Do You Kow About Electronic TRansfer Fraud in Senior Communities?
Imagine my surprise and anger when I learned nearly three weeks after I left a senior community, that a large sum of money had been withdrawn from my account without my permission!) Read on…
What is ACH?-
ACH stands for Automated Clearing House. It's a secure electronic network that facilitates the transfer of funds between banks and other financial institutions. ACH transactions are used for various purposes, including direct deposits, bill payments, and other recurring payments.
ACH is used for many types of money transfers, including direct deposit of paychecks, monthly debits for routine payments. Businesses often allow you to pay bills via ACH by providing your account number and bank routing number. Some online payment services also conduct transactions via ACH, including online bill payment services through banks and credit unions.
When this network is used for illegal purposes, it has dire consequences for not only seniors, but all consumers. This often occurs without the person realizing it has occurred!
Overview of Senior Fraud -
As consumers, we should know that fraud, and various new ways to scam people are created every day.
If only these crimminals who perpetrate such crimes would use their ‘creativity turned to heartbreak and despair to good ethical use, we would be in a far better situation.
Seniors hold 70% of the deposited wealth in the United States.
Statistically, approximately 10,000 baby boomers are turning 65 every day until 2030, creating an even larger pool of potential victims for fraudsters and scammers.
The toll taken by scams creates a financial nightmare for seniors at a time in their lives when relaxation and enjoyment should be the focus. Some may weather the storm of a financial scam. But most, are frequently left destitute; Emotionally, and physically, the consequences are immense. They are embarrassed and frequnntly withhold such information from families until it is too late. They become depressed and fearful, not trusting anyone. Such events cause stress which leads to physical health comlications and can lead to premature death.
According to the National Council on Aging the annual cost of elder fraud is approximately $36.5 billion.
During June 2022 to June 2023 , the Financial Crimes Enforcement Network of the U.S. Treasury, approximately $27 billion was reported elder suspicious activity, with 80% involving money transferred to strangers for unreceived benefits and 20% involving trusted persons, often adult children.
Common Types of Scams-
Money Mule Schemes: Scammers often recruit seniors as "money mules" to receive and then forward funds obtained through illicit means, including ACH transfers, according to the FBI (.gov). This involves the senior's bank account being used to receive funds via ACH, which they then might be instructed to withdraw and send through other methods (like wire transfers or gift cards) to the scammers.
Impersonation Scams: Fraudsters may impersonate government officials, tech support representatives, or even grandchildren, convincing seniors to send money through ACH transfers or provide their bank account information, which can then be used to initiate unauthorized ACH debits.
Tech Support Scams: Seniors might be pressured to grant remote access to their computers and financial accounts, potentially leading to unauthorized ACH transfers or the collection of banking information for future fraudulent use.
Investment Scams: Scammers might persuade seniors to invest in fictitious opportunities, often involving promises of high returns with low risk, and then direct them to transfer funds via ACH to the scammer's accounts.
ACH payments may be a fast transaction i.e clear quickly, even on the same day they are entered, on business days during business hours.. However, it may take a few days due to the way transactions are processed to guard against fraud and money laundering. The ACH network is regulated by the federal government and managed by the National Automated Clearing House Association (NACHA).
A ‘Mistake’ or Intentional Fraud-
When a senior resident transfers to another community, and another state, due diligence is expected when dealing with a resident’s funds. Requests to be removed from the ACH system were made twice following payment of all funds due. Posting of withdrawals were done on the seventh of the month. It was not until nearly 3 weeks later that I discovered my requests were not honored and money was illegally withdrawn.
I contacted my bank immediately, as I did not want to engage in any personal confrontations with employees, particularly those who were not paying attention nor acting responsibly. The bank initiated an unauthorized payment and stop future payments electronically. I followed up a couple of days later and learned that my monetary loss was reimbursed by my bank ( as they have insurance to cover such losses). However, they did not seem to be concerned about the offending business -a management company based in Virginia. Technically, it is a business transaction for the management company to reimburse the bank.
However, my concern has always been, there was and is no accountability, no lessons learned, no integrity, no apologies by the incompetent employees assigned to handle financial changes, nor the management of the senior community!
Yes, I am relieved and grateful that my funds were reimbursed. However, there is the larger issue of the great possibility that this can and does occur with other residents and families, particularly if there are no consequences to the management company.
As a lifelong advocate, this is unconscionable to me. I am “Ladyjustice”!
At the end of July, I crafted and sent a detailed letter to the management company documenting the circumstances, in addition to another act of negligence. It was sent to the Chief Operating Officer, the head of Risk Management and the Chief Financial Manager. Since that time, I have received no response by email nor any phone calls after two follow up calls.
My request involved an apology at minimum and a plan of action with the assurance that the offennding parties would be replaced with qualified competent employees.
This shows their lack of professionalism and integrity. This situation represents further opportunities for businesses with residents on ACH to exploit other residents who may come and go, or pass away with virtually no monitoring of a resident’s funds! I am contemplating my next step. The longer I get no response, the longer I am convinced I was not the first victim of fraud!
The Aftermath - I could find no specific data on the frequency of this type of fraud from senior communities. However, I did learn there are legal and criminal consequences (which I shared with the management company in Virginia,)
Here's a breakdown of why ACH payment theft is illegal:
Unauthorized Transactions: ACH fraud involves initiating electronic fund transfers without the authorization of the account holder.
Deceptive Practices: Scammers often employ tactics like phishing, stolen credentials, and account takeovers to gain access to account information and commit fraud.
Exploiting Vulnerabilities: Fraudsters target weaknesses in security procedures and human behavior to trick individuals into authorizing payments or to gain unauthorized access to accounts.
Federal Laws: Federal laws such as the Electronic Fund Transfer Act (EFTA) and the Uniform Commercial Code (UCC) outline the responsibilities of financial institutions and account holders in preventing and addressing ACH fraud.
Penalties: Those who commit ACH fraud can face severe criminal penalties, including hefty fines (up to $1 million) and imprisonment (up to 30 years) under the Federal Bank Fraud Act.
In short, any unauthorized or deceptive activity involving ACH payments, with the intent to gain illicit funds, is considered illegal and can lead to severe consequences.
While it's difficult to provide an exact figure, the increasing adoption of automated payment solutions and the push towards digital transformation in the senior living sector suggest that more and more senior communities are embracing ACH for its efficiency and cost-effectiveness.
What the Industry says-The increasing popularity of ACH in senior living:
Improved Cash Flow: Automating payments ensures timely receipt of funds from various sources, including Medicaid reimbursements and resident payments, improving the facility's financial stability.
Reduced Administrative Tasks: Automating billing and payments eliminates manual processes like printing, distributing, and reconciling paper checks, freeing up staff time for other crucial tasks, such as resident care.
Enhanced Security: Electronic payments through ACH are more secure than paper checks, reducing the risks associated with lost or stolen checks and potential fraud.
Convenience for Residents and Families: ACH offers a convenient way for residents or their families to set up recurring payments and manage expenses, reducing the stress and hassle associated with traditional payment methods.
I wrote this as a ‘fair warning’ piece of great importance. If you have a similar story, Iwould love hear it.
Please, be careful, be diligent… and don’t let them get away with it!
Quote from Dave Ramsey-
You will either learn to manage money, or the lack of it will manage you.”
Thanks for reading,