Telephone and Internet scams are everywhere. The best defense against scam artists is to be aware of how they operate and the most common scams they use. The following information is provided as a guide to the most common scams. If you feel that you have been the victim of a scam, you should contact the appropriate authorities immediately.
Common Scams and Helpful Resources
Every year, thousands of people lose their money and personal information to telephone scams. Typically, phone scammers will try to sell you something you hadn't planned to buy and will pressure you to give up personal information, like your credit card details or Social Security number.
Common Phone / Telemarketing Scams
In telemarketing fraud, phone scammers will often use exaggerated—or even fake—prizes, products, and services as bait. Some may call you, but others will use mail, text, or ads to get you to call them for more details. Types of phone scams include:
Travel packages - "Free" or "low-cost" vacations can end up costing a fortune in hidden costs.
Credit and loans - Popular schemes include advance fee loans, payday loans, and credit card loss protection.
Fake business and investment opportunities - As business and investing can be complicated, scammers take advantage of people not researching the investment.
Charitable causes - Many phone scams involve urgent requests for recent disaster relief efforts.
Microsoft/Computer Virus - Unsolicited phone calls from "technical" departments impersonating computer companies like Microsoft that claim your PC is infected with viruses or malware. These callers request your TPSB banking or debit/credit card account information to take payment so they can "fix" your problem.
National Do Not Call List
Avoid phone scams by registering your home and cell phone numbers with the National Do Not Call Registry or by calling 1-888-382-1222. This national registry was created to offer consumers a choice regarding telemarketing calls. It won't stop all unsolicited calls—but will help stop most.
Report Telephone Fraud
If you believe you have been a victim of a telephone scam or telemarketing fraud, you can file an online complaint with the Federal Trade Commission (FTC), or by phone at 1-877-382-4357.
Scam artists use different types of fraud to try to trick people out of their money. Two common types of fraud are banking scams and investment scams.
Popular banking scams include:
fake check scams, where a scam artist creates counterfeit checks that look legitimate, with watermarks, routing numbers, and the names of real financial institutions. They then try to deposit them in banks, use them as part of other frauds against consumers, or use them to pay companies for products or services.
unsolicited check fraud, where a scammer may send you a check that you didn't have a legitimate reason to receive. Unfortunately, if you cash it, you may be authorizing the purchase of items you didn't ask for, signing up for a loan, or something else you didn't ask for. The Federal Trade Commission offers tips to help you avoid being a victim of these scams, and recommends what to do if you have been a victim.
automatic withdrawals. A company sets up automatic withdrawals from your account that you didn’t approve.
phishing. Email messages that ask you to verify your bank account number or debit card PIN. By clicking on the link or replying to the email with your account number, you are giving a scammer access to your financial accounts.
Investment scams prey on your hope to earn interest or a return on investment on the amount of money that you invest. The Securities and Exchange Commission (SEC) offers overviews of many common investment frauds, and tips to avoid being a victim.
If you are the victim of an investment fraud, you can file a complaint with the SEC or with your state's securities administrator.
Know the signs of IRS imposter phone calls. Scam artists are pretending to be IRS officials to get your money. They'll call, email, or text you claiming you owe back taxes or there's a problem with your tax return. They even rig caller ID to make their call look official. They play on your fears. They threaten to take your driver's license or sue, arrest, or deport you. They want you to pay, fast.
What's the truth? The truth is the IRS's first contact with you will always be a letter in the mail. It's not a phone call, email, or text message. They won't insist that you pay with a prepaid debit card, a wire transfers, or cashier's check. Now you know. Has an IRS impostor contacted you? If so, report it at FTC.gov/impostors.
Not all organizations that claim to be charities or help people are reputable. Some scam artists set up fake organizations, taking advantage of the public’s generosity immediately after a tragedy or major disaster. Follow these tips to help you detect common charity scam tactics:
Check out the charity with the attorney general or the Better Business Bureau before you give.
Don’t give in to high pressure tactics such as urging you to donate immediately.
Don’t assume that you can get a tax deduction for donating to an organization. Use the IRS’s database of 501(c)3 organizations to find out if it has this status.
Verify the name. Fake charities often choose names that are similar to well established charities or use keywords that elicit sympathy, such as “children”, “cancer”, or “disaster relief”.
Don’t send cash. Pay with a check or credit card.
If you suspect charity fraud, report it to the Federal Trade Commission. Although the Do Not Call Registry doesn’t apply to charities, you can ask an organization not to contact you again.
Tickets for popular concerts, plays, and sporting events can be expensive and sell out quickly, making it hard to support your favorite artists and teams. While there are still scalpers outside of venues, there are many other ticket selling scams online. Some ticket resellers take advantage of buyers' hopes to attend an event, charging tickets at prices much higher than the face value, especially if the event is already sold out. Some scammers sell counterfeit tickets, with forged barcodes and logos of real ticket companies. Others sell duplicates of legitimate tickets to multiple buyers, often as electronic tickets that they e-mail. When these buyers with the same duplicate ticket number try to enter the event, some of them are denied entrance.
Before you buy tickets from a third-party seller:
Try to buy from authorized brokers and third party sellers that can guarantee the validity of the ticket.
Be especially careful of buying event tickets from online classifieds.
If you use an online search engine or social media to locate tickets, be aware that the first search result may be a paid ad that charges excessive fees, rather than a reputable seller.
Check the actual web address for the resale website; some scammers create phony websites that closely resemble authentic ticket websites.
Research the seller's name, e-mail address, and phone number, along with the words "fraud," "scams," and "fake tickets" to see if there are negative reviews.
Find out if the seller guarantees the ticket.
Get contact information for the seller, in case there is a problem with the ticket.
Before you buy, verify the section and seat number on the venue's seating chart to make sure that the seat actually exists and that you'll have a clear view.
Use a credit card to pay third party sellers, instead of wiring cash. You can dispute the ticket purchase with your credit card company if there are problems.
Check the date, time, and location printed on the ticket to make sure they match the date of the event.
Report ticket related scams to your state consumer protection office.
Lottery and Sweepstakes Scams
Not all lotteries and sweepstakes are legitimate. Before you participate, keep these tips in mind:
Scam artists often use the promise of a valuable prize or award to entice consumers to send money, buy overpriced products or services, or contribute to bogus charities.
Legitimate sweepstakes don't require you to pay to collect your winnings.
Scam operators use the telephone and direct mail to entice U.S. consumers to buy chances in foreign lotteries. These lottery solicitations violate U.S. law, which prohibits the cross-border sale or purchase of lottery tickets by phone or mail.
Read these tips from the Federal Trade Commission for more information about bogus lotteries and sweepstakes.
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A pyramid scheme, also known as Ponzi scheme, is an illegal form of multilevel marketing. In these programs, your ability to earn profits is based on the number of new participants you recruit, instead of the amount of products or services you sell. Sometimes there actually aren't any real products that are being sold. These types of schemes are common with investment and independent direct selling opportunities.
These schemes rely on the income from new participants in order to pay fake "profits" to people that have been part of the scheme for longer amounts of time. However, the scheme falls apart when there aren't enough new recruits to pay into the system, so the earlier participants no longer receive earnings.
Tips to Avoid Being a Victim
Take steps to protect yourself from being a victim of a pyramid scheme:
Be wary of "opportunities" to invest your money in franchises or investments that require you to bring in more investors to increase your profit, or recoup your initial investment.
Independently verify the legitimacy of any franchise or investment with the Better Business Bureau, your state Attorney General, or any licensing agencies.
Be skeptical of success stories and testimonials of fantastic earnings.
File a Complaint
If you've been the victim of a pyramid scheme, file a complaint with your state consumer protection office, state Attorney General, or the Better Business Bureau (BBB). If the pyramid scheme involved securities, you should also file a complaint with your state's securities administrator, or the Securities and Exchange Commission.
Tax-Related Identity Theft
Tax-related identity theft occurs when someone uses your stolen Social Security Number (SSN) to get a tax refund or a job. These tips can help you prevent and report tax identity theft:
To prevent tax identity theft, be wary of any Internal Revenue Service (IRS) letter or notice that states:
More than one tax return was filed using your SSN.
You owe additional tax, you have had a tax refund offset, or you have had collection actions taken against you for a year you did not file a tax return.
IRS records indicate you received wages from an employer unknown to you.
The IRS does not initiate contact with a taxpayer by sending an email, text, or social message requesting personal or financial information.
Dealing with Tax-Related Identity Theft
If you suspect someone used your Social Security Number (SSN) for a tax refund or a job—or the IRS sends you a letter or notice indicating a problem—take these steps:
File a report with the Federal Trade Commission (FTC). You can also call the FTC Identity Theft Hotline at 1-877-438-4338 or TTY 1-866-653-4261 (for the hearing impaired).
Contact one of the three major credit agencies to place a fraud alert on your credit records:
Census Related Fraud
The U.S. Census Bureau is the federal agency responsible for collecting data about the people and economy of the United States. It must collect some personal and demographic information from people and businesses to do this research.
Some scam artists may act as if they work for the U.S. Census Bureau to collect personal information about you to use for fraud, including stealing your identity. These scam artists may send you letters that seem like official letters from the U.S. Census Bureau, or they may come to your home to try to collect information about you.
The U.S. Census Bureau provides tips to help you spot and report these scams so that you are not a victim.
To verify if a survey is from the U.S. Census Bureau:
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Top 10 Financial Schemes Targeting Elders
Financial scams targeting seniors have become so prevalent that they’re now considered “the crime of the 21st century.” Why? Because seniors are thought to have a significant amount of money sitting in their accounts.
Financial scams also often go unreported or can be difficult to prosecute, so they’re considered a “low-risk” crime. However, they’re devastating to many older adults and can leave them in a very vulnerable position with little time to recoup their losses.
It’s not just wealthy seniors who are targeted. Low-income older adults are also at risk of financial abuse. And it’s not always strangers who perpetrate these crimes. Over 90% of all reported elder abuse is committed by an older person’s own family members, most often their adult children, followed by grandchildren, nieces and nephews, and others.
Review our list below, so you can identify a potential scam. Click on these links to find additional information on each scam.
- Medicare/health insurance scams
- Counterfeit prescription drugs
- Funeral & cemetery scams
- Fraudulent anti-aging products
- Telemarketing/phone scams
- Internet fraud
- Investment schemes
- Homeowner/reverse mortgage scams
- Sweepstakes & lottery scams
- The grandparent scam
Every U.S. citizen or permanent resident over age 65 qualifies for Medicare, so there is rarely any need for a scam artist to research what private health insurance company older people have in order to scam them out of their money.
In these types of scams, perpetrators may pose as a Medicare representative to get older people to give them their personal information, or they will provide bogus services for elderly people at makeshift mobile clinics, then use the personal information they provide to bill Medicare and pocket the money.
Counterfeit prescription drugs
Most commonly, counterfeit drug scams operate on the Internet, where seniors increasingly go to find better prices on specialized medications. This scam is growing in popularity—since 2000, the FDA has investigated an average of 20 such cases per year, up from five a year in the 1990s.
The danger is that besides paying money for something that will not help a person’s medical condition, victims may purchase unsafe substances that can inflict even more harm. This scam can be as hard on the body as it is on the wallet.
Funeral & cemetery scams
The FBI warns about two types of funeral and cemetery fraud perpetrated on seniors.
In one approach, scammers read obituaries and call or attend the funeral service of a complete stranger to take advantage of the grieving widow or widower. Claiming the deceased had an outstanding debt with them, scammers will try to extort money from relatives to settle the fake debts.
Another tactic of disreputable funeral homes is to capitalize on family members’ unfamiliarity with the considerable cost of funeral services to add unnecessary charges to the bill. In one common scam of this type, funeral directors will insist that a casket, usually one of the most expensive parts of funeral services, is necessary even when performing a direct cremation, which can be accomplished with a cardboard casket rather than an expensive display or burial casket.
Fraudulent anti-aging products
In a society bombarded with images of the young and beautiful, it’s not surprising that some older people feel the need to conceal their age in order to participate more fully in social circles and the workplace. After all, 60 is the new 40, right?
It is in this spirit that many older Americans seek out new treatments and medications to maintain a youthful appearance, putting them at risk of scammers. Whether it’s fake Botox like the case in Arizona that netted its distributors (who were convicted and jailed in 2006) $1.5 million in less than a year, or completely ineffective homeopathic remedies that do absolutely nothing, there is money in the anti-aging business.
Botox scams are particularly unsettling, as renegade labs creating versions of the real thing may still be working with the root ingredient, botulism neurotoxin, which is one of the most toxic substances known to science. A bad batch can have health consequences far beyond wrinkles or drooping neck muscles.
Perhaps the most common scheme is when scammers use fake telemarketing calls to prey on older people, who as a group make twice as many purchases over the phone than the national average. While the image of the lonely senior citizen with nobody to talk to may have something to do with this, it is far more likely that older people are more familiar with shopping over the phone, and therefore might not be fully aware of the risk.
With no face-to-face interaction, and no paper trail, these scams are incredibly hard to trace. Also, once a successful deal has been made, the buyer’s name is then shared with similar schemers looking for easy targets, sometimes defrauding the same person repeatedly.
Examples of telemarketing fraud include:
The pigeon drop
The con artist tells the individual that he/she has found a large sum of money and is willing to split it if the person will make a “good faith” payment by withdrawing funds from his/her bank account. Often, a second con artist is involved, posing as a lawyer, banker, or some other trustworthy stranger.
The fake accident ploy
The con artist gets the victim to wire or send money on the pretext that the person’s child or another relative is in the hospital and needs the money.
Money is solicited for fake charities. This often occurs after natural disasters.
While using the Internet is a great skill to have at any age, the slower speed of adoption among some older people makes them easier targets for automated Internet scams that are everywhere on the web and email programs. Pop-up browser windows simulating virus-scanning software will fool victims into either downloading a fake anti-virus program (at a substantial cost) or an actual virus that will open up whatever information is on the user’s computer to scammers.
Senior’s unfamiliarity with the less visible aspects of browsing the web (firewalls and built-in virus protection, for example) make them especially susceptible to such traps. One example includes:
A senior receives email messages that appear to be from a legitimate company or institution, asking them to “update” or “verify” their personal information. A senior receives emails that appear to be from the IRS about a tax refund.
Because many seniors find themselves planning for retirement and managing their savings once they finish working, a number of investment schemes have been targeted at seniors looking to safeguard their cash for their later years. From pyramid schemes like Bernie Madoff’s (which counted a number of senior citizens among its victims) to fables of a Nigerian prince looking for a partner to claim inheritance money, to complex financial products that many economists don’t even understand; investment schemes have long been a successful way to take advantage of older people.
Homeowner/reverse mortgage scams
Scammers like to take advantage of the fact that many people above a certain age own their homes, a valuable asset that increases the potential dollar value of a certain scam.
A particularly elaborate property tax scam in San Diego saw fraudsters sending personalized letters to different properties apparently on behalf of the County Assessor’s Office. The letter, made to look official but displaying only public information, would identify the property’s assessed value and offer the homeowner, for a fee of course, to arrange for a reassessment of the property’s value and therefore the tax burden associated with it.
Closely related, there is the potential for a reverse mortgage borrower to be scammed. Scammers can take advantage of older adults who have recently unlocked equity in their homes. Those considering reverse mortgages should be cognizant of people in their lives pressuring them to obtain a reverse mortgage, or those that stand to benefit from the borrower accessing equity, such as home repair companies who approach the older adult directly.
Sweepstakes & lottery scams
This simple scam is one that many are familiar with, and it capitalizes on the notion that “there’s no such thing as a free lunch.” Here, scammers inform their victim that they have won a lottery or sweepstakes of some kind and need to make some sort of payment to unlock the supposed prize. Frequently, seniors will be sent a check that they can deposit in their bank account, knowing that while it often shows up in their account immediately, it will take a few days before the (fake) check is rejected. During that time, the criminals will quickly collect money for supposed fees or taxes on the prize, which they pocket while the victim has the “prize money” removed from his or her account as soon as the check bounces.
The grandparent scam
The grandparent scam is so simple and so devious because it uses one of older adults’ most reliable assets, their hearts.
Scammers will place a call to an older person and when the victim picks up, they will say something along the lines of: “Hi Grandma, do you know who this is?” When the unsuspecting grandparent guesses the name of the grandchild the scammer most sounds like, the scammer has established a fake identity without having done any background research.
Once “in,” the fake grandchild will usually ask for money to solve some unexpected financial problem (overdue rent, payment for car repairs, etc.), to be paid via Western Union or MoneyGram, which don’t always require identification to collect. At the same time, the scam artist will beg the grandparent “please don’t tell my parents, they would kill me.”
While the sums from such a scam are likely to be in the hundreds, the very fact that no research is needed makes this a scam that can be perpetrated over and over at very little cost to the scammer.
Source: National Council on Aging