Elder Financial Abuse

Elder financial abuse is the improper, unauthorized or fraudulent use of an older person's money or property, including the use of a position of trust to obtain it and the denial of the person's own access to it. The definition is where the difficulty starts: there is no general federal definition of the term, and the three federal instruments that come closest each define a slightly different concept for a different purpose, using three different age thresholds. That is not a technical curiosity. Which one applies determines whether a particular protection is available to a particular person at a particular age.

The related word "exploitation" is the one the statutes actually use, and it is broader than theft. Under the Elder Justice Act it reaches not only taking an elder's resources but conduct "that results in depriving an elder of rightful access to, or use of, benefits, resources, belongings, or assets". An adult child who controls a parent's accounts and simply will not let the parent spend their own money is described by that definition without having taken a dollar.

The three definitions, with their scope stated, because a definition read outside its own statute is a common source of error.

Sixty. The Elder Justice Act, enacted as part of the 2010 health care law, opens its definitions section at 42 USC 1397j with the words "In this division", and then provides at (5) that "the term 'elder' means an individual age 60 or older." At (8) it defines "exploitation" as "the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an elder for monetary or personal benefit, profit, or gain, or that results in depriving an elder of rightful access to, or use of, benefits, resources, belongings, or assets." Two features are worth keeping. The definition names a caregiver or fiduciary expressly, so a person acting under a power of attorney is inside it rather than outside. And it covers the denial-of-access case as well as the taking case. Because of the "in this division" limitation, this is the definition for the Elder Justice Act's own programs, not a general federal definition of the term.

Sixty-five. Section 303 of Public Law 115-174, enacted on 24 May 2018 as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, appears in the Code at 12 USC 3423 under the heading "Immunity from suit for disclosure of financial exploitation of senior citizens". It is commonly called the Senior Safe Act, after the bill whose text it carries. Its definitions apply "in this section", and at (a)(1)(N) "the term 'senior citizen' means an individual who is not younger than 65 years of age". Its own definition of exploitation, at (a)(1)(G), tracks the Elder Justice Act's two limbs but is scoped to a senior citizen rather than an elder.

Sixty-five, or eighteen with an impairment. FINRA Rule 2165, the brokerage temporary-hold rule, defines a "specified adult" as a natural person aged 65 and older, or a natural person aged 18 and older whom the member firm reasonably believes has a mental or physical impairment that renders the individual unable to protect their own interests. Supplementary material provides that the reasonable belief may rest on the facts and circumstances observed in the firm's business relationship with the person. The same rule defines "financial exploitation" broadly: the wrongful or unauthorized taking, withholding, appropriation or use of a specified adult's funds or securities, or any act or omission, including through the use of a power of attorney or guardianship, to obtain control of their money or property through deception, intimidation or undue influence, or to convert it.

So the answer to "am I covered?" is three answers. A 62-year-old with no impairment is an elder under the Elder Justice Act, is not a senior citizen under the Senior Safe Act, and is not a specified adult under FINRA's rule unless a firm reasonably believes an impairment leaves them unable to protect their own interests. State law adds a fourth layer, with its own age and its own definition, and that is usually the layer that carries a duty to report.

The federal statute people reach for is an immunity, not a duty, and that distinction is the whole design. 12 USC 3423 protects an individual from liability, "including in any civil or administrative proceeding, for disclosing the suspected exploitation of a senior citizen to a covered agency", on three conditions: the individual has received the training the section describes, held a supervisory, compliance or legal role or was an affiliated registered representative, investment adviser representative or insurance producer, and made the disclosure in good faith and with reasonable care. A parallel immunity protects the institution itself where its people were trained. The section does not require anybody to report anything. It removes a reason not to.

Its two closed lists are what give it practical shape. A covered agency, at (a)(1)(C), means a state financial regulatory agency including a state securities or law enforcement authority and a state insurance regulator, any federal agency represented on the Federal Financial Institutions Examination Council, a registered securities association, the Securities and Exchange Commission, a law enforcement agency, or a state or local agency responsible for administering adult protective service laws. A covered financial institution, at (a)(1)(D), means a credit union, a depository institution, an investment adviser, a broker-dealer, an insurance company, an insurance agency, or a transfer agent. A disclosure to somebody outside the first list, or by somebody outside the second, is not protected by this section. And under (c) the section does not preempt state law except where it gives greater protection against liability than state law does.

Which firm can do what, and why the honest version is less flattering than the simple one. The temporary-hold power and the trusted-contact requirement come from FINRA rules, and FINRA rules bind broker-dealers. A registered investment adviser is not a FINRA member and has neither of those obligations nor those powers under those rules; the analogous authority for advisers is state law, which varies. The Senior Safe Act's immunity does reach an investment adviser, because the definition above names one. So the accurate summary is that the reporting immunity is broad and the transaction-stopping power is narrow, and a client should ask a particular firm what it can actually do rather than assume the protections travel together. The practical detail on both, including the hold's duration and the trusted contact's role, sits on the family and life events guide and on the trusted contact person page.

On reporting duties, one sentence and a pointer, because the ground is easy to get wrong in both directions. There is no general federal duty to report suspected elder financial abuse, and specifically none on a bank, a brokerage or a family member; there is a narrow federal duty on staff of long-term care facilities that receive federal funds, and the suspicious-activity reporting that banks and brokerages owe the Treasury is a different obligation with a different purpose. The duty to report elder abuse itself is state law, which is why the practical route usually runs through adult protective services. The family and life events guide sets that out in full and should be read for it rather than this page.

A person in a position of access or trust obtains money or property from an older person, or takes control of it and restricts the person's own use of it. Detection typically comes from a third party rather than from the person affected: a family member outside the arrangement, or a financial firm that notices a change in pattern. What happens next depends on which definition and which firm are in play: a brokerage may be able to hold a disbursement, any covered financial institution can report to a covered agency with immunity if its people are trained, and adult protective services and state law carry the general reporting route.

A hypothetical example of the age thresholds doing real work. Rosalind is 62 and has no cognitive or physical impairment. Over five weeks she is persuaded by someone claiming to be from a government agency to send $12,000, then $15,000, then $20,000 from her brokerage account, a total of $47,000 ($12,000 plus $15,000 plus $20,000).

Apply the three definitions to the same facts. Under the Elder Justice Act she is an elder, because that statute's threshold is 60, so its programs and its definition of exploitation describe what happened to her. Under the Senior Safe Act she is not a senior citizen, because that section requires 65 or older, so the federal immunity for a firm employee reporting her case does not rest on this statute; a report would need to rely on state law protection instead. And under FINRA Rule 2165 she is not a specified adult on age alone, so a brokerage cannot place a temporary hold on the third disbursement under that rule unless it reasonably believes an impairment leaves her unable to protect her own interests.

Change one fact, and make her 65. The same three transfers now sit inside all three definitions, the immunity applies on its own terms, and the brokerage has the hold available. Nothing about the conduct, the amounts or her vulnerability changed. Three years of age did.

This is a harm rather than a product, so what follows is what the framework provides and where it falls short.

What the framework provides

• The statutory concept is wider than theft, reaching a fiduciary or caregiver who denies an older person access to their own money.
• The federal immunity at 12 USC 3423 covers a wide range of firms, investment advisers and insurance agencies among them, which removes a real deterrent to reporting.
• FINRA's definition of a specified adult reaches an impaired adult of any age over 18, so the brokerage protections are not purely age-gated.
• A brokerage's temporary hold can stop a disbursement while a concern is examined, which is the only mechanism in the set that operates before the money leaves.
• A trusted contact person can be named on an account without conferring any authority, which makes it a low-cost step.

Where it falls short

• There is no general federal definition, and the three closest use three different ages, so coverage depends on which instrument is in play.
• The main federal statute is an immunity rather than a duty, so nothing federal obliges a firm to act on what it sees.
• The temporary-hold and trusted-contact rules bind broker-dealers and not registered investment advisers, so the protections do not travel with the client between firm types.
• The Elder Justice Act's definition is expressly limited to its own division, so it cannot be cited as the federal meaning of the term.
• Where theft by a trusted person is detected, the person most frequently identified is an adult child of the victim, and that is the case an outside institution reads least easily and a family is least likely to report.
• State law supplies the general duty to report and the practical enforcement route, and it differs from state to state.