Protecting Elderly Customers & Large Cash Withdrawals

Question: We have an elderly deposit customer who opened a demand deposit account with more than $50,000 two years ago. She seldom came in the branch and the account had very little activity since opening. She evidently recently named her two daughters power of attorney. There is no attorney's name on the POA - it appears to be a "boilerplate" document such as you'd get off the Internet.

We had a phone call, supposedly from our depositor, saying there was a family emergency and she needed $45,000 in cash immediately from her account. When we told her we would require ten days advance notice in order to have the necessary cash on hand for such a large cash withdrawal, she said that would be not be a problem. We became suspicious because first, if it was really an emergency, we think there would have been a problem with a two week delay. And second, because the caller had a heavy southern accent and when we later talked in person to our depositor, we realized she doesn't!

Then we had a call from one of the daughters wanting to know how they could be placed on the account as authorized signers. They also wanted to know if they could make a cash withdrawal of most of the money in the account.

We followed up the telephone calls with a letter to the depositor explaining that we normally do not process large cash withdrawals because of the risk of loss to the customer, and offered to accomplish the transaction through use of a check, or multiple checks. We included with the letter a standard "fraud alert" form that describes various scams used against the elderly and asked the depositor to let us know if we could be of any help to her whatsoever.

Our depositor has now come into the office, accompanied by her daughters, to insist that the withdrawal be made in cash. She appears to be very frail physically, but seems to be mentally alert. We are extremely skeptical about the transaction. Is there any basis for denying her request for a large cash withdrawal and instead issuing a check?

Answer: The short answer is no, you cannot deny her request. Your demand deposit contract with your customer says you will pay withdrawal orders that are properly presented, bearing her signature. If she wants the cash, you are obliged to give it to her. We suggest, however, that in order to protect yourself from other family members who may accuse you of "giving away Mom's money," that you and one other bank employee take her to a quiet office, alone, and explain the form that you will ask her to sign. That form, of course, is one that says there are scams, cons, family situations, etc., that try to talk her out of her money and that you have discussed these scams with her, and even in light of this information, she still wants to remove the cash. If she signs the form, and both bank employees sign the form, you've done all you can do to protect yourself and her.

This type of situation, unfortunately, is becoming much more common. And it's one we lose sleep over. Sometimes they turn out OK, and other times, much to our dismay, they do not. You can only do just so much to protect your older depositors.

Copyright © 2003 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 13, No. 3, 6/03