Scams and Seniors: Don’t Be the Next Victim
Scams and Seniors: Don’t Be the Next Victim
By Carolyn Campbell
The letter appeared to be a dream come true. It stated that a Utah retired couple, whom we will call Dave and Jane Richards, won third place in the annual Publishers Clearing House sweepstakes. Because Publishers Clearing House is a well-known company, the Richards thought the letter was probably authentic. They followed its instructions to make a phone call to learn more. A smooth-talking man named Robert Anderson answered the phone, assuring them that they not only won the $650,000 prize, but that winning meant that their credit card balances would also be paid off.
Anderson explained that the company would need the Richards’ credit card numbers to complete the payoff. The couple would also be required to buy an insurance policy because funds would be sent from Canada. To purchase the policy, they followed Anderson’s instructions to get a cash advance of $7920 on a credit card and FedEx the information to a Canadian address. “We were very hesitant to do that, but he kept assuring us that all of our credit cards would be paid off the next morning,” Dave explained.
When Jane called the bank the following morning, all of their credit cards—including the one with the cash advance—had zero balances. “Up to that point, we were quite concerned about what we were doing, but the zero balances on our cards convinced us that everything would be okay,” Jane recalls. So they didn’t hesitate to make another credit card advance of $8,300 to cover the difference of a money exchange between Canada and the United States.
Then the Richards waited. “We were told that Publishers Clearing House would come to our house the next Monday with our winnings,” Jane recalls. No one came to their house with prizes. They soon realized they were victims of sweepstakes scammers. Scammers work very hard to convince people that they have won a prize. One of their tactics is to disguise themselves as legitimate companies that really do offer huge prizes, such as Publishers Clearing House. While Publishers Clearing House sweepstakes are legitimate, there are also many scams that use the company’s name. While scammers usually notify potential victims of their prizes by bulk mail letters, telephone calls, and Facebook notices, all legitimate Publishers Clearing House prizes of $500 or greater are awarded by either certified or express letter or in person by Publisher’s Clearing House’s famous “Prize Patrol.”
In the Richards’ case, while their credit card balances were initially reduced to zero, the scammers were able to add the balances back to the cards because they wrote bad checks to clear those balances. When those checks bounced, the balances returned. “This experience cost us $22,000—all of our savings—to clear up our credit cards,” says Jane. She adds that the FBI and local police could not help because the fraud took place in Canada. The credit card company couldn’t help either because the Richards willingly sought the cash advances.
“If you have to pay in order to receive a ‘prize,’ it’s a scam,” says Jane. While the Richards thought that paying for an insurance policy meant they were securing their prize, in reality, scammers extorted money in exchange for a promise of a prize that never materialized. Scammers inform their ‘marks,’ (people they are trying to dupe), that they have won a lottery or sweepstakes of some kind and need to make some sort of payment to unlock the supposed prize. Often, seniors will be sent a check to deposit in their bank account (or to pay their credit card balances off, as the Richards did). While it shows up in their account immediately, it will take a few days before the (fake) check is rejected.
A legitimate winner doesn’t have to pay to receive a sweepstakes prize. To find out whether a Publishers Clearing House win notice is legitimate, it’s possible to use the customer service contact information on the Publishers Clearing House website, www.pch.com. There is a contact number reserved just for sweepstakes inquiries: 1-800-392-4190. There is also a customer service link with additional contact information.
Financial scams targeting seniors have become so prevalent that they’re now considered “the crime of the 21st century.” This is because seniors are thought to have a significant amount of money sitting in their bank accounts. Besides sweepstakes scams, other popular types of scams against seniors exist. The following information was taken from an article published by the National Council on Aging. [1]
1. Health Care/Medicare/Health Insurance Fraud
In these types of scams, perpetrators may pose as a Medicare representative to get older people to give them their personal information, or they will provide bogus services for elderly people at makeshift mobile clinics and then use the personal information they provide to bill Medicare and pocket the money.
2. Counterfeit Prescription Drugs
Most commonly, counterfeit drug scams operate online, where seniors increasingly go to find better prices on specialized medications. The danger is that besides paying money for a fake medicine that will not help a person’s medical condition, victims may purchase unsafe substances that can inflict even more harm.
3. Funeral & Cemetery Scams
The FBI warns about two types of funeral and cemetery fraud perpetrated on seniors. In one approach, scammers read obituaries and call or attend the funeral service of a complete stranger to take advantage of the grieving widow or widower. Claiming the deceased had an outstanding debt, scammers try to extort money from relatives to settle the fake debts. Another tactic of disreputable funeral homes is to capitalize on family members’ unfamiliarity with the considerable cost of funeral services by adding unnecessary charges to the bill. In one common scam of this type, funeral directors will insist that a casket, usually one of the most expensive parts of funeral services, is necessary even when performing a direct cremation, which can be accomplished with a cardboard casket rather than an expensive display or burial casket.
4. Fraudulent Anti-Aging Products
Many older Americans seek out new treatments and medications to maintain a youthful appearance, putting them at risk of scammers. Whether it’s fake Botox or bogus homeopathic remedies that do absolutely nothing, there is money in the anti-aging business. Botox scams are particularly unsettling, as renegade labs creating versions of the real thing may still be working with the root ingredient, botulism neurotoxin, which is one of the most toxic substances known to science. A bad batch of fake Botox can have health consequences far beyond wrinkles or drooping neck muscles.
5. Telemarketing
Perhaps the most common scheme is using fake telemarketing calls to prey on older people, who as a group make twice as many purchases over the phone than the national average. With no face-to-face interaction and no paper trail, these scams are incredibly hard to trace. Also, once a successful deal has been made, the buyer’s name is then shared with similar schemers looking for easy targets, sometimes defrauding them multiple times.
6. Internet Fraud
The internet can be a hazardous place for an unwary senior. Email messages may appear to be from a legitimate company or institution, asking seniors to “update” or “verify” their personal information. Other emails may appear to be from the IRS about a tax refund. In another scam, software fools victims into either downloading a fake anti-virus program (at a substantial cost) or an actual virus that will open up whatever information is on the user’s computer to scammers.
7. Investment Schemes
Because many seniors find themselves planning for retirement and managing their savings once they finish working, a number of investment schemes are targeted at seniors looking to safeguard their cash for their later years. From pyramid schemes to fables of a Nigerian prince looking for a partner to claim inheritance money to complex financial products that many economists don’t even understand, investment schemes have long been a successful way to take advantage of older people.
8. Homeowner/Reverse Mortgage Scams
Scammers like to take advantage of the fact that many people above a certain age own their homes, a valuable asset that increases the potential dollar value of a certain scam. Legitimate reverse mortgages have increased in frequency more than 1,300% between 1999 and 2008, and scammers are taking advantage of this new popularity. As opposed to official refinancing schemes, however, unsecured reverse mortgages can lead property owners to lose their homes when the perpetrators offer money or a free house somewhere else in exchange for the title to the property.
10. The Grandparent Scam
Scammers will place a call to an older person and when the mark picks up, they will say something along the lines of, “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 has established a fake identity without having done a lick of background research. Once “in,” the fake grandchild will usually ask for money to solve some unexpected financial problem (overdue rent, payment for car repairs, etc.), to be paid via Western Union or MoneyGram, which don’t always require identification to collect. At the same time, the scam artist will beg the grandparent “please don’t tell my parents, or they would kill me.”
Scammers are often very skilled and confident. If you are suspicious that someone is trying to scam you or feel that you have already been the victim of a scam, don’t be afraid to report it or seek help. In Utah, call the Utah State Division of Consumer Protection at 801-530-6601.
[1] To read about each of these scams in more detail, visit http://www.ncoa.org/enhance-economic-security/economic-security-Initiative/savvy-saving-seniors/top-10-scams-targeting.html.