[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 370 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 370

To require financial institutions to offer services to protect seniors 
from affinity scams, to report suspected affinity scams, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 20, 2011

   Mr. Baca introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committee on 
   Ways and Means, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To require financial institutions to offer services to protect seniors 
from affinity scams, to report suspected affinity scams, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preventing Affinity Scams for 
Seniors Act of 2011'' or the ``PASS Act of 2011''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Financial exploitation of the elderly is becoming an 
        increasingly familiar problem. Regular review of news headlines 
        reveals that elders and vulnerable adults are victimized 
        routinely by frauds and scams at the hands of strangers as well 
        as loved ones.
            (2) Older individuals may be targeted merely because they 
        possess more assets, such as savings, annuities, and retirement 
        accounts, stocks and bonds, insurance policies, and property 
        than younger people. People over 50 years of age control at 
        least 70 percent of the net worth of the Nation's households.
            (3) Those elders with cognitive impairments, mental health 
        conditions, or physical disabilities may be dependent upon 
        others (family members, friends, formal and informal 
        caregivers, or court-appointed representatives) for assistance 
        in making financial decisions or carrying out daily 
        transactions, and therefore may be even more vulnerable to 
        theft, exploitation, or undue influence.
            (4) Affinity scams on seniors involve transactions in which 
        a person trusted by the senior uses the relationship to defraud 
        the senior. Millions of elderly are scammed each year, losing 
        at least $2,600,000,000 a year to thieves, many of whom are in 
        their own families (conservative estimate given of the schemes 
        left unreported).
            (5) Elder financial abuse is commonly linked with other 
        forms of abuse and neglect and threatens the health, dignity, 
        and economic security of millions of older Americans. Elder 
        financial abuse has received limited attention because it is 
        not regarded as visible, life-threatening, or newsworthy as is 
        the physical or sexual abuse of elders.
            (6) Financial exploitation can be devastating to the victim 
        and is often traced to family members, trusted friends, or 
        caregivers. Financial abuse often occurs with the implied 
        acknowledgment and consent of the elder person and can be more 
        difficult to detect.
            (7) Elder financial abuse affects elders and their families 
        in significant and long-lasting ways by putting enormous 
        emotional duress on the elders, increasing their risk of 
        depression, decreasing their quality of life, and increasing 
        unnecessary institutionalization.
            (8) The financial services industry is often the first to 
        detect a change in the pattern of customers with whom they have 
        regular contact. This puts institutions in a unique position to 
        assist in protecting customers and upholding the inherent trust 
        relationship with clients.

SEC. 3. DEFINITIONS.

    For purposes of this Act:
            (1) Affinity scam.--The term ``affinity scam'' means a 
        transaction in which a person trusted by a senior, such as a 
        caregiver, relative, guardian, ``new friend'', or service 
        provider, claims to share similar interests or values with the 
        senior, establishes a relationship with the senior (either on 
        the person's own initiative or through some other method, such 
        as a court-appointed guardianship), and then uses the 
        relationship to defraud the senior.
            (2) Financial institution.--The term ``financial 
        institution'' means--
                    (A) an insured bank (as defined in section 3(h) of 
                the Federal Deposit Insurance Act (12 U.S.C. 1813(h));
                    (B) a credit union; and
                    (C) a thrift institution.
            (3) Senior.--The term ``senior'' means an individual who is 
        at least 65 years of age.

SEC. 4. AFFINITY SCAM EDUCATION AND TRAINING.

    (a) Staff Education and Training.--Each financial institution 
shall--
            (1) educate the staff of the financial institution about 
        affinity scams and how to identify transactions that may be 
        part of an affinity scam; and
            (2) train staff members on educating seniors about affinity 
        scams.
    (b) Senior Customer Education.--Each financial institution shall 
provide educational materials and other information to seniors who 
maintain a deposit account with the financial institution about 
affinity scams and how to identify transactions that may be part of an 
affinity scam.
    (c) Education and Training Oversight.--The Bureau of Consumer 
Financial Protection shall--
            (1) issue such regulations as are necessary to carry out 
        this section; and
            (2) periodically audit financial institutions to ensure 
        compliance with such regulations.

SEC. 5. SENIOR PROTECTION ACCOUNTS.

    (a) In General.--Each financial institution shall offer seniors a 
type of checking account to be known as a ``senior protection 
account''.
    (b) Senior Protection Account Requirements.--
            (1) In general.--With respect to a senior who maintains a 
        senior protection account with a financial institution, if the 
        financial institution receives a transaction request to debit 
        such account and, before processing the transaction, the 
        financial institution identifies the transaction as possibly 
        being part of an affinity scam, the financial institution 
        shall--
                    (A) not process the transaction; and
                    (B) initiate an investigation in order to determine 
                if such transaction is part of an affinity scam or is 
                legitimate.
            (2) Investigation.--With respect to a transaction that is 
        the basis of an investigation described under paragraph (1)(B), 
        a financial institution shall--
                    (A) notify the senior whose account the transaction 
                would debit, if processed, that the financial 
                institution--
                            (i) has identified the transaction as 
                        possibly being part of an affinity scam; and
                            (ii) has not yet processed the transaction, 
                        pending the result of an investigation;
                    (B) if the financial institution determines that 
                the transaction is part of an affinity scam--
                            (i) notify the senior of such 
                        determination;
                            (ii) refer such transaction to the 
                        appropriate law enforcement agency; and
                            (iii) report such transaction to the Bureau 
                        of Consumer Financial Protection; and
                    (C) if the financial institution does not determine 
                that the transaction is part of an affinity scam--
                            (i) notify the senior of such 
                        determination; and
                            (ii) process such transaction not later 
                        than 7 business days from the date on which the 
                        investigation was started, unless instructed 
                        otherwise by the senior.
            (3) Designation of staff person.--Each financial 
        institution shall designate a single staff person who shall be 
        notified whenever a staff person identifies a transaction that 
        is possibly part of an affinity scam.
            (4) Liability.--A financial institution that fails to 
        process a transaction or that refers a transaction to law 
        enforcement pursuant to the requirements of this subsection 
        shall not be liable to any person under any law or regulation 
        of the United States, any constitution, law, or regulation of 
        any State or political subdivision of any State, or under any 
        contract or other legally enforceable agreement (including any 
        arbitration agreement), for such failure or referral.
    (c) Rulemaking.--The Secretary of the Treasury shall issue such 
regulations as are necessary to carry out this section.
    (d) Tax Deduction.--
            (1) In general.--The Secretary of the Treasury shall by 
        regulation establish a deduction to be allowed in computing the 
        taxable income of financial institutions for purposes of the 
        Internal Revenue Code of 1986.
            (2) Amount of deduction.--Such deduction with respect to 
        any financial institution for a taxable year shall be an amount 
        equal to 0.77 percent of the average of the amount of deposits 
        held by such financial institution in senior protection 
        accounts for each day during such taxable year.
    (e) Civil Liability.--Any financial institution that fails to 
comply with any provision of this section with respect to a senior 
shall be liable to such senior in an amount equal to the sum of the 
following:
            (1) Actual damages.--The amount of any actual damage 
        sustained by the senior as a result of such failure.
            (2) Attorneys' fees.--In the case of any successful action 
        to enforce any liability under paragraph (1), the costs of the 
        action, together with reasonable attorneys' fees.
    (f) Nondiscrimination.--A financial institution may not 
discriminate against seniors in any fees or other charges required by 
the financial institution in order to cover the cost to the financial 
institution of implementing the requirements of this Act.

SEC. 6. ADDING AFFINITY SCAMS TARGETING SENIORS TO THE SUSPICIOUS 
              TRANSACTION REPORTING REQUIREMENT.

    Section 5318(g)(1) of title 31, United States Code, is amended--
            (1) by striking ``The Secretary'' and inserting the 
        following:
                    ``(A) Possible violation of law or regulation.--The 
                Secretary''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Possible affinity scam targeting seniors.--
                            ``(i) In general.--The Secretary shall 
                        require each financial institution, and each 
                        director, officer, employee, or agent of such 
                        financial institution, to report any suspicious 
                        transaction relevant to a possible affinity 
                        scam.
                            ``(ii) Definitions.--For purposes of this 
                        subparagraph:
                                    ``(I) Affinity scam.--The term 
                                `affinity scam' means a transaction in 
                                which a person trusted by a senior, 
                                such as a caregiver, relative, 
                                guardian, `new friend', or service 
                                provider, claims to share similar 
                                interests or values with the senior, 
                                establishes a relationship with the 
                                senior (either on the person's own 
                                initiative or through some other 
                                method, such as a court-appointed 
                                guardianship), and then uses the 
                                relationship to defraud the senior.
                                    ``(II) Senior.--The term `senior' 
                                means an individual who is at least 65 
                                years of age.''.

SEC. 7. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall take effect 
after the end of the 6-month period beginning on the date of the 
enactment of this Act.
                                 <all>