Financial Elder Abuse: Does a Bank have a Duty to Report?

Lucca v. Wells Fargo Bank, N.A., 2015 N.J. Super. LEXIS 105 (Law Div. Jan. 28, 2015)(approved for publication June 24, 2015)

Over several months in 2011, plaintiff Margaret Lucca made approximately twenty-seven wire transfers, totaling about $330,000, from her account at Wells Fargo Bank.  She sent the funds at the direction of an individual who telephoned her home, identified himself as a lawyer, and provided her with the information for the wire transfers.  Plaintiff was scammed, and never recovered the funds.  She was  eighty-two-year-old at the time.

Plaintiff filed a four-count complaint against Wells Fargo and its employee, asserting:  negligence; breach of contract; violation of the implied covenant of good faith and fair dealing; and failure “to act in good faith” by not disclosing “the wire transfers to the appropriate authorities” pursuant to N.J.S.A. 17:16T-1 to -4.

All claims but the last one were dismissed before trial by the court.  The last claim was tried in January 2015.

The central issue was thus whether N.J.S.A. 17:16T-1 to -4 imposes a statutory duty on financial institutions to report a suspected scam to the police or the office of county adult protective services, thus creating an independent cause of action for a customer to assert bad faith for the bank’s failure to notify the authorities.

The New Jersey Legislature enacted N.J.S.A. 17:16T-1 to -4 in 1998.  The statute aims to protect customers of financial institutions who are vulnerable or elderly.

The trial court analyzed the statute and its legislative intent.  The judge concluded that the statute does not require a financial institution to report to the police or adult protective services that the institution suspects a senior or vulnerable customer is the subject of a monetary scam; the statute encourages disclosure but does not require it.  Rather, the statute gives the institution a safe harbor if it chooses to release, or not to release, the customer’s information.  The purpose is to provide guidance to the bank as to conditions under which it may release information, and to whom and how much information may be released.

In turn, because the legislation creates no statutory duty on the bank to report suspected abuse, the court determined that plaintiff had no private cause of action against the bank for its failure to report.