Bay Area Law Firm Sues Chase Bank For “Financial Elder Abuse” For Allegedly Not Protecting Customers Against Scams

Two lawsuits filed by a Bay Area law firm this week highlight the legal issues that arise when an elderly bank customer is scammed out of his or her bank account by a con artist and then alleges that the bank should have intervened to prevent the loss.

While the two cases — filed in the superior courts of San Mateo and Los Angeles counties — involve different and unconnected frauds, JPMorgan Chase was the bank in each case and is alleged to bear financial liability for its customers’ lost funds.

The suits allege that even though Chase was not part of the scams against its clients, it nevertheless bears responsibility under a California statute regarding “financial elder abuse.”

The statute provides that a financial institution can be liable if it “assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.”

According to Anne Marie Murphy, the lawyer at Cotchett, Pitre & McCarthy LLP who filed the two suits, cases in the arena often turn on whether the conduct by the bank amounts to “assisting” for purposes of the statute.

Murphy says court decisions are not harmonious in their view of whether a bank defendant can be liable if they “knew or should have known” that their customer was being scammed or if they need to have “scienter.”

Scienter is a legal term that means a defendant knows that something is wrongful and intends to do it anyway.

“She mentioned that in many of these cases, the financial institution expresses regret that its customer lost their funds, but asserts that the fault does not lie with the bank. According to Murphy, banks often contend that they were unaware of the fraud and merely facilitated the transactions their customers wished to pursue. For those interested in understanding this issue further, seeking more information on fraud can provide valuable insights into how these situations arise and how customers can better protect themselves.”

Murphy has handled many financial elder abuse cases and says that her firm only brings cases when they are convinced the bank’s conduct is sufficiently egregious that a judge will let a jury decide the question of culpability.

She points to the facts alleged in the two new cases.

In the San Mateo County case, Diane Yaffe, a 77-year old widow from Redwood City, was the victim of a scam in which the scam artist pretended to be an IRS collections officer. When the dust settled, Chase had wired $1.8 million of Yaffe’s money overseas.

In the Los Angeles County case, Alice Lin, an 80-year-old resident of Alhambra, lost $721,000 after an individual named only as “Justin” contacted Lin about cryptocurrency investments and encouraged her to transfer money out of an account she maintained at Chase.

Each case is alleged to involve multiple wire transfers from the Chase accounts under circumstances that were allegedly “wildly” out of character for the plaintiffs.

Yaffe, for example, had banked with Chase for 10 years and her account had never had more than $5,000 in it at a time. She had only made one wire transfer before, that in the amount of $1,200.

Then, over a period of several weeks in the fall of 2022, Yaffe began making large deposits to her Chase account from another bank and wire transferring the funds to the scamster. In the end, according to her colorful complaint, she was “left penniless, with no hope of recovering the money that [Chase] had helped [the] scammers steal.”

Murphy said that this type of financial elder abuse is on the rise. Her complaint refers to it as “the crime of the 21st Century,” and says, “older adults are targets for financial exploitation due to their income and accumulated life-long savings.”

An additional factor is that “older adults are targeted due to their declining health, lack of technological literacy, and higher likelihood to face isolation from family and friends during their golden years,” the complaint says.

Chase is one of the largest U.S. banks with more than 4,700 branches and $2.6 trillion in assets, according to information on its website. With its acquisition of First Republic Bank in 2023, Chase has expanded its presence in the Bay Area.

Chase responded to an inquiry about the lawsuits with a statement that challenged the plaintiffs’ narrative.

According to Chase, “When customers visit our branches to complete wire transactions, our bankers ask questions, raise awareness around various scam scenarios and provide clear warnings that once a wire is sent, you may not be able to recover your money.”

The statement continued, “These interactions occurred in this case when Ms. Yaffee and Ms. Lin authorized wires from their accounts.”

“Unfortunately, the Lin and Yaffe families are the victims of scams. Consumers should always be suspicious when someone they don’t know asks them to urgently send money,” Chase’s statement said.

State Sen. Bill Dodd, D-Napa, is sponsoring Senate Bill 278, a bill that would amend California law to “clarify that victims of financial elder abuse can continue to hold institutions accountable when they should have known of the fraud but negligently assisted in the transfer anyway.”

According to the materials prepared to explain the bill, “Elder financial abuse is an epidemic. Losses equal $3 billion dollars annually. The breadth of predatory practices is staggering.”

Dodd said, “Banks must do a better job of preventing the most vulnerable Californians from getting ripped off.”