California Bill Aims to Protect the Elderly From Financial Fraud

The measure would require banks to alert account holders of any reasonably suspicious activity.

The California State Capitol building in Sacramento, Calif., on April 18, 2022. John Fredricks/The Epoch Times

A bill aimed at protecting the elderly from financial scams by establishing a program for banks to alert account holders of potentially fraudulent activity is currently making its way through the California Legislature.

SB 278, introduced by Democrat Sen. Bill Dodd in 2023, could also delay financial transactions exceeding $5,000 for three days if the bank suspects fraudulent activity.

“This legislation would strengthen elder and dependent adult financial abuse protections by clarifying the duties of banks and financial institutions to safeguard against fraud,” Mr. Dodd told The Epoch Times June 20.

Elderly Americans lose more than $36 billion annually in financial fraud schemes, according to research provided by the U.S. Department of Justice’s official research agency, the National Institute of Justice.

Alice Lin, an elderly Los Angeles resident, testified June 17 before the Assembly’s Committee on Banking and Finance about losing $720,000 in a finance scam.

She told the committee she was tricked into wiring funds to the same scammer on seven different occasions over three weeks. Each transfer occurred in person at the bank with the authorization of a bank manager, she said.

“Despite many, many red flags, my bank failed to consider that I might be a victim of elder fraud,” she told committee members.

Ms. Lin is represented by the Consumer Attorneys of California, a professional organization that represents 39 million consumer plaintiffs in the state. The organization has publicly advocated for the passage of the bill.

“Unfortunately, the language of California’s current financial abuse statute is unclear,” the organization wrote in its endorsement of the bill.

SB 278 would amend California’s Welfare & Institutions Code by requiring financial institutions to alert joint account holders or an emergency financial contact of any reasonably suspicious activity on the account. The existing code does not have such a mandate.

Mr. Dodd told The Epoch Times his bill additionally “clarifies” that banking institutions who may unknowingly assist in financial elder abuse “can be held liable.”

“It will motivate them to detect predatory practices before victims are robbed of their resources, dignity, and quality of life–losses from which they may never recover,” he said.

The issue of potential liability for financial institutions has fueled the bill’s opponents from the onset.

The California Chamber of Commerce originally opposed the bill, arguing in a letter to Mr. Dodd in April 2023 that the legislation asked banks to complete an “impossible task.” They reasoned that they would be forced into a “de facto fiduciary or conservator relationship” with senior citizens.

But the organization changed its position after the bill was amended earlier this month to offer more protection from liability for banks who would be reporting the fraud. The chamber has now taken a neutral position.

The amendment clarifies that as long as a financial institution contacts or attempts to contact the joint account holder or the emergency contact, they will be “immune from administrative, civil, or other liability.”

Several senators have so far opposed the bill, including Sens. Roger Niello, Brian Dahle, Shannon Grove, Brian Jones, and Kelly Seyarto, all Republicans.

Mr. Niello was the only lawmaker who voted against it when it passed in the Senate’s Judiciary Committee in May.

California State Sen. Roger Niello, vice chair of the Senate Budget and Fiscal Review Committee, asks questions during a meeting in Sacramento, Calif., on Jan. 23, 2024. Travis Gillmore/The Epoch Times

Later that same month, he was joined by the four other lawmakers to oppose the measure on the Senate floor.

Mr. Niello told The Epoch Times June 20 he initially opposed the legislation because he believed that it would “compromise” the relationship between banking institutions and seniors.

But, he said, following the recent amendment changes in the Assembly addressing the liability issue, “it sounds to me like they are moving in a better direction.”

He also said that as he reviewed the new amendments his “position may change.”

He additionally said it was possible that the proposed combination of having simple safety checks—like appointing an emergency financial contact and slowing down potentially fraudulent transactions—could deter the “vast majority” of fraudsters.

However, he reiterated that he did not want to see “the customer or the institution naturally at odds.”

The bill was referred to the Assembly’s Judiciary Committee June 18 and will be heard there June 25. It will also return to the Senate for concurrence following any amendments, according to Mr. Niello.