New Bipartisan Bill Would Let Banks Step in To Stop Scams Targeting Seniors and Their Homes

A new bipartisan bill, the Financial Exploitation Prevention Act, was recently introduced in Congress and, if passed, it could safeguard seniors for years to come.

It aims to protect retirees from elder financial fraud and scams by giving a range of financial institutions new powers to detect and act on suspicious activity.

By involving the Securities and Exchange Commission (SEC) and seeking to close gaps in existing protections, this could help seniors protect their life savings, including their most valuable asset: their home.

What the bill does and who’s behind it

On Sept. 17, Sen. Bill Hagerty (R-TN) and Sen. Ruben Gallego (D-AZ) reintroduced the Financial Exploitation Prevention Act. The bill was previously introduced in the Senate in 2023 and has a delegation of bipartisan support behind it.

The Financial Exploitation Prevention Act asks the SEC “to report to Congress on recommendations for legislative and regulatory changes on how to combat financial exploitation of seniors and vulnerable adults,” according to a press release on the Act.

“Older Americans are being exploited through financial scams, losing billions of dollars each year. I’m pleased to reintroduce this legislation with Senator Gallego to provide financial professionals the ability to address the growing issue of financial exploitation and abuse of vulnerable investors,” Sen. Hagerty said in the release.

The numbers are staggering: In the US, financial abuse costs seniors a whopping $27 billion annually, according to the Federal Deposit Insurance Corporation (FDIC), which added that "financial exploitation" could take many forms, like theft of property.

To put this in context, 10,000 Americans will turn 65 every day over the next decade, and retirees will represent 18% of the country’s population by 2030.

“In this country, homeownership is often seen as a lifelong goal," says Pedro A. Rojas Arroyo, the founder and CEO of VIVY TECH.

"Sadly, financial education is not seen as important as other parts of the American dream. Many of our elders, especially, face difficulties in this matter. And that’s where people with bad intentions come into play,” he adds.

The bill protects seniors by allowing a registered open-end investment company, such as mutual funds, to delay “the redemption period of any redeemable security if it was reasonably believed that such redemption was requested through the financial exploitation of a security holder who is a senior.”

Jason Sorens, senior economist with the American Institute for Economic Research, says that while the bill is a “relatively small fix,” it could be beneficial for vulnerable seniors.

He explains that the expansion of the period that open-end investment companies and their transfer agents may take to redeem proceeds from the sale of securities when they expect financial exploitation is notable.

“It’s a response to criminal activities like romance scams, often conducted overseas and hard to prosecute. It gives the financial company and its customer some time to figure out what’s going on with suspicious transactions, and in some cases it may save scam targets many thousands of dollars,” he explains.  

Ilir Salihi, founder of personal finance website IncomeInsider.org, adds that in essence, any security transaction that raises suspicions would be reportable to the SEC or other regulators to evaluate the legitimacy of the transfer.

“The House version of the bill has already been unanimously approved by the House Financial Services Committee earlier this month, and there is no indication that the bill will fail to pass either chamber of Congress,” he says. “Clearly, the bill is targeting investment accounts, but the same set of rules will apply to interrupting real estate-related scams, such as fake home improvement loans or hijacked wire transfers at closing.”

How the bill could protect seniors’ homes

Sorens says that while there’s nothing in the bill specifically about homeownership, it could prevent some people from losing their life savings, an event that obviously could make it hard for them to pay debts and bills.

Jonathan Reed, finance expert and founder and CEO of BestUSAPayday, says that as a financial advisor, he has seen firsthand the devastating effects that financial scams can have on older homeowners.

The bill would allow banks and financial institutions to intervene and stop potential scams before they can strip seniors of their homes, such as when an elderly homeowner is approached by a fraudulent contractor promising home repairs or when a family member attempts to pressure them into signing over their home, he says.

“The way scammers steal homes usually involves financial pressure upstream: draining liquidity, coercing debt, or forcing transactions that ultimately destabilize ownership,” he says.

Potential scenarios in which the bill could help older homeowners include refinance or title wash scams, which entail seniors being told they must refinance their home “immediately” to avoid foreclosure.

“They’re instructed to liquidate investments to cover fake fees. With the Act in place, that liquidation request could be delayed, giving family or regulators time to uncover that no legitimate foreclosure exists,” he explains.

He says additional scams that could be prevented include fake contractors or repair grifts—for instance, if a roofer or foundation “specialist” tells an older homeowner their house will collapse unless they wire $40,000.

“The senior tries to cash out a mutual fund. The institution, noticing the unusual size and urgency, places a hold. That pause not only blocks the scam but preserves the home by keeping the funds available for legitimate upkeep,” he adds.

How family members can help monitor and protect elder homeowners

There are several steps, however, that family can take to help protect their seniors, as well as several warning signs of financial abuse that can be recognized.

As Reed notes, the Financial Exploitation Prevention Act is a valuable safety net, but it is most effective when combined with awareness and proactive steps within the family.

Regular check-ins

Steve Sexton, CEO of Sexton Advisory Group, recommends staying involved with your elderly parents or family members as they age.

“Regular check-ins, whether a weekly phone call/visit or offering to help with mail and bills, can make it more challenging for potential scammers to slip through the cracks,” he says.

Set up safeguards

Sexton adds that this can be done via helpful tools like direct deposit, automatic bill pay, and fraud alerts to minimize opportunities for errors or manipulation.

“If your parent or family member has a large transaction coming up, recommend dual authorizations, which require a trusted family member to review big financial moves before they go through,” he advises.

Keep an eye out for red flags

Sexton added that financial abuse can include unusual bank withdrawals, sudden changes in spending habits, or unpaid bills. He notes it can also come in the form of new "friends" taking an interest in family members' finances.

“Trust your intuition, and don't ignore your gut if something feels off,” he urges.

Have a trusted financial advisor

Sexton also notes that, in some cases, having a trusted financial advisor or attorney review documents periodically can help ensure no unwanted changes have been made to deeds, wills, accounts, or trusts.

Finally, Sexton stresses the importance of how to frame things with seniors.

“These types of conversations with loved ones are much easier when these safeguards are framed as empowerment, not control. Emphasize that retaining financial freedom is the priority, and these safeguards should be regarded as a safety net. Involving your elders in the decision-making process will help them stay engaged and feel respected,” he adds.