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Consumer Fraud
1. CONSUMER FRAUD:
Protect Yourself!
Bill Taylor
University of Wyoming
Community Development Area Educator
The University of Wyoming is an 1
equal opportunity/affirmative
action institution.
2. Fraud in Wyoming
Cheyenne residents targeted
Scammer claimed to have known
Ferdinand Marcos and had gold
certificates worth billions
Would receive $1 million for an
application fee of $10,000 as part of
a ‘self liquidating loan’
50 investors lost $1 million
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Development Education
3. Warning signs of fraud
Be suspicious if you hear
You’ve won a prize or free gift
You’ve been selected to receive a special
offer
You must act immediately or lose out
You must pay for shipping your prize or free
gift
Give us your credit card number and
expiration date to verify that you are a credit
cardholder
UW Community 3
Development Education
4. More warning signs of fraud
You’re asked for personal information
You’re asked to donate to an agency
whose name sounds like a well known
charity
You’re one of only a chosen few to
receive this offer
A courier will come to your home to get
your payment
Little risk and large, short term profits
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Development Education
5. Sucker lists
If you often respond to sweepstakes or
contests, your name might be added to
lists sold to con artists
A sucker list contains the names of
people who have been, or are good
candidates to be, victims of fraud
People on the lists may hear from crooks
who claim they can help recover, for a
fee, money lost to a con artist
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Development Education
6. Types of scams
Following are various types of scams
This list is not exhaustive
www.scambusters.org list 227 present
scams, with more added as they appear
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Development Education
7. Phishing
A term used for emails that claim to be
from your bank, a reputable business or
a government agency
Criminals ask for personal information
such as Social Security numbers or
account numbers to steal funds and/or
steal identities
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Development Education
8. Grammar
A phishing email. . .
– preys on fears
– nothing is safe
Spelling
The University of Wyoming is an 8
equal opportunity/affirmative
action institution.
9. Nigerian letters
E-mails that ask recipients to provide
their bank account number to help them
share in a big pot of money
If you respond to these letters you will
lose your money
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Development Education
10. Sweepstakes and lotteries
You’re told that you’ve won a
sweepstakes or the Canadian
lottery
You’re asked to pay for
processing, taxes or delivery, or
provide a bank account number to
verify your identity
No one ever receives a penny
except for the thieves
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Development Education
11. Travel scams
Before buying travel packages
Get the offer in writing
Check to see if the company is
legitimate:
the Better Business Bureau
state attorney general’s office
your local consumer protection agency
the U.S. Dept. of Transportation (DOT) at
202-366-2396
Always use a credit card to purchase
travel
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Development Education
12. Charities
‘Sound-alike’ names can be tricky
Nonprofit and charitable groups
must file IRS Form 990
Check 990s at GuideStar
www.guidestar.org
Before you donate, check to see if
the charity is legitimate
www.charitywatch.org: 773-529-
2300
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Development Education
13. Work-at-home scams
Do not respond—these offers are scams
If you respond, you’ll be asked to pay for
supplies upfront
Might ask you for your credit card, bank
account or Social Security numbers for
fraudulent uses
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Development Education
14. Credit card fraud
Keep an eye on your credit
cards at all times
Unscrupulous employees
might steal the information
from your credit card and use
it to make counterfeit cards
Shred all credit card
statements, receipts and
solicitations before throwing
them away
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Development Education
15. Dumpster diving
Crooks look in garbage cans and
elsewhere for discarded credit card
statements and receipts to obtain the
card numbers
These papers can be used to steal your
identity and set up credit in your name
Shred sensitive papers
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Development Education
16. Real estate fraud
Before purchasing property out of state,
contact a national real estate firm with
licensed brokers
Before you purchase land contact:
The state department of real estate
where the land is located
The U.S. Department of Housing and
Urban Development at 202-708-0502
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Development Education
17. Contractor fraud
Traveling contractors are rarely licensed
or insured and often take a large cash
payment up front
They will probably never return to
complete the work
When you need a contractor for a home
improvement job, get at least 3
estimates from reputable local
contractors
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Development Education
18. Home equity loan fraud
Often working with unscrupulous
lenders, door-to-door salespeople offer
“easy financing” for improvements and
home repairs that may not be needed at
all
Often the work they do is shoddy or
incomplete
The loans they arrange are secured by
your home and often carry very high
interest rates and other costs
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Development Education
19. Refinancing scams
Brokers solicit homeowners to
refinance their existing mortgages
and replace them with bad loans
Bad loans have inflated fees and
interest and high monthly payments
that homeowners cannot afford to
pay
The homeowner falls into default and
the home is foreclosed on
The crooks buy up the real estate at
deflated prices
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Development Education
20. Deed forgeries
Scam artists forge the
homeowner’s signature on a
blank deed in order to transfer
ownership of their property
Never sign blank contract
documents
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Development Education
21. Fly-by-night lenders
Phony lenders
Set up offices in low income and minority
neighborhoods
Get homeowners’ signatures on loan
documents
Disappear with the loan money
Loans may be resold to another lender
who then forecloses on the homes
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Development Education
22. Investment fraud
Everyone would like to see his
or her money grow faster
Crooks try to convince people
to buy phony investments
with promises of unusually
high returns
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23. Analysis of Audio Tapes
Investment fraud criminals use a wide array of influence
tactics. The research found 1,100 separate uses of the
influence tactics in 128 transcripts. The most
frequently-used tactics were:
Phantom Fixation – “These gas wells are
guaranteed to produce $6,800 a month in income.”
Commitment – “You can vote to stop drilling, but if
you do, all the rest of what you have invested will be
lost.”
Authority – “I have been in the oil business for over
30 years and I have seen it all.”
Social Consensus – “I know it’s a lot of additional
money to spend, but I am in this thing just as deep
as you are and I say its worth every dime.”
Scarcity – “There are only two units left in this well.”
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Development Education
24. Avoid investment fraud
Do your homework about investments
If you are targeted with questionable
investment offers, notify the U.S.
Securities and Exchange Commission
(SEC)
Call your state attorney general’s office
to file a complaint
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Development Education
25. Checking investments
Check with the SEC before
investing
Has the offering been cleared for
sale in your state? Call your state
securities department
Check disciplinary actions against
brokers with the Central
Registration Depository (CRD)
The National Association of
Securities Dealers (NASD) may
provide a disciplinary history on
a broker or firm. 800-289-9999
or www.nasd.com
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Development Education
26. Pyramid schemes
Promoters recruit investors and use
them to recruit more investors
Investors are promised a fabulous
return, such as 20% a year
Some investors might receive
money but eventually, the
organizers run off with everything
Pyramid schemes are often called
“investment clubs” or “gifting
circles,” and can involve the sale of
products or distributorships
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Development Education
27. ID theft
ID theft criminals use your personal
information to apply for credit or
government benefits
Your name
Your birth date
Your Social Security number
Your address
Your bank account or credit card
numbers
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Development Education
28. Fake cashier’s checks
Crooks scan want ads looking for victims
Answer ads and offer to pay by “cashier’s
check” for more than the sales price
Ask you to wire the remainder of the
money back to them or to give the extra
money and the merchandise to a
“shipper”
Check turns out to be a fake and you lose
the merchandise and the money
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Development Education
29. Credit card loss protection
Don’t buy the worthless credit
card loss protection and
insurance programs sold by
telemarketers
Your liability for unauthorized
credit card charges is limited
to $50
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Development Education
30. Protect your property and assets
Financial exploitation is often committed by
a person that is trusted by the victim
Keep all important financial documents
under lock and key in your home
Store valuables in a bank safe deposit box
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Development Education
31. Medicare fraud
Medicare prohibits companies offering its
approved drug cards from calling you,
sending emails or coming to your home
unless you ask them
If you are interested in the benefits
available to you as a Medicare
beneficiary, visit the federal
government’s Medicare web site
(www.medicare.gov) or call 800-
MEDICARE (800-633-4227)
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Development Education
32. Health fraud
Signs of health fraud include:
Promoters of cures who claim that the
medical establishment is keeping
information away from consumers
Testimonials from people who
supposedly have been cured
“Secret formulas” that no one else has
The use of infomercials—programs that
look like news, but are just lengthy ads
paid for by the promoter
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Development Education
33. Living trusts
Living trusts are a legitimate estate-
planning tool
Typically, consumers with low income
and small estates do not need them
Consider a living trust only if your
estate’s value is higher than the state’s
minimum limit for probate, which is
$100,000 in Wyoming
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Development Education
34. Funerals and burial scams
While it makes sense to plan your
funeral and burial in advance, it is
not a good idea to pay for these
services in advance
Draw up your plans with a
reputable funeral business and
save a copy for your survivors
If you want cover the cost of your
funeral include funds to do so in
your will
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Development Education
35. Warning signs of fraud
Be suspicious if you hear
You’ve won a prize or free gift
You’ve been selected to receive a special offer
You must act immediately or lose out
You must pay for shipping your prize or free
gift
Give us your credit card number and
expiration date to verify that you are a credit
cardholder
UW Community 35
Development Education
36. More warning signs of fraud
You’re asked for personal information
You’re asked to donate to an agency
whose name sounds like a well known
charity
You’re one of only a chosen few to
receive this offer
A courier will come to your home to get
your payment
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Development Education
37. Protect your assets
Never
reveal your financial information to
someone who calls you on the phone
allow strangers to come into your home
believe that a stranger will use your
money for a good purpose
assign power of attorney to people you
don’t know very well
sign contracts that have any blank lines
in them
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Development Education
38. What is ID theft?
Criminals use your personal information
to apply for credit or government
benefits
Your name
Your birth date
Your Social Security number
Your address
Your bank account or credit card
numbers
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Development Education
39. What can be done with a false ID?
Open credit cards, buy goods
Take out loans
Get cell phones
Open bank accounts
Seek employment
Open credit accounts
Pay bills
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Development Education
40. What is account fraud?
Unauthorized charges, withdrawals or
new accounts
Crooks use:
Identification
Credit card numbers
Social security numbers
Bank account information
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Development Education
41. It pays to prevent ID theft
Victims spend an average of 600 hours
recovering from ID theft often over a
period of years.
It is estimated that every victim of ID
theft spends $1,400 in out-of-pocket
expenses to clear their names
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Development Education
42. Are you already a victim?
Check your credit report
Look for
Accounts you don’t recognize
Inaccurate information
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Development Education
43. Credit reports
Check your credit reports regularly.
Free credit reports can be obtained
once a year from each of the 3 credit
reporting agencies
Equifax
Experian
TransUnion
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Development Education
45. Free credit reports
Annual Credit Report
www.annualcreditreport.com
(877) 322-8228
Annual Credit Report, Request Service,
PO Box 105281, Atlanta, GA 30348-5281
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Development Education
46. Victims - be watchful
Dispute fraudulent accounts immediately
Close all affected accounts
Follow up your phone call with a written request
Get letters stating disputed accounts have
been closed
Create new passwords for all of your
accounts
Avoid easy-to-guess passwords
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Development Education
47. Social Security number (SSN)
Memorize your Social Security number
(SSN)
Don’t carry your Social Security card
Don’t print your SSN on your driver’s
license or bank checks
Keep all papers listing your SSN hidden or
locked away
Shred all documents with SSNs before you
throw them away
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Development Education
48. Financial information
Check bills, bank and credit card
statements
Report any unauthorized transactions
immediately
Track statements, new credit cards or
check orders in the mail
Call the companies immediately if you
notice
Unauthorized transactions
Missing credit cards or checks
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Development Education
49. Cards and account numbers
Shield ATM keypads when entering
passwords
Memorize your PINs
Watch your cards while they are with
sales clerks or waiters
Lock your own mailbox
Use US post boxes for outgoing mail that
contains account numbers
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Development Education
50. Phone and Internet
Don’t answer callers or e-mails asking
for personal information
Remember, you may be overheard on a
cell phone
Always make sure you are dealing
with reputable companies
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51. Marketing
Read your bank’s privacy notice
Stop or ‘opt out’ of pre-screened
credit offers
(888) 5OPT-OUT
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52. Monitor your mail
Missed bills, credit card statements,
etc. may signal trouble
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Development Education
53. Always question …
Charges, bills or collection calls that
are not yours
Complain immediately
Denials of credit when you have good
credit
Get a free copy of the credit report used
to make the decision
Check for mistakes or fraud
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Development Education
54. ID theft clean up
Document the crime
File a police report with your local police
department
Get a copy of the police report
Contact appropriate state and federal law
enforcement agencies
Complete a free ID Theft Affidavit from the
FTC
www.ftc.gov/idtheft
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Development Education
55. Password accounts
Place passwords on your credit card,
bank and phone accounts
Don’t use easy-to-guess names and
numbers
Ask businesses not to use SSN or
mother’s maiden name
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Development Education
56. What can you do: General
1. Do not give your telephone calling
card, credit card, or bank account
numbers to strangers by telephone or
mail unless you initiated the order for
goods or services.
2. Do not be pressured by salespeople
into buying NOW.
3. Do not pay to receive a free gift.
4. Shut the door. Hang up the phone.
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Development Education
57. What can you do: Telemarketers
1. Register with the FTC’s Do-Not-Call
Registry (to cut down on
telemarketers) donotcall.gov or (888)
382-1222.
2. Be very careful about sharing personal
financial information.
3. Be skeptical about unsolicited phone
calls, especially about investments.
Say: "Sorry, I do not do business over the phone."
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Development Education
58. What you can do: Investments
1. Ask for information about the
company, price information, and
written estimates from door-to-door
salespeople before doing business
with them.
2. Examine investments carefully.
3. Exercise caution about can’t miss
deals.
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Development Education
59. What you can do: Contractors
1. Ask the contractor for local references. Find out
if other customers were satisfied with the work.
2. Check with the Better Business Bureau for
complaints against the contractor.
3. Demand to review the contractor's business
license and insurance certificate. Refuse to deal
with anyone who will not provide this
information.
4. Do not pay up-front for home repairs. Divide
payments up to ensure you are not left with an
empty bank account by an unethical contractor.
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Development Education
60. Elder Abuse: Background
Often traced to family
members, caregivers and
trusted friends
Adult Protective Services
(APS) agencies report
more cases of financial
abuse than physical
abuse each year
Only 1 of 14 cases of
domestic vulnerable adult
abuse incidences is
reported
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Development Education
61. Elder Abuse Perpetrator Profiles
1. Adult children, grandchildren, or
other relatives
2. Professional or hired caretakers
3. Friends or others in a position of
trust
4. Professional crime groups that target
elders and dependent adults
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Development Education
62. Caretaker crimes
Be alert for caregivers
who try to isolate you from your friends
and family
who ask about your will and investments
who ask to be given power of attorney
who try to dominate or influence you
Tell family members or call adult protective
services
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Development Education
63. Relative and Caregiver Offenders
Methods of financial exploitation include:
Simply taking the victim’s money
Signing or cashing the person’s pension or social
security checks without permission
Forging a signature to cash checks
Deceiving or coercing the victim into signing
checks, documents (will, contract)
Transferring title on, or re-encumbering, real
property
Improper use of conservatorship, guardianship, or
power of attorney.
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64. Spot the Warning Signs: Behavior
1. Change in the elder's spending patterns,
such as buying items he or she doesn't
need and can't use.
2. Lack of personal amenities, such as
appropriate clothing and grooming items.
3. The appearance of a stranger who begins
a new close relationship and offers to
manage the elder's finances and assets.
4. Parents suddenly become secretive or
defensive about their finances.
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65. Spot the Warning Signs: Banking
1. Numerous unpaid bills when someone else has been
designated to pay the bills.
2. Abrupt or unexplained change in durable power of
attorney
3. Allegations of missing funds from a senior's account
4. Sudden increase in credit card activity or a flurry of
bounced checks
5. Checks written out of their numerical order
6. Financial statements sent to an unauthorized address
7. Signature that seems unusual or suspicious
8. Checks or other documents signed when the elder
cannot write or understand what he or she is signing.
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Development Education
66. Spot the Warning Signs: Other
Junk mail for
contests, free trips,
and sweepstakes
Calls from strangers
offering awards or
moneymaking deals
Cheap items like
costume jewelry or
mini-flashlights
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Development Education
67. Tips to Identifying Family Fraud
1. Monitor your credit card and bank account
activity.
2. Be wary if a distant relative offers to help
you with your finances.
3. If you suspect something, find another
family member you trust to talk to.
Look for . . .
A change in a caregiver’s lifestyle – a grander
lifestyle?
Isolation of an elder by the caregiver.
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68. What can you do: Family/Caregivers
1. Arrange for direct deposit of Social Security checks
and other retirement benefits.
2. Carefully choose someone to appoint as power of
attorney and in completing or revising a will.
3. Be careful about permitting family, friends or tenants
to live in your house. Have a written agreement about
expectations of services to be performed or rent paid.
4. Treat home attendants like employees, not friends.
5. Keep valuables hidden if someone comes into the
house on a regular basis.
6. Maintain contact with family, friends, neighbors
and/or your community center. The more active you
are, the less likely you are to be exploited.
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69. What can a relative do?
Stay involved, even if it’s over the phone.
Observe what they receive in the mail.
Know who is in their social circle.
Look at financial statements for unusual
activity.
Take a visual inventory of the home and note
changes.
Encourage seniors to complain to the police.
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70. What can a relative do? (2)
Talk about common
scams.
Perform background
checks on caregivers.
Take charge.
Create a trust.
Remember: Everyone does stupid things.
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71. What to do if your fears are
warranted
Don’t lecture them.
Call the police
You may need a police report to help you
prove that you were a victim
Contact your state and local law
enforcement agencies such as your
district attorney’s office or the
Wyoming Attorney General
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Development Education
72. National Association of Securities
Dealers Findings
Investment fraud victims are more financially literate than non-
victims
Fraud pitches are tailored to match the psychological needs of
the victims
Investment fraud criminals use a variety of tactics, from
friendship to fear and intimidation, to defraud victims
Investment fraud and lottery fraud victims are more likely to
listen to sales pitches than non-victims
Fraud victims often have experienced more difficulties from
negative life events than non-victims
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73. Vulnerable Consumers
Assume They Are Experts. Vulnerable
consumers do not seek information about
a subject or "opportunity". They may not
admit their lack of necessary knowledge
or skills.
Do Not Use Common Sense. Vulnerable
consumers let "getting something for
nothing" overtake sound reasoning. They
do not question what sounds too good to
be true. They accept the deal rapidly for
fear they might miss the opportunity.
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74. Vulnerable Consumers
Search for Good Health. Vulnerable
consumers let universal desire to be
healthy overtake good judgment. They
believe in false cures for an illness or
chronic condition.
Believe Misleading Ads. Vulnerable
consumers assume publications accept
advertisements from reputable sources
only. They assume information in
advertisements has been verified as true.
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75. Vulnerable Consumers
Feel Intimidated. Vulnerable consumers
buy a product or service out of assumed
obligation to the seller. They feel
threatened when they question price or
quality of goods or services.
Do Not Know or Use Their Legal Rights.
Vulnerable consumers do not seek legal
counsel when needed. They often fail to
report being swindled to law enforcement
agencies.
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76. If you become a victim...
Call the police
You may need a police report to help you
prove that you were a victim
Contact your state and local law
enforcement agencies such as your
district attorney’s office or the
Wyoming Attorney General
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77. Resources
Wyoming Attorney General
AARP
Wyoming Adult Protective Services
Consumer Action
North American Securities Association
National Fraud Information Center
National Association of Attorneys
General
National Consumers League
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78. Additional resources
FTC ID Theft Clearinghouse / ID Theft Hotline
US Department of Justice
Federal Bureau of Investigation
Federal Deposit Insurance Corporation
United States Postal Inspection Service
United States Secret Service
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79. Non-profit organizations
Consumer Action
www.consumer-action.org
Identity Theft Resource Center
www.idtheftcenter.org
National Fraud Information Center
www.fraud.org
Privacy Rights Clearinghouse
www.privacyrights.org
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As reported in The Wyoming Sage, August 2006 Walter Naylor and Sandee Dowlin scammed Cheyenne residents, as well as folks in Nebraska and Colorado. Some victims were farmers in distress, some people with a mistrust of the government. Some lived in a Fort Collins, Colo., nursing home. As part of a “self-liquidating loan” program, the Cheyenne couple charged investors between $10,000 and $15,000, an “application fee” that was to return $1 million to each investor within a few months. Naylor told tales of how he knew Marcos in the Philippines, and how Ferdinand gave him the keys to the kingdom. Naylor told investors he owned gold certificates worth billions from a foundation in the Philippines. And while he was able to hand potential investors $200 billion collateral certificates with fancy gold seals (yes, billion). He also told investors they could only talk to others ‘in the program.’ Naylor told them, ‘If you try to verify this with the government, they’ll try to deny everything.” Sandee Dowlin, who presented herself to investors as a certified public accountant with a major Denver firm. In fact, she and Naylor met when she was working as a waitress. During the 1970s, she served sentences for felony check fraud in Montana. Naylor presented himself as a Christian man, an image sold partially by the fact that he was invited to speak at several church groups. Some victims later testified Naylor’s godly persona was part of the reason they believed him. “He portrayed himself as a religious and charitable man,” Leschuck said. “He presented himself as a philanthropist.” Naylor sold his more idealistic investors on the prospect that they could not only contribute to his good works, but when they became millionaires, go on to finance good works of their own. Other victims succumbed for other reasons. One nursing home investor was confined to a wheelchair. Naylor told Schmohl that when the gold bonds matured, he’d be able to buy himself a special car equipped for a handicapped driver. Naylor convinced another elderly investor to let him use his credit card, Leschuck said. Some monthly bills were $20,000-$30,000. Over the course of a few years, the man loaned Naylor $300,000. Even after Naylor was found guilty, at least one of his investors insisted he was innocent and his investment sound. That kind of loyalty could be guilt or desperation. Characteristics of the pitch: High rate of return Need for secrecy Part of an elite group Presented himself as a Christian and promised to invest in worthy causes (a day care center in the Philippines)
“ Henry” (not his real name) was a successful businessman, married for 30 years, raised a family and lived a good life. He had accumulated a significant nest egg for his retirement. Shortly after his wife’s death, he received a Federal Express package containing very professional, slick materials detailing an investment in oil and gas wells. The next day, a salesman called him and used high pressure sales tactics (social influence) to persuade him to invest $40,000. Some examples: “ These gas wells are guaranteed to produce $6,800 a month in income.” “ Some of the most successful investors in the country are interested in these wells.” “ There are only two units left in this project.” “ We drilled a well in Texas that had these same early gas readings and the investors all made millions.” Henry ultimately lost over $500,000 to this oil and gas scam, investing in wells that always seemed promising at first, but then ran into trouble and were all capped.
Do not give your telephone calling card, credit card, or bank account numbers to strangers by telephone or mail unless you initiated the order for goods or services. Do not be pressured by salespeople into buying NOW . Do not pay for something that is supposedly "free.” Shut the door. Hang the phone.
Register with the FTC’s Do-Not-Call Registry (to cut down on telemarketers) donotcall.gov or (888) 382-1222. Be very careful about sharing personal financial information. Examine investments carefully. Ask questions and think critically about the return, the investment and who is offering it. Don’t be afraid to ask for the credentials of would-be advisors. Exercise caution about can’t miss deals. Read the fine print and remember, if it’s too good to be true . . .
Spring often triggers home improvement scams. Many homeowners' thoughts turn to various projects ranging from roof repairs to house painting. A favorite target for con artists is low-income and elderly homeowners. Using high-pressure tactics, these criminals sell overpriced materials and repairs that are not necessary or they take the money and run, never completing the work. A little extra caution can go a long way in preventing home improvement problems and headaches for you and your family. Take your time in making decisions on contract work for your home.
Often lack the physical and mental capability of caring for themselves Studies by the National Crime Prevention Council show that fraudulent telemarketers direct 56 to 80 percent of their calls to senior citizens, the fastest-growing segment of America's population. Source: RIVER PARISHES PICAYUNE; Pg. 1 “Scammers often target elderly; Sheriff has tips for avoiding fraud” August 21, 2006
Adult children, grandchildren, or other relatives Professional or hired caretakers – writing checks for a little more to cover “extra work” Friends or others in a position of trust Professional crime groups that target elders and dependent adults Source: Elder and Dependent Adult Fraud: A Sampler of Actual Cases to Profile the Offenders and the Crimes They Perpetrate, by Judith B. Sklar, JD, Journal of Elder Abuse & Neglect, Vol. 12(2) 2000 Jewelry, Checks, ATM card Credit card & identity theft Scams and frauds
Caregivers and relatives have a unique position of trust and ongoing relationship with the vulnerable adult. With a power of attorney, a relative or caregiver can make gifts, transfer ownership of a home or borrow money in the senior's name. Power of Attorney Story : Eighty-seven-year-old Elizabeth suspected something was awry when her son told her she couldn't afford to move into an upscale assisted living facility. A few years before, she had given her son durable power of attorney -- a document granting him fiduciary responsibility to make financial decisions on her behalf as long as she is alive. Elizabeth knew she had the money, and when she questioned him about the shortage of funds, he just told her she was wrong. Elizabeth, wary of her son's response, told a friend who contacted Pennsylvania's Adult Protective Services (APS). An investigation by the agency revealed that her son had transferred $225,000 from her account into his own. Fearful of alienating her son, Elizabeth chose not to prosecute. Luckily, he hadn't spent the money and could give it back. Had Elizabeth chosen another person to oversee the account, it may have prevented her son from abusing his trust The most common victims of rip-offs by a caretaker, relative or even a helpful neighbor or repairman are seniors struggling just to stay in their own homes. The process may start rather benignly. An adult child or housekeeper who fills in amounts on checks to pay for a senior's groceries may begin to add on $10, $20 or $50 as compensation for "extra work." The caretaker eventually becomes familiar with the intimate details of the senior's financial life and starts taking larger sums. As the elderly person becomes more frail and helpless, his exploiter feels free to take more and more. Caregiver Story : The case of Frances Reid seems to have followed that pattern. In 1989, deaf and weak, the Riverdale, Ga. widow hired Mildred Addison, 47, to shop for groceries and help with the housework at $5 an hour. Soon after she was hired, Reid's niece Carolyn Smith believes, Addison began using Reid's checkbook to write small amounts to herself. Then as Reid became more and more dependent, the housekeeper grew bolder. At one point Addison impersonated Reid and cashed in certificates of deposit, pocketing large portions herself. After Reid broke her hip and moved to a nursing home, Reid’s daughter took over Reid's finances and discovered irregularities in Reid's bank accounts. A senior does not have to be completely incapacitated to fall prey to fraud, though . Even small erosions in a person's abilities--difficulty in reading, for example--play directly into the hands of con artists in legitimate businesses that want to hustle their customers into a lousy deal. If a person is visually impaired, even partially, someone who has gained his trust may be able to get him to sign a document that is not in his best interest.
Aiding and abetting such weaknesses is the elderly's insufficient grasp of common deceptive practices. For all their experience getting and spending, many seniors are much less vigilant than their children, who got their consumer education from the likes of Ralph Nader. If your parents suddenly become secretive or defensive about their finances, that may be a sign that they've already fallen for a con. Identify the Threats Your parents don't have to lose their life savings in one fell swoop to do lasting damage to their financial security--and, by extension, your family's. In fact, many seniors are nickeled-and-dimed into draining their savings, sending $10 here and $20 there for contests and charities that may not be on the up-and-up. Even a small loss for someone on a fixed income is devastating. While the threats come in many varieties, the most common scams against the elderly fall into three categories: • TELEMARKETING SCAMS More than a third of the victims of telemarketing fraud are over 60 years old, according to the National Fraud Information Center. The most common scams are sweepstakes, free vacation packages, phony charity fund raisers, and expensive 900 numbers that entice people with money-saving tips and low-interest-rate credit cards. • AFFINITY FRAUD Among con artists' favorite targets are members of close-knit religious, political, ethnic or social groups. The conjoins the group and then tries to sell fraudulent investment schemes to members once he or she has gained their trust. In one of the scores of cases in the past few years, a Baptist minister named Ronald K. Randolph promised returns of up to 30% in a Ponzi scheme he pitched to elderly members of churches he joined in several southern states. He was able to bilk churchgoers out of $3.5 million from 1997 through 2000, until he was arrested and convicted on fraud charges. • FREE "INVESTMENT SEMINARS“ Financial planners often lure older people with a lunch or dinner and promise free advice from advisers who "specialize" in senior issues such as living trusts or estate planning. Once there, the senior "specialists" pressure attendees into purchasing dubious investments. Favorites are annuities, viatical statements and promissory notes. While these products are usually legal, many are monumentally bad choices for retirees-illiquid, complicated and booby-trapped with high fees. And even if attendees don't buy anything, they're usually required to provide their contact information. That can land them on the "sucker lists" that marketers sell to con artists looking for potential victims. Other good ways to land on these lists: showing an interest in gambling or filling out entries for sweepstakes.
Source: A Citizen's Guide to Preventing & Reporting Elder Abuse , the California Department of Justice.
Helping manage your parents' money can aid you in noticing trouble early. This is a delicate topic to suggest, but one way to make it easier is to bring up a question or concern you have about your own finances, just to get everyone talking. Failing that kind of access to your parents' financial records, keep alert to other clues. Are your parents getting a lot of junk mail for contests, free trips, and sweepstakes? Are they receiving calls from strangers offering awards or moneymaking deals? That may indicate that they've already ended up on a sucker list Also check around the house. If there are lots of cheap items like costume jewelry or mini-flashlights, they may be purchasing things in order to "win" a contest, one that is a common con-artist lure.
Fraud practiced by family members comes in many forms – the grandson who steals checks and makes them out to “cash”. The daughter who uses power of attorney to apply for an ATM card and then withdraw money without authority. A son taking care of Dad’s finances who uses his father’s credit card for personal purchases. Or more serious and complex ploys. A niece who convinces an elderly aunt to redirect certain assets in the will. Or a nephew that convinces an uncle to put the nephews name on the deed. Look for . . . A change in a caregiver’s lifestyle – a grander lifestyle? A new car? Isolation of an elder by the caregiver. – always an excuse as to why the elder isn’t available?
But the main burden of safeguarding the elderly from fraud belongs to their families, particularly adult children. The task isn't easy, especially when thousands of miles separate generations. Stay involved, even if it’s over the phone. Break the real or perceived isolation. Discuss finances with them, and if possible, help them keep their assets in order. Observe what they receive in the mail. Telemarketers sell names on “sucker lists” and the offers will pile up. Look for sweepstakes literature. Know who is in their social circle. Are their any new names popping – people who have great ideas about investments? Look at financial statements for unusual activity. If access to credit card and bank statements is possible, look for things like large withdrawals for no apparent reason. Take a visual inventory of the home and note changes. Is anything missing (that could have been stolen or sold)? Are there new things, especially the cheap sort of items that might be sweepstakes prizes or telemarketing schemes? Encourage seniors to complain to the police. Gambling Sister Story: Molly, 68, who was admitted to a New York hospital with renal failure. She gave the durable power of attorney to one of her sisters, who proceeded to empty Molly's account of nearly $50,000 and gamble away the money in Atlantic City. Molly pulled through her illness and discovered the missing funds. She reported the loss to the police, who investigated and turned over evidence an assistant district attorney in charge of the Elder Abuse Program in Manhattan, NY. The sister was prosecuted and had to return the money. To prevent such abuse, hire a lawyer to customize the document. Make sure it explicitly states what bills and other financial transactions you want the agent to handle. Even a well-drafted power of attorney is not foolproof. To add additional protection, assign a third-party, preferably a lawyer or other nonfamily member, to review all spending and monthly financial statements. That oversight would have gone a long way to prevent the fraud in the case of Molly with her sister.
Talk about common scams One of the easiest--and most effective--ways to protect your parents is to learn about the most common kinds of senior scams and talk to your folks about them. Tell them it's important they know what's happening--if for no other reason than to warn their friends or other relatives. Take charge. If your parent’s are truly failing and seem to be losing a grip on their finances, then you may have to take charge. Accounts that require two signatures for sizable transactions might be one option. Or have a copy of the finance statement sent to you so you can review transactions. Create a trust for your parents. Typical setup costs run between $1,000 and $3,000. Having an outside party review the actions of the trustee will help cut down the chances of abuse in management and distribution of the trust assets. Background checks on caregivers. Ann, a homebound Manhattan 98-year-old, had her health aide move in to help with personal care and eventually pay bills. By the time her children noticed the aide had been double-paying herself, more than $50,000 had been drained from Ann's account. This case is a good reminder to do a background check on caregivers. Employment agencies aren't required to do them on home health aides. But even if your agency does one, complete your own as well. Remember, though: everyone does stupid things now and then. Allow your parents to be as foolish as you are. But if they don’t learn from their mistakes, then the loses will likely grow.
What to do if your fears are warranted If it appears that one of your parents has gotten involved in a scheme, the worst thing you can do is to lecture them. Saying 'I can't believe you fell for this' will not only put an emotional wedge between you and them, it could cause them to start withholding information. Victims already feel very embarrassed and defensive about being caught up in this crime. Instead of judging or getting upset, ask conversationally about the things that worry you. Find out more about how they got that piece of jewelry, say, or what was said at that free lunch. Remember that it may take a while to get some useful information--your parents may be in denial. People don't want to believe they've been scammed. Again, you don't want to make anyone feel incompetent, but even simple tasks such as looking over their phone bills or financial statements can alert you to large ATM withdrawals or expensive calls to 900 numbers. If you think your parents are victims, contact your local police or Better Business Bureau, the Wyoming attorney general, the FTC, the U.S. Postal Inspection Service, or the National Fraud Information Center .
If you think you've been a victim, contact your local police or Better Business Bureau, the Wyoming attorney general, the FTC, the U.S. Postal Inspection Service, or the National Fraud Information Center .
Wyoming Attorney General AARP Wyoming Adult Protective Services Consumer Action: provides non-legal advice and referrals on consumer problems Web site: www.consumer-action.org Hotline: 415-777-9635 TTY: 415-777-9456 E-mail: hotline@consumer-action.org North American Securities Association National Fraud Information Center National Association of Attorneys General National Consumers League Public Education Materials on E-Fraud DOJ Special Report on Phishing (2004) - http://www.usdoj.gov/criminal/fraud/Phishing.pdf FTC Identity Theft Website – http://www.consumer.gov/idtheft