MISLEADING MAILINGS TARGETED TO SENIORS HEARING BEFORE THE SUBCOMMITTEE ON SOCIAL SECURITY OF THE COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION JULY 26, 2001 Serial No. 107–44 Printed for the use of the Committee on Ways and Means ( U.S. GOVERNMENT PRINTING OFFICE 75–753 WASHINGTON : 2001 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 10:10 Dec 11, 2001 Jkt 075753 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 E:\HR\OC\C753.XXX pfrm01 PsN: C753 COMMITTEE ON WAYS AND MEANS BILL THOMAS, California, Chairman PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York E. CLAY SHAW, JR., Florida FORTNEY PETE STARK, California NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania WALLY HERGER, California SANDER M. LEVIN, Michigan JIM MCCRERY, Louisiana BENJAMIN L. CARDIN, Maryland DAVE CAMP, Michigan JIM MCDERMOTT, Washington JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin JIM NUSSLE, Iowa JOHN LEWIS, Georgia SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts JENNIFER DUNN, Washington MICHAEL R. MCNULTY, New York MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California WES WATKINS, Oklahoma KAREN L. THURMAN, Florida J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas JERRY WELLER, Illinois EARL POMEROY, North Dakota KENNY C. HULSHOF, Missouri SCOTT MCINNIS, Colorado RON LEWIS, Kentucky MARK FOLEY, Florida KEVIN BRADY, Texas PAUL RYAN, Wisconsin ALLISON GILES, Chief of Staff JANICE MAYS, Minority Chief Counsel SUBCOMMITTEE ON SOCIAL SECURITY E. CLAY SHAW, JR., Florida, Chairman SAM JOHNSON, Texas ROBERT T. MATSUI, California MAC COLLINS, Georgia LLOYD DOGGETT, Texas J.D. HAYWORTH, Arizona BENJAMIN L. CARDIN, Maryland KENNY C. HULSHOF, Missouri EARL POMEROY, North Dakota RON LEWIS, Kentucky XAVIER BECERRA, California KEVIN BRADY, Texas PAUL RYAN, Wisconsin Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occur- rences are inherent in the current publication process and should diminish as the process is further refined. ii VerDate 11-MAY-2000 10:10 Dec 11, 2001 Jkt 075753 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 E:\HR\OC\C753.XXX pfrm01 PsN: C753 C O N T E N T S Page Advisory of July 19, 2001, announcing the hearing .............................................. 2 WITNESSES Social Security Administration, Hon. James G. Huse, Jr., Inspector General, Office of Inspector General .................................................................................. 8 AARP, Betty Severyn .............................................................................................. 140 Arkansas Office of the Attorney General, Darrin L. Williams ............................ 144 Daniels, Lorna, Arlington, VA ................................................................................ 137 TREA Senior Citizens League: George A. Smith ............................................................................................... 59 Christy Turner, Public Interest Data Incorporated ....................................... 78 Michael J. Zabko, American Red Cross .......................................................... 78 Appendix A, supplemental testimony taken by Subcommittee staff from Mau- rice K. (Chip) Heartfield, III, Squire & Heartfield Direct, Inc., Oakton, VA, and Richard J. Ruddy, Jr., Ruddy Law Firm, Fairfax, VA ....................... 157 SUBMISSIONS FOR THE RECORD The Retired Enlisted Association, Aurora, CO, Vincent B. Niski, statement ..... 195 Thoms, William H., Jr., Gloucester, MA, letter .................................................... 197 iii VerDate 11-MAY-2000 10:10 Dec 11, 2001 Jkt 075753 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 E:\HR\OC\C753.XXX pfrm01 PsN: C753 VerDate 11-MAY-2000 10:10 Dec 11, 2001 Jkt 075753 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 E:\HR\OC\C753.XXX pfrm01 PsN: C753 MISLEADING MAILINGS TARGETED TO SENIORS THURSDAY, JULY 26, 2001 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON SOCIAL SECURITY, Washington, DC. The Subcommittee met, pursuant to notice, at 10:09 a.m., in room 1100 Longworth House Office Building, Hon. E. Clay Shaw, Jr., (Chairman of the Subcommittee) presiding. [The advisory announcing the hearing follows:] (1) VerDate 11-MAY-2000 10:10 Dec 11, 2001 Jkt 075753 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\C753.XXX pfrm01 PsN: C753 2 ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON SOCIAL SECURITY FOR IMMEDIATE RELEASE Contact: (202) 225–9263 July 19, 2001 No. SS–7 Shaw Announces Hearing on Misleading Mailings Targeted to Seniors Congressman E. Clay Shaw, Jr., (R–FL), Chairman, Subcommittee on Social Secu- rity of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on misleading mailings targeted to seniors. The hearing will take place on Thursday, July 26, 2001, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m. In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consider- ation by the Committee and for inclusion in the printed record of the hearing. BACKGROUND: Social Security affects the lives of almost every American. Nine out of ten seniors receive Social Security benefits. Seniors pay close attention to any information they receive concerning Social Security, as notices often refer to changes in benefits that make up a least half of the income for a majority of seniors. Despite the fact that the law prohibits certain misleading communications, the So- cial Security Administration’s (SSA’s) Office of Inspector General (IG) continues to receive complaints and conduct investigations of misleading SSA-related solicita- tions. Recently, SSA’s IG settled a case with the Lead Agency, Inc., who sent ap- proximately 2.6 million death benefit insurance ‘‘lead card’’ mailings to seniors that appeared to be from or related to SSA. Information from these cards was then used to sell insurance policies. More recently, the IG completed investigations regarding two types of misleading mailings targeted primarily to seniors. One mailing made claims about a fictional ‘‘Slave Reparations Act’’ and the other raised the prospect of $5,000 payments to ‘‘notch babies.’’ Both mailings indicated that the payments would be coming from SSA, but that to receive the funds, the individual must supply their personal infor- mation, including their Social Security number to a National Victim’s Register. All replies were directed to the TREA Senior Citizens League (TSCL), an independent affiliate of The Retired Enlisted Association (TREA). TSCL is a tax-exempt organi- zation that advocates legislative reforms for seniors. According to the IG, these fly- ers generated more than 29,000 individual responses, many of which included copies of personal documents such as Social Security cards, drivers licenses, birth certifi- cates, and detailed family genealogies. TSCL denied any involvement with the flyer and the IG was unable to identify its origin. However, the IG investigation revealed that TSCL directed its data proc- essing firm to create a database containing the respondent’s personal information. This information was then used to send a letter to respondents disavowing any re- sponsibility for the flyers, which included TSCL’s standard fundraising brochure. In announcing the hearing, Chairman Shaw stated: ‘‘Misleading mailing scams targeted at seniors are unconscionable crimes. Many of our seniors are particularly vulnerable, due to their limited income or isolated living environment. Deceptive mailings that appear to have the approval or endorsement of SSA are illegal and VerDate 11-MAY-2000 10:10 Dec 11, 2001 Jkt 075753 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 E:\HR\OC\C753.XXX pfrm01 PsN: C753 3 will not be tolerated. The more seniors know about these scams, the more they and their families can protect themselves from becoming victims of these heartless per- petrators.’’ FOCUS OF THE HEARING: The Subcommittee will hear testimony related to several misleading mailings tar- geting seniors. Testimony will include the experiences of victims and related inves- tigation findings of the SSA/IG and other law enforcement officials. DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: Any person or organization wishing to submit a written statement for the printed record of the hearing should submit six (6) single-spaced copies of their statement, along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, with their name, address, and hearing date noted on a label, by the close of busi- ness, Thursday, August 9, 2001, to Allison Giles, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington,