Bank of American Fork recognition for its online elder-abuse prevention tools, called AccountSmart, as well as Texas-based First Financial Bank for its financial exploitation education program.
AccountSmart allows an authorized third party to monitor an account online.
First Financial Bank employees visit retirement centers, nursing homes and civic clubs to give presentations on how to avoid being a victim of financial abuse, as well as providing online resources.
Over a three-year period, Edward Jones has adjusted some age parameters it previously used in paying special attention to certain accounts to watch out for financial abuse, lowering the age from 75 to 70 or 65 for some account holders due to an increasing number of younger baby boomers with a large amount of assets, said John Ellis, a principal in the firm’s Field Supervision department.
Banks’ traditional anti-fraud technology isn’t always tailored for seniors, said Naomi Karp, a senior policy advisor at the Consumer Financial Protection Bureau.
For example, a 2 a.m. ATM withdrawal may not sound any alarms for a 25-year-old bank client, but for an 85-year-old, it often should, Karp said.
Another reason for specific technology to help detect elder abuse: Clients are living longer and require more retirement savings to support themselves in old age.
Technology shouldn’t be the only defense against financial fraud; in-person interactions at bank branches and with financial advisers can be just as helpful, Karp said.
Tellers and bank staff reviewing loan applications should all be on the lookout for elder abuse, she said.
At Edward Jones, financial advisers and office administrators at individual branches are trained to detect cognitive decline and signs of dementia and Alzheimer’s.
In fact, the investment firm announced a partnership with the National Alzheimer’s Association in February and pledged to give $4.7 million in two years, in part to make families more aware of the signs of the disease.
Although technology has helped some banks combat financial fraud, it has also allowed seniors to be scammed in new ways, including email scams or “friends” who claim to know them on social media.
“Criminals are finding ways to take advantage of those vulnerabilities,” said Corey Carlisle, the executive director of the ABA’s philanthropic arm, the ABA Foundation.
June 15 is National Elder Abuse Awareness Day. The National Council on Aging, a nonprofit organization based in Arlington, Va., offers several online resources families can use to learn more about elder financial abuse, including EconomicCheckup.org, for more information on scams. Washington, D.C.-based nonprofit National Association of Area Agencies on Aging also provides online resources.
Source: MarketWatch
Posted by: The Trust Advisor
Permalink: http://thetrustadvisor.com/uncategorized/high-tech-ways-banks-are-trying-to-save-seniors-from-having-their-money-stolen
