An act to add Division 21 (commencing with Section 60000) to the Financial Code, Section 39732 to the Health and Safety Code, relating to financial institutions. air pollution.
AB 2674 would create a new division in the Financial Code requiring banks and credit unions, defined as depository institutions, to adopt anti-fraud and anti-exploitation procedures when they suspect a transaction may be the result of financial abuse or deception. The bill defines covered conduct broadly to include theft, impersonation-based payment inducement, and abuse of powers of attorney, guardianships, trusteeships, or conservatorships. It also defines “suspect transaction” to include unusual or suspicious transfers, withdrawals, or deposits that appear consistent with deceptive tactics.
The bill requires customer-facing employees to receive updated training at least every six months on emerging fraud patterns and how to recognize warning signs. When a suspicious in-person transaction is identified, the institution must warn the customer, encourage independent verification, suggest contacting a fraud hotline, and may contact a trusted third party if one has been designated. For certain non-in-person, non-expedited transactions, the institution must display a prominent warning in the customer’s preferred language and format. If the institution complies with the bill’s procedures, it generally receives liability protection for harms tied to the suspect transaction, except for minors.
AB 2674 would add Division 21 to the Financial Code and impose new compliance, training, disclosure, investigation, and record-production duties on banks and credit unions operating in California. It would also create a customer notice-and-investigation process: a harmed customer who did not receive a required preventive measure could notify the institution within 60 days, triggering a 30-day investigation and, in some cases, a refund of the suspect transaction plus interest. The bill further authorizes civil enforcement, including statutory damages, actual damages, injunctive relief, attorney’s fees, and treble damages in certain cases, especially where a senior citizen is involved.
The bill appears to have generally favorable momentum in committee. It received unanimous or near-unanimous support in the votes provided, including a 7-1 vote to pass and re-refer in one committee and a 10-0 vote to pass as amended and re-refer to Appropriations in another. The committee action noted in the bill history also shows a 6-0 do pass recommendation. No committee transcript was provided, so the available record suggests broad support rather than documented debate.
The main policy tension in AB 2674 is between consumer protection and financial institution liability and operational burden. Support is implied by the bill’s strong committee votes and its focus on protecting vulnerable customers, especially seniors and people who may be targeted by scams or undue influence. Potential concerns for banks and credit unions include the cost of employee training, the need to identify suspicious activity in real time, the requirement to provide multilingual warnings, and exposure to civil damages if they fail to act. The bill also creates a liability shield for institutions that comply, which suggests an effort to balance consumer remedies with protections for institutions that follow the required procedures.