To Avoid Being Scammed, a Little Knowledge Goes a Long Way
Scammers target older Americans today more than any other demographic group.
According to the Federal Bureau of Investigation (“FBI”), as compared with younger groups, seniors are more often the targets of financial scams due to their more trusting nature and higher potential worth. Additionally, seniors have traditionally been more easily confused by technology and therefore employ slower means of tracking suspected financial crime.
Older Americans have always had more money to steal and are relatively easier to steal from… it’s as simple as that. But, is this still the case in today?
After all, we are living in the aftermath of a huge economic downturn that has decimated savings and retirement accounts and diminished stock portfolios. In addition, on January 1, 2011, the first of the baby boomers turned 65 and today 10,000 celebrate their 65th year each day, a trend that will continue for the next 19 years, And that assumes a much more computer savvy and Internet friendly senior population.
Sadly though, the reality of financial scamming is actually not dependent on any of those factors. The proliferation of scams targeting seniors is a huge business that is not going away anytime soon. It seems that no matter how smart new seniors are, scammers always seem to get smarter, making great use of technology to commit fraud and other financial crimes, such as identity theft.
In tough economic times, scammers find themselves in greater financial need just like everyone else, and that motivation tends to make them even more persistent and prevalent, so no matter how you slice it, they remain a serious threat.
There are many different types of fraud committed against seniors. According to many experts in the area, there are three crimes, in particular, that are on the rise. In broad terms, they are:
1. Identity Theft
2. Financial Investment Fraud
3. Medicaid/Healthcare/Medication Fraud
Knowledge is Powerful Protection…
The best way to protect yourself from scammers is to have some idea what they’re up to… when it comes to this area, knowledge is truly power. While it’s impossible to see everything coming, by learning about the most common senior scams and schemes out there today, you’ll know what to watch out for and reduce the chances of getting ripped off.
1. Identity Theft
Many people are shocked to learn how many ways, and how easy it is, for someone to find out personal information about you, especially if you’re not careful. The Internet has made the potential sources of personal information vast and accessing certain information has become relatively easy. The bottom line is that ultimately you may not even be able to prevent the theft of your identity, but that doesn’t mean you shouldn’t make it as hard as possible to steal yours.
Identity theft can be a nightmare to unwind, and in many instances, people end up fighting with the credit bureaus for months and can end up having to go to court to defend your name.
Criminals get someone’s personal information in many ways, sometimes it’s as simple stealing the person’s wallet, but other times, they do it by going through someone’s trash, searching through public records and by knowing how to manipulate online databases and other resources. A scammer after your information might even be so bold as to approach you in person, posing as someone legitimate, or contact you by telephone or email all in an effort to get you to give them the information they need.
For example, It’s amazing the damage a scammer can do just by having the last four digits of a Social Security number, and just think how many times we’re all asked to verify those last four digits over the phone or online. Those four important numbers can be easily used to connect to other personal info, like addresses, bank accounts and credit cards… and that means the scammer can potentially charge items online using your credit card information and in some cases even access your bank accounts.
The more information the scammer gets, the more he or she can accomplish… for example, with your employment history too, the more sophisticated scammers have been known to take out loans and establish lines of credit in your name. The good news is that you can minimize your risk of loss by following a few simple steps…
Tips to help avoid identity theft scams:
• Buy an electronic shredder – Businesses use them, people should too. These days you can find a shredder for $40 – $60 at your local office supply store or even at the large retailers, like Best Buy, Target or Wal-Mart. And get into the habit of shredding ATM receipts, credit card statements, plastic credit cards, or bank statements before they go into the trash.
• Never offer your credit card number to someone over the telephone.
• Keep a list of the telephone numbers you need to call to report credit cards… or your cell phone, lost or stolen. The three credit bureaus, Experian, Equifax and TransUnion, allow consumers to check their credit for free as often as every few months. Get in the habit of doing that.
• And don’t store your personal information such as Social Security numbers, bank account numbers, or credit card information in your cell phone. If your cell phone is lost or stolen, all of that information becomes easily accessible to whoever has your phone.
• Check your bank account balances as close to every day as you can. Online banking or calling the bank 800# for your balance makes it easy for to check your bank accounts daily. By developing this routine and sticking to it, any unusual fluctuations can be spotted and questioned immediately.
• Check your credit card balances. Registering your card with an online service that or even calling to check on your account status is recommended so that you know where you stand. If you balance is out of whack or you suspect fraud, report it to the credit card company immediately so they can cancel your account.
• If you suspect your identity has been compromised, ask the credit bureau to print a statement stating the problem. And report any suspicious or unauthorized financial transactions immediately.
2. Medicare, Health Insurance & Prescription Fraud
Since every U.S. citizen or permanent resident qualifies for Medicare at age 65, a scam artist doesn’t need to do much digging in order to find a Medicare recipient to scam out of some money.
The scammer might show up in person or over the phone posing as a Medicare representative with the goal being to get the Medicare recipient to give them the information on their Medicare card, along with other personal information. Once they have this information, they also have a long list of potential scams from which to choose.
The scammer might be looking to assume the Medicare recipient’s identity to obtain medical treatment and/or medications.
The scammers might invite the senior to a mobile clinic day where they provide unnecessary and sometimes fake tests to seniors at health clubs, retirement homes, or shopping malls. They then use the personal information the senior provides to bill Medicare and pocket the money.
The scammer can find out what medical supplies and prescription drugs the individual needs and offer to send them cheaper and faster if they provide their Medicare information. Insurers are then charged for products that were not needed and/or may not have been delivered. Also, if the senior agrees to send money upfront in this type of ‘deal’, of course the senior never receives what they ordered and has no proof of from where or whom they ordered.
Another large problem involves illegitimate medical equipment manufacturers offering seniors free medical products in exchange for their Medicare numbers. Because a physician has to sign a form certifying that equipment or testing is needed before Medicare pays for it, scammers fake signatures or bribe corrupt doctors to sign the forms. Once a signature is in place, the manufacturers bill Medicare for the merchandise or services that were not needed or ordered.
Tips to help avoid these scams:
• Don’t give out your Medicare information over the phone to someone you don’t know.
• Never sign a blank form of any kind for any reason.
• If you are asked to provide authorization to a medical provider so that he or she is able to bill for services, be sure you’re aware of what your medical provider charges so you know what you’ll be expected to pay out-of-pocket.
• Do not provide personal information to someone at your door or to someone over the phone – even if they tell you that you can receive free health care services, drugs or medical equipment.
• Only give your Medicare identification or insurance information to those who have provided you with medical services.
• Keep accurate records of all health care appointments, doctors you see, medical equipment you use and prescriptions you take.
3. Financial Investment Schemes
Financial scams targeting seniors have become very prevalent. In addition they often go unreported and can be difficult to prosecute. They are devastating to many older adults, and with little time to recoup their losses, can leave them in a very vulnerable position.
And it’s not just wealthy seniors who are targeted… low-income older adults are just as much at risk of becoming victims of financial fraud.
Investment schemes have long history of being a successful way to take advantage of older people. Anything from a great ‘free’ offer to a shingle-the-roof scam requiring cash up-front, to an email that promises the biggest return on your investment ever, are considered investment schemes because any of these “no-risk” gems, at some point, the scammer invariably takes money from the senior and runs.
Many of the financial investment schemes offering the promise of high financial returns or dividends that would not available through traditional investments are known as “Ponzi” schemes, named after the great fraud created by Charles Ponzi that guaranteed investors 50% return in postal coupons. This fraud fell apart because although Ponzi was able to pay his initial backers with new investment funds, he could not pay the investors that came in later. Many seniors were victims of this famous fraud and many continue to be victims of similar schemes today.
4. Franchise pyramid schemes
These are another infamous investment scam. These are marketing investment frauds where an individual is offered a distributorship or franchise to market a particular product. The real profit these companies earn, however, is not from the sale of the products, but through the sale of new distributorships.
Eventually, this reaches a point when the supply of new investors is exhausted and the pyramid collapses. Pyramid schemes typically say that new participants can recoup their original investments by getting two or more friends to make the same investment they have. This sounds great in theory but almost never happens in reality.
5. Home or auto repair deals
This often involves someone calling or knocking at your door. They offer a super deal to fix your roof, paint your house or repair your dented vehicle. To get the great deal, you typically need to pay some money up front and after you hand over the funds you discover the work is never started, incomplete, is poorly done, or wasn’t what they described in the first place.
Tips to help avoid these scams:
• Do not invest in anything unless you understand the deal. Con artists often make things sound complex and intentionally don’t explain details clearly. If you don’t get it, don’t do it.
• Think things through and do your homework before you invest in anything. Be wary of an investment that offers unusually high yields.
• Be careful of an investment opportunity that makes ‘pie in the sky’ claims and always consult an unbiased third party before investing.
• Be wary of “opportunities” to invest your money in franchises or businesses that require you to bring in other investors and their money.
• Be skeptical when hype sounds like hype, because it is probably is hype.
• Discuss financial issues with only trusted advisors and family members. Scammers look to take advantage of seniors that try to handle their finances on their own, so if you do have a trusted family member or friend that you believe can help protect your assets, then share information with them before writing anyone else a check.
• Don’t pay up-front for a service simply because it’s a great deal. It’s always safer to pay a portion of the job as the job advances, or pay the entire amount upon the completion of the job. Keep in close contact with repair people you hire to be sure they are doing what they said they would do, and that they do it correctly and completely.
There are many other schemes out there that occur less frequently than the three described above, and a few are important enough to be mentioned here.
6. Telemarketing Schemes
Older people as a group make many over the phone purchases and as a result often become easy prey for telemarketing scam artists. Over the phone scams are very hard to trace. Examples of telemarketing fraud include:
7. The Grandparent Scam
This involves a young sounding person placing a call to an older person saying something like: “Hi Grandma, do you know who this is?” When the unsuspecting grandparent guesses the name of the grandchild the scammer most sounds like, the scammer assumes the immediate fake identity.
Of course, the fake grandchild will usually ask for money to solve some problem (rent, car repair, tuition, etc), and then they ask that the money be sent via Western Union or MoneyGram, which are usually less stringent on showing identification to collect funds. Then the young scammer expresses how grateful he or she is, and asks the grandparent to “keep this between you and me.”
8. A Pigeon Drop
This is when a scammer calls an individual with a story about how they have found a large sum of money and they are willing to split it if the senior will make a “good faith” payment. The payment involves the senior having to withdraw funds from their bank account. Often, a second con artist poses as a lawyer, banker, or some other ‘trustworthy’ stranger to lend credibility to the plot.
9. Fake Accident
This isan emotional ploy where the scammer calls the victim and tells them that their child, grandchild or other relative has been injured or hospitalized and they need to wire money or provide their credit card information right away.
10. Charity Scams
These have been around forever… they play on someone’s emotions to get them to send money to fake charities or causes. These scams tend to occur most frequently during election years or following a natural disaster when people are more expecting such calls and willing to give.
You should always think twice before giving money to a charity, political group or nonprofit organization, especially if they’re soliciting donations over the phone or online.
It’s easy to check out a non-profit if they’re legitimate, so you should always do some background research to make sure the organization is legitimate and that your funds go to the right cause and purpose. Companies can be found on Scambook.com in addition to simply searching for them on the Internet.
11. Mortgage and Foreclosure Fraud
Typically these lenders make high-cost loans to seniors in need of cash, when they are particularly concerned about being on a fixed income and not able to afford their bills. The premise is that these lenders will talk the victim into a loan they really can’t afford to begin with, and then they are pressured further into refinancing a loan repeatedly to get a more affordable rate but by paying high fees each time.
Another name for this scam is “loan flipping.” Borrowers who pledge their house as collateral and can’t repay the loan could lose the home in a foreclosure. If someone approaches you with one of these types of offers, report them to local law enforcement, or your state’s department of consumer affairs.
Foreclosure related scams have become commonplace in the last few years. These scammers go through records at the local courthouse to find homes that are currently facing foreclosure. They then contact the homeowners and offer help to stop the foreclosures. The homeowner is told to sign documents that will save their home when, in actuality, the fine print transfers the ownership of the property to the scammer.
Another common foreclosure related scam is the loan modification requiring an upfront fee. The scammers assure the homeowner that they have a relationship with the bank and can help them get their loan restructured… if the homeowner pays them hundreds or thousands of dollars upfront. Of course, the loan never gets restructured and the homeowner loses not only their home, but the money they paid in advance too.
12. Prize and Sweepstakes Frauds
These types of scams usually involve a phone call or letter congratulating a senior on a prize or an amount of money that they have won. In order to be awarded their winnings, they are usually told they have to pay for something in advance. They are often required to send payment to cover shipping, taxes or handling fees and are promised that once they do that, they will receive their reward. Of course, the senior sends the required amount to a non-traceable party, and their prize never comes, or what does arrive is not worth anywhere near what they were told.
13. Selling Items & Counterfeit Checks
There are many risks involved with these transactions but one to particularly watch out for is when you sell an item to an individual and they issue you a check or a cashiers check as payment. The buyer tells you they ‘mistakenly’ made out the check incorrectly in an amount that is more than the agreed-upon price. The buyer then asks you to give the excess funds back. If you comply, you might find out too late, that the check you received is phony and the money you gave back is never returned to you.
14. Funeral Scams
This may be the lowest of low for the senior scams. The FBI warns of types of funeral fraud perpetrators that read obituaries and then either attend a funeral service or call the surviving spouse. Once they are in touch with the grieving widow or widower, they claim the deceased had an outstanding debt with them. These scammers try to, and frequently do, extort money from the bereaved and their relatives to settle fake debts.
A Few Words to the Wise… Overall, always remember these three rules for staying safe:
1. Be skeptical – If it sounds too good to be true, it probably is.
2. Be aware – There are many scammers out there who are trying to get your money.
3. Be slow – Never rush into anything. Check things out before giving anything to anyone.
4. Be aware – Before you hand over money or personal info, refer to the three rules above.