Starting Jan. 1, banks in Alabama will be able to delay transactions on elderly and vulnerable customers’ accounts if fraud is suspected.
The new law, approved by the Legislature earlier this year, was proposed by the Alabama Bankers Association.
“It is fairly common now with all of the scams out there for our banks to see members of the communities we serve impacted by fraud, particularly elderly people,” said Scott Latham, the association’s president and chief executive officer.
Latham said bank employees can establish years-long relationships with customers, allowing them to realize changes in banking behavior that isn’t right.
“This bill gives us an opportunity to pause the transaction, if the banker feels that’s justified, and make sure that transaction is on the up and up,” Latham said.
The new law also applies to customers of credit unions. The Alabama Credit Union Association also supported the legislation when it was being considered in the Legislature.
According to AARP, more than 334,000 incidents of elder financial exploitation are reported to authorities in the U.S. each year, causing an estimated $6.3 billion in losses. And those figures are likely lower than the true problem because abuse is underreported.
The bill was sponsored by Sen. Shay Shelnutt, R-Trussville, and Rep. Chris Blackshear, R-Phenix City.
Normally, banks don’t discuss an account with anyone who isn’t named on it. The new law allows customers to provide a list of trusted individuals banks can contact should they suspect fraud or abuse.
The bill says that if a bank delays or rejects a transaction because of suspected financial exploitation, it has to notify the account holder and report the incident to the Alabama Department of Human Resources and a law enforcement agency.