Should Banks Freeze Accounts of the Elderly to Protect Them Financially?

As anyone with an elderly family member knows, it can be a delicate challenge to walk the fine line between, on the one hand, allowing the aging senior her or his independence and dignity, and protecting that person from falling victim to financial fraud and “elder scams” on the other.  The Richmond Times-Dispatch reported on a proposed bill before the New York State legislature that would allow banks to temporarily freeze elderly customers’ accounts when they noticed unusual spending activity that is uncharacteristic of the account holder’s normal patterns.
As Roberta Kotkin, New York Bankers Association general counsel and chief operating officer, told AP, many banks have trained employees to spot evidence of financial exploitation. However, reporting of suspicious transactions was “chilled by the absence of guidelines and sufficiently unambiguous protections for banks and their employees who might have suspected abuse but were deterred by the lack of unambiguous appropriate protection from liability.”
According to the New York attorney general’s office, “scammers often try to play on a victim’s fears and emotions, with urgent phone calls falsely claiming a grandchild has been arrested abroad and needs money for bail, or allegations the victim owes money to the IRS.” Beth Finkel, the New York director of the AARP, said that it can be difficult to prosecute offenses, because many victims are too embarrassed to come forward.

The bill aiming to protect seniors was approved by the NY Senate, but has faced resistance in the Assembly, where it has not yet come to a vote. While most people agree that fraudulent exploitation of the elderly is a problem, some Assembly members object to stereotyping all seniors as suffering from diminished brain function. Opponents of the bill, including a committee of the New York State Bar Association, fear that it would encourage banks to put needless transaction holds on the accounts of seniors, with no consequences for mistakes.
The AARP’s Finkel has called on the NY governor and the leaders of the Senate and Assembly to come together and find a solution to pass the law. The AP quoted an individual who said he would have welcomed alerts from banks that someone was emptying out the accounts of his 78-year-old grandfather, who was in a nursing home. A relative had cleaned out the man’s savings and sold his possessions, including the suit that the grandfather was saving to be buried in. “By the time I really got involved, it was too late,” the grandson said.
Should Virginia adopt a law like this?
Craig Follis has extensive experience in litigation, negotiating and settling suits, and providing legal opinions on liability and insurance coverage. You can reach him at (888) 703-0109 or via email at

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