Fraud and Fraud Prevention

Ten Things You Can Do to Avoid Fraud

Scam Artists use clever schemes to defraud millions of people across the globe each year. They use phone, e-mail, postal mail, and the Internet to cross geographic boundaries and trick victims into sending money or giving out personal information. Knowledge and awareness of these types of schemes can help protect you from being a victim of fraud.

If you feel that you have been a victim of fraud, contact your local police department to file a complaint. In addition you may file a complaint with the Federal Trade Commission at FTC.gov or call 1-877-382-4357.

Wiring money is like sending cash, once it’s gone, you can’t get it back. Don’t wire money to strangers, to sellers who insist on wire transfers for payment, or to someone who claims to be a relative in an emergency and wants to keep the request a secret.
Don’t send money to someone you don’t know. This includes an online merchant or an online dating service. Do business with sites you trust. When buying items online, consider a payment option that provides protection, like a credit card. Do not send cash or use a wire service.
Never give personal or financial information whether the message comes as an email, a phone call, a text message or an ad. Con artists try to trick you into giving up your personal information.
Don’t play a foreign lottery. It’s easy to be tempted by messages that claim you have won or have enticing odds of winning. If you send money, you won’t get it back, regardless of the promises. It is also illegal to play foreign lotteries.
Don’t agree to deposit a check from someone you don’t know and then wire money back, no matter how convincing the story. By law, banks must make funds from deposited checks available within days, but uncovering a fake check can take weeks. You are responsible for the checks you deposit. When a check turns out to be a fake, it’s you who is responsible for paying back the bank.
Read your bills and monthly statements regularly-on paper and online. If you see charges you don’t recognize or didn’t okay, contact your bank, card issuer, or other creditor immediately.
Give to an established charity rather than one that seems to have sprung up overnight. When a natural disaster or crisis occurs, pop-up charities are likely to arise and they could be collecting money to finance illegal activity.
Talk to your doctor before buying health products or signing up for medical treatments. Ask about research that supports a product’s claims and possible risks or side effects. Buy prescription drugs only from licensed U.S. pharmacies. Otherwise you could end up with products that are fake, expired or mislabeled- in short, products that could be dangerous.
Remember there’s no such thing as a sure thing. If someone contacts you promoting low-risk, high-return investment opportunities, stay away. When you hear pitches that insist you act now, guarantees of big profits, promises of little or no financial risk, or demands that you send cash immediately, report them to the FTC and your local police department.
Know where your offer comes from and who you are dealing with. Try to find a seller’s physical address (not just a P.O. box) and phone number. Look the company up on the Better Business Bureau at bbb.org.

Fraud Target: Senior Citizens

Our Common Fraud Schemes webpage provides tips on how you can protect you and your family from fraud. Senior Citizens especially should be aware of fraud schemes for the following reasons:

Senior citizens are most likely to have a “nest egg,” to own their home, and/or to have excellent credit—all of which make them attractive to con artists.
People who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to say “no” or just hang up the telephone.
Older Americans are less likely to report a fraud because they don’t know who to report it to, are too ashamed at having been scammed, or don’t know they have been scammed. Elderly victims may not report crimes, for example, because they are concerned that relatives may think the victims no longer have the mental capacity to take care of their own financial affairs.
When an elderly victim does report the crime, they often make poor witnesses. Con artists know the effects of age on memory, and they are counting on elderly victims not being able to supply enough detailed information to investigators. In addition, the victims’ realization that they have been swindled may take weeks—or more likely, months—after contact with the fraudster. This extended time frame makes it even more difficult to remember details from the events.
Senior citizens are more interested in and susceptible to products promising increased cognitive function, virility, physical conditioning, anti-cancer properties, and so on. In a country where new cures and vaccinations for old diseases have given every American hope for a long and fruitful life, it is not so unbelievable that the con artists’ products can do what they claim.

What to Look For and How to Protect Yourself and Your Family

Health Care Fraud or Health Insurance Fraud

Medical Equipment Fraud:

Equipment manufacturers offer “free” products to individuals. Insurers are then charged for products that were not needed and/or may not have been delivered.

“Rolling Lab” Schemes:

Unnecessary and sometimes fake tests are given to individuals at health clubs, retirement homes, or shopping malls and billed to insurance companies or Medicare.

Services Not Performed:

Customers or providers bill insurers for services never rendered by changing bills or submitting fake ones.

Medicare Fraud:

Medicare fraud can take the form of any of the health insurance frauds described above. Senior citizens are frequent targets of Medicare schemes, especially by medical equipment manufacturers who offer seniors free medical products in exchange for their Medicare numbers. Because a physician has to sign a form certifying that equipment or testing is needed before Medicare pays for it, con artists fake signatures or bribe corrupt doctors to sign the forms. Once a signature is in place, the manufacturers bill Medicare for merchandise or service that was not needed or was not ordered.

Tips for Avoiding Health Care Fraud or Health Insurance Fraud:

Never sign blank insurance claim forms.
Never give blanket authorization to a medical provider to bill for services rendered.
Ask your 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 of 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.

Counterfeit Prescription Drugs

Tips for Avoiding Counterfeit Prescription Drugs:

Be mindful of appearance. Closely examine the packaging and lot numbers of prescription drugs and be alert to 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 your 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 United States.
Be aware that product promotions or cost reductions and other “special deals” may be associated with counterfeit product promotion.

Funeral and Cemetery Fraud

Tips for Avoiding Funeral and Cemetery Fraud:

Be an informed consumer. Take time to call and shop around before making a purchase. Take a friend with you who may offer some perspective to help make difficult decisions. Funeral homes are required to provide detailed general price lists over the telephone or in writing.
Educate yourself fully about caskets before you buy one, and understand that caskets are not required for direct cremations.
Understand the difference between funeral home basic fees for professional services and any fees for additional services.
Know that embalming rules are governed by state law and that embalming is not legally required for direct cremations.
Carefully read all contracts and purchasing agreements before signing and make certain that all of your requirements have been put in writing.
Make sure you understand all contract cancellation and refund terms, as well as your portability options for transferring your contract to other funeral homes.
Before you consider prepaying, make sure you are well informed. When you do make a plan for yourself, share your specific wishes with those close to you.
As a general rule governing all of your interactions as a consumer, do not allow yourself to be pressured into making purchases, signing contracts, or committing funds. These decisions are yours and yours alone.

Fraudulent “Anti-Aging” Products

Tips for Avoiding Fraudulent “Anti-Aging” Products:

If it sounds too good to be true, it probably is. Watch out for “Secret Formulas” or “Breakthroughs.”
Don’t be afraid to ask questions about the product. Find out exactly what it should and should not do for you.
Research a product thoroughly before buying it. Call the Better Business Bureau to find out if other people have complained about the product.
Be wary of products that claim to cure a wide variety of illnesses—particularly serious ones—that don’t appear to be related.
Be aware that testimonials and/or celebrity endorsements are often misleading.
Be very careful of products that are marketed as having no side effects.
Question products that are advertised as making visits to a physician unnecessary.
Always consult your doctor before taking any dietary or nutritional supplement.

Telemarketing Fraud

If you are age 60 or older—and especially if you are an older woman living alone—you may be a special target of people who sell bogus products and services by telephone. Telemarketing scams often involve offers of free prizes, low-cost vitamins and health care products, and inexpensive vacations.

There are warning signs to these scams. If you hear these—or similar—“lines” from a telephone salesperson, just say “no thank you,” and hang up the telephone:

“You must act now, or the offer won’t be good.”
“You’ve won a free gift, vacation, or prize.” But you have to pay for “postage and handling” or other charges.
“You must send money, give a credit card or bank account number, or have a check picked up by courier.” You may hear this before you have had a chance to consider the offer carefully.
“You don’t need to check out the company with anyone.” The callers say you do not need to speak to anyone, including your family, lawyer, accountant, local Better Business Bureau, or consumer protection agency.
“You don’t need any written information about the company or its references.”
“You can’t afford to miss this high-profit, no-risk offer.”

Tips for Avoiding Telemarketing Fraud:

It’s very difficult to get your money back if you’ve been cheated over the telephone. Before you buy anything by telephone, remember:

Don’t buy from an unfamiliar company. Legitimate businesses understand that you want more information about their company and are happy to comply.
Always ask for and wait until you receive written material about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. But, unfortunately, beware—not everything written down is true.
Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, state attorney general, the National Fraud Information Center, or other watchdog groups. Unfortunately, not all bad businesses can be identified through these organizations.
Obtain a salesperson’s name, business identity, telephone number, street address, mailing address, and business license number before you transact business. Some con artists give out false names, telephone numbers, addresses, and business license numbers. Verify the accuracy of these items.
Before you give money to a charity or make an investment, find out what percentage of the money is paid in commissions and what percentage actually goes to the charity or investment.
Before you send money, ask yourself a simple question. “What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?”
Don’t pay in advance for services. Pay services only after they are delivered.
Be wary of companies that want to send a messenger to your home to pick up money, claiming it is part of their service to you. In reality, they are taking your money without leaving any trace of who they are or where they can be reached.
Always take your time making a decision. Legitimate companies won’t pressure you to make a snap decision.
Don’t pay for a “free prize.” If a caller tells you the payment is for taxes, he or she is violating federal law.
Before you receive your next sales pitch, decide what your limits are—the kinds of financial information you will and won’t give out on the telephone.
Be sure to talk over big investments offered by telephone salespeople with a trusted friend, family member, or financial advisor. It’s never rude to wait and think about an offer.
Never respond to an offer you don’t understand thoroughly.
Never send money or give out personal information such as credit card numbers and expiration dates, bank account numbers, dates of birth, or social security numbers to unfamiliar companies or unknown persons.
Be aware that your personal information is often brokered to telemarketers through third parties.
If you have been victimized once, be wary of persons who call offering to help you recover your losses for a fee paid in advance.
If you have information about a fraud, report it to state, local, or federal law enforcement agencies.

Internet Fraud

As web use among senior citizens increases, so does their chances to fall victim to Internet fraud. Internet Fraud includes non-delivery of items ordered online and credit and debit card scams. Please visit the FBI’s Internet Fraud webpage for details about these crimes and tips for protecting yourself from them.

Investment Schemes

As they plan for retirement, senior citizens may fall victim to investment schemes. These may include advance fee schemes, prime bank note schemes, pyramid schemes, and Nigerian letter fraud schemes. Please visit the Common Fraud Schemes webpage for more information about these crimes and tips for protecting yourself from them.

Reverse Mortgage Scams

The FBI and the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG) urge consumers, especially senior citizens, to be vigilant when seeking reverse mortgage products. Reverse mortgages, also known as home equity conversion mortgages (HECM), have increased more than 1,300 percent between 1999 and 2008, creating significant opportunities for fraud perpetrators.

Reverse mortgage scams are engineered by unscrupulous professionals in a multitude of real estate, financial services, and related companies to steal the equity from the property of unsuspecting senior citizens or to use these seniors to unwittingly aid the fraudsters in stealing equity from a flipped property.

In many of the reported scams, victim seniors are offered free homes, investment opportunities, and foreclosure or refinance assistance. They are also used as straw buyers in property flipping scams. Seniors are frequently targeted through local churches and investment seminars, as well as television, radio, billboard, and mailer advertisements.

A legitimate HECM loan product is insured by the Federal Housing Authority. It enables eligible homeowners to access the equity in their homes by providing funds without incurring a monthly payment. Eligible borrowers must be 62 years or older who occupy their property as their primary residence and who own their property or have a small mortgage balance. See the FBI/HUD Intelligence Bulletin for specific details on HECMs as well as other foreclosure rescue and investment schemes.

Tips for Avoiding Reverse Mortgage Scams:

Do not respond to unsolicited advertisements.
Be suspicious of anyone claiming that you can own a home with no down payment.
Do not sign anything that you do not fully understand.
Do not accept payment from individuals for a home you did not purchase.
Seek out your own reverse mortgage counselor.

If you are a victim of this type of fraud and want to file a complaint, please submit information through our electronic tip line or through your local FBI office. You may also file a complaint with HUD-OIG at www.hud.gov/complaints/fraud_waste.cfm or by calling HUD’s hotline at 1-800-347-3735.

Read our intelligence bulletin on reverse mortgages.

Additional Resources on Frauds Impacting Seniors:
– USA.gov Resources for Seniors
– Resources from the United States Senate Special Committee on Aging

Source: Federal Bureau of Investigation

Fraud Prevention

Protecting Yourself From Telemarketing Fraud.
It can be hard to resist. A phone call from a charity seeking desperately needed funds for flood victims, endangered species, or the homeless. A postcard claiming you’ve won an amazing sweepstakes prize if you’ll just call and send an “administrative fee.” Or an investment offer giving you an “exclusive” chance to earn potentially enormous profits.

But resist you must. These are just a few examples of the kinds of fraudulent schemes Americans run across every day. Experts estimate that consumers lose more than $100 billion annually to a broad assortment of frauds, cons, and scams. Fraudulent telemarketing and direct mail appeals account for $40 billion of this total.

Alarmingly, the elderly are a major target for con artists, especially phony fundraisers and bogus investment and insurance schemes. Whether they are widowed and lonely, eager to help others, or merely intrigued by a “once in a lifetime” opportunity, increasing numbers Americans are falling for sophisticated and slick appeals that can wind up costing them thousands of dollars, not to mention untold anguish and stress.

Taking your money is the number-one goal of the nation’s scamming scoundrels. Many concoct their cons just to get a credit card number so they can go on a spending spree financed by YOU. Others will bill you incredible sums for merely calling them to find out more. And still more want a check or cash as soon as possible – by overnight delivery, by wire or even by courier – so they have their money before you have them figured out.

What consumer-soaking schemes are all the rage these days? Among the major scams are postcard sweepstakes offers. In a recent poll, 30 percent of Americans said they had responded to such mailings, sometimes sending hundreds of dollars to “register” for a seemingly fabulous prize or trip.

False charities are another popular consumer con. Telephone troublemakers claiming to represent everyone from police officers to the disabled take advantage of Americans’ generosity to the tune of billions of dollars each year. Adding to the problem is an array of fraudulent appeals – in newspaper ads, on TV and by mail – about business and investment opportunities, vacation homes, and even “miracle cures” for everything from baldness to cancer.

WHAT CAN YOU DO….

In the face of this onslaught of fraud, the best course for consumers is to beware. Here are some pointers so you won’t be conned by the pros.

If a caller asks for your credit card, bank account or Social Security number to verify a free vacation, a prize, or a gift, say “No” and hang up.
If you’re calling a 900 number in response to an advertisement or something you received in the mail, make sure you know all the charges up front.
Before you agree to support a charity that calls seeking money, ask for written information about its finances and programs.

If you feel you’ve been conned, call the police or the Better Business Bureau. Remember, consumer fraud is a crime. And last but not least, remember that an offer that sounds too good to be true, probably is.

Identity Theft

If you become a victim of Identity Theft, it is important to act immediately to stop the thief’s further use of your identity. Unfortunately, at this time victims themselves are burdened with resolving the problem. It is important to act quickly and assertively to minimize the damage. In dealing with authorities and financial institutions, keep a log of all conversations, dates, names, and telephone numbers. Note the time spent and any expenses incurred. Confirm conversations in writing. Provide your police report number to expedite reporting the crime.

Send correspondence by certified mail (return receipt requested). Keep copies of all letters and documents. Sometimes victims of Identity Theft are wrongfully accused of crimes committed by an imposter. If a civil judgment has been entered in your name for actions taken by an imposter, contact the court where the judgment was entered and report that you are a victim of Identity Theft. If you are wrongfully prosecuted of criminal charges, contact the state Department of Justice and the FBI. Ask how to clear your name.

We suggest you also do the following:

- Report the crime to your local police. Provide as much information as you can. Obtain a police report number and name of an officer who investigated your report and give it to creditors and others who require verification of your case. Credit card companies, banks, and insurance companies may require you to show the report in order to verify the crime. Copies of police reports can be obtained by contacting the local police department.
- Immediately contact all creditors with whom your name has been used fraudulently. Obtain replacement cards with new account numbers for your own accounts that have been used fraudulently. Ask that old accounts be processed as “account closed at consumer’s request.” (This is better than “card lost or stolen,” because when this statement is reported to credit reporting bureaus, it can be interpreted as blaming you for the loss.) Carefully monitor your mail and credit card bills for evidence of new fraudulent activity. Report it immediately to credit grantors.

CREDIT REPORTING BUREAUS

Contact credit reporting bureaus for names and telephone numbers of credit grantors with whom fraudulent accounts have been opened. Ask the credit reporting bureaus to remove inquiries that have been generated due to the fraudulent access. You may also ask the credit reporting bureaus to notify those who have received your credit report in the last six months in order to alert them to the disputed and erroneous information.

The nearest office of the Consumer Credit Counseling Service of Los Angeles might be able to give you advice on removing fraudulent claims from your credit report. Call 800-388-2227.

Immediately call the fraud units of the three credit reporting bureaus, i.e., Equifax, Experian, and Trans Union. Report the theft of your credit cards or numbers. Ask that your accounts be flagged. Also, add a victim’s statement to your report, up to 100 words. (“My Identification has been used to apply for credit fraudulently. Contact me at (telephone number) to verify all applications.”) Be sure to ask how long the fraud alert is posted on your account, and how you can extend it if necessary. Be aware that these measures may not entirely stop new fraudulent accounts from being opened by an imposter. Ask the credit bureaus in writing to provide you with free copies every few months so you can monitor your credit report.

EQUIFAX

To report fraud call: 800-525-6285 or 800-685-1111
P.O. Box 740241, Atlanta, GA 30374-0241
To dispute information in credit report write: P.O. Box 740256, Atlanta, GA 30374-0256
To opt out of pre-approved offers of credit write: Equifax Options, P.O. Box 740123, Atlanta, GA 30374-0123

EXPERIAN (formerly TRW)

To report fraud call: 800-301-7195 or fax 800-301-7196
To contact Experian Consumer Fraud Assistance write: P.O. Box 1017, Allen, TX 75013
To order a copy of credit report write: P.O. Box 2104, Allen, TX 75013-2104
To dispute information in credit report contact: Experian at the address or telephone number provided on your credit report.
To opt out of pre-approved offers of credit and marketing lists call: 800-353-0809

TRANS UNION

To report fraud call: 800-680-7289
to report fraud write: Fraud Victim Assistance Division P.O. Box 6790, Fullerton, CA 92634
To order a copy of credit report write: P.O. Box 390, Springfield, PA 19064 or call 800-916-8800
To dispute information in credit report call: 800-888-4213
Telephone number provided on credit report or use “investigation request form” provided by Trans Union when you order your report.
To opt out of pre-approved offers of credit and marketing lists call: 888-5OPTOUT

Remember, if you have been denied credit you are entitled to a free credit report. If you are the victim of fraud, be sure to ask the credit reporting bureau for a free copy of your credit report. In 1997, a law became effective requiring credit reporting bureaus to provide credit reports free of charge to victims of Identity Theft.

SOCIAL SECURITY ADMINISTRATION

If your Social Security number has been used fraudulently, report the problem to the Social Security Administration (SSA) at 800-269-0271. You may also order your Earnings and Benefits Statement by call the SSA at 800-772-1213. For extreme cases of Identity Theft, they may be willing to change your Social Security number.

DIRECT MARKETING ASSOCIATION

To remove your name from mailing lists write to: Mail Preference Service, P.O. Box 9008, Farmingdale, NY 11735

To remove your name from telephone lists write to: Telephone Preference Service, P.O. Box 9014, Farmingdale, NY 11735.

When Identity Theft occurs, you need to act quickly, know what to do, who to contact and fully understand your rights under the law. Identity Theft exerts great emotional distress on its victims. Damage containment in each fraud case depends on how deeply the imposter has invaded your personal, professional and financial life. There are many preparatory actions one can take to prevent Identity Theft.

This information is meant to educate consumers. You can never be too careful, prepared, or aware. Share this information with family and friends. Schedule family discussions, ensure everyone is aware and prepared in the event an identity thief strikes.