Dave Lieber, The Dallas Morning News

The other day I received a letter from an 86-year-old man who fell victim to the horrible grandparents scam. Believing his grandson was in jail, the man told The Watchdog that he sent thousands of dollars to the swindlers. He’ll never get it back.

Starting Sept. 1, there’s a new way to stop scammers who prey on the elderly and disabled in Texas.

This is a big deal.

A new law is about to give crime-fighting power to a group of people who can stop these crimes as they happen. No, not the police. I’m talking about bankers.

What does the law say?

The Protection of Vulnerable Adults from Financial Exploitation Act gives all Texas bankers, for the first time, the power to put a hold on a bank account when they suspect the account owner is trying to withdraw money as part of a scam.

Previously, bankers could ask questions, investigate and try to convince a customer to take a step back. But bankers couldn’t legally stop the transaction. Now they can.

And this not only applies to bankers but also to investment advisers and sellers of securities. They can put a temporary hold on an account if they suspect a scam, too.

How these scams work

So many different scams depend on victims going to a bank and withdrawing money to pay “tax” on nonexistent lottery winnings or pay a fake bill to the IRS to avoid arrest …. the list is too long.

Other bank-related scams happen when people receive large checks they aren’t expecting (maybe from a mystery shopping scam) and they’re told to deposit the fake check and send a portion back to the scammers.

Bankers usually recognize these scams, but until now they only had their powers of persuasion to stop the transaction.

How does the law work?

The holds on accounts can range from 10 to 30 days. Bankers are required to report the incident to government authorities. Bankers are also now permitted to call family members to alert them.

However, this won’t happen if a family member or caretaker is suspected of pilfering money from an elderly or disabled person’s account. The law takes into account that sometimes scammers are family members or caretakers, and tries to protect victims from them, too.

Bankers and financial advisers are given immunity if they intervene so they won’t get in legal trouble unless, of course, a financial institution acts “in bad faith or with a malicious purpose,” the law states.

Why is this a big deal?

House Bill 3921 is significant because the bill actually made it through what The Watchdog labels an anti-consumer 2017 Legislature. Very few consumer bills made it to a floor vote. Almost all (electricity shopping reform, roofer’s license and more) died in committees.

This bill quickly bounded through the Legislature without any blowback.

How come?

The author is state Rep. Tan Parker, R-Flower Mound. He’s chairman of the House Republican Caucus (meaning he’s popular) and also chairs the House Investments and Financial Services Committee (giving him power over proposed bills). So as chair, he propelled his bill on its merry way.

Fortunately for him, the bill was far enough along in the process that by the time the House Freedom Caucus killed more than 100 bills in protest, Parker’s was not one of them.

Who supported this law?

A better question is, who didn’t? Supporters included the state’s two top bank lobbying associations, AARP, insurers, financial advisers, mortgage brokers, credit unions and the securities industry.

Rep. Parker tells The Watchdog he introduced the bill because he heard from constituents that it was too easy for scammers, family members or caretakers to convince the elderly and disabled to give them large amounts of money.

Karen Neeley of the Independent Bankers Association of Texas says when customers are told about the hold, “You’re going to tick off the customer, but you’re also going to protect them from losing the money before it gets wired out. It also gives the bank statutory cover because they can say, ‘This is authorized by law.'”

Will this work? 

The Watchdog showed the new law to fraud prevention expert Traci Brown of Denver.

She calls House Bill 3921 “a great law” for Texans.

“Up to now, tellers were kind of powerless and just had to do what the account owner said, even if they had a funny feeling about it,” she says. “The bank employees really had no power even as they saw this fraud happen before their eyes.”

As Karen Neeley of the bankers group says, “Banks couldn’t stop this. Now they can.”

Staff writer Marina Trahan Martinez contributed to this report.