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A bill that’s pending in the Senate aims to battle a persistent danger to older adults and other vulnerable individuals: financial exploitation.
In a nutshell, the measure would allow so-called registered open-ended investment companies — which can include mutual funds, exchange-traded funds, hedge funds, some annuities and other pooled investments — or their agents to postpone a requested redemption of a security or fund for up to 25 days if it’s believed to be done to exploit the investor.
The bill, which would apply to people who are at least age 65 or are younger but have impairments, also authorizes state regulators, courts or administrative agencies to delay payment further.
“Bad actors are always finding new ways to exploit existing law,” said John Jennings, assistant director of government affairs at the Insured Retirement Institute.
The bill would “provide folks on the front line with the tools necessary to help prevent exploitation,” Jennings said.
Called the Financial Exploitation Prevention Act of 2023 and sponsored by Rep. Ann Wagner, R-Mo., the bill cleared the House last month in a unanimous bipartisan vote. It now awaits consideration by the Senate Banking Committee, although it’s uncertain whether or when the bill would be taken up.
A nearly identical version of the bill that cleared the House in 2021 ended up languishing in the Senate.
The average loss per incident is an estimated $120,000
Among older adults, the yearly cost of financial fraud is estimated to be about $3 billion, although the number is based on reported events, and not all occurrences are formally documented. The average loss per incident is an estimated $120,000, according to a 2020 study from the AARP Public Policy Institute.
Family members steal twice as much money as strangers, according to the study. Older adults with cognitive challenges are the most vulnerable to exploitation and may have up to twice as much stolen than those without those issues.
“The financial industry is catching up and catching on that there are a lot of people out there who are vulnerable to financial exploitation in general,” said Marve Ann Alaimo, a partner at the law firm of Porter Wright Morris & Arthur.
“The aging population … is ripe for it, particularly at a time when a lot of transactions are done online or by phone,” Alaimo said.