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Banks May Be Aiding in Scams Against Seniors

Jun 11, 2013

Banks are becoming more complicit in fraud inflicted against the senior population. The scams are basically the same, but banks seem to be playing a larger role in the methods used by fraudulent telemarketers to cheat elderly consumers out of their money.

According to just-unsealed court documents reviewed by The New York Times, one case involves Zions Bank of Salt Lake City, a financial institution that has been in operation for 140 years; the bank enabled suspect Internet sellers to commit fraud while profiting off of the scam. The Times reviewed hundreds of filings associated with civil lawsuits brought against Zions and the First Bank of Delaware by federal authorities and consumers.

In the case of First Delaware, a $15 million settlement was reached in November with the Justice Department after the bank was accused of allowing sellers to debit accounts illegally more than 2 million times for a massive $100 million, according to the Times, which also interviewed state and federal officials.

It seems that banks are making large profits by collecting fees but not following up on potential fraud warnings. In some cases, according to the Times, banks are paving the way for nefarious merchants to prey on consumers. And, although any demographic is a potential target for unscrupulous merchants, the elderly are at increased risk for mass market fraud for any number of reasons that can include money concerns and loneliness, the Times explained.

According to federal authorities, the problem is not just with Zions and First Delaware. In fact, banks nationwide are helping to perpetuate the billions in fraud annually, according to the Times, citing interviews with prosecutors at the state and federal level. In response, Justice Department officials are focusing on banks’ roles in enabling unscrupulous lenders and merchants access this country’s financial system, the Times explained.

Civil and criminal actions are being considered against banks that allow counterfeit funds to reach the branch level, for not protecting consumers against fraudulent merchants, and for enabling transactions by businesses that financial institutions know make unauthorized withdrawals from consumer accounts, say those with direct knowledge, according to the Times.

“You can’t close your eyes anymore to the fraud that you are allowing to happen,” Michael Blume, the director of the consumer protection branch at the Justice Department, told the Times. “Banks are in business to make a profit. Unfortunately, this is a moneymaking operation at consumers’ expense,” he added.

However, “nothing sharpens the focus for banks like an enforcement action,” Michael Bresnick, the director of President Obama’s Financial Fraud Enforcement unit, told the Times.

According to, nearly $3 billion dollars is lost by seniors in financial scams that involve cons over sweepstakes; bogus financial products, other products or services, and travel packages; contributions to fake charities; scams seeking money to help authorities apprehend a crook or to wire money to help a family member who has met with trouble, to name just some.

Between 2007 and 2009, tens of thousands of Americans, many seniors, made complaints to their state attorneys general, banking regulators, and the Federal Trade Commission (FTC) seeking refunds for bank charges they allege were unauthorized, according to court records the Times reviewed.

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