Kansas joined more than 40 states last week when it enacted the Protect Vulnerable Adults from Financial Exploitation Act, a law that will give financial advisers the ability to pause transactions when they suspect an older person is being defrauded.
Abuses of elder fraud lost $33,915 on average last year, with total losses exceeding $3.4 billion, according to the Federal Burau of Investigations. Scams by purported tech support workers are the most common ways victims older than 60 are defrauded, followed by personal data breaches, romance scams, nonpayment or non-delivery scams and investment scams.
When financial agents pause a transaction, they’re required to notify the Kansas Department of Insurance to investigate the potential fraud.
Kansas Insurance Commissioner Vicki Schmidt backs new law
“Recouping a victim’s money after an investment scam is an incredibly low probability — less than 5%,” said Kansas Insurance Commissioner Vicki Schmidt. “That’s why prevention is so important, particularly with the most vulnerable. These new laws will give financial advisers and the department stronger tools to prevent fraud and go after bad actors.”
The bill is modelled after draft legislation from the North American Securities Administration Association, an association of state securities administrators charged with protecting consumers from fraudulent investment advice. Representatives from prominent organizations in both aging and financial advisers supported the act, and it passed the House and Senate with just one vote against it.
“Older Americans are attractive targets for fraud because they often have sizable assets they have built up through a lifetime of hard work. Although older people make up just 12% of the population, they constitute a full 30% of the victims of consumer fraud crime,” Glenda DuBoise, state director of the American Association of Retired Persons, told lawmakers.
Bill will ‘slow down disbursements and transactions’ to prevent fraud
The bill does have timelines to make sure legitimate transactions aren’t held by a financial adviser.
“No one wants hard-earned retirement savings to be taken by scammers who utilize social media and other get rich quick schemes to mask their wrongdoing. This bill is tailored to slow down disbursements and transactions only long enough to verify their legitimacy and prevent fraud and theft,” said Eric Turek, director of governmental and public affairs for the KDOI.
Kansas previously increased the penalty for financial abuse against elderly people a decade ago. Someone convicted of doing large-scale elder abuse can be sentenced up to 40 years in prison.
