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Freezing Out Seniors – New Financial Exploitation Law Has Protections and Risks

Meet the brand-new Chapter 280 of the Texas Finance Code, effective September 1, 2017. You need to know about this one.

Going by the catchy name “Protection of Vulnerable Adults from Financial Exploitation,” Chapter 280 puts the onus on financial institutions, securities dealers and investment advisers to help protect seniors (65+) from fraud and financial exploitation. This is a good news – bad news law. The good news is that a whole new group is being educated to help stop fraud on elders. The bad news is that your financial accounts can be frozen for more than 30 days without prior notice or court order.

The ball starts rolling when an employee of a financial institution suspects financial exploitation of a customer. The employee is required to notify the financial institution, which has up to 5 days to submit a report to the Texas Department of Family and Protective Services. The institution may also notify a “third party reasonably associated with the vulnerable adult” unless, of course, it suspects that the third party is the abuser.

Now comes the scary part. After submitting the report, the financial institution may put a hold on any transaction involving the senior’s account or on any transaction that it thinks is related to the exploitation. If DFPS or a law enforcement agency requests the hold, then the financial institution is required to put the hold in place. The hold is good for 10 business days and can be extended for another 30 business days if requested by a state or federal agency or law enforcement agency. The only way a senior can lift the hold is to go to court.

The financial institutions are required to adopt internal policies on all of this, and can include as part of the policy an internal authorization to report the suspected financial exploitation to the attorney general, the Federal Trade Commission and the appropriate law enforcement agencies. The financial institution and its employees are immune from liability unless they act in bad faith or with malicious purpose.

The rules are similar for securities dealers and investment advisers, with the exception that their immunity is worded a bit differently. A dealer or investment adviser must act in “good faith and with the exercise of reasonable care” to be immune from civil or criminal liability or disciplinary action.

With all of this talk about mandatory governmental reporting and account freezes, it behooves us to look a bit more closely at definitions. “Exploitation” means the act of forcing, compelling or exerting undue influence over the senior that causes the senior to act in a way that is inconsistent with past behavior or causes the senior to perform services for the benefit of another person. “Financial exploitation” means wrongfully taking the senior’s money, assets, property or identifying information. It includes wrongful acts by an agent acting under a power of attorney.

Checks and balances, folks. Keep some cash and the name of a good lawyer handy in case your friendly banker decides you need protecting.

Hammerle Finley Law Firm. Give us a call. We can help.

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The information contained in this article is general information only and does not constitute legal advice.


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