Elder Financial Abuse vs. Bank Negligence: What’s the Difference?

When an older adult loses money, families often use one phrase to describe what happened: elder financial abuse.

That may be accurate, but it may not tell the whole story. In some cases, the person who took the money is not the only party worth investigating. A caregiver, relative, scammer, romantic partner, or financial adviser may have exploited the older adult. But a bank may also have missed warning signs, ignored suspicious activity, or failed to follow procedures that could have helped prevent the loss.

That is where the difference between elder financial abuse and bank negligence becomes important.

Elder financial abuse usually focuses on the person or group that wrongfully took, controlled, manipulated, or misused an older adult’s money. Bank negligence focuses on whether a financial institution failed to act reasonably when it had reason to suspect something was wrong.

Both can occur in the same case.

What Is Elder Financial Abuse?

Elder financial abuse, sometimes called elder financial exploitation, generally involves the illegal or improper use of an older adult’s money, property, benefits, or financial resources. The Department of Justice describes elder financial exploitation as including financial abuse committed by someone the older adult knows and financial fraud committed by a stranger. Both can cause serious financial, physical, and emotional harm.

Common examples include:

• Caregiver theft
• Misuse of a power of attorney
• Pressure from a relative or romantic partner
• Forged checks
• Unauthorized ATM withdrawals
• Investment scams
• Cryptocurrency scams
• Romance scams
• Fake government or bank impersonation scams
• Coerced transfers of money, property, or account access

In these cases, the main wrongdoer may be the person who lied, pressured, threatened, isolated, or manipulated the older adult. The abuse may happen in person, over the phone, online, through text messages, or through a trusted relationship.

How Is Bank Negligence Different?

Bank negligence is different because it looks at the bank’s conduct, not just the scammer’s conduct.

A bank may not have created the scam. It may not have stolen the money. It may not have known every detail of what was happening. But if the bank saw warning signs of exploitation and failed to respond reasonably, it may have contributed to the harm.

Federal agencies have encouraged financial institutions to use tools such as employee training, transaction monitoring, escalation procedures, suspicious activity reporting, and other controls to identify and respond to elder financial exploitation.

Potential bank negligence may involve:

• Ignoring unusual withdrawals
• Processing repeated wire transfers without meaningful review
• Failing to escalate suspicious activity
• Overriding internal fraud alerts
• Ignoring concerns raised by family members
• Failing to follow the bank’s own elder exploitation procedures
• Allowing suspicious transactions to continue after red flags appeared
• Failing to report suspected exploitation when required or appropriate

The key issue is not whether the bank could have stopped every scam. The issue is whether the bank acted reasonably based on what it knew or should have known at the time.

Common Examples of Each

A case of elder financial abuse might involve a caregiver who uses an older adult’s debit card without permission. It might involve a family member pressuring a parent to withdraw money. It might involve a scammer convincing someone to wire funds into a fake investment account.

A case of bank negligence might involve a different set of facts. For example, an elderly customer who has banked the same way for years suddenly begins making large wire transfers to unfamiliar recipients. The bank’s system flags the activity. A teller notices the customer seems confused. A family member calls to warn the bank. Despite all of that, the bank continues processing transfers.

In that example, the scammer may be responsible for the fraud, but the bank’s actions may also need to be reviewed.

The DOJ lists warning signs of elder financial exploitation that include sudden changes in bank accounts or banking practices, unexplained withdrawals of large sums, additional names added to bank signature cards, unauthorized ATM withdrawals, and abrupt changes in financial documents. FinCEN has also identified financial and behavioral red flags that may help financial institutions detect and report possible elder exploitation.

Potential Defendants

The potential defendants in an elder financial abuse case may include the person who took the money, the person who helped them, or someone who had legal duties toward the older adult.

Depending on the facts, possible defendants may include:

• A caregiver
• A family member
• A romantic partner
• A financial adviser
• A scammer or fraud ring
• A person with power of attorney
• A nursing home or care provider
• A bank or financial institution
• A bank employee, in limited circumstances
• Another business that enabled the loss

Not every case will involve every type of defendant. Sometimes the scammer is unknown or located overseas. Sometimes the exploiter is a trusted person close to the victim. Sometimes the bank is the only party with records showing how the money moved and whether warning signs were ignored.

That is why these cases often require careful investigation. The question is not only who took the money, but who had a duty to act and failed to do so.

Legal Standards

The legal standards in these cases vary by state and by the claims involved.

In an elder financial abuse claim, the focus may be on whether someone wrongfully took, obtained, retained, or used an older adult’s money or property. The case may involve fraud, undue influence, theft, conversion, breach of fiduciary duty, abuse of power of attorney, or violations of state elder protection laws.

In a bank negligence claim, the focus may be on whether the bank owed a duty, breached that duty, and caused or contributed to the loss. A family may need to show that the bank had warning signs, failed to follow reasonable safeguards, ignored its own procedures, or allowed suspicious transactions to continue when action should have been taken.

Banks may defend themselves by arguing that the customer authorized the transaction, that employees had no clear reason to suspect exploitation, or that the bank followed applicable rules. Families may argue that the customer’s “authorization” was the product of manipulation and that the bank missed obvious red flags.

The Senior Safe Act may protect certain financial institutions and eligible employees when they report suspected senior exploitation in good faith and with reasonable care, provided training and other requirements are met. Some states also have laws that allow or require transaction holds when financial institutions suspect exploitation. Because these rules are highly state-specific, an attorney can help determine which legal standards apply.

Available Remedies

The remedies available in elder financial abuse and bank negligence cases may depend on the facts, the state, the defendants, and the type of claim.

Possible remedies may include:

• Recovery of stolen or lost funds
• Compensation for financial losses
• Reimbursement of fees or penalties
• Damages for emotional distress, where allowed
• Punitive damages in certain egregious cases
• Court orders preventing further misuse of funds
• Removal or limitation of a power of attorney
• Claims against multiple responsible parties

In some cases, the goal is to recover money. In others, it may also be to stop ongoing exploitation, protect the older adult from further harm, preserve assets, or hold an institution accountable for ignoring serious warning signs.

Families should act quickly. Bank records, surveillance footage, call recordings, fraud alerts, and internal notes may become harder to obtain over time. Deadlines to file claims also vary by state, and waiting too long can affect the ability to pursue compensation.

What is elder financial abuse?

Elder financial abuse occurs when someone illegally or improperly uses an older adult’s money, property, accounts, benefits, or financial resources. It can be committed by someone the older adult knows, such as a caregiver, relative, romantic partner, adviser, or person with power of attorney. It can also be committed by a stranger through a scam, such as a fake investment scheme, romance scam, cryptocurrency fraud, or government impersonation scam. 

Elder financial abuse often involves trust, pressure, deception, fear, or confusion. The person responsible may convince the older adult to send money, sign documents, change account access, withdraw cash, or keep the situation secret from family members.

How is bank negligence different?

Bank negligence focuses on whether the bank failed to act reasonably when warning signs of exploitation appeared. The bank may not have committed the scam itself, but it may have processed suspicious transactions, ignored unusual account activity, failed to escalate concerns, or disregarded its own fraud procedures. For example, if an elderly customer suddenly starts sending large wire transfers to unfamiliar recipients and the bank’s internal systems flag the activity, the bank’s response may matter. A negligence claim asks whether the bank had a duty to respond, whether it breached that duty, and whether that failure contributed to the loss.

Can both occur at the same time?

Yes. Elder financial abuse and bank negligence can occur in the same case. A scammer, caregiver, or relative may be the person directly exploiting the older adult, while the bank may have failed to respond to warning signs that appeared during the exploitation. For instance, a scammer may convince an elderly victim to send repeated wire transfers, while the bank processes those transfers despite fraud alerts, unusual account activity, or family warnings. In that situation, the exploiter may be responsible for taking the money, and the bank may need to be investigated for failing to take reasonable steps to prevent or reduce the loss.

Who may be legally responsible?

The legally responsible parties depend on what happened. A caregiver, relative, romantic partner, scammer, adviser, or person with power of attorney may be responsible if they took money, manipulated the older adult, or misused legal authority. A bank or financial institution may be responsible if it ignored red flags, failed to follow procedures, or allowed suspicious transactions to continue when it should have acted. In some cases, more than one party may share responsibility. An attorney can review the evidence, identify potential defendants, and determine whether the facts support claims against an individual, a financial institution, or both.

What type of attorney handles these cases?

These cases may be handled by attorneys who work on elder abuse, financial exploitation, consumer protection, negligence, fraud, or banking-related claims. The right attorney should understand how to review bank records, transaction histories, wire transfers, fraud alerts, internal procedures, and state elder protection laws. Because these cases may involve both the person who exploited the older adult and the bank that processed the transactions, it is important to work with a legal team that can investigate all potentially responsible parties. 

Morgan & Morgan may be able to review what happened, explain your options, and help determine whether you or your loved one may have a claim. Contact us today for a free and confidential case evaluation to learn more.