Key Points
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Although recent scams often involve cryptocurrency, seniors holding this most basic investment are at risk.
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Current law makes it nearly impossible for some financial companies to protect client assets.
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The bill remains in the Senate, awaiting further action.
By passing the Financial Exploitation Prevention Act (H.R. 2478), the U.S. House of Representatives is fighting back against the 59% increase in senior fraud losses reported by the FBI. As of July 30, the bill has moved to the Senate, where it awaits action.
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 more than any other age group — with an average loss per victim of $38,000.
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While cryptocurrency scams have become a major cause of the damage, you may also be at risk, even if you have no interest in cryptocurrency. That’s due in part to the Investment Company Act of 1940, a law that has long served as the backbone of mutual fund regulation. Critics argue that several features of the Act are severely outdated and rob investors of the ability to properly protect their assets.
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Whether you own mutual funds outright or they’re part of your 401(k) or individual retirement account (IRA), the amendment of the Investment Act of 1940 may help protect your investments from fraud. Here’s how.
How the bill could protect you
If, like many seniors, a portion of your wealth is in mutual funds — directly or indirectly — the measure could be critical. According to the FBI, many recent high-collar schemes push victims to rapidly liquidate retirement portfolios with promises of greater riches elsewhere.
Let’s say you answer a call or respond to an email from a party claiming to be a government agency, or you’re “befriended” by a person who spends months slowly worming their way into your life. The goal for all scammers is to rob you of your life savings. As it stands, the Investment Company Act of 1940 does little to protect you.
Left with little protection
If you do fall for the ruse and move to empty your mutual funds, the company may express concern. However, unlike broker-dealers covered by the Financial Industry Regulatory Authority (FINRA), mutual fund companies lack the federal authority to protect your assets by freezing withdrawals.
The Financial Exploitation Prevention Act amends the Investment Company Act of 1940 by authorizing mutual fund companies and their agents to delay a redemption request when there’s potential fraud. When a company reasonably believes that a transaction involves the exploitation of a person aged 65 or older, or an adult with a mental or physical disability that may make it difficult to safeguard their interest, the company would be permitted to freeze the transaction. Suspicious withdrawals could be paused for up to 15 business days, and a hold could be extended for an additional 10 business days if exploitation is confirmed.
Given that an estimated one in five Americans over 65 has been a victim of financial fraud, it’s hoped that such legislation can help turn the tide.
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