Whether buying bogus products on infomercials or being deceived by dishonest caretakers dipping into the cookie jar, millions of older Americans have fallen prey to elder fraud and financial exploitation.
It even happened to legendary actor Mickey Rooney, who died this year with an estate reportedly valued at only $18,000. Rooney went from being a teenage Hollywood icon to becoming an alleged victim of financial abuse who testified before Congress about the need to protect elderly against financial fraudsters, including family members.
According to some estimates, financial fraud involving senior citizens is a $40 billion annual problem in the United States and rates are expected to continue skyrocketing as more baby boomers hit their golden years.
In response, regulations have rolled out that require financial institutions to help deter elder financial abuse. For example, Colorado recently began requiring credit unions to report suspected elder exploitation within 24 hours after making a discovery.
"We're seeing a rapid increase in the need for credit unions to play a role in preventing elder financial abuse," said Andrew Downin, innovation director at the Filene Research Institute in Madison, Wis.
To fight the growing problem, Filene is looking for credit unions to test the prototype of a new payment card concept designed to prevent the financial abuse of elderly, disabled and other vulnerable members, Downin said.
The True Link Prepaid Visa Card, which proactively limits transactions commonly associated with financial abuse, combines a debit card, mobile alerts and an online spending monitor into one easy, convenient service, Downin explained.
"Credit unions that participate in the True Link Card prototype test with Filene will be on the leading edge of preventing elder financial abuse before it ever occurs," he said. "True Link will also help credit unions comply with emerging laws that require financial institutions to look for and report potential elder financial abuse."
Purchases can be automatically declined to unscrupulous mail order businesses, questionable charities, late-night ATM cash withdrawals and other potential scams, Downin added. As a result, those reportable transactions are less likely to occur, which protects older members and reduces the reporting impact on credit unions.
Read more: How True Link works …
Filene is seeking credit unions to test True Link, which combines a debit card, mobile alerts and an online spending monitor to fight financial fraud among the elderly and others.
A trusted person acting as an administrator can set or adjust spending limits, receive alerts of suspicious charges and auto-reload the card from a linked account.
"In addition to helping prevent elder financial abuse from happening, True Link loops in a trusted person when suspicious activities have occurred, allowing the appropriate action to be taken," Downin said.
The power of True Link is in its ability for members or their trusted caregivers to proactively decline transactions commonly associated with elder financial abuse, he noted.
"Plus, we see possibilities where this card could help with disabled members or other people who might need a bit more protection from buying things they shouldn't."
As an extra layer of protection, True Link plans to continuously update and expand its database of suspected merchants and scams.
Downin said the card's concept was brought to Filene's attention after an i3 project in 2012 called Senior Sentry, which is an alert system concept that leveraged existing core processor or BSA analysis tools.
Kai Stinchcombe, CEO of the San Francisco-based startup True Link, told a Finovate audience in May that his team was inspired by stories from relatives who had experienced elder fraud, including his grandmother who lost tens of thousands of dollars to predatory marketing scams.
"It seems like everyone we talk to has an aging family member who lost money to scams and pushy marketing," Stinchcombe told CU Times. "It turns out, it's everybody's secret."
"The way scams and elder predatory marketing used to be prevented is, if grandma was trying to wire money to Nigeria, the teller would notice and ask what it was about and then, maybe call her family and make sure everything was okay. That's the credit union vision – member-centric, locally-based banking."
Stinchcombe said True Link is service for the digital age.
"With True Link, at any credit union that we've partnered with, grandma can say 'maybe it would be better to have an extra set of eyes on my account in case someone is trying to scam me,' and they'll get that level of personalized service, where if something looks funny we can loop their trusted family member in and make sure their money is kept safe."
Downin agreed that it seems like a natural fit for credit unions to take the lead in fighting financial fraud against the elderly.
"As trusted financial partners with their members, credit unions are well suited to offer solutions like the True Link Card to help prevent elder financial abuse," Downin said. "With our upcoming prototype test, Filene is seeking to research how the (card) can help prevent elder exploitation."
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