A grandmother is shocked when she gets an email from her grandson pleading for help.
He’s in New York City where he crashed a rental car. He needs her to wire several thousand dollars to a bank account in the Caribbean. His parents don’t know he’s in the Big Apple, so please please please don’t tell them.
The loving grandmother goes to the bank to get the money. But little does grandma know that she’s being scammed by someone pretending to be her grandson. And once the money is gone from her bank account, it is hard to get it back.
“The scammers do this all day long. They are able to pull enough information off of Facebook to build a story and they know just enough to convince an elderly person that it’s true,” said Celeste Embrey, assistant general counsel at the Texas Bankers Association. “The elderly are very ripe and rich targets for scammers.”
But a new state law gives Texas banks and financial institutions more flexibility to protect the elderly and disabled from exploitation by allowing them to stop what they believe to be questionable transactions and allow them to report the potential fraud to the authorities for additional investigation.
The law went into effect Sept. 1.
“More of this goes on than we’d like to admit,” said state Sen. Kelly Hancock, R-North Richland Hills, one of two local lawmakers who sponsored House Bill 3921 along with state Rep. Tan Parker, R-Flower Mound. Hancock said this a vulnerable part of our society, “many of who have worked their whole lives to get to this point and they can be destroyed overnight.”
While no one can say precisely how much money is lost in these type of transactions, the U.S. Justice Department estimates that about $3 billion is lost annually through elderly financial fraud schemes, but one AARP Texas official told the Star-Telegram the total could reach $24 billion.
The legislation is part of a growing movement in Texas and across the country to protect the growing elderly population. Earlier this year the Tarrant County District Attorney’s Office created an elder financial fraud unit to specialize in prosecuting crimes against the elderly and the disabled. It also helped to create the Financial Exploitation Prevention Center of Tarrant County to help those who have been victimized.
“These are greedy people with very little conscience,” Hancock said.
Banks, credit unions and other financial institutions previously had the ability to halt transactions if there was questionable activity, but often it required freezing an entire account. They also didn’t have the authority to notify a third party about an out-of-the-ordinary check or withdrawal of cash.
The new law allows a financial institution to place up to a 10-day hold on a specific request for payment, similar to what credit card companies do after a questionable purchase is reported. Blocking that payment can be extended for up to 30 days if requested by a state or federal agency or law enforcement. The request to extend the financial hold would be reviewed by a court.
It also gives an individual employee like a teller immunity from being sued if a customer is unhappy about not having immediate access to his or her money.
But, if the request for funds is legitimate, the hold shouldn’t cause the parties involved to “throw a fit,” said Tim Morstad, assistant state director for AARP Texas, one of the stakeholders who backed the bill.
“The tellers are the last backstop,” Morstad said. “Once the money leaves a bank account, you can’t get it back. We want the bank teller to have some options. ... This is one more tool in their tool box.”
If the transaction involves someone with an ongoing personal relationship with the elderly victim — a family member, a caretaker or a neighbor who routinely provides help — then Adult Protective Services, a division of the Texas Department of Family and Protective Services, would conduct the investigation.
If the transaction in question involves a stranger taking advantage of a senior citizen, such as a scam artist promising to fix a driveway or a roof, it would be turned over to law enforcement.
Slightly more than 63,000 exploitation allegations of all kinds were made to Adult Protective Services from 2012 to 2016 with about 4,800 being validated, according to state records. That is only the “tip of the iceberg,” since it is believed that a vast majority of financial abuse goes unreported, said Kez Wold, associate commissioner for the department.
“This bill gives us some tools that can be very helpful in helping these vulnerable clients,” Wold said. “The realities are that the aging population is exploding and the resources for serving this community are struggling to keep up.”
Martin Noto, president and CEO of the Fort Worth region for First Financial Bank, said he knows firsthand how these scams work. His 80-year-old father-in-law got a call from someone suggesting that his grandson in Los Angeles was in jail and he needed several thousand dollars to get him out. The grandfather told them “thanks, but no thanks.”
Noto said the new bill “will give us more teeth” in fighting exploitation of a segment of the population that holds the greatest amount of wealth. Embrey at the Texas Bankers Association said that 75 percent of the wealth is held by people 50 years and older.
“That is what makes them the targets they are,” Noto said.