A California senior lost $700K to scammers. Now she’s asking the state to slow bank transfers

by Ryan Sabalow

A bill by Napa Democratic Sen. Bill Dodd aims to keep seniors from being scammed.

In summary

A California bill would temporarily halt large transactions if a financial institution suspects elder fraud. Will the bill prevent seniors from accessing their bank accounts for legitimate expenses?

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Alice Lin’s husband died, and she found herself alone and caring for a disabled son. Then two years ago, the 81-year-old Alhambra woman said she started getting texts from a stranger on a messaging app.

Over the course of a series of friendly chats, he convinced her to wire $720,000 — her entire life savings — to a cryptocurrency app.

So she did – in seven separate in-person transactions at her local bank over three weeks. Her life savings disappeared, along with the man who scammed her. For a time, she said she contemplated suicide. But then she got angry – at her bank.

“Despite many red, red flags, my bank failed to consider that I might be a victim of elder fraud,” Lin told the California Assembly’s Banking and Finance Committee this week. “And they did not even contact my daughter, who is the joint account holder on the account.”

In the months since, Lin started working with Consumer Attorneys of California to sponsor Senate Bill 278, a measure aimed at preventing elder fraud scams like the one that drained Lin’s investment accounts.  

The bill, by Napa Democratic Sen. Bill Dodd, would require that financial institutions delay transactions of more than $5,000 by at least three days if they “reasonably” suspect an elderly person is a victim of fraud. Banks would be required to train their employees to spot red flags, such as an unusually large and sudden transaction. Banks would also have to take steps to inform an elderly customer’s designated “emergency financial contact” or joint account holder – someone like Lin’s daughter – of a suspected fraudulent transaction.

“Elder financial abuse is everywhere,” Dodd told the banking committee. “Losses exceed $23 billion annually. Once a senior falls prey to financial fraud, they may never recover.”

Dodd’s bill passed the Senate this spring with support from every prominent senior advocacy group in California, including the AARP. The measure originally faced intense opposition from the state’s banking and business lobbies, though they’ve since softened their stance after the bill was recently amended. 

The financial institutions cite worries that they’d be forced into defacto conservatorships that would give them too much control over an elderly customer’s finances. The restrictions would also limit how quickly customers get their cash for legitimate expenses.

It was a concern shared by Roseville Republican Sen. Roger Niello who cast the lone “no” vote when the bill was before the Senate’s judiciary committee last month.

“As the bill exists now, it seems to me we run the risk of more conflict between seniors and their financial institutions than we do limiting elder abuse,” said Niello, who used the opportunity to give Dodd, 68, a good-natured ribbing about his age.

“I want you to know you don’t look a day over 90,” said Niello, who is 76 and the third-oldest member of the Legislature.

Dodd told the Assembly committee that the bill has been amended to limit the liability banks could face “when they do the right thing to protect elderly people, their customers.”

State Sen. Bill Dodd speaks during the first day of session at the state Capitol in Sacramento on Jan. 3, 2024. Photo by Fred Greaves for CalMatters

That eased some of the concerns from the 13 financial and business groups, including the California Chamber of Commerce, that are listed as opponents to Dodd’s bill.

“We think what’s in front of us right now, while it’s going to be a heavy lift for credit unions, the good outweighs the work that’s going to go in there,” Robert Wilson, a lobbyist with the California Credit Union League, told the banking committee this week. “This is going to protect seniors.”

Wilson and other bankers remain leery of how Dodd’s measure would be enforced – a matter that Dodd says will get cleared up by the time the bill reaches the Assembly Judiciary Committee next week.

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A California senior lost $700K to scammers. Now she’s asking the state to slow bank transfers