Federal banking agencies are highlighting financial exploitation of the elderly in recently issued written Guidance. That Guidance cites studies to the effect that although financial exploitation is one of the most common forms of elder abuse, it is greatly underreported. It notes that older adults can become targets of financial exploitation by family members, caregivers, financial advisors and others because they often have significant assets and are vulnerable to exploitation due to health or other problems.
Financial institutions, often because of the familiarity of their front-line staff with their elderly customers and the institution’s unique position of being a repository for deposit accounts, can spot unusual account activity of its customer, putting it in a unique position to detect suspected exploitation. However, financial institutions also have heightened legal responsibility to protect confidential consumer information under Federal and state law. Accordingly, the Guidance is particularly useful in reconciling their privacy obligations with their ability to aid in the fight against financial exploitation of the elderly.
The Gramm-Leach-Bliley Act’s basic rule is that a financial institution may not disclose any nonpublic personal information about a consumer to any nonaffiliated third party unless it first provides the consumer with a notice describing the disclosure and a reasonable opportunity to opt out of the disclosure. However, GLBA incorporates exceptions to this basic rule that permit a financial institution to disclose such information without the consumer’s consent and without violating GLBA, to local, state or federal agencies when there is suspected financial exploitation, such as:
In addition, financial institutions doing business in New Hampshire can look to New Hampshire’s statutory scheme that also aids in the fight against financial exploitation of the elderly. NHRSA 161-F deals with protective services to adults and requires any person suspecting or believing in good faith that any adult who is suspected to be incapacitated, has been subject to exploitation, shall report such to the commissioner of health and human services (or his authorized representative) or if requested by the commissioner, to disclose financial records to further an investigation.
The law protects those participating in good faith in the making a report of exploitation or providing information relative to a report, from liability. Further, New Hampshire’s Right to Privacy Act regulating government access to financial institution records, is specific in not prohibiting the disclosure to the department of health and human services, of financial records requested by the commissioner or his authorized representative for the purpose of investigating a report of alleged exploitation.
Banks will want to train staff on spotting signs of financial exploitation of incapacitated adults, and update policies and procedures on not only reporting suspected exploitation, but also responding to requests from governmental agencies for customer information in the course of investigating financial exploitation.
Susan is a member of the Real Property and Probate Section of the New Hampshire Bar, and is admitted in New Hampshire, Massachusetts, and Vermont.
THIS ARTICLE IS NOT INTENDED TO PROVIDE LEGAL ADVICE, AND DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP.