Existing law, the Uniform Commercial Code (UCC), provides that, unless displaced by the particular provisions of the UCC, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement the UCC.

Existing law generally regulates fund transfers, including by prescribing rules applicable to a transfer pursuant to a security procedure for the detection of error to a beneficiary not intended by the sender.

This bill would similarly specify that those fund transfer provisions do not displace those principles of law and equity.

Existing law requires all officers and employees of a financial institution to report known or suspected instances of financial abuse of an elder or dependent adult, as specified. Existing law imposes a civil penalty for violation of this prohibition in an amount not exceeding $1,000 or, if the failure to report is willful, a civil penalty not exceeding $5,000, as specified.

This bill would increase those civil penalties to $10,000 and $50,000, respectively, and would additionally authorize an elder or dependent adult who suffers financial abuse because of the noncompliance to recover those civil penalties.

This bill would also enact various provisions related to protecting a victim of abuse of an elder or dependent adult with respect to a fraudulently induced transaction, defined as an “injured consumer,” including by limiting the liability of an injured consumer for a fraudulently induced transaction to the lesser of $50 or the amount of money or value of property or services obtained in the fraudulently induced transaction before the financial institution has notice that, or a reasonable basis to believe that, a fraudulently induced transaction involving the injured consumer’s account has been, or may be, effected, as prescribed.

This bill would also require a financial institution that, within 60 days of transmitting to a consumer certain required documentation related to the consumer’s account, receives oral or written notice in which the consumer, among other things, indicates the consumer’s belief that the consumer is an injured consumer, to investigate, as prescribed, the alleged reasons and determine whether the consumer is an injured consumer within 10 business days. This bill would authorize an injured consumer to bring a civil action against a noncompliant financial institution, as prescribed.