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Best Practices for Credit Unions on Detecting Elder Financial Abuse Released in Partnership of Credit Union Association of New York

Elder Abuse Best PracticesPrivacy concerns are a major issue for all financial institutions when their members/customers experience financial exploitation. Even in cases where abuse and exploitation of an elderly person is evident, many financial institution staff may feel uncomfortable reporting the incident to authorities due to fears of liability.

While New York is one of the few states in the continental United States that does not require mandatory reporting of elder abuse, New York’s credit union staff can still feel safe in reporting suspicious activity with the knowledge that under the Social Services Law of New York, there is a grant of civil immunity to any person who reports or testifies in good faith. Further, there are provisions of federal privacy laws that provide ‘safe harbors’ for financial providers when disclosing customer information as requested as part of a duly authorized investigation of elder financial exploitation.

To aid all credit unions detect and report elder financial abuse, the National Federation of Community Development Credit Unions collaborated with the Credit Union Association of New York and Alan Lawitz, Esq., Director of Bureau of Adult Serivces at the New York State Off ice of Children & Family Services to publish a Best Practices Guide on Detecting and Reporting Elder Financial Abuse. The guide provides a legal framework on both state and federal levels, concrete steps for credit union staff when elder financial abuse is detected, as well as useful resources such as Nine Things You May Not Know About Adult Protective Services for Adults and Its Role in Investigation of Financial Exploitation, directory to locate adult protective services across the US, and news to the latest developments in elder financial abuse.

The Best Practices guide is available for download here or by clicking the image above.

Federal Reserve Releases New Paper on Insights Into Financial Experiences of Older Adults

The Federal Reserve Board’s Division of Consumer and Community Affairs recently released a new paper on financial experiences of older adults (aged 45 and above), detailing their findings based on a 2012 online survey. The paper looked into experiences of accessing financial products as adults age, how these adults make financial decisions,  as well as identifying the sources of financial stress. Their findings showed that:

  • Many older adults have mortgage debt, including 6 in 10 of those in their 60s and nearly four in 10 of those who are 70 and older; while one-third of surveyed adults had their mortgage debt refinanced in the last three years, very few have considered using a reverse mortgage.
  • Use of alternative financial services such as payday loans, deposit advances or cash advances are more prevalent among lower-income and minority adults.
  • Many respondents make decisions about their finances without help from a financial professional, relying on friends, family and other informal networks instead.
  • The majority of survey respondents do not have plans in place in the event they are unable to make financial decisions themselves.
  • More than than one-third of respondents reported experiencing major financial stress in the last three years, arising from job losses, underemployment and health-related issues. Less than half have sought advice when dealing with financial stress.

The findings further note that many older adults carry debt late in their lives, emanating from credit card debt, student loans or mortgages, undermining financial security well into retirement. Many respondents “never” expect to retire as a result of debt and do not seek advice when dealing with complex financial decisions such as mortgage debt. These findings underscore the fact that there is a need for a broad, comprehensive response needed to ensure the financial well-being of older adults by providing them with suitable products and targeted financial advice to cope with stress.

To access the full report, please click here (PDF).

Potential dangers of Pension Advance mentioned in NYT

An April 28th article from the New York Times warns about the potential danger of loans borrowed against pension – known as Pension Advances.  These loans, disguised as cash advances, pose a threat to the economic security of retirees by requiring them to sign over all or part of their monthly pension check as collateral to the loan. With effective APR of loans ranging from 27 percent to 106 percent, pension advances can have a devastating effect on retirees and low-income seniors much like a payday loan.

Read more about the potential hazards of Pension Advances here.

Credit Union Journal highlights the work of the Federation’s Better Directions program in a series of articles on elder financial abuse

Going Paperless in 2013:
Benefit Payments and the Impact on Seniors

By Margot Saunders,

Counsel, National Consumer Law Center, Washington, D.C.

After years of gently nudging recipients towards direct deposit, on March 31, 2013, the federal government will require electronic direct deposit of all payments (except IRS refunds) and including social security. By that date if a recipient has not provided the relevant federal agency with an account number at a financial institution, benefits will be automatically placed on Treasury’s Direct Express card or on request, a private-label prepaid card that meets certain criteria. Financial institutions and organizations that deal with seniors can help smooth this transition.

Who is affected?

Everyone who receives regular federal payments is covered by the electronic payment rule.

Can anyone avoid the mandate?

Recipients who are receiving their benefits via paper checks on March 1, 2013 and are 92 years of age or older will be permitted to continue receiving their benefits by check. Recipients with a mental impairment or who live in a remote geographic area which lacks the infrastructure to support the electronic financial transaction may request a waiver in writing.

What will happen in March 2013?

Benefit recipients will be asked to provide the number of their bank account, information for private label prepaid card, or they will automatically start receiving benefits on the Treasury sponsored Direct Express Card.

The Direct Express Card is a prepaid card issued by Comerica Bank under a contract with the Treasury Department. The card can be used like any other debit card: to make purchases anywhere MasterCard is accepted and to withdraw cash at ATMs and at most banks and credit unions. The card will be mailed along with activation instructions.

Seniors who are converted to the Direct Express Card but wish to switch to direct deposit to another account –bank or credit union account or a different prepaid card account – may always do so. Other prepaid cards are eligible for direct deposit of federal payments only if they carry deposit insurance, comply with the legal protections governing debit cards, and do not have an attached line of credit or loan agreement that is automatically repaid from the deposit.

How Organizations Can Help

Publicize the transition and encourage direct deposit.Many seniors who still receive paper checks may distrust electronic deposits, be reluctant to provide their account numbers, or may not understand the materials. However, direct deposit into a bank or credit union account is always the safest and least expensive way to receive federal payments.

Who can help allay concerns before the March 2013 deadline? Member services staff and tellers who see seniors come in to deposit their paper checks at a financial institution; Senior centers’ staff; Credit counselors.

Offer accounts to unbanked seniors. Seniors who do not have bank or credit union accounts should be encouraged to sign up for one. Second chance accounts can be especially helpful for seniors who have had trouble with accounts in the past. For those concerned with garnishment, new rules protect federal benefits from debt collectors.

Explain the Direct Express Card.The Direct Express Card is a good option for those who do not qualify for a credit union or bank account. The card has few fees and these can be avoided with careful use. Customer service is free and paper statements are available for only $0.75/month. Alerts by telephone, text message, and email can provide notice when a deposit has been made or the balance is low.

Evaluate other prepaid card options. There are two drawbacks to the Direct Express Card; it cannot accept deposits from other sources, such as a private pension, and it does not offer an online bill payment feature. In contrast, other prepaid cards may have more functionality and can be used for direct deposit, but it is crucial to review the fee schedule. Stay away from cards connected with credit features or overdraft “protection” (i.e., fees), or those offered by payday lenders and check cashers.

To Learn More

U.S. Treasury

Sign up for Direct Deposit & get information on the Direct Express Card at www.godirect.org and learn more about the Direct Express Card at www.usdirectexpress.com

National Consumer Law Center

Sign up for a free webinar on this topic this fall at http://www.nclc.org/conferences-training/webinars.html

Download free Fact Sheets at http://www.nclc.org/issues/protection-of-exempt-public-benefits.html

Better Directions Webinars

Your invitation to learn how credit unions can effectively serve seniors

If you missed them, here are links to important recent Better Directions Webinars

Assessing the Economic Well-being of American Families and Elders

Watch here >

Responsible Approaches to Reverse Mortgages

Watch here >

And watch for the announcements of these upcoming webinars:

Fighting Elder Financial Abuse: What Credit Unions Should Recognize and How to Respond

CDCU executives told us that their members 65 and older are being targeting by financial scams. CDCU senior members told us that they had been the victims of exploitation. In this Webinar national experts will discuss the risks of elder financial abuse, explain how to recognize the signs and look at effective responses and intervention strategies.

Watch here >

Seniors Going Green: An Introduction to Equity Express

Equity Express® is a unique approach to financial literacy; a curriculum that helps seniors make smart consumer choices, lower their household expenses, improve their health and have a smaller environmental footprint.

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