Thursday, August 25, 2011
Friday, August 19, 2011
Fraud Against the Elderly: When the Golden Years are Tarnished By Laura Telford
As the Baby Boomer generation enters retirement, more attention is being paid to fraud committed against senior citizens and the elderly. These groups have long been targeted by fraudsters, but as more victims come forward, more light can be shed on these crimes.
There are many different schemes that can be perpetrated against seniors:
Financial Fraud Against the Elderly
As older adults approach retirement, they might be looking to pad their nest eggs as much as they can. Also, many retirees own their homes outright or have inherited money from other family members who have passed away. Because of these factors, seniors may be the target of advance-fee swindles, Nigerian fraud schemes and pyramid schemes.
Financial fraud is also perpetrated against the elderly by family members or caregivers. The scheme may be as simple as stealing cash from the victim's home, or fraudsters may run far more complex scams, like weaseling their way into a senior's will or living trust.
Contractor Fraud
A contractor might troll neighborhoods looking for homes owned by elderly individuals. Posing as a helpful handyman, the fraudster tells the homeowner he was just passing by and happened to notice that some part of the home -- such as the roof or chimney -- is in danger of falling apart. The contractor offers to fix the “problem” for a modest fee -- even though there was nothing wrong with the home to begin with.
Seniors may appreciate the helpful nature of the visit, and believe the fraudster is truly trying to help. In this scheme the victim may never know he has been defrauded.
Telemarketing Fraud
According to the National Consumer League's National Fraud Information Center, nearly one-third of all telemarketing fraud victims are age 60 or older. There have been many theories as to why the elderly are targeted, but contrary to popular belief, it is not because older victims are lonely, isolated or incompetent. In fact, most seniors who are victims of fraud lead healthy, vibrant lives and are just dazzled by the lure of prize money or too-good-to-be-true opportunities.
Fraudsters often take advantage of the fact that older people tend to be more trusting of strangers and more reluctant to just hang up on a caller. In addition, fraudulent telemarketers know that it's often difficult to tell if a salesperson is legitimate. Seniors are often targeted relentlessly, sometimes receiving as many as 20 calls a day from scammers.
Medicare Prescription Fraud
In 2006, Medicare began offering coverage for prescription drugs, which provided yet one more way for fraudsters to run a scheme. There are several reasons the Medicare drug coverage program is targeted by fraudsters, not the least of which is that the plans are confusing. Fraudsters use this confusion to pressure seniors into purchasing fraudulent drug coverage plans. They might offer bonuses and prizes for signing up, or offer drug coverage for such a low price that it is difficult for an elderly person, surviving solely on Social Security payments, to resist. Another scheme involves offering a legitimate-sounding deal, but requiring payment upfront -- and a credit card number over the phone.
Fraudulent Medicare peddlers may also attempt a door-to-door sales tactic, incorrectly believing that all seniors are lonely and unlikely to shut the door in someone's face. The fact of the matter is that it is illegal to sell Medicare plans door-to-door, though many seniors aren't aware of such legalities.
Fraudulent medical providers may also scam Medicare by billing for services never performed, or by billing for the same thing twice. Medical suppliers may submit reimbursement claims to Medicare for equipment that was never ordered by the victim.
Reverse Mortgage Scams
A legitimate reverse mortgage allows borrowers, who are at least 62 years of age, to convert the equity in their homes into a line of credit or monthly income. In many reverse mortgage scams, seniors are offered free homes, investment opportunities and foreclosure or refinance assistance; they may also be used as straw buyers in property flipping scams.
In a fraudulent reverse mortgage scheme, the perpetrator will identify a foreclosed, distressed or abandoned property using information obtained from county deed records. The fraudster will purchase the property using a straw buyer -- who commits occupancy fraud by stating they will be using the property as their primary residence. The fraudster then recruits a senior to purchase the property from the straw buyers by transferring the property deed to the senior with no exchange of money. After the senior has occupied the property for at least 60 days, the fraudster arranges for the senior to obtain a reverse mortgage and -- with the aid of a fraudulently inflated appraisal -- encourages them to request lump sum disbursements of the equity. The fraudster, often in collusion with the settlement attorney, absconds with all of the equity at closing.
Red Flags of Elder Fraud
Relatives, friends, neighbors, and others can help fight elder fraud by watching their elderly loved ones for signs of potential victimization. For example, an elderly victim might:
There are many different schemes that can be perpetrated against seniors:
Financial Fraud Against the Elderly
As older adults approach retirement, they might be looking to pad their nest eggs as much as they can. Also, many retirees own their homes outright or have inherited money from other family members who have passed away. Because of these factors, seniors may be the target of advance-fee swindles, Nigerian fraud schemes and pyramid schemes.
Financial fraud is also perpetrated against the elderly by family members or caregivers. The scheme may be as simple as stealing cash from the victim's home, or fraudsters may run far more complex scams, like weaseling their way into a senior's will or living trust.
Contractor Fraud
A contractor might troll neighborhoods looking for homes owned by elderly individuals. Posing as a helpful handyman, the fraudster tells the homeowner he was just passing by and happened to notice that some part of the home -- such as the roof or chimney -- is in danger of falling apart. The contractor offers to fix the “problem” for a modest fee -- even though there was nothing wrong with the home to begin with.
Seniors may appreciate the helpful nature of the visit, and believe the fraudster is truly trying to help. In this scheme the victim may never know he has been defrauded.
Telemarketing Fraud
According to the National Consumer League's National Fraud Information Center, nearly one-third of all telemarketing fraud victims are age 60 or older. There have been many theories as to why the elderly are targeted, but contrary to popular belief, it is not because older victims are lonely, isolated or incompetent. In fact, most seniors who are victims of fraud lead healthy, vibrant lives and are just dazzled by the lure of prize money or too-good-to-be-true opportunities.
Fraudsters often take advantage of the fact that older people tend to be more trusting of strangers and more reluctant to just hang up on a caller. In addition, fraudulent telemarketers know that it's often difficult to tell if a salesperson is legitimate. Seniors are often targeted relentlessly, sometimes receiving as many as 20 calls a day from scammers.
Medicare Prescription Fraud
In 2006, Medicare began offering coverage for prescription drugs, which provided yet one more way for fraudsters to run a scheme. There are several reasons the Medicare drug coverage program is targeted by fraudsters, not the least of which is that the plans are confusing. Fraudsters use this confusion to pressure seniors into purchasing fraudulent drug coverage plans. They might offer bonuses and prizes for signing up, or offer drug coverage for such a low price that it is difficult for an elderly person, surviving solely on Social Security payments, to resist. Another scheme involves offering a legitimate-sounding deal, but requiring payment upfront -- and a credit card number over the phone.
Fraudulent Medicare peddlers may also attempt a door-to-door sales tactic, incorrectly believing that all seniors are lonely and unlikely to shut the door in someone's face. The fact of the matter is that it is illegal to sell Medicare plans door-to-door, though many seniors aren't aware of such legalities.
Fraudulent medical providers may also scam Medicare by billing for services never performed, or by billing for the same thing twice. Medical suppliers may submit reimbursement claims to Medicare for equipment that was never ordered by the victim.
Reverse Mortgage Scams
A legitimate reverse mortgage allows borrowers, who are at least 62 years of age, to convert the equity in their homes into a line of credit or monthly income. In many reverse mortgage scams, seniors are offered free homes, investment opportunities and foreclosure or refinance assistance; they may also be used as straw buyers in property flipping scams.
In a fraudulent reverse mortgage scheme, the perpetrator will identify a foreclosed, distressed or abandoned property using information obtained from county deed records. The fraudster will purchase the property using a straw buyer -- who commits occupancy fraud by stating they will be using the property as their primary residence. The fraudster then recruits a senior to purchase the property from the straw buyers by transferring the property deed to the senior with no exchange of money. After the senior has occupied the property for at least 60 days, the fraudster arranges for the senior to obtain a reverse mortgage and -- with the aid of a fraudulently inflated appraisal -- encourages them to request lump sum disbursements of the equity. The fraudster, often in collusion with the settlement attorney, absconds with all of the equity at closing.
Red Flags of Elder Fraud
Relatives, friends, neighbors, and others can help fight elder fraud by watching their elderly loved ones for signs of potential victimization. For example, an elderly victim might:
- Receive lots of mail for contests, prizes or sweepstakes from foreign countries.
- Receive frequent phone calls from strangers offering great deals or asking for donations.
- Make repeated or large payments to companies in other states or countries.
- Have difficulty buying groceries and paying utility and other bills.
- Get calls from organizations offering to recover, for a fee, money lost to fraudulent telemarketers.
- Make frequent large bank withdrawals, including daily maximum currency withdrawals from an ATM.
- Have a caregiver or other individual who shows excessive interest in the elderly person's finances or assets, does not allow the elderly person to speak for himself or is reluctant to leave the elderly person's side during conversations.
- Show an unusual degree of fear or submissiveness toward a caregiver, or express a fear of eviction or nursing home placement if money is not given to a caretaker.
- Avoid existing relationships and move toward new associations with other "friends" or strangers.
- Lack knowledge about his financial status, or be suddenly reluctant to discuss financial matters.
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