The U.S. House of Representatives has passed the Financial Exploitation Prevention Act (H.R. 2478) in response to a dramatic rise in financial crimes targeting older Americans.
The legislation directly addresses a 59% increase in senior fraud losses documented by the FBI, with the bill now sitting in the Senate awaiting further action as of July 30.
According to the FBI’s 2025 Internet Crime Complaint Center report, Americans aged 60 and older reported $7.748 billion in losses in 2025, far exceeding losses reported by any other age group.
The FBI report also found that the average loss per victim among seniors reached $38,000, a figure that underscores the devastating financial impact these crimes are having on retirees.
While cryptocurrency scams have emerged as a significant driver of those losses, seniors with no interest in digital assets remain dangerously exposed under existing law.
A key part of the problem lies in the Investment Company Act of 1940, a law originally designed as the backbone of mutual fund regulation that critics now argue is severely outdated.
Unlike broker-dealers covered by the Financial Industry Regulatory Authority (FINRA), mutual fund companies currently lack federal authority to freeze withdrawals when they suspect a client is being exploited.
This gap leaves many seniors vulnerable, particularly when scammers pressure them into rapidly liquidating retirement portfolios with promises of greater returns elsewhere.
The Financial Exploitation Prevention Act addresses this directly by amending the Investment Company Act of 1940 and granting mutual fund companies the authority to delay suspicious redemption requests.
Under the bill, when a company reasonably believes a transaction involves the exploitation of a person aged 65 or older, or an adult with a mental or physical disability, it would be permitted to freeze that transaction.
Suspicious withdrawals could be paused for up to 15 business days, and that hold could be extended by an additional 10 business days if exploitation is confirmed.
The legislation would apply broadly, covering seniors who hold mutual funds directly as well as those whose retirement accounts such as 401(k)s or IRAs contain mutual fund investments.
Common fraud schemes documented by the FBI include bad actors posing as government agencies or individuals who spend months building false trust before moving to drain a victim’s savings.
An estimated one in five Americans over the age of 65 has been a victim of financial fraud, making the passage of stronger protective legislation an urgent priority for consumer advocates.
The bill’s arrival in the Senate marks a critical moment, with supporters hopeful that lawmakers will act quickly to close a loophole that has left millions of older Americans without adequate financial protection.
