Committee signals support to draft bill allowing banks and credit unions to pause suspicious transactions

Joe Valente, director of policy at the Department of Financial Regulation, told the committee that 26 states have laws enabling financial institutions to pause suspicious transactions and investigate potential fraud.

“Our recommendation is that banks and credit unions should have the general discretion to place a pause on a potentially suspicious transaction, and they should have some degree of liability protection associated with that,” Valente said, arguing that a temporary hold can provide a ‘‘cooling‑off’’ period that helps prevent urgent scams from completing.

Valente summarized scale data: the FBI’s IC3 report for 2024 recorded 937 fraud complaints from Vermonters with about $11,000,000 in reported losses; 243 complaints listed complainants age 60 or older, with roughly $4,000,000 in reported losses among that cohort. He told members the working group recommended starting with banks and credit unions as the covered institutions, adopting trusted‑contact options, requiring employee training, limiting holds to the suspicious transaction (leaving the customer access to other funds), and considering 15–30 day initial holds with extensions for law‑enforcement or adult‑protective‑services investigations.

Committee members spoke in favor of drafting bill language. No formal roll‑call vote was recorded; members agreed the committee would take the lead in preparing a draft for further debate and technical edits, including decisions on liability, the covered institutions, and specific hold durations.

Next steps identified: DFR and committee members will draft language for review at a subsequent meeting; additional stakeholder testimony and technical amendments will follow as needed.