New Jersey Court Holds Financial Institutions are Not Required to Report Suspected Elder Fraud

In a case of first impression, the Superior Court of New Jersey held that financial institutions do not have an affirmative duty to report suspected fraud upon senior citizens or vulnerable individuals. See Lucca v. Wells Fargo Bank, N.A., 441 N.J. Super. 301, 315 (Law Div. 2015). In Lucca, an 82-year old woman received a phone call from a man (who identified himself as a lawyer) inviting her to “participate in an enterprise where she could win some money.” Over the course of six months, he instructed her to make twenty-seven wire transfers totaling $330,000 to individuals in Alabama and Costa Rica. Bank employees at Wells Fargo reported these transfers to their internal elder fraud unit as a potential scam, but never received a response from that unit and did not pursue the matter any further.

N.J.S.A. 17:16T-1 to 4 is a statute that authorizes financial institutions to release customer financial records to law enforcement and adult protective agencies. Relying upon the statute, the woman sued Wells Fargo and asserted that the statute requires financial institutions to report a suspected scam to either adult protective services or the police. N.J.S.A. 17:16T-3 provides that “a financial institution may release” a customer’s financial records to a law enforcement or county adult protective services agency, if the “senior customer” or “vulnerable customer,” as those terms are defined by the statute, has an interest in the account and “the financial institution suspects that illegal activity is, or will be, taking place which involves the account including, but not limited to, defrauding any vulnerable or senior customer . . .” Additionally, N.J.S.A. 17:16T-4(b) provides that a financial institution “which decides in good faith not to disclose information which it is permitted to disclose . . . shall not be liable under any law or regulation or common law of this State for that decision.”

In analyzing whether Wells Fargo had an affirmative duty to report the suspected scam to either the police or adult protective services, the Court looked to both the plain language and the legislative history of the statute and concluded that disclosure is not required. The Court instead found that the statute immunizes the institution from liability whether or not it releases the customer’s information to the authorities. Id. at 311. The use of the word “may” in both the legislative committee statement and the statute itself concerning the decision to release information confirms that interpretation. Id. at 311-312. Accordingly, the Court concluded that plaintiff had no cause of action against Wells Fargo. Id. at 315-316.

The Court’s decision in Lucca is instructive for anyone with family members who may be vulnerable to predatory financial scams, undue influence or deception. It highlights the importance of ensuring that trusted individuals are appointed to protect the assets of such family members through the use of durable powers of attorney or by instituting guardianship proceedings when necessary.