This new bill hopes to 'put the brakes' on financial fraud targeting older Americans

A new bipartisan bill making its way through Congress aims to protect seniors and other vulnerable people from scams by allowing some financial institutions the ability to pause transaction requests while they investigate potential fraud.

The Financial Exploitation Prevention Act would give open-end investment companies, including mutual funds, the ability to pause redemption requests from people 65 and older or people with disabilities when the institution believes financial fraud or exploitation is at play.

"Financial exploitation is a huge problem in this country," said Nina Kohn, an elder law expert at the Syracuse University College of Law. Artificial intelligence is also helping fraudsters become more sophisticated and making it harder for people to avoid scams, she added.

Financial abuse cost older victims nearly $2.4 billion in 2024, according to incidents reported to the Federal Trade Commission. The agency noted in its annual report that the estimate of total losses include "only a fraction" of older adults harmed by fraud due to underreporting.

Three people accused of being behind a major romance fraud scheme targeting older adults were indicted by the Department of Justice in May, part of a series of cases that have charged 11 others from the U.S. and Ghana with wire fraud and money laundering.

"The concern is, in part, that individuals may lose their life savings," Kohn said.

"So financial institutions and entities that are holding individuals' money can be empowered to help put the brakes on scams by delaying disbursement to a suspected victim," she added.

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The bill passed the House in a 414-2 vote last month, while a similar bill resides in the Senate, though it's not clear if or when the banking committee under that chamber will consider the legislation.

The overwhelming support for this bill shows "there's broad agreement that protecting seniors from financial exploitation shouldn't be a partisan issue," said Rep. Andrew Garbarino, R-N.Y., one of the bill's co-sponsors, in an emailed statement to PBS News.

The legislation gives these financial institutions additional tools to "recognize when something isn't right and help stop financial abuse before the damage is done."

Here's what to know about the bill.

What would the bill do?

The bill would allow a financial institution that manages investments, such as mutual funds and some exchange-traded funds, to temporarily halt requests to access funds that it "reasonably believes" might be exploitative.

The bill focuses on requests from two specific groups:

• Someone age 65 or older
• Any adult the financial institution "reasonably believes has a mental or physical impairment that renders the individual unable to protect" their own interests.

It doesn't require the institutions to carry out the pauses or investigate potential fraud. But there is a proposed framework for delays. The institution can put a hold on the request for up to 15 business days while companies notify a client-provided adult contact that the customer may be the victim of financial exploitation. There are steps an institution can take to extend the hold for another 10 days. A court, state regulator or another administrative authority could also extend the delay.

The bill does not apply to other financial institutions, like banks or credit unions. It does require the Securities and Exchange Commission to submit a report to Congress with recommendations on how to further reduce financial fraud targeting these adults within a year of enacting these measures.

The Financial Industry Regulatory Authority, or FINRA, already allows brokers and money managers to temporarily freeze requests that are from older adults who may be the victims of exploitation.About half the states also have laws on the books that allow banks and sometimes credit unions to do the same.

This federal legislation "fills a gap," Kohn said, by covering investment funds that are self-managed.

How this bill could help

The Department of Justice identified more than 1 million victims of all forms of elder financial exploitation, fraud, neglect and abuse between July 2024 and June 2025. Offenders allegedly stole or attempted to steal $2.3 billion, according to the department's latest annual report to Congress.

There are no national reporting standards for how often financial institutions detect exploitation, and when they do, how often they put holds on accounts, said Marti DeLiema, associate professor at the University of Minnesota School of Social Work.

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But some state-level data does exist. In Minnesota, of the 286 cases referred for investigation in 2022, temporary holds were implemented in a quarter of them, according to a study DeLiema co-authored.

Half of the banks who responded to a 2024 survey from the American Bankers Association Foundation said they had delayed disbursements or refused or held transactions when they suspected exploitation.

And more than 85% of banks in states without hold laws said they would find them beneficial, the survey found.

"Financial institutions are seeing this stuff is happening. They want to help," DeLiema said. Sometimes, a conversation from the bank or law enforcement is enough to pull the victim from the scam, she said.

Other times, that's not enough.

In those cases, temporary holds can be used as a "last resort" to keep the person and their money safe.

Concerns and questions about autonomy

For Kohn, it's not clear whether the pauses proposed by the bill will prevent the exploitation entirely or just delay it. Putting holds on customers' accounts also puts financial institutions at risk of degrading trust with their clients.

While 43% of banks in the ABA Foundation survey said they found state hold laws useful in preventing financial exploitation among older people, 45% also said customers reacted negatively to those holds. Nearly 17% said customers closed their accounts after a delay, and 2.4% said the hold has been challenged in court.

Another concern is someone's self-determination. Allowing financial institutions to stop customers from accessing their own money may verge into limiting people's ability to make choices about their lives and their own funds, Kohn said.

"The question is: Is that restriction on self-determination justified?" she said.

Giving people the opportunity to make their own decisions, even bad ones, is called "dignity of risk," a term often used in disability studies.

For example, people are allowed to take their retirement funds and spend it at a casino, DeLiema said, so "why would we stop them from participating in a scam?"

"The answer has to be: The people on the other end are criminally victimizing these individuals. They're using deception, they're lying," she said.

That exploitation leads victims to believe they're in a relationship with their scammer, or that they're rescuing a grandchild, or that their money is being invested in cryptocurrencies, she said.

With the rise of deepfakes and other AI-driven technology being used in scams, "all this is going to get a lot worse," she added.

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It's reasonable for policymakers to be concerned about exploitation among older adults in particular, because they tend to lose more money than younger adults and have less time to recover financially, Kohn said.

But she also worries that legislation based on age may perpetuate stereotypes against older people.

If financial holds are good policy, why limit their application, she said.

"I think that speaks to our willingness as a society to curtail the self-determination and financial independence of older adults and people with disabilities to a degree that we are not comfortable curtailing the self-determination and financial independence of other adults," she said.