How to Protect Members from Being Financially Exploited

It could be someone you love – mother… father… uncle…aunt… grandparent. At some point it could even be you. We’re not talking about physical health failure or mental deterioration. The plain truth is each or all of these persons may be targeted by con artists and white-collar criminals, especially as they become older.

According to the Institute for Fraud Prevention (IFP), persons 60 and older account for 15% of the population however this same groups represents 30% of consumer fraud victims. The IFP goes on to state that schemes have included telemarketing scams, home improvement scams, counterfeit drug fraud and identity theft.

Credit unions have proven more to members than just a financial institution. They have become financial advisor, lifestyle counselor and in many cases advocate, seeking to protect them (members) from forces that would negatively impact those individuals, financially and personally.

As an advocate, sometimes credit unions feel compelled to involve themselves in the lives of their members who may be making reckless or unsafe decisions. With this in mind, credit union management has begun to face a very tough dilemma: Where does our responsibility end with regard to stopping a member from making a potentially bad or ill-conceived decision? There are numerous constructive avenues to resolve this issue, however, in each case, caution must be exercised in the approach. 

Personal counseling has proven to be one of the most successful long-standing methods in influencing a member’s decision. There are a few important items to avoid when attempting to work with any member to prevent exploitation by unscrupulous individuals:

• Don’t challenge the right of the member to make an independent decision: Some older members fear losing their right to make choices on their own. In many cases they have relatives or caretakers making decisions that were once the sole option of this member such as doctor visits, diet, and schedule. 
• Avoid “talking down” when explaining why this person might be the victim of fraud: Many times we are too quick to assume that (any) member might have difficulty in understanding new concepts and jargon with regard to the financial industry as well as various levels of related fraud. 
• Offer written or electronic media to allow the opportunity for the member to make a more fact-based decision: Many credit unions have started implementing a (Senior) Member Protection Policy. This policy outlines what management will do to protect members, senior or otherwise, and the extent to which it will go to make these provisions. Unfortunately there remain numerous limitations (by law) that present significant liability for crossing certain lines.

Suzanne Yashewski, Cornerstone Credit Union League Senior Vice President Regulatory, Compliance, advises, “The law requires any person who believes that an elderly or adult with disabilities is being abused, neglected or exploited to report the circumstance to the Texas Department of Family and Protective Services (DFPS) Statewide Intake or to the Department of Aging and Disability services (licensed homes/institutions).

• Department of Family and Protective Services Statewide Intake, toll free 1-800-252-5400.
• Department of Aging and Disability Services complaint intake, toll free 1-800-458-9858.”

Although the credit union may want to protect the member, the credit union must be cognizant of privacy laws and regulations. Therefore, the credit union should contact legal counsel before discussing accounts and transactions with family members of an elderly member.“

Yashewski adds, “Elder abuse through powers of attorney is growing; at this point in time, financial institutions are not required to honor a power of attorney, so the credit union may refuse to accept a POA if they suspect the agent is taking advantage of the principal.”

Ultimately, management must make the final decision when attempting to advise a member of potential fraud situations or scams. Protecting  both members and the credit union against these abuses and crimes can best be handled through:

• Knowing your members
• Staying proactive in being informed about scams and fraud situations, reporting any suspicious activity
• Knowing when to involve legal counsel or law enforcement

By Steve Gibbs, CUCE, BSACS, AVP Shared Compliance, Credit Union Resources, Inc.