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Committee approves bill letting banks pause suspicious transactions to protect seniors and vulnerable adults
Summary
The Senate Commerce and Energy Committee voted to give House Bill 1238 a do‑pass recommendation; the bill lets financial institutions temporarily delay or refuse transactions they reasonably suspect are financial exploitation of consenting seniors or vulnerable adults and provides liability protection for good‑faith action.
Senators heard multiple hours of proponent testimony before giving House Bill 1238 a do‑pass recommendation. Proponents described the bill as a consumer‑protection measure that gives banks a discretionary, time‑limited tool to stop scams and coordinate with families or law enforcement before irreversible transfers occur.
Representative Melissa Herman, who testified about a family incident in Nebraska in which a bank paused a suspicious withdrawal and a relative verified the customer’s safety, said a brief intervention can prevent catastrophic losses. "The only reason he did not lose everything in his account that day was because the bank was able to step in," Herman said.
Carl Adam, president and CEO of the South Dakota Bankers Association, and other banking and elder‑advocacy groups supported the bill as modeled on legislation adopted in states such as Nebraska. The measure allows a financial institution to delay a transaction for up to 30 business days and provides a mechanism for extension in complex cases; it also includes liability protection for institutions and employees who act in good faith.
Brett Aft of the Department of Labor and Regulation’s Division of Banking and AARP South Dakota emphasized the growth of fraud targeting older Americans and the practical role banks play as the last line of defense. Disability Rights South Dakota and the Alzheimer's Association voiced support while asking that safeguards respect autonomy and privacy.
Committee members asked how accounts would be identified as qualifying seniors or vulnerable adults, how pauses would be extended beyond 30 business days when needed, and whether consent options would be available to customers. Proponents said financial institutions will develop training and templates and that written consent provides greater latitude to involve a trusted contact, but the bill allows intervention even without prior consent when exploitation is reasonably suspected.
The committee voted to give HB 1238 a do‑pass recommendation and placed it on the consent calendar for floor consideration.
