BILL ANALYSIS �
AB 1525
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Date of Hearing: March 27, 2012
ASSEMBLY COMMITTEE ON AGING AND LONG-TERM CARE
Mariko Yamada, Chair
AB 1525 (Allen) - As Amended: March 22, 2012
SUBJECT : Elder or dependent adult financial abuse: mandated
reporters.
SUMMARY : Includes Money Transmitters as mandated reporters of
suspected elder and dependent financial abuse. Specifically,
this bill :
1) Adds "money transmitter" to the definition of a mandated
reporter of suspected elder and dependent adult financial
abuse, and subjects them to the same standards for
reporting known or suspected elder and dependent adult
financial abuse, as those standards that currently apply to
employees and officers of banking institutions in
California.
2) Defines money transmitter as a person or entity engaged
in selling or issuing payment instruments, or receiving
money for transmission.
3) Makes a money transmitter, and the employer of a money
transmitter, subject to civil penalties for failure to
report suspected financial abuse of an elder or dependent
adult.
EXISTING LAW
1) Establishes the "Money Transmission Act" which provides
for licensure of money transmission entities to protect the
interests of persons in California who use money
transmission services, to provide for the safe and sound
conduct of money transmissions, and maintain public
confidence in money transmission services.
2) Defines "agent" within the Money Transmission Act as a
person that provides money transmission in California on
behalf of a licensee.
3) Defines "money transmission" as the act of selling,
issuing, or receiving money for transmission.
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4) Requires mandated reporting of suspected elder and
dependent adult financial abuse by all officers and
employees of certain financial institutions, when they
observe or have knowledge of behavior or unusual
circumstances or transactions, or a pattern of behavior or
unusual circumstances or transactions, that would lead to a
reasonable belief that an elder or dependent adult is the
victim of financial abuse, and provides civil penalties for
failing to report elder and dependent adult financial
abuse.
5) Provides immunity from civil and criminal prosecution of
mandated reporters of suspected elder or dependent adult
financial abuse, when reporting in good faith.
6) Requires county adult protective services to report
instances of reported elder and dependent adult financial
abuse.
7) Requires county adult protective services agencies to
provide financial abuse instructional materials to mandated
reporters.
8) Requires financial institutions to release information,
as specified, requested by a county adult protective
services office or a long-term care ombudsman, when
investigating the financial abuse of an elder or dependent
adult.
FISCAL EFFECT : Unknown
COMMENTS :
Author's Statement: "The intent of this bill is to strengthen
existing law in a way that promotes greater oversight and
monitoring of financial institutions so that elderly and
dependent adults are not victimized. By folding money
transmitters into the Elder Abuse Act, this bill provides
greater protections against financial abuses of vulnerable
elders and their families that are desperately needed,
especially in such dire economic times. AB 1525 is a step in
the right direction towards protecting one of California's most
vulnerable populations."
AB 1525
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Background supplied by author : According to the author, this
bill is necessary because mass marketing and e-mail or telephone
scams are difficult to track.
Arguments in Support: The AARP states that "?elder financial
abuse is a growing issue that is impacting more and more people
as our population ages." They describe demographic changes that
could mean a dramatic increase of vulnerable adults over the
next 20 years. They also state that additional strategies are
necessary to combat abuse of this vulnerable population, such as
including money transmitters as mandated reporters of suspected
elder and dependent adult financial abuse.
The California Advocates for Nursing Home Reform (CANHR) states
that the impact of wire scams is staggering, and impacts an
elder's ability to thrive and live independently. They consider
AB 1525 a modest measure that will encourage employees to be on
the look-out for elders who seem apprehensive or confused while
attempting to wire thousands of dollars. According to CANHR, the
value of the law will be that employees who are engaged in
wiring away a senior's money will know that the state and
society expect them to look out for the well-being of those
customers.
Arguments in Opposition: The Money Services Roundtable, "TMSRT"
is an organization composed of non-bank money transmitters that
engage in funds transmission, issuance of payment instruments,
and stored value. TMSRT asserts that money transmitters do not
deal directly with retail customers, do not have customer
accounts, and that TMSRT members employ effective techniques to
identify, interdict and prevent fraud.
TMSRT argues that including wire transmitters in the statutes
that guide banking employees on their mandated reporting
responsibilities fails to recognize that wire transmitters do
not have relationships with their customers and do not review or
approve customer financial records. TMSRT further states that
unlike wire transmitters, banks employ trained financial
services personnel who should be expected to know when
suspicious activity occurs.
TMSRT states that their members deploy effective techniques to
identify, interdict and prevent fraud through web-site warnings,
wire transmission point-of-sale warnings, customer education,
fraud prevention tools, agent training and law enforcement
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cooperation.
Background and Discussion: According to the Federal Bureau of
Investigation (FBI), seniors become targets of elaborate fraud
schemes because they are likely to have savings, own their home,
and have good credit. Con artists know that older persons'
depression era value systems, optimistic natures, and altruism
make it difficult for them to say "no" or just hang up the
telephone. Con artists know that older people are less likely
to report fraud because of shame, and fear that relatives may
think they are losing mental capacity. Furthermore, older
people often make poor witnesses. Con artists exploit the
effects of age on memory. Victims often fail to realize they
have been swindled until weeks or months after the event.
The Federal Trade Commission (FTC) considers money transfers
risky, and inappropriate for anything other than exchanges of
money between people who know each other. Material submitted by
the author's office states that scammers capitalize on the
nature of wire transfers because it is similar to sending cash:
recipients obtain the money quickly, and typically, there is no
way to reverse or trace a transfer. Con artists and scammers
use a range of techniques to lure older people into sending
money via wire transfer services: "lottery and sweepstakes
scams" where "lucky winners" are asked to wire cash to cover
taxes and fees; "mystery shopper scams" which request
unsuspecting consumers to deposit a fraudulent check into their
bank account and to wire the amount to someone measuring
"customer service" criteria; "online purchase scams" demand wire
transfer of funds for goods that never arrive; "advance fee
loans" promising loans and credit regardless of one's credit
history, for a wire-transferred fee. Typically, fraud starts by
enticing individuals through e-mail, mass marketing or telephone
solicitations.
In certain circumstances, the wire transfer "agents" were found
to be complicit in the fraud. According to a 2009 settlement
with the FTC, MoneyGram International, Inc., paid $18 million in
consumer redress after charges were filed that assert the
company allowed its money transfer system to be used by
fraudulent telemarketers. Between 2004 and 2008, MoneyGram
agents assisted con artists who tricked U.S. consumers into
transferring over $84 million after consumers were told they had
won a lottery, or were hired for a secret shopper program, or
were guaranteed loans.
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Money transmitters operate in a variety of commercial retail
settings. For instance, Money Gram operates out of 98 outlets
in the City of Sacramento alone, including, among others, some
Bel Air grocery outlets, Longs Drugs stores, 7-11s, Advance
America outlets, and Ace Cash Express outlets. Money
Transmission Act licensees, such as Money Gram and Western
Union, typically do not have direct contact with customers at
point of sale. Money Transmission Act licensees consider those
who have direct customer contact at point of sale "agents," and
include employees of outlets, as well as the outlets themselves.
Recent Amendments: The author recently amended AB 1525 to
exempt retailers of "stored value" from the provisions of AB
1525. "Stored value" is a way to describe the sale of gift
cards or pre-paid credit cards.
REGISTERED SUPPORT / OPPOSITION :
Support
California Senior Legislature - Co-Sponsor
San Diego County District Attorney - Co-Sponsor
Aging Services of California
Area Agency on Aging - San Luis Obispo/Santa Barbara
AARP
AFSCME
California Advocates for Nursing Home Reform (CANHR)
California Association of Area Agencies on Aging (C4A)
Crime Victims Action Alliance
Los Angeles County District Attorney's Office
Older Women's League (OWL)
Opposition
The Money Services Roundtable (TMSRT)
Analysis Prepared by : Robert MacLaughlin / AGING & L.T.C. /
(916) 319-3990
AB 1525
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