A bipartisan bill making its way through Congress aims to protect seniors and other vulnerable adults from financial scams by allowing some investment companies to temporarily pause withdrawal requests while investigating potential fraud.
The Financial Exploitation Prevention Act would give open-end investment companies, including mutual funds, the ability to delay redemption requests from people 65 and older or individuals with disabilities when the institution believes financial exploitation is occurring. The legislation passed the House in a 414-2 vote last month, and a similar measure awaits action in the Senate.
What the Left Is Saying
Advocates for older Americans say the bill addresses a critical gap in protections against increasingly sophisticated scams targeting seniors. Nina Kohn, an elder law expert at Syracuse University College of Law, said financial exploitation is a significant problem that has been worsened by artificial intelligence tools that help fraudsters appear more credible.
"Financial institutions and entities that are holding individuals' money can be empowered to help put the brakes on scams by delaying disbursement to a suspected victim," Kohn said. She noted that older adults tend to lose more money than younger victims and have less time to recover financially from losses.
Marti DeLiema, associate professor at the University of Minnesota School of Social Work, said financial institutions are already seeing exploitation occur and want tools to help stop it. "Sometimes a conversation from the bank or law enforcement is enough to pull the victim from the scam," she said, adding that temporary holds serve as a necessary last resort when conversations fail.
The Department of Justice identified more than 1 million victims of elder financial exploitation, fraud, neglect and abuse between July 2024 and June 2025. Offenders allegedly stole or attempted to steal $2.3 billion, according to the department's latest annual report to Congress.
What the Right Is Saying
Some conservative voices have raised concerns about government overreach and the rights of individuals to control their own finances. Kohn said allowing financial institutions to stop customers from accessing their money may limit people's ability to make choices about their lives and funds.
"The question is: Is that restriction on self-determination justified?" Kohn said. She expressed concern that legislation based on age may perpetuate stereotypes against older people, asking why protections should be limited by age if holds are good policy.
DeLiema raised the concept of "dignity of risk," which emphasizes allowing individuals to make their own decisions even when those decisions carry potential harm. "People are allowed to take their retirement funds and spend it at a casino," she said, questioning why that differs from falling victim to a scam.
The American Bankers Association Foundation survey found that while 43% of banks found state hold laws useful in preventing exploitation, 45% also reported that customers reacted negatively to those holds. Nearly 17% said customers closed their accounts after a delay, raising concerns about trust between financial institutions and their clients.
What the Numbers Show
Financial abuse cost older victims nearly $2.4 billion in 2024, according to incidents reported to the Federal Trade Commission. The agency noted its estimate includes only a fraction of older adults harmed by fraud due to significant underreporting.
The bill would allow institutions to place holds on suspicious requests for up to 15 business days while notifying a customer-provided contact that the account holder may be a victim of exploitation. Institutions could extend those holds for another 10 days, and courts or regulators could authorize additional delays.
FINRA already allows brokers and money managers to temporarily freeze requests from older adults who may be victims of exploitation. About half of U.S. states also have laws permitting banks and credit unions to do the same. The proposed federal legislation would extend these protections to self-directed investment funds that currently lack such authority.
In Minnesota, of 286 cases referred for investigation in 2022, temporary holds were implemented in about a quarter of them, according to research co-authored by DeLiema. More than 85% of banks in states without hold laws said they would find such provisions beneficial, per the ABA Foundation survey.
The Bottom Line
The bill now awaits action in the Senate, though timing remains unclear as the banking committee has not indicated when or if it will consider the legislation. Proponents say the near-unanimous House passage demonstrates broad agreement that protecting seniors from financial exploitation transcends partisan divides.
Supporters argue AI-powered scams are making exploitation more prevalent and harder to detect, necessitating new tools for financial institutions. Critics counter that age-based restrictions on account access raise significant autonomy concerns and may reflect paternalistic attitudes toward older adults.
The legislation requires the Securities and Exchange Commission to submit a report to Congress with recommendations on further reducing fraud targeting these populations within one year of enactment.