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Senate Special Committee on Aging Hearing on Fighting Elder Fraud

Special Committee on Aging

“Fighting Elder Fraud: Progress Made, Work to be Done”

Wednesday, January 16, 2019

Key Topics & Takeaways

  • Financial Services Industry Involvement: Asked how financial institutions are involved in efforts to combat senior exploitation, Kozlowski explained there are many “robust” training programs in place at large financial institutions. Casey noted his bill, the Stop Senior Scams Act, that in part sets up an advisory committee to ensure banks and other businesses have the tools they need to effectively train their employees.
  • Challenges in Combating Financial Exploitation: Simeoni explained that a large percentage of perpetrators are caretakers, family members, or are otherwise known to the victim, and it is difficult for victims to “report people they love.” Simeoni continued that fear of the loss of their independence and cognitive impairment are also factors.
  • Education: Kozlowski said it is important to think more broadly about education, engaging with those who touch the life of an older adult, such as letter carriers, emergency medical technicians (EMTs), doctor’s offices and faith communities.

Witnesses

Opening Statements

Sen. Susan Collins (R-Maine), Chairman, Senate Special Committee on Aging

In her opening statement, Collins noted that the committee has held a number of hearings on senior financial exploitation, examining the Internal Revenue Service (IRS) imposter scam, Jamaican lottery scam, computer tech support fraud, grandparent scams, identity theft, romance scams, drug mule scams, and other forms of elder financial exploitation. Collins noted that many of these fraudulent schemes are perpetrated from overseas, outside the reach of state and local law enforcement, and therefore requires a coordinated response led by the federal government in close cooperation with state and local law enforcement, the private sector, and stakeholder organizations. Collins highlighted that law enforcement has stepped up their efforts, including the takedown of five call centers in India and the arrest of their U.S. co-conspirators in 2016. Collins noted that many seniors are not only losing money, but their retirement security to scams.

Sen. Bob Casey (D-Pa.), Ranking Member, Senate Special Committee on Aging

In his opening statement, Casey said it was critical to continue working on this issue, saying fraud against seniors adds up to $3 billion per year and that individuals are being robbed of their retirement security. He discussed his legislation, the Stop Senior Scams Act, which will bring together the public and private sectors to develop solutions to protect seniors from scams, calling it a “commonsense proposal.”

Testimony

Erika Flavin, Daughter of Couple Scammed by Grandparents Scam

In her testimony, Flavin described her parents’ experience falling victim to a grandparent scam and how it has impacted their family and financial security. Flavin’s parents were contacted by an individual claiming to be a lawyer and lost more than $80,000 they thought was going towards legal fees for their grandson. When they finally contacted their daughter, they learned they had become victims of a scam and their grandson was not actually in any legal trouble. Although their living expenses are currently covered, Flavin’s parents lost much of their Thrift Savings Plan (TSP) retirement account and have little left to cover emergencies that may arise.

Candice Simeoni, Administrative Supervisor, Kennebunk Police Department; Founder and President, York County Elder Abuse Task Force

In her testimony, Simeoni discussed her experience conducting elder abuse training and education programs, stressing the effectiveness of a multidisciplinary approach to address the issue. Simeoni said the initial goal should not be prosecution, but rather the prevention of further victimization, and only then focusing on building a criminal case. Simeoni noted that statutes need to be modified to help protect victims even when they do not believe they are being scammed, and that it is important to develop specialized law enforcement officers in each state to focus on elder financial exploitation

The Honorable Derek Schmidt, Attorney General, State of Kansas

In his testimony, Schmidt said that three factors converge to highlight the growing concern about senior exploitation: 1) the number of Americans over age 65 is growing rapidly as 10,000 people turn 65 every day; 2) certain generational characteristics, such as loneliness and a desire to be polite, tend to create vulnerabilities; and 3) older Americans are the wealthiest demographic in the country, with a median household wealth of $240,000. He continued that these factors have resulted in more vulnerable, wealthier targets than ever before. Schmidt highlighted a few concrete steps that can be taken to mitigate these risk factors, including addressing robocalls, education and outreach efforts, federal-state partnerships to improve the prosecution of cases, and utilizing a multidisciplinary approach.

Judith Kozlowski, Elder Justice Consultant

In her testimony, Kozlowski said it was important to think about how to better systematically approach senior exploitation issues and noted that a lot of progress has been made, particularly at the federal level. Kozlowski said that there is work needed beyond law enforcement, especially addressing cognition and social challenges seniors face, highlighting the need for multidisciplinary teams (MDTs) to focus on these problems. Kozlowski highlighted one such effort, the Elder Justice Coordinating Council, a working group of federal agencies working together to address elder abuse and financial exploitation. She explained that they have produced inter-agency guidance on reporting financial abuse of older adults, provide “robust” online financial exploitation resources, and leverage its membership for the dissemination of materials and discussion. Kozlowski also stressed the importance of civil legal services in this space, as their resources are essential when an older adult’s life is upended by exploitation. Kozlowski said the proactive involvement of the financial services industry is key in combating senior fraud, noting that the Senior Safe Act, the NASAA model rule that has been adopted in 19 states, and the SIFMA senior investor protection working group have been active to ensure assets are protected.

Question & Answer

Gaps in Current Law

Multiple Senators, including Martha McSally (R-Ariz.), Doug Jones (D-Ala.), and Kyrsten Sinema (D-Ariz.), asked about gaps in current law that need to be addressed. Kozlowski said the regional offices of various federal government agencies could be utilized more, and noted that thanks to many new laws and regulations on the books, financial professionals have many tools including trusted contacts and report and hold safe harbors. She said the banking industry does still have gaps in training, but recognize the importance of keeping assets in their institutions.

Financial Services Industry Involvement

Senators Collins, Casey, Jacky Rosen (D-Nev.), and Mike Braun (R-Ind.) asked various questions about how financial institutions are involved in efforts to combat senior exploitation. Kozlowski explained there are many “robust” training programs in place at large financial institutions, and noted that AARP has developed the BankSafe training program for tellers and supervisors. Casey noted his bill, the Stop Senior Scams Act, that in part sets up an advisory committee to ensure banks and other businesses have the tools they need to effectively train their employees.

Flavin stated that if provisions of the Senior Safe Act had been in place at the time her parents were defrauded, it likely would have had an impact, and that they would have been receptive if they had been approached with information about scams to dissuade them from withdrawing the money they lost. She said when she later spoke to her parents’ bank, there was a lack of knowledge about laws that would have allowed them to intervene.

Challenges in Combating Financial Exploitation

Asked by Collins why more seniors do not come forward to report scams and fraud, Simeoni explained that a large percentage of perpetrators are caretakers, family members, or are otherwise known to the victim, and it is difficult for victims to “report people they love.” Simeoni continued that fear of the loss of their independence and cognitive impairment are also factors, and victims are often reluctant or unable to believe someone would prey on them. Simeoni said she stresses to seniors that it is okay to hang up the phone to make the calls stop, as many seniors fall victim to both charismatic scammers as well as harassing calls.

Robocalls

Asked by Casey how to address the proliferation of robocalls, Schmidt explained that a vast majority of robocall scams originate outside the U.S. Schmidt noted that the no-call list does work to block law-abiding telemarketers, but there has been an “explosion” in volume of calls by “offshore crooks.” Schmidt said the issue will never be solved by law enforcement, but rather by prevention through partnerships with the tech and telecom industries.

Education

McSally asked what challenges there are in educating seniors, especially in rural areas. Simeoni explained her organization is exploring putting public service announcements (PSAs) on local tv stations, stressing the need to make the videos human and relatable and include contact information for local resources. In response to a question from Rosen, Kozlowski noted it is important to think more broadly about education, engaging with those who touch the life of an older adult, such as letter carriers, emergency medical technicians (EMTs), doctor’s offices and faith communities.

For more information on this hearing, please click here.