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The California state legislature has approved Senate Bill 278 (SB 278), a measure aimed at bolstering protections against financial abuse targeting the elderly and vulnerable.
The bill, introduced by Senator Bill Dodd, passed with overwhelming support and seeks to clarify and strengthen the responsibilities of banks and other financial institutions in preventing fraud, and ensure that regulators can hold institutions accountable when they fail to act.
“Today, we take an important step toward safeguarding our seniors from scams that have become all too common,” said Dodd.
“This bill ensures that if a financial institution knows or reasonably suspects that an elder or dependent adult is being financially abused and fails to act, [it] can be held accountable. SB 278 will serve as a proactive measure to prevent such scams from occurring in the first place.”
According to the Democratic senator, financial elder abuse is a growing concern in California, with cases spanning all socioeconomic backgrounds.
However, the current language of the state’s elder financial abuse laws has been unclear, leading to inconsistent court rulings and uncertainty over financial institutions liability.
Under existing law, financial institutions can avoid liability by claiming a lack of actual knowledge of the fraud.
SB 278 addresses this loophole by clarifying that banks and credit unions can be held accountable if they reasonably suspect fraud but proceed with the transaction regardless.
Protecting the vulnerable
The bill is designed to help victims of financial elder abuse meet their burden of proof and encourage institutions to implement preventive safeguards.
It has garnered significant support from elder rights advocates and consumer protection groups, including the Consumer Attorneys of California and Elder Law & Advocacy.
“SB 278 represents a historic shift in preventing scams before they happen by holding financial institutions accountable for taking common-sense steps to protect seniors,” said Jacquie Serna of Consumer Attorneys of California. “We urge Governor Newsom to sign this critical legislation into law.”
Caleb Logan of Elder Law & Advocacy, a co-sponsor of the bill, added: “Older Californians are particularly vulnerable to financial fraud, and SB 278 will help prevent them from losing their life savings to scams. We commend Senator Dodd for his leadership on this important issue.”
SB 278 now heads to Governor Gavin Newsom's desk for signature.
If signed, the bill will take effect on January 1, 2026, establishing new protocols for financial institutions, including an emergency financial contact programme and a mandatory delay in suspicious transactions.
These measures aim to provide a critical layer of protection for California’s seniors against the rising tide of financial fraud, and echo legislation implemented elsewhere in the world.
