Scams, Schemes & Frauds Impacting Older Adults and How to Avoid Being a Victim

1. Scams, Schemes & Frauds Impacting Older Adults and How to Avoid Being a Victim Presented by Bonnie Dahl, Esquire, Raquel Smith, Legal Advocate, and Karen Chenoweth, MSW SeniorLAW Center CARIE - Center for Advocacy for the Rights and Interests of the Elderly Thursday, January 12, 2012

2. Largest provider of legal services to seniors in Pennsylvania Independent non-profit organization Serving over 10,000 seniors each year with: direct individual representation legal advice, information & referral services community legal education professional training systemic reform Legal staff and pro bono panel Celebrating over 30 Years of Service (1978 – 2011)

3. Projects and Clinics: Homeowners Assistance Program Project S.A.F.E. (Stop Abuse & Financial Exploitation) Serving Older Women Victims Of Violence & Sexual Assault Kin C.A.N. (“Kinship Caregiver Assistance Network”) The Hospice and Home Care Legal Project Fostering Connections to Kinship Care (DHS, abuse and neglect) Community-Based Legal Services, including home and hospital visits and neighborhood legal clinics throughout Philadelphia

4. Projects and Clinics (cont.): Legal Services for Asian Elders Pension Rights Project Legal Services For Hispanic Elders Pennsylvania SeniorLAW HelpLine 1877 PA SR LAW

5. Founded in 1977, CARIE’s mission is: “To improve the well-being, rights and autonomy of older persons through advocacy, education and action”

6. Circle of Advocacy CASE ACTION CAUSE

7. CARIE LINE T-SAP PAVE APPRISE Long Term Care Ombudsman PA-SMP Education and Research Public Policy Initiatives

8. Scams, Schemes and Frauds Facts Financial fraud is one of the most common yet under-reported forms of elder abuse Financial scams targeting seniors have become so prevalent that they are now considered the crime of the 21st century [NCOA Report 2011] Elder financial fraud victims lose an estimated 2.9 billion dollars annually [2011 Met life study]  As the population of senior citizens increases, so does the number of people willing to take advantage of them Today’s webinar will focus on ten common scams impacting seniors ¡

9. Top Ten Scams, Schemes, and Frauds Home Improvement Fraud Debt Relief Fraud Funeral Fraud Reverse Mortgage Scams Investment Scams Telemarketing Fraud Internet Fraud Lottery and Sweepstakes Fraud Phony “Government” Scams Grandparent Scam

10. Be wary of the contractor who: • Solicits door to door • Just happens to have materials left over from a previous job • Only accepts cash payments • Asks you to get the required building permits • Does not list a business number in the local telephone directory • Uses high pressure sales tactics • Fails to provide a written contract • Requests full payment before completing work • Offers exceptionally long guarantees • Offers home improvement loans Home Improvement Fraud

11. Tips for Avoiding Home Improvement Scams Home Improvement Fraud Obtain more than one bid for the job Insist that the contract be in writing Don’t pay contractor before you read and sign a contract Don’t pay contractor more than 1/3 of the contract price to begin work Sign contract before the work begins and keep a copy for your records Contract must state the exact work to be done and include start and completion dates along with the total cost of the project Obtain the name, address (not P.O.Box) and phone number of contractor on contract. Get license number and name license is under on the contract Check to see if contractor registered with Pennsylvania Attorneys General office. Check for complaints with the Better Business Bureau Never make final payment until you are completely satisfied with the work

12. What to do if you have been the victim of Home Improvement Fraud: Home Improvement Fraud • File Complaints with the various government agencies • Small Claims Court or Common Pleas Court •   Call Pennsylvania SeniorLAW HelpLine 1-877-727-7529

13. Home Improvement Programs and Resources Go to: http://portal.hud.gov/hudportal/HUD?src=/states/pennsylvania/homeownership/homerepairs • HUD website gives an extensive list of organizations that provide homeowners with home repairs and improvements by city/town and county

14. Debt Relief Fraud Bogus Credit Counseling Services and Debt Management Plans (DMP) Lie about their nonprofit status Don't provide education and counseling Often arrange for consumers to pay debt through a DMP Many have been shut down by the FTC How A DMP Works: Deposit money each month with the credit counseling service, which uses your deposits to pay your unsecured debts Counselor develops payment schedule with creditors Creditor may agree to low interest rates and waive certain fees DMP requires the counseling service to make regular timely payments May take up to 48 months to complete Must agree not to apply for or use any additional credit while in the plan

15. Tips for Avoiding Debt Management Plan Fraud Debt Relief Fraud  Be wary of credit counseling organizations that: Charge high up-front fees for enrolling in credit counseling or a DMP Pressure you to make “voluntary contribution,” another name for fees Try to enroll you in a DMP without spending time reviewing your financial situation Offer to enroll you in a DMP without teaching you budgeting and money management skills Demand that you make payments into a DMP before your creditors have accepted you into the program

16. More Tips for Avoiding Debt Management Fraud Debt Relief Fraud Protect Yourself Contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the counseling service handling your DMP Always read your monthly statements promptly Check to see if licensed or registered with the state Don’t commit to participate in a DMP over the telephone Get the DMP in writing. Make sure it includes a detailed price quote of all fees charged Ask what safeguards are in place to protect the privacy of your information Contact Housing and Urban Development (HUD) for a list of bona fide credit counselors

17. What to do if you have been a victim of DMP fraud or DMP company has closed down. • Stop all automatic bank payments • Start paying your bills directly to your creditors - ask if they will give reduction in interest rate • Order copy of credit report - ask that late notations be removed • Report to government agencies • Make a police report • File Complaint in Court Debt Relief Fraud

18.  Debt Relief Fraud Debt Negotiation Programs • The Claims: • Claim can arrange to have debt paid off anywhere from 10 to 50 percent of the balance owed • Claim services will have little or no negative impact on your credit • Claim negative information can be removed from your credit report • Tell you to stop making payments to creditors - send to them • Promise to hold your funds in a special account and pay your creditors on your behalf

19. Debt Relief Fraud The Truth: • No guarantee that their services are legitimate • No guarantee creditor will accept partial payment • If you stop making payment (interest & fees continue) • Debt negotiation companies charge:  fee to establish the account, monthly service fee, and a final fee of a % of the money you've saved • No payments are made to the creditor until account has built up enough funds for realistic settlement of account. • Debt negotiation companies rarely reach out to creditor for settlement, but rather wait until you receive collection letters. • Negative entry on credit report • Creditor can still sue and get a judgment

20. Funeral Fraud • Overcharging for goods and services • Selling unnecessary services and goods • Stealing or mismanaging funeral prepayment funds

21. Funeral Fraud At-Need Funeral Arrangements A Grieving Heart can be an opening to empty your pocketbook • FTC created the "Funeral Rule" to stop abusive practices (a copy can be found at www.bbb.org) •   According to the Funeral Rule: • The right to choose the funeral goods and services you want (with some exceptions) • The funeral provider must state this right in writing on the general price list • If state or local law requires you to buy a particular item, it must be disclosed on the price list • The funeral provider may not refuse, or charge a fee, to handle a casket you bought somewhere else • A funeral provider who offers cremations must make alternative containers available 

22. Funeral Fraud Pre-paid Funeral Plans: How to avoid being a victim of fraud • Pennsylvania's Future Interment Law governs pre-paid funeral goods and services • You can make plans in advance, without prepaying • A funeral director shall deposit in escrow or transfer in trust to a banking institution in this Commonwealth, the entire amount of monies received by the funeral director under a prepaid contract for funeral services or merchandise, including additional service fees or arrangement fees. • The "Funeral Rule" applies - all rule requirements to be followed at the time the funeral arrangements are pre-planned

23. Funeral Fraud     Important issues to consider before paying any money • What are your paying for?  Services and goods • What happens to the money you prepaid? • What happens to the interest income on money that is prepaid and put into a trust account? • Are you protected if the firm you dealt with goes out of business? • Can you cancel the contract and get a full refund if you change your mind? • What happens if you move to a different area? • Be sure to tell your family about the plans made

24. Funeral Fraud Tips to Avoid being a victim of funeral fraud • Be an informed consumer • Shop around •   Funeral homes are required to provide detailed price lists  •   Ask if lower priced items are included on the price list • Check out the funeral service •   Contact BBB •   Check to see if funeral director is licensed with State Board of Funeral Directors @ www.state.pa.us • Require that everything be in writing  • Itemize all prices • Specify any future costs •  Read carefully before signing •  For pre-paid funeral arrangements, ask if the agreement you sign can be voided, taken back or transferred to other funeral homes    

25. Funeral Fraud If you have a problem concerning funeral matters: Contact: Funeral Consumers Alliance: www.funerals.org or call 1-800-765-0107 Funeral Service Consumer Assistance Program: 1-800-662-7666 Funerals: A Consumer Guide:  www.ftc.gov or call 1-877-FTC-HELP

26. What is a Reverse Mortgage? • Home loan that lets a homeowner convert the equity in his/her home into cash • The loan is repaid when you die, sell your home, or when home is no longer primary residence • Many have no income qualifications • One owner Must be 62 or older • Cash can supplement income, pay taxes, insurance, home repairs • Retain title to home Homeowner/Reverse Mortgage Scams

27. Homeowner/Reverse Mortgage Scams What is a Reverse Mortgage? • There are three types of reverse mortgages: • Single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations • Federally-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs) and back by the U.S. Department of Housing and Urban Development (HUD) • Proprietary reverse mortgages, private loans that are backed by the companies that develop them

28. Homeowner/Reverse Mortgage Scams Scam 1:  Charged for Information • Beware of companies who call themselves advisors or estate planners, and offer nothing more than information • Say they will help you find a reverse mortgage lender and provide you with basic information about the loans for a fee • HUD provides the same facts and services for free • Do not pay for any type of Reverse Mortgage Information, brochures, or calculations of what you can qualify for • Senior home owners who have fallen prey to this scam have lost thousands of dollars • Contact HUD for information on reverse mortgages at 1-888-466-3487 or go to HUD.gov 

29. Homeowner/Reverse Mortgage Scams Scam 2:  Shady Counseling • Beware of counselors that are partners with other reverse mortgage lenders or financial service individuals and will try to push you into their products or services To Avoid the Shady Counselor: • Meet with a HUD approved Reverse Mortgage Counselor • FHA Housing Counseling Agency Listing at 1-800-569-4287 or HUD.gov  

30. Homeowner/Reverse Mortgage Scams Scam 3:  Equity Theft • Scheme designed to withdraw false and inflated equity from residential properties •  Scammer purchases the residential property using a "straw buyer" • The scammer then recruits a senior to "purchase" the property from the straw buyer by transferring the deed to the senior with no exchange of money. • After the senior has occupied the property for 60 days, the scammer arranges for the senior to obtain a reverse mortgage • With the aid of a fraudulently inflated property appraisal - senior is encouraged to request a lump sum from the lender • Often with the help of the settlement attorney, the scammer absconds with all of the equity money at closing. • How the Senior Loses: • Senior gets no equity money at closing • Senior is and unwitting accomplice to lender fraud • Senior is put into a home and cannot afford to pay for the maintenance, taxes and insurance. • If approached about using a reverse mortgage on a rehab or foreclosure property and asked to sign a Quit Claim Deed up front - this is a fraud.

31. Homeowner/Reverse Mortgage Scams Scam 4:  Mortgage Repair Scams • Due to strict FHA Appraisal requirements, a reverse mortgage may require repairs made to the property before closing How to Protect Yourself: • Find out from the appraiser exactly what needs to be repaired • Get multiple quotes - don't just use contractor recommended by the Reverse Mortgage company • Reputable contractors will agree to be paid at closing • Work needs to be up to HUD guidelines

32. Homeowner/Reverse Mortgage Scams Reporting Possible Fraud • Let the counselor, lender, or loan officer know • File Complaint:  FTC, AG, State Banking Regulatory Agency

33. Types of Investment Schemes • Investments for working capital • Oil-rich land, film production company, brokers of gemstones, communication businesses, ownership interests in company • Investment Questions: • If the answer to any of these questions is no, vague or complicated = fraud • Is company registered to sell securities? (Obtain annual report from SEC) • Is it "too late" if I don't invest my money now? (Pressure tactic) • Does investment have a track record? (Get track record and background of people promoting it) • Where is my money going?(Ask for written proof of where • money is going and investors) Investment Schemes

34. Investment Schemes Investigate • Get an independent appraisal of the specific asset, business or venture • Search for published information about the company, particularly proof that the company has registered the securities it is selling (SEC) • Check with someone you trust who has heard of the company • Check with BBB, FTC and AG for any complaints • Don't let appearances fool you - anyone can incorporate an entity and put a toll-free number into their home • Beware of sale pitches that play down risk or portray written risk disclosures as routine formalities required by the government • Scam artists lie • Demand written proof of profit projections from independent sources • If the investment sounds too good to be true, it usually is

35. Investment Schemes (cont.) The Seminar Pitch • Earn up to $100,000 a year • Multiply your money in 6 months or less • Insider secrets for making money fast • You can't afford to pass up this valuable opportunity • Letter, infomercial

36. Investment Schemes Be Wary of Promotional Materials or Sales Pitches that Make these claims • Earn big money fast, regardless of your lack of experience or training • Offered for a short time only • "Sure thing" • Reap financial rewards by working part time at home • You will be coached each step of the way to success • The program worked for other participants - even the organizers

37. Investment Schemes How to Avoid the Seminar Pitch • Avoid high pressure sales pitches that require you to buy now • Investigate the business • Be wary of "success stories" - generally paid shills • Be cautious of seminar representatives who are reluctant to answer questions, or who give evasive answers • Ask how much money you need to qualify for the investment or sales opportunity - get it in writing - ask about the company's refund policy

38. Investment Schemes Resources - Where to check on investments • PA Securities Commission at www.psc.state.pa.us - offers a FREE background check of a firm or individual at www.psc.state.pa.us/investor/checkinvest.html or call 1-800-600-0007 • PA Department of Insurance at www.ins.state.pa.us • U.S. Securities and Exchange Commission at www.sec.gov

39. Telemarketing Fraud  Scam artists use the telephone to prey on older people’s vulnerability  High pressure tactics- you must act NOW or offer will be no good Can’t afford to miss this ‘no risk” offer One of the most common schemes -no face to face interaction- no paper trail Once deal has been made, victim’s name is shared with other scam artists looking for easy targets

40. Telemarketing Fraud • Scam artists may use any of the following tactics: • Cold Calls- scam artists get victims' name from telephone directory , mailing list or "sucker list" (information about people who've responded to previous telemarketing scams) • Direct mail-  Letter or postcard saying you've won a prize and please call this # for more info.  • Can begin with a letter, postcard, TV, newspaper or magazine ad directing victims to call for more information

41. Examples of Telemarketing Fraud Caller says he or she is with person’s bank or credit card company and needs to verify account information Person has won a “free gift” BUT must pay postage and handling Cross-Border Fraud- Scam artists “guarantee” that person has won prizes such as vacations, cars or large sums of cash BUT “winners” must pay “fees” for shipping, taxes, customs, insurance etc. Charity scams-money solicited for fake charities

42. Tips for Avoiding Telemarketing Fraud Place phone number on National Do Not Call Registry Never buy from an unfamiliar company Ask that offer be put in writing and hang up if request is refused Never agree to have courier pick up check at their home or wire money to telemarketer Never agree to confirm bank account or credit card information to an unfamiliar company Always take time to make a decision Do not pay in advance for services

43. Internet Fraud “Cyberspace”- newest area being used by con artists Effective means of reaching a mass audience without spending a lot of time, money or effort Websites, online message, or “spam” e-mails used for the purpose of fraudulent solicitations to prospective victims Easy to make messages look real and credible

44. Examples of Internet Fraud Internet auction fraud is a misrepresentation of a product advertised for sale through an Internet auction site Free credit report fraud Get rich quick schemes-make money in your spare time Work at home scams and business opportunities Advertising that promises much more than can be delivered  (Dramatic Weight Loss in 2 weeks) Phishing,” con artists attempt to gather personal information by asking consumers to “update” or “verify” billing information, such as credit card information and Social Security numbers

45. How To Avoid  Internet Fraud Avoid filling out forms in emails or on websites that ask for personal information Only open attachments from known senders Do not click on links in unsolicited emails Contact business that supposedly sent the email to verify Look for the small yellow lock icon that appears in the browser window Do not click on Internet “pop ups”

46. More Tips to Avoid Internet Fraud Don’t respond to unsolicited e-mails Make certain you have a firewall and up to date anti-virus software Don’t use the same password for all online accounts Don’t do online banking or access Internet accounts using unsecured wireless networks

47. Lottery and Sweepstakes Fraud Fraudulent foreign scam artists telephone or send mail to people in the U.S. telling them they’ve won a sweepstakes or foreign lottery Victim is told he or she must first pay “fees” for shipping, handling, taxes, customs or other supposed expenses by wiring money, sending a personal check, providing credit card information or sending a money order by overnight delivery or courier

48. Lottery And Sweepstakes Fraud Letter informs victim that it’s their lucky day- "You just won the lottery“ Cashier’s check to cover taxes and fees is enclosed Deposit check and wire money to sender for taxes and fees When sender gets payment, victim gets winnings

49. Lottery And Sweepstakes Fraud Sweepstakes are the most common form of fraud according to the FTC Seniors lose about $35 million annually in prizes or sweepstakes It is against federal law to play a foreign lottery on the telephone or through the mail Legitimate lotteries do not notify winners by phone, mail or e-mail Legitimate lotteries do not charge fess or upfront charges and do not collect credit card information

50. Lottery and Sweepstakes Fraud Actual Case Mrs. M received a phone call informing her she'd won $1.5 million from "American Gaming Board“      She was instructed to wire four payments of $1,500 to Quebec,      Canada, after which, she'd receive her "prize"      After a few weeks went by and she had not received her "prize"      she became very concerned. At that point, she realized she had       no contact information for "American Gaming Board" . All she       knew was that she'd wired the money using Western Union as       instructed. Mrs. M contacted the BBB and was informed that       "American Gaming Board" was a bogus company for which       many complaints had been received.      Mrs. M contacted SeniorLAW Center. She was advised to file a       police report immediately and report the fraud to the Attorney       General Consumer Protection Unit. She was also told that because       wired the money, it was like sending cash and could not be traced.      SeniorLAW Center informed her that we could assist her in getting       some compensation from the Pennsylvania Commission on Crime      and Delinquency (PCCD) Victims Compensation Assistance       Program (VCAP)