‘Financial Exploitation Prevention Act’ Unanimously Passes House

Bipartisan bill to protect at-risk seniors from financial scams and exploitation heads to Senate 

by Brian Anderson, Editor-in-Chief

U.S. House of Representatives. Image credit: © Kmiragaya | Dreamstime.com

U.S. House of Representatives unanimously passed a bipartisan financial services bill Monday aimed at preventing the financial exploitation of seniors and other vulnerable adults.

H.R. 500, the Financial Exploitation Prevention Act, sponsored by Capital Markets Subcommittee Chairwoman Ann Wagner (R-MO), passed the House by a vote of 419 to 0, and now awaits action by the Senate.

“The Financial Exploitation Prevention Act will provide our vulnerable investors with an important layer of protection to help make sure that they receive the hard-earned savings that they have built up over the years,” Wagner said in a statement. “Financial exploitation of seniors is elder abuse and, tragically, about 20% of senior investors fall prey to financial fraud, losing an estimated $2.9 billion annually. I hope the Senate takes up this bill immediately so vulnerable investors have the protections they deserve.”

Specifically, the bill would give the financial industry better tools to address suspected financial exploitation and abuse of seniors and those with mental and physical disabilities. First, the bill requires the Securities and Exchange Commission to report to Congress on recommendations for legislative and regulatory changes on how to combat financial exploitation of seniors and vulnerable adults.

Second, the bill permits a registered open-end investment company or transfer agent for that company, including mutual funds, to better protect seniors by delaying the redemption period of any redeemable security if it was reasonably believed that such redemption was requested through the financial exploitation of a security holder who is a senior or an individual unable to protect their own interests.

“Millions of seniors across the country, including my own mother, have been the victims of financial scams, and far too many have been cheated out of their retirement savings. Every few weeks, when I get a call from someone who’s fallen prey to a shameless huckster,” said Rep. Josh Gottheiemer (D-NJ), a member of the Financial Services Committee. “Our seniors should be spending time with their kids, grandkids, and friends—not staying up late at night worrying about whether someone is preying on their retirement nest egg. And we must be protecting those with mental and physical disabilities from predators who want to take advantage of them.”

The House approved the same measure by voice vote in 2021, but the Senate never took it up before the previous Congress concluded at the end of last year. Wagner wasted little time bringing the bill back in the new Congress.

A pair of major financial industry associations have already expressed support for the measure.

“Mutual funds are key to building financial security for the majority of households in the U.S., and around a third of those are seniors. The bipartisan Financial Exploitation Prevention Act is an important step to protecting seniors and vulnerable adults from manipulation and elder fraud by enhancing safeguards around redemptions,” Investment Company Institute (ICI) President and CEO Eric Pan said in a statement.

The Insured Retirement Institute (IRI) expressed its strong support for the bill in a letter to Rep. Wagner. The legislation is one of IRI’s legislative priorities included in its Retirement Security Blueprint.

“The prevention of financial exploitation and the protection of older and vulnerable Americans is a top legislative and regulatory objective for IRI,” said Wayne Chopus, IRI President and CEO. “Our members are on the front lines of this issue, working with clients across America every day. As a result, they are often the first to notice that a client may be the victim of a financial crime.”

Given its unanimous bipartisan support in the House, it is expected that the Senate will also approve the measure, but the timing of the upper chamber of Congress taking any action is highly unpredictable.

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‘Financial Exploitation Prevention Act’ Unanimously Passes House

Opinion: Pass this bill that would let mutual funds delay withdrawals if they suspect financial exploitation

By Eric J. Pan

The Senate should follow the House and pass the Financial Exploitation Prevention Act 

Getty Images/iStockphoto

Financial exploitation is a significant, and potentially devastating, problem throughout the country, particularly for seniors and other vulnerable adults who are common targets of scammers and cheaters. 

These criminals prey on lonely and isolated seniors to gain their trust and affection, then often make an urgent request for money for reasons ranging from a personal emergency or last-minute plane ticket to medical expenses or gambling debts. An estimated 7.86 million cases of elder fraud take place annually in the United States, resulting in losses of $148 billion to this vulnerable population each year. 

While financial companies may identify certain withdrawal requests as unusual, there are currently no laws that enable them to stop such transactions. But there is legislation moving through Congress right now to allow the firms behind mutual funds and exchange-traded funds—which is where many seniors save and invest their money—to better protect vulnerable Americans.

A bill called the Financial Exploitation Prevention Act would allow fund companies to delay transactions reasonably believed to be the result of financial exploitation for as long as 15 business days. This would allow time to confirm the validity of the transaction, verify the customer’s contact information, or identify any legal guardians, executors or trustees.

The ability to pause a transaction is especially important because a key component of these scams is the pressure criminals put on victims to withdraw money urgently. Under the Financial Exploitation Prevention Act, fund companies can pause the transaction to verify its validity before the money is stolen. Once the money is gone, it’s likely taken from the senior forever and could potentially leave them unable to pay their bills or afford basic living expenses.

The legislation also would cover anyone 18 or older who is unable to protect his or her own interests.

In addition to allowing companies to delay suspicious transactions, the bill requires the Securities and Exchange Commission to report to Congress with recommendations for legislative and regulatory reforms to combat financial exploitation of seniors and other vulnerable adults. Elder abuse is a vastly underreported crime. Enhanced reporting from the SEC would likely lead to more information and data about these crimes, which could help identify additional safeguards to protect those at risk. These efforts could also identify ways to help educate potential victims as well as their family or caretakers to help prevent future theft.

The House of Representatives approved the Financial Exploitation Prevention Act—which was introduced by Rep. Ann Wagner (R-Mo.), a senior member on the powerful House Financial Services Committee—unanimously in October. While the Senate has yet to take it up, the bill passing the House with strong bipartisan support is a positive sign and should serve as a catalyst for action in the Senate.

The Investment Company Institute and its members prioritize the fight against financial abuse and exploitation. We are constantly working to ensure the fund industry uses the most sophisticated security measures and safeguards available and continually searching for new ways to protect individual investors. That’s why ICI strongly supports the Financial Exploitation Prevention Act and calls on the Senate to pass it immediately.

Eric J. Pan is president and CEO of the Investment Company Institute, the leading global trade association for mutual funds and other regulated funds.

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Opinion: Pass this bill that would let mutual funds delay withdrawals if they suspect financial exploitation

New Protections in Place for Vulnerable Adults as Financial Exploitation Prevention Act Goes into Effect Sunday

Agency: Attorney General

Media contact: Lynsey Mukomel 517-599-2746
Public inquiries: 517-335-7622

September 25, 2021

LANSING - Vulnerable adults in Michigan will have new protections in place as the Financial Exploitation Prevention Act takes effect tomorrow, September 26. The statute enacts new requirements on financial institutions to ensure they have training and procedures in-place to better recognize the signs of financial exploitation and take action to protect those who are unable to protect themselves from abuse, neglect, or exploitation because of a mental or physical impairment or because of advanced age. 

The Act is the result of collaborative work led by the Department of Attorney General's Elder Abuse Task Force, the Michigan Bankers Association, the Michigan Credit Union League, the Prosecuting Attorney's Association of Michigan, Michigan Department of Health and Human Services, Michigan State Police, Michigan Sheriffs' Association and Michigan Association of Chiefs of Police. 

"Victims of financial exploitation do not usually know they are being taken advantage of, which is why it is so important that our financial instructions have the tools and training they need to help keep vulnerable individuals safe," said Governor Gretchen Whitmer. "This Act increases protections for Michiganders from unscrupulous individuals trying to exploit them. I am proud of the partnership between several government agencies and private sector entities to ensure Michiganders are protected from fraud."

"I continue to be proud of the important change our Elder Abuse Task Force is achieving through its diligent work," said Attorney General Dana Nessel. "This Act is the result of prioritizing our vulnerable adults through consumer protection measures and education, and financial institutions will play a vital role in preventing exploitation. The partnership between financial institutions, prosecutors, Adult Protective Services, and law enforcement will result in earlier detection and successful prosecution of those that prey on our vulnerable citizens." 

"With the appropriate training and procedures in place, Michigan's financial institutions will be better equipped to identify and report exploitation to protect our state's seniors and other vulnerable adults," said DIFS Director Anita Fox. "Our state's financial institutions work hard every day for the communities they serve, and this Act gives them additional tools to help recognize and stop fraud."  

Signed into law on December 30, 2020 by Governor Whitmer, the Financial Exploitation Prevention Act requires financial institutions to develop and implement policies, training, and procedures for identifying and reporting the exploitation of their customers. It also allows financial institutions to freeze customer transactions or assets under certain circumstances; provides immunity from criminal, civil, or administrative liability to financial institutions for actions taken in good faith under the Act; and provides for the powers and duties of certain governmental officers and entities to enforce the Act.  

The Department of Attorney General offers an educational presentation on the Act and elder financial exploitation prevention to interested groups. Eligible groups include but are not limited to elder abuse coalitions, area agencies on aging, law enforcement, and financial institution professionals. 

Groups interested in attending a presentation are asked to email AG-PA@michigan.gov with the following information: 

• subject line that states "FEPA Presentation Request"; 
• a brief description of the professional background of potential attendees; 
• the number of people likely to attend; 
• potential dates and times that will work well for the group (flexibility is encouraged); and 

• The format of the presentation (virtual presentations are recommended). 

If the group is below 50 attendees, the Department of Attorney General asks, to preserve time and resources, that the interested group allow another group to join their event upon request. 

In addition to working to implement this Act, the EATF worked with a bipartisan group of state legislators to announce additional legislation in June, which would implement fundamental reforms impacting guardians and conservators.  

Those bills have received hearings in both the House and Senate. If passed, the bills will achieve the remainder of the Task Force's first initiatives. 

The Elder Abuse Task Force, which Nessel launched shortly after taking office, consists of more than 55 different organizations in the public, private and nonprofit sections - all working together to combat elder abuse.   

The Department of Attorney General provides a library of resources for consumers to review anytime on a variety of topics.   

Your connection to consumer protection is just a click or phone call away. Consumer complaints can be filed online at the Attorney General's website, or by calling 877-765-8388.   

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New Protections in Place for Vulnerable Adults as Financial Exploitation Prevention Act Goes into Effect Sunday