Senior citizens are targeted for scams for several reasons. They often have savings and are home owners with good credit, which allows them to consider investing their money for the benefit of themselves or their loved ones. On the other hand, they may be on a fixed budget or living just above the poverty line and anxious to find ways to cut costs or replenish retirement savings they’ve lost. Below are nine increasingly common ways criminals are taking advantage of seniors. Many scams relate to purchasing insurance. If you or a loved one has questions or are suspicious about an insurance provider, you can contact your state department of insurance for assistance.
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Medicare fraud
Medicare provides guaranteed health care coverage for Americans age 65 or older. It is financed in part by payroll taxes and monthly premiums deducted from Social Security checks. Using illegally acquired doctor ID and patient Social Security numbers, criminals can, after establishing a fake health care clinic or pharmacy store, bill Medicare for treatments that never happened. These operations usually last six months to a year before the thieves pack up and disappear. To avoid inadvertently becoming a part of such a scam, seniors need to guard their Social Security number and closely review their quarterly Medicare Summary Notices. If the notice is too confusing, seniors should contact Medicare or their local Medicare office for assistance.
Stranger-owned life insurance policy (STOLI) fraud
Stranger-owned life insurance scams often specifically target seniors. Fraudulent investors convince seniors to purchase life insurance and then sell the policy over to them for a lump sum. The insured will then be asked to name the investor as the beneficiary. As part of the deal, the investor takes over the premium payments and receives death benefit proceeds once the insured dies. Seniors in need of the immediate cash may be unaware that such a transaction is illegal in many states, that they’ll have to pay taxes on any cash they receive for selling the policy, and, if the insurance company finds out about the transaction, find it difficult or impossible to obtain life insurance in the future. Investors often misrepresent the assets of the insured, which is illegal, in order to obtain a larger windfall when the insured dies.
Post-major or other disaster scams
Within hours of a severe storm, tornado, or hurricane, scammers are on the scene, in person or via phone or the Internet, preying on the raw emotions of the victims of such a disaster. Criminals may claim to represent insurance companies and attempt to collect your Social Security number and other personal data. Or, they may try to sell you fake insurance that supposedly provides needed coverage in the aftermath of the disaster. But if you were not insured at the time of a disaster, you cannot file a claim afterward.
Annuity sales scams
“Churning” is the practice of convincing annuity holders into replacing their current annuity with a new one and promising them an immediate cash bonus for doing so. Seniors, concerned about their retirement income and who have seen the value of their nest eggs decline in the recent economic downturn, may be particularly susceptible to this scam. Insurance company employees may try to sell clients new, unsuitable, and costly annuities to bring a profit to the insurance company and receive a big commission payment. If you are in doubt, your state’s division or department of insurance should be able to tell you if an insurance company you are dealing with is fraudulent or not.
Bait and Switch
This is a scam worthy of a B movie. An unscrupulous life insurance agent convinces a senior that they are buying a less expensive policy, and tricks them into signing paperwork for a much more costly policy with high, unaffordable premiums. The agent profits from the larger commission that comes with such policies. Like many of these scams, the criminals prey upon seniors concerned about their financial well-being or living on fixed incomes. One thing you should always remember is to never sign any paperwork you do not completely understand.
Medicare Part B participants scam
Medicare, and any government program, will never make an unsolicited call to a beneficiary requesting personal health or financial information. In recent years, Medicare Plan B participants have been contacted by callers telling them they are eligible for new diabetic glucose meters. These callers identify themselves as being with a government agency and, after telling them about the new meter, ask the participants for their Medicare number. This scam is a common way criminals attempt to gather a victim’s personal identification to help with other criminal activities.
Fake prescription drug scams
Counterfeit drug scams are commonly found on the Internet where seniors go to research and buy medication they need for a low price. With co-pays increasing and insurance plans refusing to cover certain expenses, counterfeit drug scams are growing. The medication you purchase from a fraudulent website, if it doesn’t turn out to be a placebo, is very likely to harm you. Stick to online pharmacies that have the VIPPS seal of approval. You can also check the safety and prices of legitimate online pharmacies at Pharmacy Checker.
Funeral Insurance Scams
It sounds awful, but it’s a fact that funeral insurance scams perpetrated by funeral homes do exist. A policy may name the funeral home instead of a family member or friend as the beneficiary, which means any money left over after a funeral’s expenses will go to the funeral home, not the family. Regarding the cost of a casket, a policy may not allow for inflation, and after burial of the deceased, the family is burdened with the increased expense. As with any kind of insurance, it is important to buy from a reputable provider who takes time to answer your questions without any sales pressure.
Telemarketing Scams
Fraudulent telemarketers may pretend to be with a government agency such as Medicare, insurance company, or even a law enforcement agency tasked to investigate fraud, and request your personal information and money. The FBI reports that as much as $40 billion dollars annually is paid out to fraudulent telemarketers. Any of the scams described above could begin with a simple phone call. Legitimate telemarketers are willing to send you written information about the products or services they’re selling. But do not feel pressured to give out your home address or for that matter, any other personal data. One way to see if a caller is legitimate is to ask for their phone number so you can call them back. If the caller refuses, hang up.
