Frauds Against the Elderly: Hang Up the Phone, Lock the Door, Bury Your Checkbook!

by Franny Van Nevel

The why's

"The No. 1 thing about fraud and the elderly is they are generally living on fixed incomes and drawing down their assets. The house is doing OK, but they don't know if their money will last as long as they do," says Jean O'Neil, director of research and evaluation at the National Crime Prevention Bureau in Washington, D.C.

This, she adds, is followed second by health problems, either their spouses' or their own, "which makes them see a need for more money than planning ever suggested."

And third, while older folks may be cash poor, they have accumulated lots of assets--homes, antiques, gems--making them very attractive to con artists. "Layer on top of that an interest in making a profit, which is central to how we work in this society," says O'Neil, "and it's not hard to understand how people can get taken." And why even as baby boomers age, they will face the same situations.

"The elderly often are perceived by con artists as more trusting, less aware of their surroundings, and easier to manage because of their age," says Diane Terry, senior director of the Fraud Victim Assistance Department at TransUnion, one of the country's top credit reporting agencies. If older consumers are victims of fraud, they often don't report it. "They're terrified that their children or other family members will deem them incompetent and try to take over their assets. Every one of us knows we don't want to lose that freedom; we want to be independent," says O'Neil.

The who

While it's easy to picture a shady operator preying on anonymous victims, too often the elderly know the person who's lifting their savings. Older consumers face more medical issues and may visit more doctors, medical facilities, or have the need for in-home care, says Terry. When people are admitted to a facility or sign up with a physician, they give out all the information that they'd put on a credit application. This makes it tempting for an unscrupulous employee, a caregiver or housekeeper, or even a relative to either steal the information or steal directly from the person.

What to watch out for:

Identity theft

In September 2003 the Federal Trade Commission (FTC) released a survey stating that 27.3 million Americans have been victims of identity theft over the past five years, 9.9 million people in the past year alone. An earlier FTC report indicated that 10% of identity theft victims are age 60 or older. Identity thieves use the information to open new accounts, misuse checking or saving accounts, rent housing, obtain medical care or employment, or obtain government records such as tax returns. Some thieves even use stolen identities when being charged with crimes.

The FTC offers these tips to protect yourself and elderly relatives:

• Don't give out personal information on the phone, through the mail, or over the Internet unless you've initiated the contact or are sure you know whom you're dealing with.
• Guard your mail and trash from theft. Deposit outgoing mail in post office collection boxes or at your local post office instead of in an unsecured mailbox. Remove mail from your mailbox promptly.
• Tear or shred your charge receipts, copies of credit applications or offers, insurance forms, physician statements, checking and savings statements, and expired charge cards.
• Before revealing any identifying information (for example, on an application), ask how it will be used and secured, and whether it will be shared with others.
• Keep your Social Security card in a secure place and give your SSN only when absolutely necessary.
• Limit the identification information and the number of credit and debit cards that you carry.

• Keep your purse or wallet in a safe place at work and at home.

Telemarketing schemes

"People who don't know about consumer rights, frauds, and scams are more likely to wind up being victimized," says O'Neil. "The one thing that absolutely makes you a target is being caught the first time--these companies share and sell names." For protection:

• Learn how to say NO. Ask that information be sent by mail to give you time to check it out.

• Appoint a friend or relative as your "financial adviser" and tell callers you have to run any opportunities by your adviser before signing up.

• Be wary of prizes that require you to pay any fee to claim, or any pressure to act now or the offer will expire.

• Put your name on the national do-not-call registry.

Insurance scams

• Discount plans--Seniors think they're buying discounted insurance, but they're really getting membership in a buyer's club, which offers them the names of doctors who may or may not offer discounted services. Seniors end up paying for phantom discounts, or discounts may be offset by administrative fees buried in the fine print. Quiggle says these plans represent a "regulatory black hole for consumers" because states are confused about who is supposed to regulate these plans and who is supposed to protect plan users
  Consumers lose more than $40 billion a year to telemarketing fraud.
• Fake health plans--These are marketed as health insurance, says Quiggle, but don't exist at all. "You're buying worthless paper." He says these policies tend to be marketed toward working Americans in their 60s and 70s. Quiggle says health insurance agents usually are the sellers of these plans, which are marketed in seminars, over the phone, via the Internet, through direct mail, and by personal referrals. Companies "tend to pay smaller claims up front to buy time to market more plans and keep up their income stream," says Quiggle. But, he adds, the buck stops cold when large claims for cancer, surgeries, and other expensive medical treatments start coming in. "Hundreds of thousands of working Americans have been scammed out of well over $100 million for stolen premiums and unpaid medical bills, which they then have to pay out of their own pockets," says Quiggle. Since these aren't legitimate plans to begin with, there is no protection offered by the state insurance commissioner's office once things go south.

Protect yourself

Vigilance is key when trying to avoid getting taken, and older consumers have to be especially careful. Robert Allen Kosbie, CPA, and owner of Financial Growth Systems Network, in San Diego, has this advice:

• Require a second signature (trusted child or adviser) on checks for more than a certain dollar amount.
• Have credit union/bank and investment statements sent to a trusted individual (child or CPA) for review and reconciliation.
• Practice saying "no."
• Practice higher authority. Tell sellers you need a trustee's approval or you need to confer with your spouse or child.

  Ramon Machado, CPA and certified fraud examiner at Deloitte & Touche, LLP in Los Angeles says, to avoid being taken, get all offers in writing, check out the seller through such organizations as the Better Business Bureau, find out how they got your name, don't be pressured, and finally, if it sounds too good to be true, RUN.

  Top three credit reporting agencies

  Equifax--To report fraud, call 800-525-6285, or write to P.O. Box 740241, Atlanta, GA 30374-0241
  Experian--To report fraud, call 888-EXPERIAN (397-3742), or write to P.O. Box 9532, Allen, TX 75013
  TransUnion--To report fraud, call 800-680-7289, or write to Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790

  Useful resources

  Federal Trade Commission's (FTC) Aging Parents and Adult Children Together (A/PACT)
  

  FTC's Helping Older Consumers Avoid Charity Fraud
  

  Internet Fraud Tips From the National Consumers League's Internet Fraud Watch
  

  Coalition Against Insurance Fraud
  

  Published January 26, 2005