New ‘Report and Hold’ Law Aims to Protect Against Scammers

Every week, Lisa Anderson hears heartbreaking stories from Idahoans who have lost thousands of dollars — sometimes their life savings — to scams. But a new state law aiming to stem such fraud is “the exact tool Idaho needed,” says the AARP Idaho director of advocacy.

The legislation passed earlier this year and goes into effect July 1.

The “report and hold” law helps financial institutions protect their clients’ money when scammers convince account holders to transfer funds for bogus investments, fake emergencies or other fraudulent purposes.

If officials from financial institutions suspect adults 65 or older — or those with disabilities — are being targeted by criminals, the new law allows a hold of up to 15 days on the transaction, giving them time to check for red flags on the recipient’s accounts or previous questionable activity. The financial institution can report suspected abuse to state Department of Finance or Commission on Aging officials to investigate.

“Financial institutions are critical in recognizing unusual financial activity, such as a series of large withdrawals or a flurry of stock trades, that could be indicators that an older or vulnerable adult is being financially exploited,” Anderson says.

There are many other fraud indications as well. An advisory from the federal Financial Crimes Enforcement Network detailed two dozen behavioral and financial red flags that could signal financial exploitation is in play.

A behavioral red flag, for example, could be when an older customer’s account shows “sudden and unusual changes in contact information” — or if during a transaction an older customer appears nervous, leery or unwilling to disconnect a cell phone conversation. A financial red flag could be when an account that’s been dormant suddenly shows a stream of withdrawals. Or if an older customer sends several checks or wire transfers with a memo note saying “tech support services,” the advisory said.

“Fraud continues to grow every year, with Idahoans losing millions of dollars,” Rep. Jeff Ehlers (R-Meridian), a sponsor of Idaho’s legislation, said in an email to the Bulletin.

Last year, Idaho consumers reported losing nearly $54 million to several types of scams, according to the Federal Trade Commission; because of persistent underreporting, experts think the true total is far higher. The new law is one avenue to help prevent future losses, Ehlers says.

According to AARP, 43 states now have report-and-hold laws applying to the securities industry and 26 have it applying to banks; Idaho’s legislation applies to both.

Also of interest:

• The Scope of Elder Financial Exploitation: What It Costs Victims
• Concerned Persons Exposed to Elder Financial Exploitation Are Victims, Too
• How Banks and Credit Unions Can Better Serve and Protect People 50-Plus