The robbing of the elderly, part 1: The problem

By Anna Szmajda, CPA, CFP
Berlin, Ramos & Company, P.A.

Fraudulent telemarketers are using the phone to steal the life savings of unsuspecting people.

"Twenty six percent of all telemarketing fraud victims are age 60 or older, and 60 percent of people in that age group are victims of prize or sweepstakes fraud," says Debbi Baer of the U.S. Postal Inspection Service. But the actual number may be much higher. Many victims of fraud never report it to authorities because they're too embarrassed and humiliated to admit they've been scammed.

"These criminals prey on seniors, using the telephone (or the mail) instead of a gun to rob them," said Susan Grant, director of the National Fraud Information Center.

Ms. Baer has written about a case involving U.S. Postal Inspector Mike Ellis, whose specialty is mail fraud. According to Ellis, these criminals set up phone rooms called "boiler rooms," where they promote fraudulent lotteries and sweepstakes schemes that "guarantee" you are a winner — for a fee. Ellis says some elderly people respond to these schemes because they are hungry for attention.

Mr. Ellis' case involved a Mrs. Nelson and her 90-year-old husband, a former preacher who had recently entered a nursing home. Mrs. Nelson began receiving sweepstakes offers in the mail at her home. "They'd tell me I won and that all I had to do was send in $50 or so and I'd get free stuff, so I kept playing," she said. "They'd call me, too, and they were very nice on the phone."

Soon Mrs. Nelson began receiving tons of mail and two to three calls a day telling her of the "prizes" she had "won" but could only collect if she sent anywhere from $50 to $2,000 by overnight mail — which she did. Sadly, Mrs. White was writing as many as 90 checks a month to participate in sweepstakes games offering "free prizes."

Have you given your elderly parents a computer so they can keep in touch by e-mail? Beware — uninvited e-mails often include fraudulent offers and opportunities to gamble away their life savings.

According to the National Consumer's League, the top three telemarketing (and mail and e-mail) frauds against seniors are these:

Sweepstakes and prize offers. "You have won a fantastic prize," but you must pay taxes or fees or buy something to get it. The result is, you pay and don't get anything. The danger sign is the request for money. The law states that a prize is free. It is illegal to require payment for a prize. The caller must tell you the "no payment-no purchase" method of entering and the odds of actually winning or the factors used to calculate the odds. Never pay to play.
Magazine sales. You can get a great magazine for pennies a day or renew your existing subscription at a low rate. The result is, the subscription may be for a much shorter period that normal and you end up paying more than you realize, or you get no magazine at all. The danger signs are pressure to act immediately or the caller's refusal to provide contact information for the publisher so you can verify that the caller is legitimate.

Never give your bank account number or credit card number to strangers selling things over the phone. These criminals can debit your account and never send you what you have ordered and can even withdraw as much money from your account as they want.

The law states that the caller must get your written authorization or tape record your verbal authorization to withdraw a specified amount from your account, or send you a written confirmation of the transaction, before attempting to withdraw money from your account. The caller also must provide the taped verbal authorization to your bank upon request. Better yet, get the details in writing.
Credit card loss protection plans. "You need this protection because you could lose lots of money if someone steals your credit card and uses it." The truth is, you're not responsible for any charges if you report your card missing before someone else has used it, and you are not liable for more than $50 if it has been used.

Part II of this article will discuss an action plan to prevent and deal with fraud.

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