Credit card companies are responsible for fraud loss, under federal law. But there's no penalty for big banks when venerable victims wire thousands of dollars to scammers. California lawmakers just passed a bill that could change that.
Alice Lynn has been telling her story a lot lately.
"I thought about ending my life," Lynn said while testifying before the Assembly. "At my age, I do not have a second chance."
The Southern California widow – who cares for a disabled son – befriended a stranger on a messaging app where, over time, he convinced her to wire him her life savings in a cryptocurrency scam.
"I went to the bank again and again, seven times," Lynn explained during a recent state senate hearing.
She says the bank missed several red flags and opportunities to stop her.
The bank says it tried.
Lawmaker joins the fight
When outgoing State Sen. Bill Dodd (D-Napa) heard Alice's story, he decided to address financial elder abuse as one of his last acts in state office.
"There are still banks that are out there almost aiding and abetting … scammers," Dodd said.
Dodd introduced Senate Bill 276 tailored to Alice's case.
The bill would require banks to create an emergency contact program for elderly accountholders and dependent adults – someone to approve a transfer if the bank suspects elder fraud or financial abuse.
"[The bank] did not even contact my daughter, who is the joint account holder, Alice explained in her senate testimony. "If they even stopped the last [transaction], they would have saved me $200,000."
The bill also authorizes banks to delay transactions over $5000 for three business days if they suspect fraud.
Banks oppose bill
The banking industry had its own concerns, opposing the initial version of Dodd's bill over worries about the liability of delaying transactions and keeping people from their money.
"I think I would be pretty upset if a teller working their way through college told me that I could not withdraw money out of my own," said Jason Lane with the California Bankers Association during the senate hearing.
So Dodd went back to the bargaining table, making major amendments to his bill, limiting banks' liability and delaying the bill's implementation until 2026.
The banking industry removed its opposition to the final bill, and it passed both the Assembly and Senate with bipartisan support.
Still, lobbyist and law professor Chris Micheli explains the opposition might not be over.
"It would surprise me if a federally chartered bank didn't challenge this law," Micheli said.
Federal law protects national banks – like Chase, Bank of America and Wells Fargo – from some state regulation, meaning the California law may not be enforceable for federal banks.
For instance, when Alice sued her bank under a current California law, her bank had the case moved to federal court where state law may not apply.
"So what's the point of this bill then, if alone it doesn't actually have any teeth?" CBS News California asked Micheli.
"It might start that conversation at the federal level and amongst other states," Micheli explained, noting it will be enforceable unless or until it is challenged.
What's the status of Dodd's bill?
Ultimately, Micheli says it could prompt Congress to act and make a federal version of the state law – allowing Dodd to leave a lasting legacy for his last act in office.
"Do you think this will ultimately change policy across the country?" CBS News California asked.
"I really do … because they want to protect their seniors as well," Dodd said.
In a rare move, a federal judge recently denied a motion by Alice's bank to have her case dismissed. Her case will move forward in federal court. The next hearing is in November.
Meanwhile, Dodd's bill is sitting on the governor's desk, and the deadline to sign it is Monday.
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