Why Are Canadian Banks Not Protecting Seniors? The $40 Billion Dollar Question

After an 89-year-old Victoria man lost $1.7 million to phone scammers despite bank red flags, retirement expert and authour, Susan Pimento, exposes a critical protection gap: while U.S. banks like Bank of America offer "Trusted Contacts" (designated people banks call to verify suspicious transactions) for all accounts, Canadian banks restrict this safeguard to investment accounts only—leaving everyday banking vulnerable where most fraud occurs. In Canada, senior fraud is vastly underreported (RCMP estimates only 5-10% surface), and banks are treating this as a cost issue rather than a moral crisis.  Susan Pimento is available for interviews to discuss practical solutions, industry insights from her decades of work within financial institutions, and why Canadian banks are failing to implement a simple fix that could save seniors' life savings. Connect with her directly through ExpertFile to schedule TV, radio, podcast, or print interviews. 

As I was polishing this post for Canadian Financial Literacy Month, another senior fraud story flashed across my screen. This one stopped me cold.

According to this CBC story, an 89-year-old man in Victoria, B.C., was tricked into handing over nearly $1.7 million of his life savings in a months-long phone scam. The caller claimed to be from the fraud department at CIBC and said he was helping with a national money-laundering case. (Spoiler: he wasn't.)

Despite red flags and staff awareness, the bank still allowed large in-person withdrawals. He was told to buy gold bars — yes, actual gold bars — with drafts of up to $395,000, which couriers then collected like some twisted Uber Eats retirement fraud.

Every week in Canada, we see another heartbreaking headline: a senior sends thousands, sometimes millions, to a scammer pretending to be their grandchild, the CRA, or — the ultimate irony — their bank. 

These scams targeting seniors don't require fancy hacking. They rely on fear, isolation, and misplaced trust. Once the money's gone, it's gone—no refund policy.

And here's the kicker: what we're reading about is just the tip of the iceberg. For seniors, fraud now ranks as the top crime, and most fraud goes unreported—especially in this demographic. In a previous post, I showed how the data suggests the real figures could be 10 to 20 times higher than what's officially reported.  The RCMP estimates that only 5-10% of fraud victims come forward.

Many victims never speak out due to embarrassment, fear, or confusion.

Translation? For every story that makes the news, countless others suffer in silence.

How The Banking Industry Can Actually Fight Fraud

I've worked within financial institutions for decades. Let's just say I understand how the process works. Banks have billion-dollar tech stacks, layers of compliance, and advanced fraud detection systems that can flag a suspicious $47 transaction in milliseconds.

But the solution for this type of fraud isn't a multimillion-dollar algorithm or a new "AI-powered fraud prevention dashboard." Instead, it's a human-based approach called a Trusted Contact.

What's a "Trusted Contact," Anyway?

It's not an app, a chatbot, or some new gadget that requires a firmware update every Thursday.

It's a person. 

Someone you trust — a family member, attorney, accountant, or another third-party who you believe would respect your privacy and know how to handle the responsibility of communicating with your bank in your best interests if something suspicious occurs. They don't access your money or view your accounts. They can't see that you spent $47 at the LCBO last Tuesday (Your secret is safe).

They're simply your human safety net — a fraud wing person, if you will.

The Origins of the Trusted Contact

The concept began in the U.S. in 2018, when FINRA mandated investment firms to request a Trusted Contact Person. Canada followed in 2022, when the Canadian Securities Administrators introduced similar guidance for investment accounts.

What things can be discussed with a trusted contact? As its name implies, a Trusted Contact is a designated person who is inherently trusted by the individual (and has no authority to transact business on a client’s account), so there is little to no danger that any reasonable disclosure would violate a client’s trust or give rise to any material issue.”

What Canadian Banks Are Doing...And Not Doing

Here's the good news. If you invest through Wealthsimple, RBC Direct Investing, TD Direct, or BMO InvestorLine, you can already designate a Trusted Contact.

But here's where it gets ridiculous: RBC Direct might have that security feature — but your regular RBC chequing account? Not so much. That protection vanishes the moment Mom or Dad logs into their everyday banking.

And that's where most fraud actually occurs.

It's like installing a state-of-the-art security system on your front door but leaving the back door wide open with a welcome mat that says "Scammers Enter Here!"

Fraud in Canada for Banks is Still a Budget Item: Not a Moral Crisis

Here's the uncomfortable truth: For banks, fraud is considered a "cost of doing business." And since most of those losses are borne by customers, not the bank, there isn't much urgency to innovate. 

The Big Five earned over $40 billion in total last year. They have the means to care. They're not particularly motivated to actually do so.

The Big Opportunity for Banks: Add a Little Humanity to the System

Banks like to boast about their AI, blockchain, and next-gen fraud analytics. But most scams don't occur because of breached firewalls — they happen because of breached hearts.

A Trusted Contact provides an additional simple, low-tech layer: human verification.

Picture this: The bank spots an unusual transaction — a large new payee, an international wire transfer, or a sudden gold-bar purchase (it happens). Instead of sending another automated text alert, the system could ask:

"This looks unusual. Would you like us to confirm with your Trusted Contact before proceeding?"

or

“Just a heads-up: scammers often use urgent or unusual requests. Prefer we run this by your Trusted Contact before we proceed?”

That's it. One additional step. One extra set of eyes. One brief conversation could save someone's life savings.

This isn't about limiting independence — it's about safeguarding autonomy. Ensuring your decisions are genuinely yours, not the scammer's. Banks could even call it "Senior Protection Mode." I'd sign up tomorrow. Heck, I'd pay extra for it. (Shhh, don't tell them that.)

Here's the Proof Trusted Contacts Work: Bank of America Did It

In 2022, Bank of America became the first major bank to extend Trusted Contacts beyond investment accounts to everyday banking clients. Customers can now add a trusted person the bank can call if something seems wrong, if they can't reach you, or if staff suspect undue influence.

That person can't access your money — they're just the human speed bump before disaster: one simple form, one phone number, and much heartbreak avoided.

If Bank of America can do it, why can't ours? Canadian banks already have the tech — and indeed the profits — to make it happen.

What's Holding Canada's Banks Back?

Cue the usual excuses:

"Our legacy systems can't handle that." Sure — some of your code still thinks "Y2K" is an active threat. But if you can build an app that tracks my latte points and sends me notifications about my "spending insights,"  you can add one field for a Trusted Contact.

"Privacy laws make it risky." Nope. FINRA and the CSA already provide safe-harbour protections. With consent, banks can legally contact a Trusted Person. Just add a checkbox. You love checkboxes. You make us check dozens of them every time we update our password.

"Customers haven't asked for it." They're asking now. Loudly. With megaphones. And pointing at stories like the Victoria gentleman who lost $1.7 million in gold bars.

The business case has historically been weak because most fraud losses affect customers, not the bank's balance sheet. But here's the catch: every fraud story damages trust. And in banking, trust is supposed to be the core of the business.

For Canadian Banks There's a Competitive Advantage in Caring

Rolling out a Trusted Contact feature isn't just good ethics; it's good business. Imagine the marketing campaign: "We don't just protect your password — we protect your peace of mind."

Seniors would love this. So would their kids. That's multi-generational loyalty money can't buy. If EQ Bank or any challenger brand wanted a PR home run, this would be it.

It's Time to Take Action on Fraud

To the Banks:

Stop waiting for regulators to force your hand. Lead. Be the first to offer Trusted Contacts for all customers — not just investors. You have the framework, the talent, and the budget. You absolutely do not need another consultant to tell you this is the right thing to do.

To Policymakers:

The Financial Consumer Agency of Canada should update its Code of Conduct to include a mandatory Trusted Contact option for all customers, safe-harbour rules allowing banks to pause suspicious transactions, and annual public reporting on outcomes.

Because sunshine is the best disinfectant, even in banking.

To Consumers:

Don't wait for policy — be the policy. Ask your bank today if you can add a Trusted Contact. If they say no, ask why not — and post it. Loudly. Talk to your family. Choose your Trusted Person now. Write your MP or MPP and ask why U.S. banks protect seniors better than ours.

Remember the $3 ATM Fee Rebellion?  Canadians once revolted over paying $3 to access their own money at ATM's. We later got no-fee accounts, digital challengers, and a whole new generation of more innovative banking. 

If we can rally over an ATM fee, surely we can rally to protect our parents and grandparents from losing their life savings. Fraud isn't an inevitable part of aging — it's a solvable problem. And Trusted Contacts are one of the simplest, most human solutions we have.

Don't Forget Two-Factor Authentication for the Soul

Adding a Trusted Contact won't stop all fraud — let's be clear about that. But it will go a long way toward slowing it down, adding a common-sense pause, and potentially saving even one senior from losing any part of their hard-earned money.

It's unfortunately too late for that gentleman and his family in BC, but it's not too late for countless others.

This won't crash legacy systems or drain bank profits. It just adds a little humanity back into banking — right where it belongs.

Because the best kind of security isn't just two-factor authentication.

It's two people who care.

And if we don't care about protecting our elders, who exactly do we care about?

Sue

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