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A California senior lost $700,000 to cryptocurrency scammers. Now he is asking the state to slow down bank transfers
A bill from Napa Democratic Sen. Bill Dodd would require financial institutions to delay transactions over $5,000 by at least three days if they “reasonably” suspect that an elderly person is the victim of fraud. (Getty Images/iStockphoto)
By Ryan Sabalow | CalMatters
Alice Lin’s husband died and she found herself alone to care for a disabled son. Then, two years ago, the 81-year-old Alhambra woman said she started receiving messages from a stranger on a messaging app.
Over a series of friendly chats, he convinced her to do so transfer $720,000 – his entire life savings – to a cryptocurrency app.
So he did, in seven separate in-person transactions at his local bank over the span of three weeks. Her life savings are gone, along with the man who defrauded her. For a time she said she contemplated suicide. But then she got angry – at her bank.
“Despite many warning signs, my bank did not consider that I might be a victim of elder fraud,” Lin told the California Assembly Banking and Finance Committee this week. “And they didn’t even contact my daughter, who is the joint account holder.”
In the following months, Lin began working with California consumer advocates to sponsor Senate Bill 278a measure aimed at preventing long-standing scams like the one that drained Lin’s investment accounts.
The bill, by Napa Democrat Senator Bill Dodd, would require financial institutions to delay transactions over $5,000 by at least three days if they “reasonably” suspect that an elderly person is the victim of fraud. Banks would be required to train their employees to spot warning signs, such as an unusually large and sudden transaction. Banks should also take steps to notify an elderly customer’s designated “emergency financial contact” or joint account holder – someone like Lin’s daughter – of a suspected fraudulent transaction.
“Elder financial abuse is everywhere” Dodd told the Banking Committee this. “Losses exceed $23 billion a year. Once a senior falls prey to financial fraud, he may never recover.”
Dodd’s bill passed the Senate this spring with support from all of California’s major advocacy groups, including AARP. The measure originally faced strong opposition from the state’s banking and business lobbies, although they have since softened their stance after the bill was recently amended.
Financial institutions fear being forced into a de facto conservatorship that would give them too much control over an elderly customer’s finances. The restrictions would also limit how quickly customers get their cash for legitimate expenses.
It’s a concern shared by Roseville Republican Sen. Roger Niello who cast the lone “no” vote when the bill came before the Senate Judiciary Committee last month.
“As the bill exists now, it seems to me that we run the risk of more conflicts between seniors and their financial institutions than we do with curbing elder abuse,” Niello saidwho took the opportunity to give Dodd, 68, a good-natured quip about his age.
“I want you to know that you don’t look a day over 90,” said Niello, who is 76 and the third-oldest member of the Legislature.
Dodd told the Assembly committee that the bill was amended to limit the liability banks could face “when they do the right thing to protect seniors, their customers.”
That eased some concerns from the 13 financial and business groups, including the California Chamber of Commerce, listed as opponents of Dodd’s bill.
“We think that what we have in front of us right now, while it will be a big step forward for credit unions, the good outweighs the work that will be done,” Robert Wilson, a lobbyist for the California Credit Union League, he told the Banking Committee this week. “This will protect the elderly.”
Wilson and other bankers remain wary of how Dodd’s measure would be applied — a question Dodd said will be clarified when the bill reaches the Assembly Judiciary Committee next week.
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