federal efforts to protect seniors

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ConsumerFinancialProtectionBureau

Office for Older Americans An Overview

Note: This document was used in support of a live discussion. Assuch, it does not necessarily express the entirety of thatdiscussion nor the relative emphasis of topics therein.

June 13, 2016


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Disclaimer

This presentation is being made by Consumer Financial Protection Bureau representatives on behalf of the Bureau. It does notconstitute legal interpretation, guidance or advice of the Bureau.

Note: This document was used in support of a live discussion. Assuch, it does not necessarily express the entirety of that discussionnor the relative emphasis of topics therein.

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Consumer Financial Protection Bureau (CFPB)

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The mission of the Consumer FinancialProtection Bureau is to make markets forconsumer financial products and services

work for consumers by making rulesmore effective, by consistently and fairlyenforcing those rules, and byempowering consumers to take more

control of their economic lives.


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CFPB Office for Older Americans

Learn more about us at consumerfinance.gov/older-americans

We help older consumers:

The only office in the federal government specifically dedicated to thefinancial well-being of older consumers .

Prevent unfair, deceptive andabusive practices aimed atseniors

Make sound financialdecisions as they age


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Office for Older Americans, contd

OA is:developing education initiatives;

conducting research to identify best practices and effectivemethods, tools, technology and strategies to educate andcounsel seniors about personal finance management with afocus on(1) protecting themselves from unfair, deceptive, andabusive practices, (2) long-term savings, and (3) planning forretirement and long-term care.

coordinating efforts with federal and state regulatory agencies,

and law enforcement; andcollaborating with community leaders and local organizations.

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Key data points on older Americans

Population : 57 million Americans are age 62 and over17.9% ofpopulation.

Net worth : In 2011, the net worth of households headed by aconsumer age 65 and older was approximately $17.2 trillion, and

the mean net worth was $655,500. Banking habits : Over 3/4 of households headed by a consumer age65+ are fully banked. Older households (especially those 70+) aremuch more likely to rely on tellers as primary form of banking.

Cognitive impairment: 22% of those over age 70 have mildcognitive impairment (MCI)


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Prevent unfair, deceptive andabusive practices aimed atseniors

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The problem of elder financial exploitation

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Illegal or improper use of an older adults funds, property or assets.The most common form of elder abuse.

Targeted due to relative wealth, vulnerabilities (e.g. cognitiveimpairment).


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Elder financial exploitation, continued

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Prevalence estimates vary :4.7% of older adults 60+ living independently report financialexploitation by someone they live or spend time with (Peterson et al,2014).

17% of seniors 65+ report being taken advantage of financially

(Investor Protection Trust, 2016). Estimates of annual losses range from $2.9B to $36.48B .

Under the radar : one study found that only one in 44 cases come toattention of protective services agencies or programs for victims.


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Financial Institutions Advisory

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Released by CFPB on March 23, 2016.Office for Older Americans identified best practices to enablefinancial institutions to prevent elder financial abuse and interveneeffectively when it occurs

FIs can consider recommendations as they assess their currentpractices.

Does not impose any responsibilities or duties on FIs.

Emphasizes importance of compliance, but not intended to interpret

federal consumer financial law or any other statute or rule.

CFPB Advisory & Recommendations for FIs

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PROTOCOLS: Develop, implement and maintain internal protocolsand procedures for protecting account holders from elder financialexploitation.

TRAINING: Train employees regularly and frequently, and tailortraining to specific staff roles.

DETECTION: Harness technologyensure that fraud detectionsystems include analyses of types of products and account activitythat may be associated with elder fraud risk.

Overview of recommendations

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REPORTING: Report all cases of suspected exploitation to relevantfederal, state and local authorities; expedite document requests fromagencies investigating reports.

PROTECTION: Comply with EFTA/Reg. E; offer age-friendlyservices that enhance protections.

COLLABORATION: Work with law enforcement and adultprotective services, and support coordinated efforts to educate olderaccount holders, caregivers and the public.

Overview of recommendations, continued

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Find the Advisory and Recommendations

Advisory:http://files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdf

Recommendations and Report:http://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdf
http://files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdfhttp://files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdf


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OA Initiatives: Money Smart for Older Adults

PROBLEM:Many older Americans, their caregivers, and others in thecommunity dont know how to spot and avoid frauds and scams.

CFPB INITIATIVE:

The Office developed an awareness program called MoneySmart for Older Adults: Prevent Financial Exploitationin collaboration with the FDIC.

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OA Initiatives: Managing Someone Elses Money

CFPB released a set of national guides calledManaging Someone Elses Money in 2013

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Managing Someone Elses Money guides

CHALLENGE:

Declining capacity to handle finances can make older adults vulnerable

People with diminished capacity often need surrogate to handle their money

Lay fiduciaries critical source of help; often have no training; some even commit

fraudCFPB INITIATIVE:

Released a set of national guides called Managing Someone Elses Money in 2013

User-friendly how-to guides for four types of fiduciaries: agents under powers ofattorney; guardians; trustees; Social Security representative payees and VAfiduciariesLinks to all guides: www.consumerfinance.gov/managing-someone-elses-money

Bulk orders: http://promotions.usa.gov/cfpbpubs.html#someone

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http://www.consumerfinance.gov/managing-someone-elses-moneyhttp://promotions.usa.gov/cfpbpubs.html#someonehttp://promotions.usa.gov/cfpbpubs.html#someonehttp://www.consumerfinance.gov/managing-someone-elses-money


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State-specific guides

Phase 2 of Managing Someone Elses Money initiative:State-specific guides for six states: AZ, FL, GA, IL, OR, VA

Virginia guides launched August 17, 2015Florida guides launched September 30, 2015Oregon guides launched April 20, 2016Templates and tips for other states launched October,2015

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Make sound financial decisions as

they age

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Definition

Financial well-being is a state of being wherein a person can fully meet current and ongoing financial obligations, can feelsecure in their financial future, and is able to make choices thatallow enjoyment of life.

Elements of financial well-being:

1. Having control over day to day, month to month finances

2. Having the capability to absorb a financial shock

3. Being on track to meet financial goals, and4. Having the financial freedom to make choices that allow one

to enjoy life

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Age differences

The thoughts expressed by working-age Americans and older Americans about the meaning of financial well-being wereremarkably similar. However, the intended meanings weredifferent for the two populations.

Older Americans also frequently discussed the decisions andchoices they had made earlier in life, such as saving effectivelyor failing to do so, that affect their situation now that they areolder.

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Measuring Financial Well-Being

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Considering a Reverse Mortgage?

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Important questions to ask: Are Borrowers the only ones who live in the home?

Can I afford my living expenses, property taxes, and insurance?

Do I plan to remain in my home for a long time?

Can I wait until Im older?Consider Alternatives:

Wait (the older a borrower is, the more he or she can borrow)

Refinance your current mortgage

Alternative home equity products might be cheaper

Lower your expenses (consider downsizing to a moreaffordable home)


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A Closer Look at Reverse Mortgage Advertising

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When you see advertisements, consider these facts:

A reverse mortgage is a home loan, not a government benefit.

You can lose your home with a reverse mortgage.

Without a good plan, you could outlive your money.


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Consumer Guide: Know Your Financial Adviser

Important questions to ask:Does the title or certification require college-level coursework?

Do you know how your adviser is paid?

Can you file a complaint if you have a problem?

Is the credential from an accredited organization?Red Flags:

Educational investment workshops

Freebies like meals and golf trips

High pressure tactics and exaggerated claims (low risk, high return,act now!)

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Planning for Diminished Capacity and Illness

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PROBLEM:

Some people experience diminished financial capacity asthey age or become ill, losing the ability to manage theirmoney effectively.

With diminished financial capacity, people are more vulnerable to financial abuse.

CFPB INITIATIVE:

Consumer advisory to help you plan for your financial future.

Tips for giving trusted others the authority to make financialdecisions for you.

Suggestions for organizing and protecting importantdocuments.

Tips for helping a loved one with diminished capacity.


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Lump-sum payouts and your retirement security

Proceed with caution

Detect and correct errors in your lump sum

calculation

Plan for tax consequences

Make your money last

Protect your money from fraud and scams

Plan ahead

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?


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More CFPB Tools and Resources

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Ask CFPBInteractive online tool with answers to many questionsregarding financial services and products.

Can browse by topics, e.g. fees or closing, or bypopulations, like servicemembers, students, and older

Americans.Under older Americans tag, find answers to questionsabout financial products and services, powers of attorney,accepting assistance with bill-paying and banking, andtips to avoid financial harm.


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Stay in touch

Nora Dowd [email protected]

Visit us at:consumerfinance.gov/older-americans

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