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Crooks posing as legitimate business people or
other "trusted" individuals scheme
to trick consumers into giving up money, property or valuable personal
information |
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Frauds that Target the
Elderly: Beware of Strangers Bearing Gifts
It's true - senior
citizens are often the targets of fraud and
financial crimes. Among the reasons: Some older people have
built substantial assets (including their own home and large savings
accounts), they're easy to find at home, and they can be swayed by fears
of losing their financial independence. "Also, despite the efforts of
law enforcement, criminals are getting smarter and using technology to
their advantage to commit fraud and other financial crimes, such as
identity theft," said Michael Benardo, manager of the FDIC's Financial
Crimes Section.
The following are common cons designed to trick consumers – especially
elderly people – into giving up money, property or valuable personal
information. These scams often are committed by strangers posing as
legitimate business people, government officials or other "trusted"
individuals. The information is based on reports from the U.S. Justice
Department, FDIC fraud specialists, the Federal Trade Commission (FTC)
and other sources:
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Prize and
Sweepstakes Frauds: This type of scam may involve a
congratulatory phone call or letter informing a consumer that he or she
has won a prize or a large sum of money in a lottery or sweepstakes. But
before any "winnings" are delivered, you are told you must pay for fees,
taxes, shipping and handling or other charges. Of course, the prize
never comes or any products that do arrive are essentially worthless.
"Prize and sweepstakes fraud is more prevalent among older consumers
than among the public at large, and is particularly prevalent among
consumers age 70 and older," Lois Greisman, an Associate Director in the
FTC's Bureau of Consumer Protection, said in testimony before the U.S.
Senate Special Committee on Aging in July. She said nearly 12,000 older
consumers complained to the FTC that they lost almost $35 million in
fraudulent prize or sweepstakes promotions in 2004, with the median loss
being about $2,000. "These frauds can be devastating to consumers who
sometimes cash out retirement funds to claim their purported prizes,"
Greisman said.
Fraudulent Investments: A firm or
individual "guarantees" fantastic returns on investments, business
opportunities, gems and other "no-risk" deals. These will sound
attractive compared to what local banks are paying on deposits. At some
point the seller takes the money and runs, leaving the investor with a
big loss.
Charitable Donation Scams: Crooks
disguised as charities collect donations or money for raffles. While you
think you're helping people in need, you're really helping con artists
pad their pockets. You should make donations only to charities you are
familiar with or after consulting with the Better Business Bureau (BBB),
which maintains reports on national and local charities. Contact your
local BBB as listed in the phone book or check out charities online at
www.give.org.
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Home or Auto Repair Scams: Someone
calls or knocks at your door offering a super deal to fix your roof or
driveway or repair your car. After you hand over the funds you discover
the work hasn't been completed, is of poor quality or wasn't needed in
the first place. Some scammers have billed consumers for maintenance or
repairs that were never performed.
Loan or Mortgage Fraud: These
typically involve unscrupulous "predatory" lenders (typically from the
non-bank or home improvement industries) that use false or misleading
sales tactics to make high-cost loans to consumers in need of cash,
including older homeowners concerned about paying bills. Victims often
can't afford the loan, and they may be pressured to refinance a loan
repeatedly and pay high fees each time – a scam known as "loan
flipping." Borrowers who pledge their house as collateral and can't
repay the loan could lose the home in a foreclosure.
Help for Avoiding Foreclosures: The
fraudster goes through records at the local courthouse listing homes
facing foreclosure. He or she then contacts the homeowners and offers
assistance to prevent the foreclosure from taking place. Instead, the
homeowner is then tricked into signing documents that, in the fine
print, transfer the ownership of the property to the fraudster.
"I-Need-Your-Help" Scams: Unlike the
previous scams that involve selling or giving something to the victim,
here the con artist is asking to receive some assistance... and in the
process obtains account information or access to funds. Example: Someone
claiming to be a bank examiner, bank security officer or police officer
calls asking for help investigating a possible fraud by withdrawing cash
from your bank account or providing account information. If the trick
works, the bogus investigator can walk away with the money or use the
confidential information to raid the victim's bank account.
Counterfeit Checks: In one example,
you sell an item over the Internet and the buyer sends a cashier's check
for more than the agreed-upon price. The buyer instructs you to wire the
excess funds back. If you comply, you will most likely find out that the
check you received is phony and the money you wired cannot be returned
to you. |
| Source: FDIC |
Frauds that Target the
Elderly
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