Financially savvy seniors are most likely to be victims in investment scam

By Ken Little

Internet and telemarketing scams spawned by the recession economy pose a special threat for seniors.

“We’re not seeing a rash or increase of older people being victimized, but generally, seniors are more likely to be targeted in these scams,” said Luci deHaan, an AARP specialist in financial fraud.

Law enforcement agencies try to keep abreast of fraudulent e-mail offers or telemarketing pitches that may sound enticing, but are geared toward ripping off the consumer. The FBI says these schemes can take many forms, including financial investments, funerals and cemetery plots, travel deals or bogus “anti-aging” products.

Common sense on the part of the consumer is the first line of defense, said Rochester Police Department spokesman Sgt. Gary Moxley.

“When in doubt, hang up. Do not allow the scam artist to speak longer than necessary,” Moxley said.

Criminals tend to follow the money. That rule holds true for con artists seeking victims on the Internet or through phone calls, deHaan said.

“What we really find is the people who are more financially secure are the people being targeted by scam artists,” she said.

Some scams center around persuading people to access their life savings for quick returns on shady investments. Many seniors are drawing on money for everyday spending they should be saving for use later in life.

“What we’re seeing is some people who are starting to take money out of 401ks and IRAs and stop saving, deHaan said. “What we’re advising now is not to make rash decisions and have a plan in place and consult with financial advisors qualified to help manage your finances.” Get-rich-quick schemes rarely work, she adds.

deHaan said seniors should be wary in general of Internet solicitations, known as “phishing.” Some scams take the form of a communication from a supposedly legitimate financial institution requesting personal information so records can be updated. The same con can be done over the phone.

“It’s just a way to get their personal information,” deHaan said. “The first time you receive [contacts] like that, contact your bank first.”

deHaan advised seniors to be wary of the “free lunch” seminars often advertised in newspapers and other media that lure individuals and couples into situations where they are pressured to participate in questionable investment plans.

“That’s probably another area where people need to be careful to ask questions of a financial professional,” deHaan said. “They invite you there because they want you to buy their product. They’re pitched as a very soft-sell and when you have your lunch, it becomes a very hard-sell.

“They key is not to make any commitments when you are there,” she said.

Spokesperson Moxley said current scams reported to Rochester police include debt consolidation offers, lottery-sweepstakes pitches, magazine offers and other pitches that arrive via post card.

“Shred those,” he said.

Moxley offered some common-sense tips to avoid being ripped off by scam artists.

Never give out personal information such as a Social Security number, date of birth or bank account number.

“If someone asks you to call them back, check and see where the area code you are calling is located,” he said.

Area code 876 is in Jamaica, where many scam calls originate, Moxley said.

Another popular scam involves a call from a young person either claiming to be a grandchild who needs money, or from another person who claims to know the grandchild and is calling on their behalf for money.

Be diligent with all bank accounts, Moxley added.

“Check your accounts weekly to make sure they are accurate and no money is missing,” he said. deHaan offered this advice: “The old saying is if it looks too good to be true, it probably is. There is no such thing as a free lunch and there is no such thing as a free dinner,” she said.

The FBI says older Americans are more likely to have a nest-egg, own their own home or have excellent credit, all potential sources of money a thief will try and tap into. Those who perpetrate fraud focus their efforts “on the segment of the population most likely to be in a financial position to buy something,” according to the agency.

As seniors plan for retirement, they can fall victim to investment scams. Some of the more common ones cited by the FBI include advance fee schemes, pyramid schemes and Nigerian letter fraud schemes.

“People need to rid themselves of this notion of who the quintessential victim is for an investment scam. It’s often not the person living alone,” deHaan said. “It’s normally somebody who is financially savvy and considers themselves knowledgeable about their financial affairs.”

People brought up in the 1930s, ‘40s and ‘50s “were generally raised to be polite and trusting,” qualities that can work against them in some situations, the FBI says.

“The con man will exploit these traits knowing that it is difficult or impossible for these individuals to just say ‘no’ or hang up the phone,” according to the agency.

Telemarketing scam artists often target those age 60 and over by trying to sell them bogus products or services by phone. Older women living alone are often singled out, according to the FBI. Telemarketing scams often involve offers of prizes, low-cost vitamins and health care products and travel offers.
Warning signs include promises of “free” or “low-cost” vacations or get-rich-quick offers. Many scam artists try to pressure the person on the other end of the line to act immediately, send money or provide a bank account number in order to receive a gift, vacation or prize.

It’s difficult to get a refund if you are cheated over the phone. The FBI offers the following tips to avoid being a victim of telemarketing fraud:
• Don’t buy from an unfamiliar company. Legitimate businesses understand a person may want more information about their company and will readily comply.
• Always ask for written material and wait until it is received before acting on any offer or charity solicitation. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. Not everything in writing is true.
• Always check out unfamiliar companies with your local consumer protection agency, the Better Business Bureau, state Attorney General, the National Fraud Information Center or other watchdog groups.
• Obtain a salesperson’s name, business identity, telephone number, street address, mailing address and business license number before making a transaction. Verify the accuracy of the information.
• Before giving money to a charity or making an investment, find out what percentage of the money is paid in commissions and what percentage actually goes to the charity or investment.
• Always take your time making a decision. Legitimate companies won’t pressure you to make a snap decision.
• Never send money or give out personal information such as credit card numbers and expiration dates, bank account numbers, birth date or social security numbers to unfamiliar companies or unknown persons.

Many people, particularly senior citizens, are reluctant to report they have been the victim of a fraud scheme.

“Very often, they are not reported,” deHaan says.

Other scams that target seniors identified by the FBI fall into the category of health insurance fraud.

Included on the list is medical equipment fraud, Medicare fraud, services that are billed but not performed and “rolling lab” schemes that involve unnecessary and sometime fake tests given to individuals at health clubs, retirement homes or shopping malls and billed to insurance companies or Medicare.

The FBI offers the following tips to avoid health insurance fraud:
• Never sign blank insurance claim forms.
• Never give blank authorization to a medical provider to bill for services rendered.
• Ask medical providers what they will charge and what you will be expected to pay out-of-pocket.
• Carefully review your insurer’s explanation of the benefits statement. Call your insurer and provider if you have questions.
• Do not do business with door-to-door or telephone salespeople who tell you that services or medical equipment are free.
• Give your insurance/Medicare identification only to those who have provided you with medical services.
• Keep accurate records of all health care appointments.
• Know if your physician ordered equipment for you.
The FBI also advises seniors to be on guard against counterfeit prescription drugs. It asks consumers to:
• Be mindful of appearance and closely examine the packaging and lot numbers of prescription drugs. Be alert of any changes from one prescription to the next.
• Consult your pharmacist or physician if your prescription drug looks suspicious.
• Alert your pharmacist and physician immediately if you medication causes adverse side effects or if your condition does not improve.
• Use caution when purchasing drugs on the Internet. Do not purchase medications from unlicensed online distributors or those who sell medications without a prescription, Reputable online pharmacies will have a seal of approval called the Verified Internet Pharmacy Practice Site (VIPPS), provided by the Association of Boards of Pharmacy in the U.S.

The bottom line in avoiding becoming a scam victim is to remain vigilant, deHaan said.

“We’re advising people not to make rash decisions and if they are very worried [about personal finances] put together a plan and contact an expert. Get informed, learn about your portfolio and don’t be afraid to ask for help,” she said.