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Do Financial Professionals Need Mandated Reporter Training?

Do Financial Professionals Need Mandated Reporter Training?

Do Financial Professionals Need Mandated Reporter Training?

Do Financial Professionals Need Mandated Reporter Training?

One in ten older Americans have experienced some form of elder abuse. Factors like social isolation and diminishing mental capacities can make older adults more vulnerable to abuse and exploitation, including financial abuse. Financial professionals and employees of financial institutions are in a unique position to spot the signs of elder financial abuse and exploitation, from unusual spending patterns to fraudulent signatures on financial documents.

Are Financial Professionals Mandated Reporters?

Many states specifically name financial institutions as mandatory reporters of elder abuse.

In California, all officers and employees of financial institutions are mandated reporters of suspected financial abuse of elders. This responsibility extends to any notary public who, while providing notary services, observes or gains knowledge of the potential financial abuse of an elder or dependent adult.

A mandatory reporter is someone who is required by law to report suspected abuse. This designation is often occupation-based and may include financial professionals based on individual state legislation.

What is Elder Financial Abuse?

Elder financial abuse involves the illegal or improper use of an elderly person’s funds, property, or assets. Examples include cashing checks without authorization, forging signatures, coercing or deceiving an older person into signing documents, and the improper use of guardianship or power of attorney. It’s a form of exploitation that significantly impacts the health, welfare, and financial stability of older adults.

10 Examples of Elder Financial Abuse or Exploitation

Employees of financial institutions or other financial professionals may find themselves recognizing one or more of the following examples of financial abuse:

Unauthorized Use of Funds or Assets: This involves illegally or improperly using an elder’s money, assets, or property. For instance, a caregiver or family member might misuse an elder’s credit card or bank account without permission.

Forgery: Elderly individuals may fall victim to forgery, where their signature is forged on checks, titles, or other legal documents, thereby illegally transferring money or property.

Scams and Fraud: Elderly individuals are often targeted by scammers through schemes like lottery scams, where they are told they’ve won a prize but must pay a fee to claim it, or romance scams, where perpetrators feign romantic interest to gain financial advantage.

Abuse of Power of Attorney: This occurs when someone with legal authority to manage an elder’s financial affairs (like a power of attorney) misuses that authority for personal gain, such as transferring money from the elder’s account to their own.

Real Estate Fraud: This includes situations where an elderly person is deceived into signing away their home or property or is involved in a predatory lending scheme related to reverse mortgages or refinancing.

Investment and Financial Advisor Fraud: Unscrupulous financial advisors might exploit an elder’s trust, leading to inappropriate investments, churning of accounts for commissions, or outright theft of funds.

Coercion or Undue Influence: This involves pressuring or manipulating an elder to sign documents, like wills or deeds, against their best interest, often benefitting the manipulator financially.

Identity Theft: Stealing an elder’s personal information to open credit accounts, drain bank accounts, or commit other forms of fraud.

Telemarketing and Internet Fraud: Elders may be tricked into providing personal financial information over the phone or online, leading to unauthorized withdrawals or purchases.

Neglect of Financial Responsibilities: In cases where an individual is responsible for managing an elder’s finances, neglecting this duty or failing to use their resources for necessary care and expenses can also constitute financial abuse.

How Prevalent is Elder Financial Abuse?

Elder financial abuse is alarmingly common, though often underreported. The National Council on Aging estimates that up to 5 million older Americans face financial abuse each year. However, only 1 in 44 cases are typically reported.

The financial impact is substantial, with elder financial abuse costing older Americans an estimated $36.5 billion annually.

Why Are Financial Professionals Mandated Reporters of Financial Abuse?

Financial professionals are often the first line of defense against elder financial abuse. Their unique position allows them to notice red flags, such as unusual banking activity or changes in spending patterns that family members or friends might miss. By mandating reporting from these professionals, states like California aim to create a proactive approach to identifying and stopping financial abuse early.

California is not the only state to specify financial professionals as mandated reporters of elder financial abuse.

Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Kansas, Mississippi, New Mexico, North Carolina, and Washington are among the states that specifically list financial institutions as mandated reporters or that require mandatory reporting training for financial institutions.

Do Financial Professionals Need Mandated Reporter Training?

While financial professionals are adept at handling finances, identifying abuse requires specific skills and knowledge. Training programs typically cover recognizing signs of financial abuse, the legal responsibilities of reporting, and how to report effectively.

In some states, such as Illinois and Washington, mandated reporter training is required for employees of financial institutions.

Even if training is not a requirement in your state, providing training for employees and officers of financial institutions can help these mandatory reporters understand their legal obligations for reporting.

The role of financial professionals in combating elder financial abuse is invaluable. Being aware of the signs of potential abuse and understanding how to make a report can help protect your clients against fraud and exploitation. As a mandatory reporter, you can help safeguard someone’s financial assets and help make a difference in someone’s life.

Recognize the signs of abuse.