GPSOLO July - August 2008
Scams That Target the Elderly
A few months ago I received a call from a friend at my church who was concerned that her elderly mother, Helen (not her real name), may have become the victim of a fraudulent telemarketer. She said that a home improvement handyman called Helen offering to clean her gutters at a discount rate because he was already working in the neighborhood. Although Helen had not planned to have her gutters cleaned until the fall, she could not pass up a “discount.” Once the handyman began the work he claimed that one section of her gutter was loose and needed repairs to prevent leaking. Helen was thankful that he caught the problem even though she hadn’t noticed any leak. Owing to her severe arthritis, Helen could never have climbed a ladder to view the damage for herself.
As Helen wrote a check to pay the handyman, she mentioned that the handrail on the stairs to her front porch was loose. The handyman smiled and said he would be happy to help check it out for her. He took a quick look and informed Helen that the handrail had rotted through and the support beams under the porch also would have to be replaced immediately to prevent the porch from collapsing on an unsuspecting visitor. He asked for a deposit to purchase materials, but Helen, to her credit, said she would have to talk it over with her daughter. That evening, after Helen’s daughter arrived home from work, she took the ladder out of the garage and climbed up to survey the handyman’s work. The gutters had not been cleaned, nor was there any sign of repairs to any section of the gutters, and the porch was sound. The handyman was part of a home improve scam ring whose leader, his uncle, was serving a prison sentence for defrauding home owners out of thousands of dollars for shoddy repair work or in most cases no work at all. This scenario is replayed daily throughout the nation.
I regularly get calls from lawyers trying to help clients, and all too often, their own parents or relatives. Americans are getting older faster than ever and facing the challenges that come with aging. As a nation, people over age 65 account for approximately 13 percent of the population but represent 30 percent of scam victims. This article will address three of the major scams that target the elderly: telemarketing fraud, charity fraud, and home improvement fraud.
Telemarketing fraud costs victims more than $40 billion a year; much of that money comes from seniors. Scam artists target seniors because they are often more willing to continue a conversation—they may live alone, may have free time to talk, may be less likely to hang up the phone because they see that as rude, may have memory impairment, or may be more trusting. Today the traditional scams discussed below may evolve into identity theft once the scammer obtains credit card or bank account information. Common telemarketing fraud schemes directed at seniors include the following:
Prizes and sweepstakes. These frauds generally involve informing the victim that he or she could win, or has already won, a “valuable” prize or a lot of money. The victim is required to send in money to cover taxes, shipping, or processing fees. The prize may never be delivered or, if so, is usually costume jewelry or cheap electronic equipment worth far less than the money paid to retrieve it. Be suspicious of any sweepstakes solicitation that asks you to send money to cover shipping and handling costs or to provide a credit card number as a condition of receiving your prize. Many states prohibit claims that you are a winner unless you have actually won a prize; requirements that you buy something to enter the contest or to receive future sweepstakes mailings; the mailing of fake checks that do not clearly state that they are non-negotiable and have no cash value; and use of seals, names, or terms that imply government affiliation or endorsement.
Remind your clients and their family members of the following:
• Sweepstakes are free.
• Buying merchandise will not improve your chances of winning.
• Before you get excited about having won the sweepstakes, read the entire solicitation. If your prize notice tells you that you are a “guaranteed winner,” there is usually a qualifying statement indicating that you are only the “winner” if you have and return the winning number.
• Bona fide contests clearly disclose the terms, rules, entry procedures, and odds of winning.
Investments. Because many seniors live on fixed incomes, they often want to increase the value of their estate and ensure they have sufficient funds to meet basic needs. In investment scams, offenders persuade the elderly to invest in precious gems, real estate, annuities, or stocks and bonds by promising unrealistically high rates of return. The investments often consist of fake gemstones, uninhabitable property, or shares in a non-existent or unprofitable company. Three out of four people over 65 years of age receive at least 25 percent of their income from investments. Securities, such as stocks, mutual funds, and other investments are sometimes higher-yielding—and also higher risk. Unfortunately, that has made many senior citizens vulnerable to con men and fast-talking brokers who are eager to deprive investors of their life savings. In order to protect your clients and their savings, tell them to follow the tips below before investing:
• Be wary of unsolicited phone calls and letters.
• Always demand written information—and read it carefully.
• Be suspicious of “insider information,” “hot tips,” or “rumors.”
• Never be afraid to ask questions or tell someone that you don’t understand.
• Don’t give in to high-pressure sales tactics.
• Don’t believe promises of doubling or tripling your money in a short time.
• Deal only with established brokers.
• Read the fine print on contracts and prospectuses.
• When in doubt about an investment, don’t make a commitment before you feel comfortable. It’s better to lose an “opportunity” than to act hastily and lose the money you have worked so hard to save.
Health, funeral, and life insurance. Many seniors are concerned about having the funds to pay for needed medical care or a proper burial or to bequeath to loved ones upon death. Unscrupulous salespeople take advantage of these concerns by selling the elderly policies that duplicate existing coverage, do not provide the coverage promised, or are altogether bogus.
Health remedies. The elderly often have health problems that require treatment. Preying on this vulnerability, offenders market a number of ineffective remedies, promising “miracle cures.” Unfortunately, given this false hope, many seniors delay needed treatment, and their health deteriorates further.
Travel. Compared with younger adults, seniors often have more leisure time and are attracted to low-cost travel packages. However, many of these packages cost far more than market rates, provide substandard accommodations, or do not provide the promised services.
Confidence games. These frauds generally do not involve a product or service; instead, they include a broad array of deceitful scenarios to get cash from the elderly. The offender may pretend to be in a position of authority (e.g., a bank examiner) or otherwise trustworthy, concocting a story to get the victim to hand over cash and then disappearing. For example, a scam that has become popular on the Internet is the “lottery proceeds” scam, in which scammers claim to have won the lottery but to have no bank account in which to deposit the winnings. The offender promises the victim a premium in exchange for use of his or her account. After the victim makes a “good faith” payment to the offender, the victim never hears from the offender again.
Final tips. Below are some additional tips to help your clients and relatives avoid telemarketing scams.
• Never disclose your credit card, bank account, or Social Security numbers to someone who contacts you by telephone or Internet.
• Ask detailed questions about the offered product/service, the total price, the delivery date, the return and cancellation policy, and the warranty terms.
• Ask the caller to send you more information through the mail. Any reputable company will mail information about its products or services. If a telemarketer is unwilling to provide you with specifics on the phone or through the mail, be suspicious.
• Research the company’s track record with your local Better Business Bureau.
• Resist pressure to send payment via private courier, wire transmission, or overnight delivery—these tactics sometimes prevent you from changing your mind.
• Pay with a credit card. Federal law protects consumers from paying for charges on their accounts when they have not received the ordered merchandise. You have the right to contest such a charge with your credit card company.
• Call 1-888-5OPT-OUT to have your name removed from consumer lists provided to telemarketers by credit reporting agencies.
• Take your time in making decisions. Remember, they called you. Don’t be afraid to say no or hang up.
An “Easy Hang Up” device can used to help seniors end calls without fearing they are being rude or abrupt. Once the senior decides the call is unwanted, he or she presses an activation button, and a short recorded message is played, such as “I’m sorry, this number does not accept this type of call. Please regard this as your notification to remove this number from your list. Thank you.” The call is then disconnected. You may want to recommend this device to particularly vulnerable clients. These items are available online and retail for about $16 to $60.
Americans donate billions to charity each year, and older Americans are especially generous. Most charities are honest, but some employ dubious solicitation tactics. Advise your clients to follow the suggestions below before donating money to a charity online, by mail, by telephone, or in person:
• Be alert to groups using names that closely resemble those of well-known charities.
• If you do not recognize the charity, it could be a fraud. A legitimate charity welcomes background checks on its operations. Verify the organization by asking for its exact name and phone number, especially if donating online.
• Find out the planned uses for the money to be donated. Will proceeds directly benefit those in need? What portion of the contribution will go toward the charitable purpose and what portion will be spent on fundraising and administrative costs?
• Be wary of appeals that are long on emotion and short on descriptions about providing help to those in need.
• Don’t succumb to high-pressure tactics and demands for an immediate decision.
• Before making a donation online, look at the organization’s URL in the browser window. If the domain name of the URL is hidden, is unfamiliar, or is not the same as the link’s text, the request may be a scam.
• Never give credit card or Social Security numbers to a telephone solicitor.
• Do not give cash. Write a check in the name of the charity, not the individual fundraiser, and get a receipt.
• Check with your state Attorney General’s Charities Bureau to determine whether the organization is registered.
Home Improvement Scams
As I described in the introduction, home improvement scams are quite frequently targeted at seniors. The U.S. Department of Health and Human Services estimates that 60 percent of older persons live in homes more than 20 years old. As housing stocks age, so do their owners. In addition to repairs, these homes may require grab bars or ramps to provide accessibility. Each year, home improvement contracting fraud ranks among the top five most common complaints received by the New York Attorney General’s Office. The complaints involve, among other things, shoddy workmanship, deceptive pricing, and failure to honor warranties or make refunds.
To guard against home improvement scams, you may wish to recommend the following advice to your clients and family and friends:
• Watch for contractors who come to your home unsolicited claiming that your home needs expensive repair work for damage that you never noticed. Common approaches involve work on your chimney or driveway. These contractors often offer a special “deal” because they have material left over from another job in your neighborhood.
• Never agree to have work done on the spot. Determine what you want done and seek qualified contractors.
• Get at least two written estimates from reputable contractors that include specific information about the materials and services provided for the job.
• Check references by contacting the Better Business Bureau, local licensing authorities, previous customers, banks, and suppliers.
• Do not pay the full amount up front or other unreasonable advance sums. Negotiate a payment schedule tied to the completion of the job and pay by check. Do not pay with cash.
• Get any promises in writing and make sure the project is thoroughly described in your contract. If you can, ask a lawyer to review the terms of the written contract before you sign.
• Don’t be bullied or pressured. Call the police and get a license plate number if a door-to-door contractor won’t take “no” for an answer.
Seniors who are isolated and have little contact with family, friends, caseworkers, and other concerned parties may be at increased risk of being victimized by fraudulent businesses. Decreasing this isolation through police welfare checks, neighborhood watches, and in-person outreach efforts can help to ensure that elders are aware of available resources they can turn to with questions and concerns about potential scammers. Further, ongoing contact with family members can provide the means to monitor an elder’s financial matters. Lawyers can play an important role in educating seniors about how to better protect themselves from fraud.
Benjamin Bruce works as an assistant attorney general in the Rochester, New York, office of New York State Attorney General Andrew M. Cuomo, where he handles a variety of consumer fraud and public advocacy matters. He may be reached at email@example.com.