July 2006 Legal Briefs

Deceptive Use of a Bank’s Name in Soliciting Customers

  1. Insurance Practices
  2. Disclosure of Non-Authorization
  3. Comparing the Statutes

Exploitation of Disabled or Elderly Adults

  1. “Elderly” Defined
  2. “Disabled” Not Defined
  3. "Lacks Capacity to Consent”
  4. “Exploitation” Defined
  5. Criminal Penalties
  6. Knowledge of Incapacity
  7. Reporting to Authorities

Deceptive Use of a Bank’s Name in Soliciting Customers

The Oklahoma Legislature has passed two new laws, each putting restrictions on how an unauthorized third party can use a bank’s name in a notice or solicitation regarding products or services that the third party is offering.  (No restrictions are imposed on an “authorized” third party using a bank’s name by permission.)

Third parties often look at newly filed deeds and mortgages to develop “prospect lists.”  Marketers use home buyers’ names and addresses to offer all kinds of products and services.  It’s perfectly legal to obtain information in this manner.    

Someone “crosses the line,” however, when “publicly filed information” concerning a bank customer is used to send a notice or solicitation that mentions the bank and implies (falsely) that it may be from the bank.  In some situations, a letter offering products or services may not mention the bank by name but uses specific details (such as loan amount) that the customer assumes could only come from the bank.  Either way, the sender attempts to “personalize” the facts so that the bank customer will read the letter instead of throwing it away.   

A solicitation for insurance, or for mortgage refinancing, might take the form of a “Notice of Possible Uninsured Status” or “Notice of Available Refinancing.” It might prominently state it is “in reference to your recent mortgage loan for $115,000 from FIRST NATIONAL BANK OF [YOUR TOWN]” (in large letters).  Although clearly naming the bank that made the mortgage loan (as obtained from public records), this letter or notice perhaps never identifies who is sending the letter.  It may have only a vague, official-sounding return address–such as “Insurance Processing” or “Loan Department,” with a P.O. Box and phone number.  

This type of solicitation usually attempts to create the impression that something extra is needed in connection with the existing transaction, or that something has been overlooked, or something is wrong and needs be fixed, or could be handled more advantageously. The sender tries to get the customer to respond (1) by trading off the good name of the bank to get the customer’s attention, or (2) by confusing the customer as to the actual source of the offered products or services, or (3) by making the customer worry a bit about some issue.  Anything that “keeps the customer trying to figure it out” will increase the chances that a person will actually respond to the solicitation.  

One of the two new statutes mentioned earlier is specific to insurance solicitations that use a bank’s name in a deceptive way.  For this one, violations are enforced by the Insurance Commissioner, based on complaints received.  The second statute covers a much broader range of situations that can involve the use of a bank’s name (not just insurance), but it requires a bank to file a lawsuit against the offending party, to obtain an injunction, damages and legal expenses. 

1.  Insurance Practices

The first provision, in Senate Bill 1095, amends Section 1204 of Oklahoma’s Insurance Code (Title 36 O.S.).  The previously existing statute contains a list of “unfair methods of competition and unfair and deceptive acts or practices in the business of insurance.”  The amendment, effective November 1, 2006, adds a new subsection (13) as an additional unfair insurance practice.

The new language prohibits “deceptive use of a financial institution’s name in notification or solicitation” by an insurance agent or insurance company, either verbally or by any other means.  Four elements (all occurring together) are necessary for “deceptive use” of a bank’s name in connection with insurance:

(a) The person giving notice or making the solicitation mentions the name of a financial institution (without authority);

(b) The notice or solicitation mentions some type of insurance product or suggests that the customer may lack insurance coverage;

(c) The notice or solicitation fails to identity who sent it (actual name or trade name), but mentions the financial institution’s name; and

(d) The notice or solicitation creates an impression (falsely) that the financial institution (or someone authorized by it) is the sender.    

This statute will not apply if an insurance company or agent has a contractual agreement with a financial institution, allowing the bank’s name to be mentioned in soliciting customers.  

Whenever this statute is applicable  (when the marketer is an insurance company or insurance agent authorized to do business in Oklahoma), the Oklahoma Insurance Commissioner can impose fines, order the agent or company to cease “unfair practices,” and/or suspend the person’s license.  If the statute fits, a bank should file a complaint with the Insurance Commissioner.   

However, if “unfair use of a bank’s name” does not involve insurance, the other new statute (discussed next) may be available instead.

2.  Disclosure of Non-Authorization

House Bill 2147 adds a new Section 1418 to Oklahoma’s Banking Code, effective July 1.  It applies whenever a third-party solicitation for products or services uses either (a) a lender’s name without the lender’s permission, or (b) specific loan information without the lender’s permission.

First, Section 1418(B) provides that a person making a written solicitation to prospective customers with regard to any kind of products or services (without a lender’s consent) cannot include in that solicitation the “name, trade name or trademark” of that lender  (or any name, trade name or trademark similar to that of the lender) unless the person makes certain disclosures:  

(1) The solicitation must clearly and conspicuously state in bold-face type, on the front page, that the person is not sponsored by or affiliated with a lender, and that the solicitation is not authorized by the lender, which must be identified by name.

For example, if an unauthorized person wants to send out a solicitation letter which states that it is “in reference to your recent mortgage loan for $115,000 from First National Bank of [Your Town],” that person would be required to disclose, in bold-face, something like this: “We are not sponsored by or affiliated with, nor is this solicitation authorized by, First National Bank of [Your Town].”  

(2) Additionally, where the above bold-faced “statement” is required on the solicitation, it “must [also] include [in bold-face] the name, address and telephone number of the person making the solicitation and [state] that any loan information referenced was not provided by the lender.”

Second, Section 1418(E) states that if a person makes a written solicitation to prospective customers with regard to products or services (without a lender’s consent—and maybe not even including the lender’s name, trade name, etc., in that solicitation), but it does include “a loan number, loan amount or other specific loan information that is publicly available,” that person must make the same disclosures outlined above, in bold-face, naming the lender by name and clearly and conspicuously stating that the sender is not sponsored by or affiliated with the lender, which has not authorized the solicitation.  Also, the name, address and telephone number of the person making the solicitation must be disclosed, in bold-face, on the first page of the solicitation.

To avoid making the additional disclosures that would be required by this statute, a person sending solicitations for products or services (1) must avoid using the name, trade name or trademark of the lender (or anything similar) and also (2) must avoid stating the loan number, loan amount or other specific loan information that is publicly available.

Section 1418(F) provides that in a written communication including a solicitation for products and services by someone other than the existing lender, no postcard, nor the outside of any envelope, nor the portion of any letter that is visible through an envelope window, can make reference to that existing lender’s name, nor to a loan number, loan amount, or other specific loan information, unless the existing lender gives written consent.  

Thus, (1) a postcard cannot be used at all (without authorization) to mention an existing lender, loan number, loan amount, etc., and (2) no envelope can include on the outside (without authorization) a “teaser” such as “important notice concerning your loan from First National Bank of Anywhere.”

Section 1418(H) has two exceptions to the prohibitions stated above:

(a) The statute does not cover any communications by a lender or its affiliates with its current customer or someone who was its customer within the preceding 18 months.  

(b) The statute does not cover an advertisement or solicitation by a lender for products or services also offered by another lender, provided that the person making the comparison clearly and conspicuously identifies itself in the advertisement or solicitation.  (It may promote greater competition if one lender is allowed to compare its products and services with another lender’s products and services, but this is “fair” only if the person making the comparison is clearly identified.)

Section 1418(G) sets out the method of enforcing the statute.  A lender can seek an injunction to stop the unlawful use of a name, trade name, trademark or loan information, as explained above. The statute automatically presumes that there is irreparable harm to the lender in these circumstances, and does not require the lender to prove actual damages.  The lender also can sue for actual damages to itself, as well as any profits the third party has earned by means of the violation. The prevailing party can recover court costs and attorney’s fees.
Section 1418(A) contains a fairly broad definition of “lender” for purposes of the statute—“a bank, savings and loan association, savings bank, credit union, finance company, mortgage bank, mortgage broker and any affiliate.”  Note particularly that every company connected with a lender by affiliation will be treated under the statute just the same as if it were the lender.

For example, the statute allows a bank-affiliated company to mention another lender’s name, products and services for purposes of comparison—as freely as the statue permits one lender to compare its products with those of other lenders. 

3. Comparing the Statutes

It should be noted that the first statute outlined above and the second statute are partially overlapping, although each statute also covers situations that the other does not.  For example, if the soliciting company’s name is disclosed, but only in fine print (not “clearly and conspicuously” and not in bold-face letters), the second statute will apply, but the first one will not.  

If the solicitation is verbal (by phone), and mentions the bank’s name (without authority), and does not identify the soliciting entity, the first statute will apply, but the second statute (covering only written communications) will not.  If the unfair solicitation is not about insurance, the second statute will probably apply, but the first statute will not.

Exploitation of Disabled or Elderly Adults

In Senate Bill 1793 the Oklahoma Legislature has adopted a criminal statute prohibiting the financial exploitation of elderly or disabled adults.  It applies to anyone who is elderly, even if not disabled.  It also applies to all disabled adults (with physical or mental impairment), regardless of age. This statute is effective July 1, 2006, and will be codified as 21 O.S. Section 843.4.

The statute creates very little additional compliance burden or liability for banks.  The provisions are directed at persons who are taking unfair advantage of someone financially.  Banks will not be accused of this, except in extreme situations.

As discussed later, I have some concerns when a bank sees a fiduciary or other agent doing things that clearly are not for the benefit of an incapacitated person.  If a fiduciary is trying to do something clearly improper, such as changing beneficiary provisions for his own benefit, the bank should refuse to follow the fiduciary’s instructions—to avoid knowingly aiding him in wrongdoing.
The statute broadens the definition of “exploitation” (compared to existing law) and creates stiff criminal penalties in situations where someone in a “position of trust and confidence” deals improperly with an elderly or disabled person’s assets—including trustees, guardians, personal representatives, representative payees, agents of all kinds, and persons exercising a power of attorney.  

The statute also covers any business relationship that’s on terms not benefiting the incapacitated person–who cannot give knowing consent.  This would include someone who cheats an impaired person by charging too much, by selling him products or services that he does not need, or by just generally “scamming” him.  A bank usually should avoid entering into a deposit agreement with someone who is somewhat mentally impaired, because a court could determine later that the individual did not understand (and therefore is not bound by) the bank’s various standard fees, etc.  Although a bank’s Regulation DD disclosures and the provisions of the bank’s deposit contract are designed to bind the depositor, this may not work if the individual “lacks capacity to consent.”

Frequently a family member with a power of attorney wants to do something that seems convenient, although it’s contrary to that family member’s  “duty of trust” to the elderly person being represented.  The family member may even get mad if the bank refuses to allow a transaction that to the bank does not look right. The bank may appear to be unreasonable–the only “roadblock” to what the family member is trying to do.  A bank officer’s explanation of what is a “violation of fiduciary duty” may go unheard.

(Vulnerable adults are often forced by circumstances (age, or physical or mental condition) to turn to others for more extensive help than younger, healthier persons would require; and to protect adults with “special needs” conditions, the statute imposes higher duties on persons who do business with them, or act as fiduciary or agent on their behalf.)

The new statute makes a clearer statement than before about what cannot be done with regard to an elderly or disabled adult’s assets, and it imposes criminal penalties.  Having a copy of this statute available might help to get the attention of someone who doesn’t want to take a bank officer’s concerns seriously.

With a more precise definition of financial exploitation, this statute also clarifies what circumstances a bank should report to legal authorities.

1. “Elderly” Defined

The statute protects any “elderly person” from exploitation.  Section 843.4(C) defines “elderly person” as a person sixty-two (62) years of age or older.  This is the youngest age at which someone can draw reduced (85% of normal) Social Security retirement benefits; so the definition includes almost everyone who may be retired or eligible to retire.

2. “Disabled” Not Defined

The statute protects “disabled adults” from financial exploitation, but does not define “disabled.”  I think the statute must be interpreted to include either physical or mental disability.  There are separate, stronger protections in the statute for a person who “lacks the capacity to consent ” (discussed next), but the statute clearly also covers less-impaired disabled persons who are not mentally incapacitated.   

3. “Lacks Capacity to Consent”

Under Section 843.4(A)(2)), an adult who “lacks the capacity to consent” receives the highest level of protection from “exploitation.”  This is someone who does not have the mental ability to understand what he is agreeing to, or the consequences of agreeing.  In this category are some retarded adults of any age, but mostly this includes seniors experiencing a serious level of dementia.

For example, an Alzheimer’s patient might be coached into signing a check for $1,000 as a “gift” to a neighbor who mows the yard and needs some flashy new wheel rims.  The incapacitated person really signs the check (it’s not a forgery), and it might be a well-formed signature, but “intent” is lacking if the elderly person doesn’t really understand what he’s doing. Chances are that five minutes later the Alzheimer’s patient won’t even remember it.

Someone who directly enters into a transaction with a person who is mentally incapacitated is in a situation with serious risk for exploitation.  The impaired individual cannot “understand” what’s going on, in any meaningful sense.  (There may be no “exploitation” if the transaction is clearly needed by the incapacitated person and the terms are fair.  However, from the standpoint of enforceability, there’s a great chance that any document signed by an incompetent person may be voided, due to incapacity.)

In other cases, some fiduciary or agent may be acting for the benefit of an incapacitated person who lacks “capacity to consent.”  A third party perhaps has no direct transaction with the impaired person, but deals with the fiduciary or other agent.  Even if the third party is doing nothing wrong, the agent who has control of certain money, assets, etc., belonging to the impaired person, could be exploiting the incapacitated person by means of the transaction with the third party.  For example, a trustee might purchase a new sports car that the beneficiary doesn’t need, although neither the car dealer selling the car to the trustee, nor the bank that pays the check on the trust account, is actually “exploiting.” Yet these other persons are in a position to become suspicious that “exploitation” is occurring.

4. “Exploitation” Defined

The statute has two separate definitions of “exploitation of an elderly person or disabled adult.”  Working through these definitions can be useful both (1) in understanding when the bank could be liable (if at all), and (2) in knowing when a third party is exploiting an elderly or disabled adult in a way that a bank should report.

a. “Deception or Intimidation.”  The first definition of “exploitation,” found in Section 843.4(A)(1), involves “knowingly, by deception or intimidation, obtaining or using, or endeavoring to obtain or use, an elderly person’s or disabled person’s funds, assets or property with the intent [1] to temporarily or permanently deprive the elderly person or disabled adult of the use, benefit, or possession of the funds, assets, or property, or [2] to benefit someone other than the elderly person or disabled adult.”  

This definition involves a trick or threat by which the individual is separated from his money or assets, or by which assets get used in a way not benefiting the owner. This definition of “exploitation” does not require mental infirmity. The focus instead is someone’s wrongful influence or actions—something way beyond what could be explained by “good intent but ignorance of the law.”

Two categories of persons can be found guilty of “exploitation of an elderly person or disabled adult” under the first definition, stated above:

First, the statute applies to any person who “stands in a position of trust and confidence with the elderly person or disabled adult” (and uses deception or intimidation).  Relationships of trust can be formal or informal.  Every trustee, guardian, personal representative, Social Security representative payee, or person holding a power of attorney is subject to the limitations imposed by this section.  

Going further, anyone else in whom an elderly or disabled adult places “trust and confidence” can also be subject to this statute, if that person uses deception or intimidation.  A friend or next-door neighbor who is asked to cash a check, to take care of various errands, to buy groceries, to pay the water bill, etc., is someone placed “in a position of trust and confidence” with respect to the elderly or disabled adult—at least with respect to those transactions.  Every care-giver will presumably fit within the “trust and confidence” category, because that person has been placed in the home, where there is free access to the elderly or disabled adult’s cash, jewelry, check books, and other belongings.  The care-giver is placed there to provide assistance–not to steal or defraud.

(You may wonder, “Is a bank ‘in a position of trust and confidence’ with respect to an elderly or disabled adult?”  I would say, “Probably not.”  Section 425 of the Oklahoma Banking Code provides that a state-chartered or national bank has no “special or fiduciary duties or obligations” with respect to a customer unless the bank has expressly agreed in writing to assume such duties. Skipping over that point, a bank is not going to be acting by deception or intimidation, which this first definition requires.)

The second prong of the first definition of “exploitation” applies to a person who has “a business relationship with the elderly adult or disabled adult” (instead of a position of trust) and who uses “deception or intimidation” to separate that adult from his assets, etc.    Any business that tricks or threatens an elderly or disabled adult—for example, the phony contractor, the repairman who charges for car repairs not needed or performed, or even the person committing the “garden-variety scam” that tricks a person into wiring money—can be guilty of “financial exploitation” under the statute.  (Note that “deception” is from the standpoint of the victim, and might be easier to prove in court than a criminal charge of “fraud,” which requires proving the wrongdoer’s bad intent.)

Certainly a bank is in a “business relationship” with an elderly adult or disabled adult who has a bank account, but I don’t think this second prong of the first definition is likely to be a problem for banks.  It’s hard to argue that there can be “deception or intimidation” if the customer is mentally competent and reasonably able to understand the nature of a deposit arrangement, etc.  A bank’s standard “truth-in-savings” disclosures (adequate under Regulation DD) are pre-determined (by regulation) to be adequate, and therefore are not likely to be found to “deceive” the elderly or disabled adult who is mentally competent.    

b. “Lacks the Capacity to Consent.”  The second definition of “exploitation,” set out in Section 843.4(A)(2), applies to elderly or disabled adults who also are to some degree mentally incompetent (whether or not determined by a court).  The tougher standard of conduct placed on third parties by this definition is justified by the elderly or disabled person’s mental incapacity.  (He has no ability to protect himself.)

This second definition of “exploitation” is as follows–“obtaining or using, endeavoring to obtain or use, or conspiring with another to obtain or use an elderly person’s or disabled adult’s funds, assets, or property with the intent [1] to temporarily or permanently deprive the elderly person or disabled adult of the use, benefit, or possession of the funds, assets, or property, or [2] to benefit someone other than the elderly person or disabled adult” when the person “knows or reasonably should know that the elderly or disabled adult lacks the capacity to consent.”

There are several differences from the first definition, given earlier:

(1) Anyone who “knows or reasonably should know that an elderly or disabled person lacks the capacity to consent” can potentially “exploit” that person.   (The person taking the questioned action does not have to be in a position of trust or in a business relationship).  

(2) “Deception or intimidation” is not required in the second definition (like it was in the first definition).  An elderly or disabled adult who is incompetent cannot understand what’s going on, so the mere fact that someone separates him from his assets or uses them to benefit someone other than himself is enough to amount to “exploitation.” In some respects, just being involved in a direct transaction with an individual who lacks “capacity to consent” might be viewed as “beating up on that person” from a financial standpoint.  

(Transactions specifically allowed under provisions of a power of attorney or trust agreement, benefiting persons other than the incapacitated individual, are not “exploitation,” because they carry out what the now-incapacitated individual himself desired, as expressed in writing while he remained competent.)

(3) The second definition has a “conspiracy” option (which the first definition does not).  It’s possible for someone to be charged under this statute with “conspiring to exploit” an incapacitated person.  This would apply to persons who planned to exploit someone, whether they carried it out or not.

To keep some perspective on who might be charged with violating this second definition, you should recognize that “exploitation” or “conspiracy to exploit” is a criminal charge, not a civil suit.  Even an overzealous plaintiff’s lawyer trying to make trouble for a bank cannot file criminal charges. Only a district attorney can do so.  It’s likely that a D.A. will limit any charges to “real cases of financial abuse,” not technical allegations.  There are already too many “bad” criminals to prosecute, and district attorneys generally save their limited resources for prosecuting those cases that are most serious and most need to be pursued. 

5.  Criminal Penalties

Section 843.4(B) sets out penalties for violating the new “exploitation” statute.  If funds or assets involved are valued at $100,000 or more, the violator commits a felony punishable by up to fifteen years in prison and a fine of up to $10,000.  (This is in addition to a judge’s ability to order restitution of the funds taken.)

If the funds or assets involved in the exploitation are valued at less than $100,000, the violator commits a felony punishable by up to ten years in prison and a fine of up to $10,000 (in addition to restitution).

6.  Knowledge of Incapacity

The second definition of “exploitation,” above, narrowly restricts the conduct of persons who “know or reasonably should know” that an elderly or disabled adult lacks capacity to consent.

In what situations does someone “reasonably know” that another person is incapacitated?  For example, a bank’s knowledge of a person’s incapacity is unavoidable when someone gives the bank documentation in any of the following situations:  (a) a guardian has been appointed for the individual; (b) a power of attorney has become effective, based on incapacity as evidenced by a doctor’s letter (which also has been provided); or (c) a trust agreement allows a successor trustee to take over upon incapacity as evidenced by a doctor’s letter (and the letter has been obtained).  

In each situation just listed, the person taking over for the incapacitated person is unavoidably aware of the incapacity—and is automatically charged with a higher duty. A bank dealing with the person who takes over is put on notice of both (1) the impaired individual’s incapacity, and (2) the statutory duty imposed on the person taking over, to carry out transactions only on the incapacitated person’s behalf. When the bank sees that the person taking on this role is not complying with the statute’s higher standard of conduct, there is a possible breach of fiduciary duty and also perhaps a criminal violation.

There also exists a somewhat-less-definite “middle range” of circumstances where persons still “reasonably should know” that an individual is incapacitated.  One situation occurs when a Social Security representative payee has been appointed.  There will be no determination by a judge that the beneficiary of funds is incompetent, but the representative payee will have signed an affidavit that the beneficiary cannot take care of his own finances.

(Physical frailty can be the basis for appointing a representative payee, and does not automatically imply mental incapacity. However, the bank is placed on notice that something is seriously wrong with the customer–either mental or physical.  If the bank knows its customer well, the appointment of a representative payee probably does put the bank on notice concerning whether the particular customer’s disability is mental or physical or both.  In putting a representative payee on an account, a bank has a good opportunity to inquire in a friendly and concerned way about the circumstances.)

Another situation in the “middle range” that may alert a bank to the customer’s incapacity occurs when a person holding a power of attorney comes into the bank and says he needs to take over the account.  If the power of attorney is written so that it is effective as soon as it is signed (but just hasn’t been used yet), there won’t be any doctor’s letter provided, nor any professional determination made at the time of the customer’s incapacity. Still, the bank can ask a few “gentle and concerned” questions of the person holding the power of attorney.  When the bank “reasonably knows”of the customer’s incapacity, it becomes charged with knowledge that the person representing the customer is obligated by statute to carry out transactions only for the benefit of the customer.

 There also may be some “less clear” scenarios, where there is no single “defining event” (such as a change in account styling) but only a pattern of activity over time that causes a bank to “reasonably know” of (or strongly suspect) the customer’s incapacity.

As an example, where there is an authorized signer on an account, the bank may gradually notice that the owner never writes checks any more, but only the signer.  This may be a good indicator that the owner’s condition has changed significantly.  A bank officer might comment to the signer, “We haven’t seen your mother in a while.  How is she doing?”

 At the point when any agent takes over signing all of the checks on an account, the “exploitation” standards probably should be applied strictly to that person.  (All transactions must be for the benefit of the person being represented, with nothing benefiting others–particularly the agent.)  On the one hand, it’s not the bank’s job to monitor the checks on anyone’s account; but if the bank cannot avoid noticing a pattern of activity that doesn’t look right, the bank probably needs to do something.

In another example of the “less clear” category, tellers that regularly deal directly with a customer may notice that the customer is gradually starting to lose her memory or needs help to get through transactions.  Perhaps the customer asks the same question more than once, after it has already been answered. It may become obvious that she does not fully understand what she is doing.  At this point the bank probably “reasonably knows” that the “exploitation” statute would apply.  As a result, anyone dealing with the customer (including the bank) could be held to a strict standard of liability—and any transaction not specifically benefiting the customer, or not needed, or not carried out at a fair price, may be suspect.
In the past I have said that until a judge appoints a guardian for someone, the bank is generally entitled to assume that a customer is competent.  The general assumption is that checks written by someone not yet declared to be incompetent are legally binding, and contracts entered into by that person are also binding.  

Still, if a customer’s condition has become so bad that everyone can see it, a bank probably needs to contact either that person’s relatives or DHS adult protective services, rather than continuing to deal directly with the customer.  The risk if the bank does nothing is that someone may obtain a guardianship for the customer next month, and the guardian may then ask the judge to order the bank to reimburse for checks paid from the account this month (with the customer’s signature) because the customer obviously was already incompetent.   

7.  Reporting to Authorities

Customer privacy is not violated when a bank discloses information under a permitted privacy exception.  For example, Regulation P, 12 C.F.R. Section 216.15(a)(7)(i), permits disclosure “to comply with federal, state, or local laws, rules and other applicable legal requirements.” Additionally, Section 216.15(a)(2)(ii) permits disclosure “to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability.”

Previously existing Oklahoma law, at Title 43A O.S. Section 10-104(A)(1) states (with non-financial portions omitted), “Any person having reasonable cause to believe that a vulnerable adult is suffering from . . . exploitation shall make a report to either the Department of Human Services, the office of the district attorney in the county in which the suspected . . . exploitation occurred or the local municipal police department or sheriff’s department as soon as the person is aware of the situation.”  

Section 10-104(E)(1) provides, “Any person participating in good faith and exercising due care in the making of a report pursuant to the provisions of this section shall have immunity from any civil liability or criminal liability that might otherwise be incurred or imposed.”

The definition of “exploitation” in 43A O.S. Section 10-103(A)(9), is as follows:  ““Exploitation” . . . means an unjust or improper use of the resources of a vulnerable adult for the profit or advantage, pecuniary or otherwise, of a person other than the vulnerable adult through the use of undue influence, coercion, harassment, duress, deception, false representation or false pretense.”

The most important difference between the pre-existing statute (just quoted) and the second definition above, is that under the new statute it is sufficient to show that someone is separating an incompetent person’s assets from him, in a way not benefiting that individual.  No proof of intentional “bad motives” is necessary.  

If a bank wants to contact the authorities about a pattern of activity that it sees or suspects, going beyond the definition in Section 10-103(A)(9), above, but fitting the new definition of “exploitation” in Section 843.4(A)(2), the bank should consider filing a Suspicious Activity Report.  (The state-law immunity from liability in Section 10-104(E)(1) does not apply, but the bank could file an S.A.R. to gain immunity under Federal law.)

Any bank can file an S.A.R. on an optional basis (even if not required to file one) if it suspects a criminal violation. The new statute creates a more broadly-defined criminal violation than before, and opens the door to filing an  S.A.R.  After filing the S.A.R., the bank can provide a copy to local law enforcement, with Federal law protecting the bank from liability for disclosure.