This story was produced as part of the Colorado Capitol News Alliance. It first appeared at cpr.org.
A bipartisan proposal that would protect older and vulnerable adults from financial scammers is advancing through the Colorado statehouse with little opposition. The bill would allow banks and other financial institutions to halt suspicious transactions while they notify the authorities to investigate.
“This bill is about stopping and preventing financial exploitation before a senior or vulnerable adult loses their life savings,” said Democratic Rep. Jamie Jackson of Aurora, one of the main sponsors.
Each year, scammers steal billions of dollars from older adults in the U.S. They often manipulate their victims by posing as law enforcement, troubled family members, romantic interests or even bank officials to create a sense of fear, secrecy and urgency.
“Financial exploitation is fueled by some of our best qualities, when we're trusting and polite and open to new relationships,” said Steve Schwarz, a volunteer advocate with AARP. He testified in support of the bill at a hearing at the state Capitol last month. “We all have moments of vulnerability.”
By the time victims have a chance to pause and think clearly, their money is often long gone.
“Colorado has to face the fact that financial scams and exploitation are becoming more and more commonplace, sophisticated, hard to spot, and difficult to resolve,” said Democratic Rep. Sean Camacho of Denver, the other main sponsor in the House. “While everyone is at risk of financial exploitation, our older adults are not only the most targeted but historically financially vulnerable groups.”
The measure applies to people aged 70 years and older, as well as adults with intellectual disabilities or other conditions that leave them particularly vulnerable to financial exploitation.
Under the proposal, banks and credit unions would have to alert law enforcement or adult protective services agencies when they suspect those customers are being victimized by scammers. Currently that type of discretion can vary from institution to institution because the law does not offer clear direction, according to Luke Justice, assistant vice president of compliance, fraud and security with the Credit Union of Denver.
“When things don't make sense, our employees are trained to speak up,” Justice said. “The ASSET Act will give us that extra resource that we need to finish the job and protect our members.”
Fraud experts say people are most at risk of falling victim to scams when they’re driven to respond immediately to scammers’ demands.
The bill would also give financial institutions the authority to stop scam victims from acting rashly by placing a hold on questionable transactions for up to 180 days while the suspected fraud is investigated and refusing to process requests confirmed to be fraudulent.
Banks and credit unions currently have some ability to put a hold on dubious transactions, but the bill’s backers said that ability was highly dependent on the type of transaction—digital payment networks like Zelle have different rules than wire transfers, for instance. They described the question of involuntary delays on transactions as a bit of a legal gray area that makes financial institutions wary.
“They're worried that there is this legal exposure,” said Eric Chess, a physician, lawyer and University of Denver professor who specializes in aging, financial security and health. “So even though (their) red flag or (their) yellow flag is going up, (they) really don't have the authority and until we have some protection on this, you have to err on the side of letting these funds go if you have no other good reason.”
But once banks let those funds go, the damage is often irreversible.
“This bill gives responsible institutions the ability to intervene before that harm is done,” Jackson said.
The financial industry has mostly rallied around the measure, along with AARP and some mental health groups. Some Colorado counties and legal organizations are asking for amendments, but no groups have registered as opposed. About 25 other states have already adopted similar laws.
Lawmakers are so far generally open to the bill, with both support and some opposition on each side of the aisle. It passed in the House of Representatives on Monday on a 44-18 vote and now heads to the State Senate for further consideration.
But those opposed have questioned the clauses that would grant legal immunity to financial institutions whether or not they delay transaction requests, as long as bank officials act in good faith.
“I worry we're creating a situation where somebody who is scammed actually has less financial recourse because they are now not able to go after the bank or credit union for not delaying,” said Democratic Rep. Yara Zokaie. “Whereas before they could have recouped some of the lost funds.”
Zokaie joined two other Democratic lawmakers who said they were in favor of the bill’s intent, but ultimately voted against it because they took issue with the 70-year-old age limit, arguing that all ages should be entitled to any available defense against scammers.
“Why narrow it by age or by cognitive ability at all?” Zokaie said. “If we have this definition of financial exploitation, I would think we want to hold that accountable regardless of who that victim is.”
Backers said they’re open to future iterations that broaden the protections to all ages. But the bill was crafted to mirror legislation from 2017 that established similar obligations and protections for financial advisors and investment professionals who suspect their elderly clients are being defrauded by scammers.
Democratic Sen. Jessie Danielson, who is sponsoring this year’s bill and was a main sponsor of the 2017 law, said she wanted to extend those protections to the banking system.
“So many of us have had to deal with it after someone scams our loved ones,” Danielson said. “It's painful and it's intrusive and it's theft and it's older people and it's awful.”
