NASAA Model Legislation or Regulation to Protect Vulnerable Adults from Financial Exploitation | Adopted January 22, 2016

 

Legislative Text & Updated Commentary
for the 2021-22 Legislative Session


Background

The need for new tools to help detect and prevent financial exploitation of vulnerable adults

Financial exploitation is the fastest growing category of elder abuse in many states. According to the 2016 Investor Protection Trust Elder Investment Fraud Survey, nearly one out of every five citizens over the age of 65 has been victimized by a financial fraud.[i] These frauds can be perpetrated by strangers, con artists, or even by family members and caregivers whom the elderly have placed their trust. In addition, a February 2019 report by the Consumer Financial Protection Bureau titled “Suspicious Activity Reports on Elder Financial Exploitation: Issues and Trends” reported over 180,000 suspicious activities targeting older adults, involving more than $6 billion and noted that financial exploitation by scammers, family members, and caregivers is widespread.[ii]

State securities regulators are committed to protecting retail investors and are often well-positioned to intercede on behalf of vulnerable seniors.[iii] However, to successfully combat senior financial exploitation, securities regulators must be made aware of it. State legislatures should assist in this effort by enacting policies to break down barriers to sharing information about financial exploitation and provide critical training to inspire action by financial services professionals who are positioned to identify red flags. In this regard, the enclosed NASAA Model Act to Protect Vulnerable Adults from Financial Exploitation (the “Model Act” or “Act”) represents an important and significant step forward.

 

NOTES

[i] Nearly one in five Americans over the age of 65, which is nearly seven million seniors, have “been taken advantage of financially in terms of an inappropriate investment, unreasonably high fees for financial services, or outright fraud,” according to a major survey conducted by Public Policy Polling (PPP) and on behalf of the Investor Protection Trust (ITP). See https://www.investorprotection.org/ipt-activities/?fa=research.  

[ii] See https://www.consumerfinance.gov/about-us/blog/financial-institutions-report-widespread-elder-financial-abuse/.

[iii] In 2019, NASAA members received 607 complaints, opened 486 investigations, and brought 208 enforcement actions involving seniors. See NASAA 2020 Enforcement Report, available at https://www.nasaa.org/wp-content/uploads/2020/09/2020-Enforcement-Report-Based-on-2019-Data-FINAL.pdf

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