CFG CFG Elder Financial Exploitation & Consumer Protection 1 — Questions and Answers
Question 1: Which federal agency is primarily responsible for protecting consumers, including older adults, from financial fraud and unfair financial practices?
- The Securities and Exchange Commission (SEC)
- The Consumer Financial Protection Bureau (CFPB) (Correct answer)
- The Federal Trade Commission (FTC)
- The Financial Industry Regulatory Authority (FINRA)
Correct answer: The Consumer Financial Protection Bureau (CFPB)
The CFPB has specific programs focused on protecting older consumers from financial exploitation, including the Office for Older Americans.
Question 2: What is 'elder financial exploitation' (EFE)?
- The process of a senior voluntarily gifting assets to family members
- The illegal or improper use of an older adult's funds, property, or assets by another person (Correct answer)
- A legal financial planning strategy that reduces an elder's taxable estate
- Investment losses suffered by seniors due to market volatility
Correct answer: The illegal or improper use of an older adult's funds, property, or assets by another person
Elder financial exploitation involves the illegal, unauthorized, or improper use of an older adult's resources by a trusted person, caregiver, family member, or stranger for personal gain.
Question 3: Which of the following is a common warning sign that an older adult may be a victim of financial exploitation?
- Opening a new bank account independently
- Unexplained withdrawals, sudden changes to beneficiary designations, or a new 'friend' managing finances (Correct answer)
- Increasing charitable contributions to established organizations
- Paying off a mortgage early using retirement savings
Correct answer: Unexplained withdrawals, sudden changes to beneficiary designations, or a new 'friend' managing finances
Sudden unexplained financial changes such as large withdrawals, altered beneficiaries, unpaid bills, and the appearance of a new financial influencer are classic red flags of elder financial exploitation.
Question 4: What is a 'trusted contact person' designation, and which regulatory body requires broker-dealers to make reasonable efforts to obtain one?
- A legally appointed power of attorney; required by the SEC
- A person a financial firm can contact if there are concerns about a client's well-being or financial exploitation; required by FINRA Rule 4512 (Correct answer)
- An emergency contact for medical decisions; required by CMS
- A co-signer on all investment accounts; required by FINRA Rule 2111
Correct answer: A person a financial firm can contact if there are concerns about a client's well-being or financial exploitation; required by FINRA Rule 4512
Under FINRA Rule 4512, broker-dealers must make reasonable efforts to obtain the name of a trusted contact person who can be reached if the firm has concerns about a client's health, safety, or possible financial exploitation.
Question 5: Which federal law gives FINRA member firms the ability to temporarily hold disbursements from accounts of seniors when financial exploitation is suspected?
- The Elder Justice Act
- The Senior Safe Act
- FINRA Rule 2165 under SEC Rule 17a-3 (Correct answer)
- The Adult Protective Services Act
Correct answer: FINRA Rule 2165 under SEC Rule 17a-3
FINRA Rule 2165 permits broker-dealers to place a temporary hold on disbursements of funds or securities when there is a reasonable belief that financial exploitation of a senior investor has occurred or is being attempted.
Question 6: The Senior Safe Act of 2018 provides what protection to financial professionals who report suspected elder financial exploitation?
- Criminal immunity from any prosecution related to client accounts
- A federal grant to train staff in detecting exploitation
- Protection from civil and administrative liability for good-faith reports of suspected exploitation to covered agencies (Correct answer)
- Tax deductions for elder financial counseling services
Correct answer: Protection from civil and administrative liability for good-faith reports of suspected exploitation to covered agencies
The Senior Safe Act grants immunity from civil and administrative liability to financial institutions and their employees who, after receiving training, make good-faith reports of suspected elder financial exploitation to covered agencies.
CFG CFG Elder Financial Exploitation & Consumer Protection 1
Which federal agency is primarily responsible for protecting consumers, including older adults, from financial fraud and unfair financial practices?