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My Grandmother, Financial Fraud, and the CFPB
Posted by: Elizabeth Ridlington on
In the 1990s, my grandmother lost $60,000 to a financial scammer who took advantage of her age and vulnerability. A lucky, and perhaps illegal, phone call from her bank flagged the problem to the family. Today, thanks to the Consumer Financial Protection Bureau, I think it’s likely the problem would have been noticed and stopped sooner.
My grandmother Ione, a frugal and financially astute woman, liked to gamble. She’d take the occasional trip from her home in eastern Washington State to Reno, Nevada, to play the slot machines, winning a few dollars and chintzy prize necklaces that she’d give to me or my sister. Her hobby was in stark contrast to her everyday frugality: she saved assiduously, investing her dollars well, and also saving rubber bands, plastic bags, and nearly empty spice jars from 1955.
This photo of my grandmother Ione was taken around the same time she lost $60,000 in a financial scam targeting older Americans.
But by the early 1990s, her financial instincts weren’t as good, and she fell prey to a scam. Somebody pretending to represent the Drug Abuse Resistance Education (D.A.R.E.) program began to call her regularly, asking for donations to help protect children from drugs. In return for a donation, the caller promised, she’d be entered into a drawing to win something. This appealed to her benevolent side, and to her interest in gambling. She would send in a few thousand dollars, and in return “win” a microwave, an espresso maker, a TV, or some other relatively inexpensive item. And the scammer would call again.
Only after she had given away tens of thousands of dollars to this scammer did somebody at her bank call my uncle to warn him something odd was going on with Ione’s finances. The contact at the bank said something to the effect of “I know this is probably violating all sorts of banking privacy rules, but I wanted to let you know that something strange is happening with your mom’s money. You probably should look into it.”
If the same situation occurred today, I’d hope that the bank would act sooner, following senior fraud prevention guidance from the CFPB. One element of the CFPB’s mission is to help protect older Americans from abuses in the financial marketplace. Older Americans are attractive targets because they often have significant financial assets, while cognitive decline, isolation, and other factors may leave them more receptive to scams. The CFPB’s Office of Older Americans has worked with banks and credit unions to help them identify situations when an older customer has been the target of a scam. Banks can take steps such as:
- Training staff to recognize when someone might be the victim of a scam, and to know how to respond,
- Using fraud monitoring technology to look for patterns that might indicate financial abuse of an elder, and
- Reporting suspected financial abuse to legal authorities, and facilitating investigations. In particular, the CFPB has assured financial institutions that they can report problems to law enforcement without fear of violating privacy rules.
Had Ione’s bank followed such guidance, perhaps the financial scam she suffered from would have been detected sooner.
Ione’s scam story has a relatively happy ending. After the bank called, my uncle discovered she had been swindled out of approximately $60,000. He helped her get an unlisted phone number, placed limits on how much she could spend from her bank account without his approval, and helped get rid of all her “won” items. (I remember Ione was disappointed not to keep winning; my uncle joked that maybe we should start calling her “I-won.”)
He also contacted the Washington State Attorney General. Because Ione was a meticulous note taker and had a record of every phone call, the A.G. was able to prosecute the New Jersey-based scammer and recover much of the money Ione had lost. At the time, it was the largest financial recovery in an elder-scam case in the state.
It would have been far better if her bank had been able to help detect the scam long before she gave away so much money. The CFPB’s efforts are designed to reduce financial abuse of older Americans, and make stories like Ione’s less common today.