New state law protects seniors against financial fraud
Minnesota seniors now have a new line of defense against financial fraud, thanks to a new law that took effect Aug. 1, 2018. The new law was proposed by the Minnesota Commerce Department and supported by both senior advocacy groups and financial industry stakeholders.
The Safe Seniors Financial Protection Act (HF 3833), equips financial professionals with new tools to protect their senior and vulnerable adult clients by working with the Commerce Department to prevent and stop suspected fraud.
“This law is an opportunity for the Commerce Department to partner with financial professionals to spot and stop fraud before seniors lose their hard-earned life savings,” said Commerce Commissioner Jessica Looman. “These financial professionals are a first line of defense, and this law will strengthen their ability to defend seniors against financial exploitation.”
It is estimated that one out of every five persons over age 65 has been victimized by a financial swindle, with older Americans defrauded out of nearly three billion dollars each year. The threat of senior financial fraud is expected to grow as the senior population itself grows, with the aging of the Baby Boom generation.
Under the new law, broker-dealers and investment advisers are authorized to report suspected financial exploitation against a senior or vulnerable adult client to the Commerce Department at (952) 237-7571 or the Minnesota Adult Abuse Reporting Center at (844) 880-1574. They may also disclose information to a trusted third party designated by the senior client.
“Financial exploitation is second only to caregiver neglect in allegations of maltreatment made to the Minnesota Adult Abuse Reporting Center,” said Human Services Commissioner Emily Piper. “The Safe Seniors Financial Protection Act is an important new guard against this type of abuse, and I encourage Minnesotans who suspect the financial, physical or psychological maltreatment of an older or vulnerable adult to contact MAARC as soon as possible.”
Withdrawals and transfers from an account may also be temporarily delayed to prevent financial loss and give investigators time to intervene. There is immunity from administrative or civil liability as long as the financial professional acts in good faith to prevent fraud.
“We were pleased to collaborate with the Department of Commerce to give broker-dealers the tools they need help protect their senior clients,” said Robyn Rowen, executive director of the Minnesota Insurance and Financial Services Council.
“The Financial Planning Association of Minnesota realizes the value both to our profession and to consumers in providing additional financial safeguards to certain segments of our community that this legislation will provide,” said Jason Kley, president of the Financial Planning Association of Minnesota. “Advisers will now be equipped with additional tools to protect older adults and vulnerable adults.”
The new law closely follows model legislation approved by the member states of the North American Securities Administrators Association (NASAA).
The Commerce Department registers broker-dealers (those in the business of buying and selling securities) and their agents, as well as investment advisers (those who make investment recommendations). In Minnesota, there are more than 2,000 broker-dealer and investment adviser firms, and more than 160,000 individual broker-dealers and investment advisers.
Senior financial protection is a top priority for the Commerce Department. Last fall, the department launched a “Hang Up on Fraud” campaign, a statewide education and outreach initiative with a toolkit that older Minnesotans and their families can use to identify and prevent financial fraud. The toolkit is available through the Commerce Department website (mn.gov/commerce).