New Banking Law Aims to Curb Fraud

Posted on 03/31/24 by Cristina Rouvalis

For a 73-year-old man from the Hartford area, the scam started with a Facebook message from an unfamiliar woman who seemed friendly and caring. They messaged back and forth so much that he started referring to her as his girlfriend.

Then she started asking him for money, for what she described as business opportunities. It began with small amounts before escalating to $20,000—supposedly to pay taxes on a $500,000 windfall. His bank noticed irregular activity on his account and warned it might be a scam, but he wired his “girlfriend” the money anyway, says Dorian Long, manager of the Protective Services for the Elderly program, part of the Connecticut Department of Social Services.

Long is now investigating the matter as a case of financial exploitation. But the chances of success aren’t good; once a wire transfer occurs, it can be tough to recover the funds.

A new state law, which goes into effect July 1, is designed to prevent such exploitation by authorizing banks and other financial institutions to put a temporary hold on suspicious activities if the victim is 60 or older. The law says financial institutions may report suspected abuse to the state’s Department of Banking or Department of Social Services for investigation. If warranted, the police are also contacted.

Jorge Perez, Connecticut’s banking commissioner, says banks will be on alert for unusual patterns.

“You’ve been a customer for 20 years. You have a routine. Now all of a sudden, you’re coming to the bank every day, taking out $5,000, $7,000, $8,000 and ... you’re not doing a renovation to your house,” he says. “There’s no logical reason.”

The temporary freeze will slow things down, enable an investigation and hopefully prevent financial exploitation from happening in the first place, he says.

The initial hold can last up to seven days and can be extended up to 45 days if evidence of fraud is found. Perez says banks that report suspicious activity will get a “safe harbor”—meaning they won’t be liable if the funds are improperly released—as long as they train their staff, give proper notification and comply with other elements of the law.

For those 50+, fraud hits hard

In 2023, Americans reported losing more than $10 billion to fraud—ranging from romance and investment schemes to gift card scams—according to Federal Trade Commission data.

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Graphic: Nicolas Rapp

Kathy Stokes, director of fraud prevention programs with AARP, says younger Americans report more fraud than older adults. But it can be more devastating when retirees are targeted.

“When you’re 83 and you lose $800,000 and that’s all you had, it’s life-altering,” she says.

Nora Duncan, AARP Connecticut’s state director, says older people should not feel embarrassed if they are the victim of a scam.

“There are criminals spending every day of their lives working full time in a syndicate or organized crime to remove money from your wallet,” she says.

AARP supported the new bank law, which passed unanimously. “The whole point is to do this before the money’s taken away,” Duncan says.

Long says banking officials often try to dissuade customers from sending large amounts of money when there are red flags, but it can be difficult to make the case. She says many customers develop a strong emotional connection to the sophisticated con artists who perpetrate these kinds of scams.

To throw banks off their scent, criminals even coach victims on what to say to skeptical tellers about transactions, providing them with scripts, says David DelVecchia, senior vice president and bank security officer at Liberty Bank in Middletown.

“It’s amazing, the grooming and the techniques that these fraudsters use” to build trust,
he says.

In the case of the 73-year-old Hartford-area man, he still seems to have an emotional connection to the person who took his money, Long says.

“Sometimes it takes a little time,” she says.

Cristina Rouvalis, a writer based in Pennsylvania, covers business, health care and other issues. She has written for the Bulletin for more than a decade.

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This story is provided by AARP Connecticut. Visit the AARP Connecticut page for more news, events, and programs affecting retirement, health care, and more.

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