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Preventing Elder Financial Abuse - April 2024

Elder financial abuse robs older Americans of billions of dollars in money, property and other assets every year. As those safeguarding their customers’ finances, community bankers are key watchdogs for monitoring and preventing this abuse.

As relationship lenders and financial first responders, community banks are in a unique position to help shield our elderly customers against these prevalent threats through employee training and the use of technology to spot red flags and report suspicious activity to authorities.

Medicare/Health Insurance Scams

It is difficult to imagine that someone could prey on those in need of medical assistance, but unfortunately, Medicare fraud is all too common. Criminals are posing as Medicare or medical supply representatives to obtain personal information or provide bogus services and use the information to bill Medicare or assume an identity to perpetrate fraud.

As a good rule of thumb, never share personal or financial information with anyone who contacts you out of the blue.

Zoom Phishing Emails and Internet Fraud

Con artists are also capitalizing on the rise in video meetings, registering thousands of fake Zoom-related internet domains to send phony emails, texts, or social media messages to trick consumers into clicking on bogus links to address “account suspension” or “meeting” notices. Those that take the bait inadvertently download malware (malicious software) on their computer, exposing their personal information to potential use by fraudsters.

Internet scammers are also known for sending fake text messages alleging trouble with an internet account, credit card, bank account or shopping order. Many contain realistic looking logos to lure you into clicking on a link and divulging personal information.

To limit your exposure, avoid clicking on links from unsolicited emails or texts. If you suspect a problem with an account, contact the bank or service provider directly.

Telemarketing/Phone Scams

Seniors schooled in etiquette may frown upon “hanging up the phone” or simply saying “no” to unsolicited calls, but taking these calls leaves the door open to criminals posing as company representatives. Three notable examples include:

  1. The pigeon drop:  con artists pretend to share found money in exchange for a “good faith” payment drawn from the contacted person’s bank account.
  2. The fake accident ploy:  con artists create a false narrative that a loved one has been injured in an accident and needs money for medical expenses.
  3. Charity scams: con artists solicit funds on behalf of a charity for which they are not affiliated with or is not legitimate.

Remember, if it’s too good to be true, it probably is. If you want to donate to a charity, go directly to the source. And if you are worried about a friend or family member, verify the information with them directly.

Unfortunately, scams are always changing, making fraud nearly impossible to fully eradicate, but we’ll never stop looking out for your benefit and encourage you to consult the Federal Trade Commission’s “scam alert” page for information about the latest scams targeting consumers.

Our community bank employees are trained in the latest fraud prevention techniques and are available as a resource as well. They can help you spot potential scams and take appropriate measures to protect your account if you suspect you have been a victim of financial fraud.


Adults 60 and older were 45 percent more likely than adults aged 20-59 to report losing money to a friend or family impersonation scam, according to the Federal Trade Commission.

Roughly 20 percent of older Americans fall prey to financial exploitation totaling $3 billion annually or an average of $120,000 per elderly victim, according to a study from the AARP Public Policy Institute.

Source: Independent Community Bankers of America

Consumer advisory: Your money is at greater risk when you hold it in a payment app, instead of moving it to an account with deposit insurance - 
More than three quarters of adults in the United States have used a payment app , sometimes called a P2P (peer-to-peer or person-to-person) app. Widely used nonbank payment apps include PayPal, Venmo, and Cash App. The apps can be used on a computer or mobile device to send money to someone else without writing a check or handing over cash.
Young adults use payment apps even more frequently. According to a March 2022 survey by Consumer Reports , 85 percent of consumers aged 18 to 29 have used one of these apps.
Money stored in nonbank payment apps often is not protected by federal deposit insurance
Nonbank payment apps help you move money into and out of a linked bank account, credit union account, or card account. They also let you store money inside the app. In fact, money you receive generally stays in your payment app account until you connect to the app and move the money to your linked account.
Keeping money inside your nonbank payment app might feel the same as a keeping money in a traditional bank account with deposit insurance. You can check your balance and review transactions, just as you might do with online banking. However, the difference is that the money in your app might not be held in an account at an FDIC member bank or NCUA member credit union. This means it might not offer federal deposit insurance.
The difference is key because money you keep in your bank or credit union account is insured if the bank or credit union fails. However, deposit insurance does not apply when a nonbank payment company fails. When you consider the worst-case scenario, you might wonder: What if the payment company holding my money goes out of business or fails?
If a payment app’s business fails, what happens next is often unclear
Apps can be set up in different ways, with different business models, investment strategies, and risks. Your payment app company might invest your money in loans and bonds, instead of keeping the money in a bank or credit union account. The company can earn money on these investments, while generally paying no interest to you. The payment app’s business could be at risk from investment losses, interest rate changes, currency exchange rates, and liquidity problems.
Your user agreement might be confusing, murky, or even silent on exactly where your money is held or invested. It might not explain whether and under what conditions your money may be insured at a bank or credit union, and what happens in the case of the nonbank payment app’s business failure or bankruptcy.
In contrast, money you deposit in an account at an insured bank or credit union is protected up to the insurance limit if the firm fails. The Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) protect deposits up to $250,000 under the same owner or owners. If your bank or credit union fails, you still have quick access to your money.
If the nonbank payment app’s business fails, your money is likely lost or tied up in a long bankruptcy process. You might be standing in line with other lenders to the failed app, waiting to see if you can get any of your money back after the business is unwound.
Some apps offer “pass-through” insurance, if you take additional steps
Some apps may claim to provide pass-through insurance through business arrangements with a bank or credit union for customers who sign up for additional services. For example, you might have to get a company-branded card or choose direct deposit. To be eligible for pass-through insurance, the account must comply with certain rules and regulations set by the FDIC or NCUA.
Pass-through insurance means you are insured against the failure of the bank or credit union where the app holds the money for you. It doesn’t insure you against the failure of the payment app company. This means there could be a risk of losing your money in the event the company fails. If the payment app company followed all the relevant requirements, though, your money could be safe in the associated bank or credit union. Still, there could be risks, like delaying your ability to access your money.
Tip: Send yourself a reminder to move your money from the app to your insured account

Source: CFPB

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