State 'Hold' Laws and Elder Financial Exploitation Prevention

A Survey Report

Table of Contents

EXECUTIVE SUMMARY ....................................................................... 1 INTRODUCTION .................................................................................... 2 STATE HOLD LAWS: IMPLEMENTATION AND IMPACT.........4 HOLD LAW TRAINING AND SPECIAL PROVISIONS.............. 7 EFFECTIVENESS AND CUSTOMER REACTIONS.....................9 WORKING WITH LAW ENFORCEMENT AND APS ................11 OPERATIONAL CHALLENGES ......................................................14 BANK RECOMMENDATIONS ..........................................................15 CONCLUSION........................................................................................15 ACKNOWLEDGMENTS......................................................................16

EXECUTIVE SUMMARY

To protect older customers from the growing threat of elder financial exploitation, banks have implemented protective measures including staff training, customer education, enhanced fraud investigations, and collaboration with law enforcement and adult protective services (APS).

States have also taken strong action — about half currently have "hold" laws that allow banks to delay disbursements or hold transactions when they suspect financial exploitation of an older or vulnerable person.

To better understand how banks are utilizing these laws, the ABA Foundation conducted a national survey from Sept. 9 – Oct. 8, 2024. Key findings include:

• Prevalence of Hold Laws: More than half (54.4%) of the respondents conduct business in states with hold laws.
• Utilization of Hold Laws: Among these banks, half have used the laws to hold transactions, leveraging the time to contact a trusted family member or friend, collaborate with law enforcement or APS, or dissuade customers from transferring their money to a would-be thief.
• Call for Longer Hold Periods: Over half (52.4%) of respondents utilizing state hold laws believe longer hold periods are needed to accommodate thorough investigations and, when necessary, interventions.
• Effectiveness: Nearly half (43%) of respondents utilizing state hold laws report that the laws have been useful in preventing elder financial exploitation.
• Support for Passage of Hold Laws: Almost 90% of respondents in states without hold laws said such a law would be beneficial.
• Challenges: The patchwork of state hold laws presents challenges for banks with customers in multiple states.
• Legal Protections: Safe harbor provisions are critical to empowering banks to take action on behalf of customers without fear of legal repercussions.

Stopping elder financial exploitation remains a top priority for banks and their staff. While state hold laws are an important tool in these efforts, respondents emphasized that there's room for improvement.

"Banks are on the front lines of the battle against financial exploitation. From large financial institutions serving clients in multiple states to smaller community banks, the industry is dedicating more resources than ever to this challenge. The findings in this report highlight the determination of banks to help older customers safeguard their hard-earned assets." — Sam Kunjukunju, Vice President of Consumer Education, ABA Foundation

INTRODUCTION

As of January 2025, laws in about half the states allow bank depository institutions to hold or deny suspicious transactions involving older customers — generally age 60 to 65 or older — or vulnerable individuals meeting criteria established by APS or definitions similar to it. Currently, there is no federal counterpart to these state laws.

State hold laws also provide financial institutions with safe harbor from litigation when acting in good faith to protect older or vulnerable customers. A bank's hold authority is often paired with requirements, such as mandatory reporting of cases of suspected financial exploitation to APS, law enforcement and other government agencies.

Key provisions of state hold laws may include:

• Transaction holds for a specified duration, with some laws mandating holds upon the direction of law enforcement, a prosecutor's office or APS.
• The option to extend transaction holds for further investigation, if necessary.
• Mandatory staff training to recognize and handle suspicious transactions.
• Liability protections for institutions that place holds on transactions in good faith.
• Authorization for customers to identify a trusted third party (such as a family member or close friend) who may be contacted when banks suspect financial exploitation.

The ability to hold and investigate suspicious transactions is more crucial than ever as elder financial exploitation continues to rise. The FBI's Internet Crime Complaint Center reported a 14% increase in elder fraud complaints in 2023, while the Federal Trade Commission notes losses may be as high as $61.5 billion.

To assess the impact of hold laws in preventing elder financial exploitation, the ABA Foundation commissioned a survey of 158 U.S. banks in states with and without such laws. The findings of this survey, along with insights from one-on-one conversations with bank officials specializing in detecting, investigating and preventing elder financial exploitation, are detailed in this report.

The 158 banks that responded to the survey, conducted Sept. 9 – Oct. 8, 2024, represent 71% of the industry's number of deposit accounts. They comprise banks of various asset sizes, with the majority having assets of less than $1 billion.

Note: Sample sizes vary for each question, as some questions were only applicable to some banks and others were optional.

Most banks reported that their local area is the primary market they serve.

At 54.4%, more than half of the respondents do business in at least one state with a hold law.

![Respondent Size chart showing: Under $1 billion: 53.2%, $1 billion-$9.9 billion: 34.2%, $10 billion+: 12.6%]

![Primary Market chart showing: Local: 62.7%, Statewide: 15.8%, Regional/Multistate: 17.1%, National: 1.3%, Online: 3.2%]

![Banks Operating in States with a Hold Law chart showing: Yes: 54.4%, No: 45.6%]

STATE HOLD LAWS: IMPLEMENTATION AND IMPACT

Half of survey respondents operating in states with hold laws reported using the laws to delay, refuse or hold transactions to help protect older customers from financial exploitation. The holds allowed banks to investigate the legitimacy of transactions and provide customers with the opportunity to reassess their decision in a no-pressure setting. Additionally, banks used the delay to contact APS, law enforcement or customers' trusted third parties to assist with investigations and educate customers about the financial risk involved.

An overwhelming majority (nearly 90%) of respondents operating in states without hold laws expressed support for implementing the laws.

While some banks are hesitant to initiate the process to establish a hold law in their state, the majority said hold laws are a powerful tool in the fight against elder financial exploitation.

While only about half the states have hold laws for depository institutions, a significantly larger number have implemented similar laws for broker-dealers and investment advisers. Some state banker associations are trying a different approach.

![Banks Using Hold Laws to Protect Customers chart showing: Yes: 50.0%, No: 34.5%, Uncertain: 15.5%]

![Banks in States Without Hold Laws Find Them Beneficial chart showing: Yes: 85.7%, No: 1.4%, Uncertain: 12.9%]

For instance, "Iowa does not have a state transaction hold law and given the ever-evolving landscape in the payments space, our members have felt it best to pursue educational efforts for bankers and consumers on avoiding and detecting fraud," said Mike Rozenboom, Legislative & Legal Counsel for the Iowa Bankers Association.

He said the focus is on educating bankers about other methods of fighting financial exploitation, such as working with customers to name trusted contacts and building partnerships with state law enforcement on fraud call centers to intervene with customers.

Survey respondents reported that all types of fraud are at unprecedented heights due to increased sophistication by fraudsters targeting Americans. By delaying suspicious transactions for even a few days, banks can often prevent funds from being lost to scammers or misused by exploitative family members. Hold laws provide banks with the time needed to investigate a transaction's legitimacy, contact a trusted third party, and report suspected financial exploitation to law enforcement, APS and other governmental agencies.

Among survey respondents who indicated they have utilized their state's hold laws at least once, more than half (54.7%) are holding transactions for some amount of time. Nearly a quarter (23.8%) said they delay suspicious transactions a few times a month, while others indicated doing so once a month (19%), daily (7.1%) or weekly (4.8%).

In addition to contacting law enforcement, APS or other government agencies when suspicious activity is suspected, nearly half (47%) of bank respondents utilizing their state's hold law reported notifying a customer's trusted contact.

The survey also found that nearly one-fifth of banks using their state's hold law delay suspicious transactions for an average of five days. Some banks answered "Other" when asked about hold periods, noting that the duration varies depending on the circumstances as the bank investigates the transaction.

![Frequency of Hold Transactions: Among Banks Operating in States with Hold Laws chart showing: Rarely: 40.5%, A few times a month: 23.8%, Once a month: 19.0%, Daily: 7.1%, Weekly: 4.8%, Uncertain: 4.8%]

Among respondents utilizing transaction holds, more than half indicated they should have the ability to hold transactions for a longer period of time. One respondent suggested that banks should have the flexibility to determine the appropriate length of transaction holds, noting that "each situation may vary depending on how best to support the client."

Jennell Huff, Community Outreach Coordinator and Relationship Manager at Bank of the Rockies in Montana, shared that while the relatively long 15-day hold allowed by state law is a significant amount of time to restrict access to funds, "these investigations can take a significant amount of time."

Among respondents who expressed a need for longer hold periods, about 29% stated that a 30-day delay would be ideal.

However, many respondents emphasized the need for flexibility to effectively investigate suspicious activity.

"The timeframe needs to be a little more fluid." — Barbara Graziano, Vice President, Internal Audit, Compliance & BSA Officer, First Seacoast Bank, New Hampshire

![Average Length of Transaction Holds chart showing: 3 days: 11.9%, 5 days: 19.05%, 10 days: 9.5%, 15 days: 11.9%, 30 days: 19.05%, Uncertain: 16.7%, Other: 11.9%]

![Flexibility to Increase Transaction Holds chart showing: Yes: 52.4%, No: 14.3%, Uncertain: 16.7%, Other: 16.7%]

![Preferred Hold Transaction Times chart showing: 10 days: 14.3%, 15 days: 19.0%, 20 days: 4.8%, 25 days: 0%, 30 days: 28.6%, 60 days: 14.3%, Other: 19.0%]

HOLD LAW TRAINING AND SPECIAL PROVISIONS

Banks primarily focus training efforts regarding state hold laws on branch associates and first-line fraud investigators. Some respondents noted that all staff members receive training on these laws, while others reported that only compliance and fraud investigators are trained on the full scope of internal hold policy and procedures, with additional staff trained on how to escalate cases of suspected exploitation.

As of this report, six states have enacted hold laws that require training for bank staff.

Among banks operating in states with hold laws, 55% of respondents indicated that they have a documented process for utilizing the provisions of the law or are in the process of developing them.

![Job Responsibilities of Bankers Trained on Hold Law chart showing: Branch associates (e.g., tellers and managers): 77.8%, First-line fraud investigators/analysts: 65.4%, Second-line compliance investigators: 48.1%, Call center representatives: 37.0%, Back-office payment processors: 33.3%, Credit officers: 29.6%, Other: 11.1%]

![Documented Processes for Using Hold Laws chart showing: Yes: 32.9%, In process: 22.4%, No: 29.4%, Uncertain: 15.3%]

The hold laws provide immunity for banks seeking to assist their customers in accordance with the law, but banks remain vulnerable to lawsuits. Among banks operating in states with hold laws, nearly 60% reported feeling confident in their liability protection. However, a significant portion (40%) expressed uncertainty or concern.

Banks in states with hold laws rely on the liability protections when deciding to hold transactions. Respondents especially emphasized the importance of clear immunity provisions in state hold laws as banks face pressure to make rapid decisions about how to protect a customer's funds in uncertain circumstances.

"Immunity is peace of mind and allows us to be more proactive and go out on a limb for our customers. The more comfort we can get that we're not going to face a lawsuit, the better," as one banker noted.

Several bankers shared that safe harbor provisions provide banks essential "cover" to ensure they can act in good faith to protect their customers.

In states like California, where no hold law or liability protection exists, there are risks involved in attempting to intervene, according to Laurel Sykes, Executive Vice President and Chief Risk Officer at American Riviera Bank. "Right now, if I wanted to freeze funds for suspected fraud, I run the risk of liability for wrongful dishonoring of checks written on the account," she said.

Bank respondents overwhelmingly indicated that they wished there was a federal law, providing more consistency when serving customers across the nation.

![Sufficient Liability Protection from Hold Laws chart showing: Yes: 59.3%, No: 10.5%, Uncertain: 26.7%, Other: 3.5%]

WORKING WITH LAW ENFORCEMENT AND APS

When banks hold suspicious transactions, they often use the time to bolster their efforts to prevent elder financial exploitation. This is true for banks in states with and without hold laws.

A significant majority of banks work with law enforcement by reporting suspicious activity (91.8%), assisting with investigations (81.6%) and educating customers about elder financial exploitation (76.9%). A small percentage of banks (6.1%), primarily those with assets of less than $10 billion, noted other forms of cooperation with law enforcement, such as receiving training on identifying red flags and filing suspicious activity reports.

More than 43% of banks surveyed reported having positive experiences with law enforcement in addressing elder financial exploitation, while 22% said their work with law enforcement could be improved.

Some banks reported that law enforcement officers take suspected elder financial exploitation seriously, act decisively and communicate effectively.

Several respondents who shared positive experiences with law enforcement highlighted the "collaborative" relationships they have with local police departments that understand the complexities of elder financial exploitation.

However, these positive interactions were not consistent across all jurisdictions. David DelVecchia, Senior Vice President & Bank Security Officer for Liberty Bank of Connecticut, emphasized the need for more law enforcement officers to receive training on elder financial exploitation.

Law enforcement "are asked to wear multiple hats while preforming their duties and are often pulled in different directions at a moment's notice. All too often, they are inadequately prepared or lack the resources to effectively handle these cases and may not always recognize the impact that it has on the victim or the big picture of a large criminal enterprise that affects many people."

— David DelVecchia, Senior Vice President & Bank Security Officer, Liberty Bank, Connecticut

Banks also see APS as a crucial partner in safeguarding the assets of older customers. Nearly all survey respondents (93.8%) report cases of suspected financial exploitation to APS.

However, working with APS goes beyond reporting. More than two-thirds (68.1%) of banks actively assist APS with investigations. Nearly half (43.8%) work with APS to educate customers about exploitation risks, while a small percentage (4.2%), primarily banks with less than $10 billion in assets, engage with APS in other ways, such as participating in multidisciplinary teams to address elder financial exploitation cases.

Nearly half of respondents (46%) reported positive experiences with APS in addressing elder financial exploitation, although 22.6% said cooperation with APS could be improved.

Some survey respondents highlighted their long-standing partnerships with APS to support community outreach and educational events. Nearly 44% of banks also work with APS to educate their customers, noting that APS responds promptly to reports and collaborates effectively. "We are often on phone calls with the APS bureau chief regarding a number of elder financial exploitation cases," one respondent shared. "Additionally, our entire staff undergoes training from APS annually."

Other respondents expressed concerns about APS agencies and their limited resources and staffing, especially as elder financial exploitation cases continue to surge. Huff at Bank of the Rockies spoke to the challenge of serving a state as geographically large as Montana, where there is only one investigator covering as many as 14 counties and a single elder justice prosecutor for the entire state. "When it comes to any type of elder abuse, time is of the essence, but these agencies are understaffed and underfunded," she explained.

Banks also reported frustration with APS agencies' lack of follow-up. Lane at C&N noted that it's difficult for banks to know how to proceed with cases if they don't hear back from APS. "If they could follow up with us," she said, "it would help us to know how to proceed, and what, if any, additional steps may be necessary."

The absence of feedback from APS emerged as a primary complaint. While banks understand the need for confidentiality, respondents expressed that feedback on their reports would help them make more informed decisions about reporting and ultimately enhance protections for their customers.

Despite these challenges, there has been growing communication and cooperation between banks and APS in recent years, according to Joe Snyder, Public Policy Chair of the National Adult Protective Services Association. "A lot of APS agencies will tell you what they can share," he said. "Make your case for why you need to see more."

In May 2024, the U.S. Department of Health and Human Services published a final rule establishing federal regulations for APS for the first time. Snyder emphasized that these regulations set standards for APS feedback, coordination with other agencies and entities, and procedures for preventing and detecting elder abuse.

"This is a great opportunity to learn and reach out to APS, to sit down and talk about how we're going to communicate, and how quickly we're going to get records to you. What's needed is a common-sense partnership between financial institutions and APS agencies to stop financial exploitation. We're all in this together. It's the only way we're going to solve it."

— Joe Snyder, Public Policy Chair, National Adult Protective Services Association

Bank professionals looking to establish a partnership with APS or seeking resources on abuse or exploitation can obtain contact information for their state APS agency from the National Adult Protective Services Association.

OPERATIONAL CHALLENGES

Banks working to prevent elder financial exploitation face many obstacles, including litigation risk for holding funds, inconsistencies in state laws, and a pressing need for more customer education on financial exploitation and the scope of protection under state laws.

The primary concern voiced by banks — both those operating in states with hold laws and those in states without — remains ensuring adequate liability protection. One respondent emphasized that safe harbor provisions should be in place whenever banks have a reasonable belief that elder financial exploitation is occurring.

Patchwork of State Laws Weakens Customer Protection

While many respondents expressed support for the concept of hold laws, they noted challenges posed by the patchwork nature of the laws. Inconsistencies across the states create gaps in protection, leaving older adults vulnerable to financial exploitation. Several respondents acknowledged that existing laws are "a step in the right direction," but that those who exploit people are quick to adapt and identify gaps. Scammers have even moved their operations to states without such protections.

Inadequate Resources for APS and Law Enforcement

Respondents highlighted the critical role of APS and law enforcement in investigating cases of suspected financial exploitation. However, frustrations persist among bank employees due to the lack of feedback from APS agencies, which limits banks' ability to take informed action on both current and future cases. Many expressed a desire to see more training for law enforcement officers on handling financial exploitation cases.

One respondent pointed out that states enacting hold laws requiring banks to report cases of suspected exploitation "should prepare for an increase in reports to APS." A major concern is the inadequate resources at APS agencies to investigate within the often tight timeframes set by hold laws. Without the necessary resources, the influx of cases could lead to bottlenecks, reducing the effectiveness of hold laws.

Customers Unaware of Hold Laws

Survey results identified a need for better customer education regarding what banks are permitted to do under hold laws. One respondent suggested clearer guidance from states on how banks should handle suspected exploitation — such as easily accessible materials like videos and/or online content. As one respondent said, "it would be wonderful if there was guidance on how to explain this to the customers." This information and transparency would help customers better understand the protections available to them.

BANK RECOMMENDATIONS

Banks seek additional support to better address elder financial exploitation, particularly:

• Federal Legislation — Many respondents called for federal legislation or, at a minimum, greater consistency across state laws to simplify implementation for banks operating in multiple states. A federal law could help avoid conflicts with existing federal banking regulations, including discrimination and privacy laws.

• Safe Harbor — Banks in states with hold laws emphasized safe harbor provisions are the most important provision for states considering such laws. Nearly all respondents noted the importance of safe harbors, with some suggesting that a safe harbor for frontline employees may empower them to take stronger action to protect older customers, without fear of liability or other repercussions.

• Customer Education — Respondents say they need resources to help educate customers about bank authority and responsibility under hold laws. Without information and transparency, some customers may take their business elsewhere without understanding that all banks in their area are bound by state laws.

• Bank-to-Bank Communication — Banks suggested that hold laws could benefit from a provision allowing banks to communicate with one another about customer accounts. This would be particularly valuable if the customer attempts to move funds to another bank to subvert attempts to prevent fraudulent transactions.

• Longer Hold Times — Many respondents called for more bank flexibility in determining transaction hold length to allow for thorough investigations of suspected financial exploitation, as well as time to coordinate with law enforcement and APS. At the same time, banks emphasized that any delay should be kept to a minimum to avoid undue hardship on customers. Ensuring that holds are as short as possible while maintaining adequate protection would balance customer rights with prevention efforts.

CONCLUSION

State laws allowing banks to delay transactions in cases of suspected elder financial exploitation play a critical role in preventing fraud and exploitation and helping older Americans safeguard their hard-earned savings.

Many banks report that hold laws are effective tools in combating exploitation, and this survey highlights opportunities to enhance these laws, enact such laws or advocate for a federal hold law — all of which further empower banks to protect their customers from the growing threat of elder financial exploitation.

ACKNOWLEDGMENTS

Thank you to Bank of America, Citi and JPMorgan Chase for their sponsorship of the ABA Foundation's survey and their ongoing support of the Foundation's work to protect older Americans from financial exploitation.