Seniors and vulnerable adults would have greater protection from financial fraud under a bill discussed Jan. 28 by the Banking, Commerce and Insurance Committee.
LB853, introduced by Sen. Matt Williams of Gothenburg, would allow a financial institution to notify a caretaker or other third party reasonably associated with a vulnerable adult or senior of suspected financial exploitation.
The bill would allow a financial institution to place up to a 30-day hold on suspicious transactions and indemnify a financial institution’s employees, officers and directors from civil, criminal or administrative liability for any transaction delayed based on a good faith belief that the transaction may have been exploitive.
The bill would apply to transactions such as cash withdrawals, checks presented for payment, changes in beneficiary designations and changes of account ownership. It would not apply to sales of securities.
Williams said current law forbids bankers from notifying anyone other than law enforcement of suspected fraud.
“They recognize a scam. The red flags have gone up, but because of contract duties imposed by federal and state laws, and privacy regulations, they are unable to protect their customers,” Williams said. “LB853 allows the bank to simply call a timeout.”
Williams said 10 states have passed similar legislation.
Kent Franzen, vice-president at Henderson State Bank in Henderson, spoke in favor of the bill. He told lawmakers about an elderly client who began using the drive-thru window to withdraw several hundred dollars in cash multiple times a week. Tellers became suspicious and Franzen contacted the customer’s son—co-owner of the client’s account.
The client was being scammed, Franzen said, but the bank would not have been able to alert the client’s son had he not been a co-owner.
“In this instance, the son was most grateful,” Franzen said.
Theresa Heye, testifying on behalf of the Nebraska Independent Community Bankers Association, also spoke in support. She said LB853 would expand protections against elder abuse to include financial exploitation.
“This is not a hypothetical situation,” Heye said. “This has been a reoccurring problem.”
Mark Quandahl, director of the Nebraska Department of Banking and Finance, testified in support as well. He said he’s reviewed numerous cases of people taking advantage of elderly Nebraskans and said the bill would help address the problem.
No one testified in opposition and the committee took no immediate action on LB853.