Liz Sanders’ elderly mother had a $20 signature stamp that she used for her banking, but that little stamp ended up costing more than $700,000 after a dishonest caregiver got her hands on it.
Sanders said the stamp turned out to be the perfect tool for forging checks, gaining access to dormant credit lines and transferring large sums into a bank account opened without her mother’s knowledge.
“It was a horrible situation,” said Sanders, who lives in Woodland Hills. She said the caregiver bought a new Mercedes, paid for a breast job and a tummy tuck, racked up $80,000 in debt at Nieman Marcus and Saks Fifth Avenue and outfitted herself with QVC purchases. “It took her only a few months to get the first $400,000.”
A bill awaiting the governor’s signature will regulate the way California banks issue such signature stamps and offer new protections against financial abuse. Sen. Fran Pavley, D-Agoura Hills, authored SB 586 after she learned how easily Sanders’ bedridden, 82-year-old mother was swindled out of her life savings.
This article is one in an occasional series on aging with dignity, independent living and public policy that affects both. For a complete archive of the articles, click here.
“This bill establishes some basic and common sense protections of one particular financial instrument that can be easily used to drain vast sums of money and assets,” Pavley said in a written statement.
With the state’s senior population expected to double to 6.4 million by 2025, Pavley called the abuse of elderly and dependent Californians “an insidious and growing problem.”
Under SB 586, banks issuing signature stamps to accountholders would be required to do so in person, with a bank employee verifying in writing that the customer asked for the stamp. Disabled customers unable to come into a bank would have to submit a letter from a doctor attesting to their disability and a bank form with their notarized signature.
The bill also would prohibit banks from opening accounts based only on a signature-stamped letter received in the mail. Banks would have to tell customers about the risks associated with lost or stolen signature stamps and the importance of reviewing bank accounts regularly.
In addition, Senate Bill 586 would double the financial penalties for elder abuse — to as much as $12,000 for some offenses — and send the additional money to adult protective service agencies in the counties prosecuting the crimes.
“We’re supporting this bill to raise awareness and also because most counties are underfunded in the prosecution of elder abuse,” said Christina Clem, spokeswoman for AARP California, which co-sponsored the bill along with the California Senior Legislature. “One of the hardest things to do is to stay one step ahead of the crooks and the frauds, and this bill will help us do that.”
The California Bankers Association and the California Independent Bankers Association both opposed the bill. The groups reported that signature stamps are not widely used and that banks might stop issuing the stamps rather than comply with new regulations, according to a legislative analysis. They also noted that SB 586 would not apply to federally chartered banks.
Representatives from the associations did not return calls seeking comment.
Sanders, however, says the legislation could have done more. Sanders has been a tenacious advocate for the bill, but wishes it had retained an earlier provision that would let accountholders put a limit on withdrawals made with signature stamps.
“This bill will make a difference, but it won’t completely prevent abuse,” said Sanders, whose mother died last year.
Sanders said the woman who defrauded her mother in 2009 was sentenced to 32 months in prison and ordered to pay restitution.
“I know we’re never going to see a dime,” she said.
Senate Bill 586 passed out of the Assembly on a 48-27 vote Aug. 25 and out of the Senate on a 25-13 vote Aug. 30.
The governor has 30 days from when the bill reached his desk to sign it.
