Legislature Approves Sen. Dodd’s Elder Fraud Protection Bill

SACRAMENTO – The California Legislature today approved a measure from Sen. Bill Dodd, D-Napa, that would strengthen elder and dependent adult financial abuse protections by clarifying the duties of banks and financial institutions to safeguard against fraud.

“Today we take an important step toward underscoring what steps a bank or credit union should take to protect against senior scams, which, unfortunately, are occurring all too often,” Sen. Dodd said. “My bill says in plain language that if an institution or advisor knows or should have reasonably suspected that an elder or dependent adult is subject to financial abuse – and repeatedly fails to act – they may be held accountable for assisting in the abusive activity. When adopted it will serve as an up-front scam prevention policy for California banks and credit unions. I thank my fellow legislators for their support.”

Financial elder abuse cases are on the rise in California. The breadth of predatory practices is staggering, with victims coming from all socioeconomic backgrounds. Perpetrators can be family members, trusted professionals or large financial institutions. Such institutions are uniquely positioned to detect financial abuse and take action. Unfortunately, the language of California’s current financial elder abuse law is unclear, leading to conflicting court rulings regarding the standard of proof for holding accountable a financial institution.

Now, when victims attempt to sue their bank for assisting in a scam, the institution can avoid responsibility by claiming it did not have actual knowledge of fraud.  But Sen. Dodd’s legislation, Senate Bill 278, would clarify that victims of financial elder abuse can continue to hold institutions accountable when they reasonably suspected the fraud but assisted in the transfer anyway. The clarification would support victims of financial elder abuse in meeting their burden of proof. The bill will incentivize financial institutions to implement safeguards upfront, so seniors don’t lose their life savings to scams.

SB 278 is supported by elder rights advocates and Consumer Attorneys of California. It passed the Senate today with overwhelming support after previously clearing the Assembly. SB 278 heads next to Gov. Gavin Newsom for his signature.

“Help is on the way for millions of California seniors, who are at risk of losing their life savings in a financial scam,” said Jacquie Serna of Consumer Attorneys of California. “SB 278 would mark a historic shift to preventing scams before they happen, holding banks and other financial institutions accountable to take common-sense steps to help seniors recognize the signs of a scam. We are grateful to the Senate and Assembly for advancing this important legislation, and we urge Gov. Newsom to sign SB 278 into law.”

“Older Californians are the fastest growing segment of our population and face a particularly high risk of financial fraud and abuse,” said Caleb Logan of Elder Law & Advocacy and bill co-sponsor California Low-Income Consumer Coalition. “Fortunately, banks can prevent seniors from losing their life savings to a scam. SB 278 will clarify existing law to revitalize important safeguards against financial abuse. We are proud to support this important bill and applaud Sen. Dodd’s efforts on behalf of seniors throughout California.”

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Senator Bill Dodd represents the 3rd Senate District, which includes all or portions of Napa, Yolo, Sonoma, Solano, Sacramento and Contra Costa counties. More information on Senator Bill Dodd can be found at www.senate.ca.gov/dodd.