http://www.fraud.org/learn/older-adult-fraud/they-can-t-hang-up

“Fraud.org is an important partner in the FTC’s fight to protect consumers from being victimized by fraud.” - FTC Commissioner Maureen K. Ohlhausen

They Can't Hang Up

According to the National Consumers League, nearly a third of all telemarketing fraud victims are age 60 or older. Studies by AARP show that most older telemarketing fraud victims don’t realize that the voice on the phone could belong to someone who is trying to steal their money.

Many consumers believe that salespeople nice young men or women simply trying to make a living. They may be pushy or exaggerate the offer, but they’re basically honest. While that’s true for most telemarketers, there are some whose intentions are to rob people, using phones as their weapons. The FBI says that there are thousands of fraudulent telemarketing companies operating in the United States. There are also an increasing number of illegal telemarketers who target U.S. residents from locations in Canada and other countries.

It’s difficult for victims, especially seniors, to think of fraudulent telemarketers’ actions as crimes, rather than hard sells. Many are even reluctant to admit that they have been cheated or robbed by illegal telemarketers.

Step 1

THE FIRST STEP in helping older people who may be targets is to convince them that fraudulent telemarketers are hardened criminals who don’t care about the pain they cause when they steal someone’s life savings. Once seniors understand that illegal telemarketing is a serious crime— punishable by heavy fines and long prison sentences—they are more likely to hang up and report the fraud to law enforcement authorities. They can help catch the crooks and put them in jail—where they belong.

Step 2

THE SECOND STEP in fighting telemarketing fraud against seniors is to understand why they are particularly vulnerable. It’s a myth that victims are incompetent, lonely, or isolated. In fact, AARP research shows that many older victims are active people who are simply lured by false promises of great deals or ways to add to their "nest eggs." Fraudulent telemarketers take advantage of the fact that:

• It’s difficult to tell whether someone is legitimate.Good salespeople are convincing, but so are crooks. They use many of the same sales tactics—being friendly, getting people excited, creating a sense of urgency; • Seniors tend to be trusting.Since they have difficulty imagining that some telemarketers are criminals, they’re more likely to give them the benefit of the doubt; • It’s easy to wear people down. Seniors are targeted relentlessly—some get more than 20 calls a day from scam artists. They may also receive dozens of mailings every week asking them to call about sweepstakes and other offers; • We all want to believe.Who doesn’t want to win a valuable prize, take a free trip, or strike it rich on an investment? People want to believe that it’s their lucky day, and may react with anger or suspicion when others question their optimism; and, • It’s hard to hang up. Many seniors feel that it’s impolite to hang up on people. Swindlers know how to take control of the conversation and are prepared to tell any lies necessary to keep potential victims on the phone.

Step 3

THE THIRD STEP is helping older people recognize the "red flags" of fraud:

• A promise that you can win money, make money, or borrow money easily; • A demand that you act immediately or else miss out on this great opportunity; • A refusal to send you written information before you agree to buy or donate; • An attempt to scare you into buying something; • Insistence that you wire money or have a courier pick up your payment; and, • A refusal to stop calling after you’ve asked not to be called again.

The common thread that runs through all telemarketing scams is the demand for payment upfront. Seniors need to know that:

• It’s illegal for companies that operate contests or sweepstakes to ask you to pay to enter or claim your prize or even to suggest that your chances of winning will improve if you buy something; • It’s illegal for telemarketers to ask for a fee upfront to help you get a loan if they guarantee or strongly imply that the loans will be made; • There is no reason to give your credit card number or bank account number to a telemarketer unless you are actually making a payment with that account; and, • If you have to pay first before getting detailed information about the offer, it’s probably a scam.

Step 4

THE FOURTH STEP is to recognize when older people have been victimized or may be in grave danger and know how to help them. Seniors may be in trouble if they:

• Receive lots of mail for contests, "free trips," prizes, and sweepstakes; • Get frequent calls from strangers offering great deals or asking for charitable contributions; • Make repeated and/or large payments to companies in other states or countries; • Have difficulty buying groceries and paying utility and other bills; • Subscribe to more magazines than anyone could normally read; • Receive lots of cheap items such as costume jewelry, beauty products, water filters, and knick knacks that they bought to win something or received as prizes; • Get calls from organizations offering to recover, for a fee, money they have lost to fraudulent telemarketers.

If you are trying to help an older person with a telemarketing fraud problem, don’t be critical. It could happen to anyone—con artists are very good at what they do. Encourage them to:

• Report actual or attempted fraud via Fraud.org's Online Complaint Form. That information will be transmitted to law enforcement agencies; • Change his or her phone number if con artists call repeatedly; and, • Change his or her bank account or credit card numbers if they have fallen into the hands of thieves.

Step 5

THE FIFTH STEP in fighting telemarketing fraud is to inform older people about how to reduce the number of unwanted sales calls and mailings they receive and how to deal effectively with telemarketers.

• Avoid getting on sucker lists. Don’t fill out contest entry forms at fairs or malls—they are a common source of "leads" for con artists. Ask companies you do business with not to share your personal information with other marketers. • Know your "Do-Not-Call" rights. Under federal law, you can tell a telemarketer not to call you again. Ask your state attorney general’s office or consumer affairs department if there is a state "Do-Not-Call" law and how it protects you. • Know who you’re dealing with. If it’s an unfamiliar company or charity, check it out with your state or local consumer protection agency and the Better Business Bureau.

• Screen your calls.Use an answering machine, Caller ID, or other services that may be available from your phone company to help you determine who you want to talk to and who you want to avoid. • Have a plan for speaking to telemarketers. Before you pick up the phone, know what questions you want to ask or what you want to say. Be polite, but firm. Hang up if someone refuses to answer your questions or you detect the"red flags" of fraud. • Know that your phone number may be collected. When you call a company, your number can be displayed through Automatic Number Identification (ANI). If you have an account with the business, this enables the customer service representative to pull up your records and help you faster, but ANI can also be used for marketing purposes. Ask what information is being collected and tell the company if you don’t want to be put on a marketing list.

Resources Better Business Bureau (BBB)

Check the complaint records of companies. Call the BBB nearest to you to find out how to reach the BBB where the company is located or use the BBB locator.

Direct Marketing Association

Remove your name from telemarketing and mail lists of major companies (you’ll still hear from them if you are current customer). For telemarketing lists, write to Telephone Preference Service, DIRECT MARKETING ASSOCIATION, P.O. BOX 282, CARMEL NY 10512 or visit the website. Include your phone number. For mail lists, write to MAIL PREFERENCE SERVICE, DIRECT MARKETING ASSOCIATION, P.O. BOX 282, CARMEL NY 10512 or visit the website.

Securities and Exchange Commission

Get general advice and check the records of investment brokers and advisers, 800-732-0330 or www.sec.gov. Also check with your state securities regulator, listed in your phone book under state government or at the North American Securities Administrators Association Web site, www.nasaa.org.

Wise Giving Alliance

Check the records of national charities through this program operated by the Better Business Bureau. Visit www.give.org or call 703-276-0100.

Your state or local consumer protection agency

Ask if you have a state "Do-Not-Call" law or other telemarketing rights and get help with telemarketing complaints.

One-Stop Shopping to Curb Unwanted Sales Calls

Tired of calls from strangers trying to sell you something? Bothered by shady characters offering deals that are too good to be true? Take back control of your telephone!

Sign up for the National Do Not Call Registry. It’s easy and it’s free! Call 888-382-1222, TTY 866- 290-4326 from the phone number you want to register. Unfortunately, registering by phone may not work if you live in a residential complex that uses a PBX phone system. But you can also register online at www.donotcall.gov. If you don’t have a computer, use someone else’s.

To register online, you’ll need Internet access and a working email address. The Do Not Call system will send a response to that address with a link that must be clicked on within 72 hours to complete the registration.

Some callers aren’t covered. Nonprofit groups, charities, political organizations, and survey companies don’t have to use the national Do Not Call list. But when charities use professional fundraisers to call, they must honor your request not to call again.

Even if your number is on the registry, companies can still call if you purchased something from them or made a payment within the previous 18 months, you asked about a product or service, or submitted an application within the past three months. Companies can also call if you have a “personal relationship” as a friend, relative, or acquaintance or you gave them written permission to call. But you always have the right to tell them not to call again. And if you don’t want to register for the list, you can tell companies not to call you again on a case-by-case basis.

Registration lasts for five years. No renewal notice will be sent, so you should write the registration and renewal dates on the reverse side of this page as a reminder (or, if you told individual companies or charities not to call again, use the form to note their names and the dates of your requests). You can confirm that a number is on the registry and learn its registration date through the toll-free number or the Web site. If your number changes or is disconnected, you’ll need to re-register. You can also take the phone number off the Do Not Call registry any time via the toll-free number or Web site.

Some states that have their own Do Not Call lists have transferred the numbers to the national registry. Look at the www.donotcall.gov Web site to see how specific state do not call laws relate to the national registry. If telemarketers ignore the fact that your number is on the registry or your request

not to call again, report them through the Do Not Call toll-free number 1-888-382-1222, for TTY call 1-866-290-4236, or visit the Web site www.donotcall.gov. You can also sue telemarketers that violate your federal Do Not Call rights in small claims court for $500 (the court can triple that amount if the company knowingly broke the law). Use the form on the reverse side to record violations.

http://www.nccppr.org/drupal/content/insightarticle/83/fraud-against-the-elderly-in-north-carolina

NCCPPR North Carolina Center for Public Policy Research

Fraud Against the Elderly in North Carolina December, 2009 — Alison Gray Overview:

Fraud committed against the elderly is on the rise, and North Carolina needs to do more to protect its seniors.

Executive Summary:

As they age, North Carolina’s Baby Boom generation may find new meaning in the lyrics of the Dire Straits’ song, “Money for Nothing,” if they come up against the everevolving scam artists whose enticing lures of free money and even false love rob them of their life savings. “Elder fraud,” or the financial exploitation of older adults, is not a new phenomenon. What is new, however, is the increasing sophistication and international scope of the fraudulent operations, a continually growing population of older and wealthier citizens, and the widening role of the Internet and other forms of advanced technology as a means of perpetrating new, and often hard to detect, schemes. These factors add additional layers of complexity to an already complex problem where the schemes are as varied as the minds of those who devise them, few generalizations can be made about the victims, and the perpetrators range from complete strangers to trusted family members, caregivers, and advisors.

How Big Is the Problem?

Although the actual extent of fraud against the elderly is not clear because it is an under- reported crime, the impact is substantial and far-reaching. On a national scale, consumers lose in excess of $40 billion a year to telemarketing fraud, only one type of the many

fraudulent schemes. On an individual scale, persons can lose anywhere from a few dollars to their life savings and homes. Such losses can be especially devastating to senior citizens who have limited opportunities — because of their age and in some cases accompanying health problems — to recover such losses.

North Carolina is no stranger to this crime. According to the Federal Trade Commission, consumers in the Tar Heel state lodged 14,846 fraud complaints in 2007 and 23,128 in 2008. In 2008, 85 percent of these complaints reported an actual total loss of $25,473,738. In addition, North Carolina consumers lodged 6,069 identity theft complaints in 2007 and 7,609 in 2008. Overall, in 2008, North Carolina ranked 24th among the 50 states in the number of fraud complaints, and 21st in the number of identity theft victims. Nationwide, in 2008, 30 percent of all consumer fraud complaints and 26 percent of identity theft complaints were lodged by individuals aged 50 and over.

The Scammers and Their Schemes

In general, the financial exploitation of the elderly is carried out by two broad categories of perpetrators: (1) strangers; and (2) relatives, family friends, and caregivers. Strangers run the gamut from (a) sophisticated, international telemarketing check and sweepstake schemes; to (b) local home repair fraud rings that persuade elderly homeowners to undertake needless repairs based on false reports of crumbling chimneys, rotting roofs, and frozen pipes; to (c) Internet-based identify theft through phishing (an electronic attempt to illegally acquire information such as usernames, passwords, and credit card details by pretending to represent a trustworthy organization) and spam e-mails; to (d) the insidious “sweetheart scam” where an opportunistic con artist befriends an elderly widow or widower and over time feigns false love which they use to gain control of the senior citizen’s estate and finances.

Unlike strangers, family members, friends, and caregivers have a legal, fiduciary, or moral responsibility to take care of, not abuse, the older adults within their care and start out from a position of trust. The methods used by these individuals include, among others: (a) intentional theft of money, property, or valuables from the senior citizen’s home; (b) “borrowing” money without any real intent to repay it; (c) withholding services or medical care to conserve the elder person’s financial estate; (d) selling or disposing of the elderly person’s personal property without permission; (e) misappropriating funds received by the elderly in the form of pension or retirement checks; (f) misusing ATM and credit cards; and (g) forcing the senior citizen to part with resources or sign over property.

Who Are the Victims?

It is human nature to want something for nothing or feel like one is getting a bargain. Whether older adults are necessarily more vulnerable overall to such impulses than other age groups, however, is unclear. Various studies show that different frauds attract different audiences. Although age alone is not necessarily a good predictor of likely victimization, it is clear that many scam artists specifically target the elderly due to the following risk or lifestyle factors. First, the elderly are the most financially well-off population group, and their assets tend to be easy to convert to cash. Second, as retirees, older individuals are more likely to

be at home to respond to telephone calls or door-to-door scams. Third, according to the American Prosecutors Research Institute, “most older Americans are just too polite to hang up.”

Efforts by North Carolina To Combat Elder Fraud: Prevention and Enforcement

Those with front-line state responsibility for addressing elder fraud — the Attorney General’s Office, the Division of Aging and Adult Services, and the Secretary of State, as well as the nonprofit AARP-NC (formerly the American Association of Retired Persons-North Carolina) — view this issue as a high priority for the state. Their combined work mirrors what is widely viewed as a necessary two-pronged approach to combating fraud against the elderly: prevention and enforcement.

Among North Carolina’s earlier efforts in prevention was the 1995 creation of the Partnership for Consumer Education, a nonprofit organization with authority to secure financial and other support for the statewide education of consumers in identifying and avoiding fraud. In 1998, the North Carolina Senior Consumer Fraud Task Force was formed to bring together federal, state, and local law enforcement, consumer networks, crime prevention agencies, and North Carolina’s aging network in an alliance to address the financial exploitation of the elderly in North Carolina. Then in 1999, the N.C. Attorney General’s Office was selected to participate in a pilot project funded by U.S. Department of Justice to fight telemarketing fraud. Other successful prevention efforts include SCAM Jams — half-day or full-day events where the elderly and other consumers are invited to listen to presentations and discuss consumer- related topics such as identity theft, telemarketing fraud, and investment fraud — and the

accompanying “Shred-a- Thons” — where a truck which contains a huge cross-cutter shredder comes to the SCAM Jam or other public venue so that people can safely shred outdated financial documents.

North Carolina is embracing the role of volunteers in two elder fraud initiatives. First, the Victims Assistance Program uses trained volunteers who are assigned to individuals who are especially vulnerable individuals and/or those already victimized. Second, in 2007, the Fraud Fighters Program began training a number of speakers to go into community groups, civic groups, clubs, and churches and present a 30-minute presentation on elder financial exploitation.

Although preventive efforts are often geared at educating the public, equally important is educating and enlisting the support of local and national businesses, especially financial

Institutions which are in a front-line position to assist in detecting and halting fraudulent transactions. One success story in this area is a 2005 agreement with Western Union that was negotiated by N.C. Attorney General Roy Cooper and nine other attorneys general on behalf of 48 states to protect consumers from telemarketing scams. Under the agreement, Western Union has agreed to institute better warnings on their materials and in their offices, train their clerks to recognize the telltale signs that a transaction is fraudulent, and provide $8.1 million in funding for consumer counseling. A similar agreement with MoneyGram was reached in summer 2008.

There is no question that fraud against the elderly is a multi-jurisdictional problem that presents a role for local, state, federal, and international law enforcement. Ensuring that all the various law enforcement parts are working in conjunction with each other, however, can be a very difficult process. In North Carolina, the Attorney General’s Office does not have original criminal jurisdiction; thus, criminal prosecutions either have to be referred to federal authorities who prosecute telemarketing cases under, for example, wire or mail fraud statutes, or to local district attorneys who prosecute under state laws against obtaining property by false pretenses. Both of these options, however, can be problematic because many times the amount of the loss fails to satisfy federal guidelines, and local district attorneys may be ill-equipped financially and time-wise to handle cases that can be complex and resource-draining in light of the multi-jurisdictional issues. Despite the limitation on its powers, the AG’s Office has been very active in prosecuting civil claims under the North

Carolina Unfair and Deceptive Trade Practices Act.

Future Elder Fraud Trends

The expectation is that fraudulent telemarketers will increasingly use computer technology, including spam e-mails, to contact potential victims because the aging population of Baby Boomers tends to rely on computers twice as much as the current generation of older Americans. The implications of this in terms of fraud against the elderly could be significant. The combination of decreasing costs through technology and the increasing number of seniors, especially seniors with wealth, is a worrisome combination. One foreseeable implication is that law enforcement and prosecutors will have to become fully knowledgeable about how to investigate and prosecute telemarketing fraud and identity theft conducted through the Internet. Such training also will have to include educating prosecutors and investigators on how to obtain and present electronic evidence to juries. According to the American Prosecutors Research Institute, another troublesome trend is the scam artists’ increased use of “disposable technology such as calling cards, cellular phones, and laptop

computers, to avoid identification. [Such] tactics pose immense barriers to successful investigation and prosecution.” Finally, consumer advocates in North Carolina are becoming concerned about the increased targeting of elderly people in the early stages of dementia or Alzheimer’s disease. Those individuals who are most likely to become repeat or “super- victims” are those with mild dementia because “the community around them has not yet appreciated that they’re having memory disorders.” The targeting of this subset of elderly creates significant enforcement problems because these victims are unlikely to make good witnesses due to their impaired memory function. North Carolina’s public and private consumer advocates have made great strides in implementing programs and creating ongoing partnerships that address the financial exploitation of older adults. However, from defining mistreatment of the elderly to gathering data on the extent of the problem to finding solutions, all agree more needs to be done.

The Center’s Recommendations on the Mistreatment of Elders

Fraud against the elderly, or the financial exploitation of older adults, is just a part of the problem. No one knows how many older adults in America suffer from elder fraud, abuse, and mistreatment. According to the National Center on Elder Abuse, a program of the U.S.

Administration on Aging, “while evidence accumulated to date suggests that many thousands have been harmed, there are no official national statistics.” Even the definitions vary, and in the absence of a uniform reporting system for states or a nationwide tracking system, information on the prevalence of this problem is hard to come by. The wolves are often those we least expect: a minister, a daughter, a next-door neighbor, a trusted caregiver. To prepare for its aging population, North Carolina needs to update its laws to protect vulnerable adults age 60 and over. The Baby Boomers are a wealthy generation, and the more money Gramps and Grandma have and the longer they live, the more conniving the wolves will be.

Recommendations

The Definition:

The N.C. Center for Public Policy recommends that the N.C. General Assembly clarify and strengthen N.C. General Statute Chapter 108A, the Protection of the Abused, Neglected, or Exploited Disabled Adult Act. The statute has not been amended since 1981, and it needs to support a broader system of protection for older adults. The definition of abuse should include physical abuse, emotional abuse, sexual abuse, financial exploitation, neglect, and abandonment. The act should cover vulnerable adults instead of limiting it to disabled adults.

In defining vulnerable, the functional limitations of an individual should be considered in addition to any diagnosis, and the act should also cover vulnerable adults who are at substantial risk of being abused. For those elders that have the capacity to consent to services, the statute should cover voluntary interventions as well as involuntary interventions. And, in keeping with the definition in the federal Older Americans Act, older adults should be defined as those 60 and over.

The Numbers

The Center recommends that the N.C. General Assembly require reporting on the statewide incidence and prevalence of mistreatment of the elderly, expanding North Carolina’s current data collection system.

The Role of the Banks:

The Center recommends that the N.C. General Assembly establish a study commission to examine how the N.C. Commissioner of Banks, the financial management industry, and law enforcement agencies can partner to prevent fraud against the elderly. The study commission should assess whether training for bank employees can help them recognize, report, and reduce the incidence of fraud against the elderly.

The Role of the Attorney General:

The Center recommends that the N.C. General Assembly consider giving the N.C. Attorney General authority to initiate prosecutions for fraud against the elderly. Only five states do not give their Attorney General any authority to initiate local prosecutions — North Carolina, Arkansas, Connecticut, Texas, and West Virginia.

Important Links NC Attorney General’s elder abuse webpage http://www.ncdoj.com/Help-for-Victims/Elder-Abuse-Victims.aspx If you have questions about the laws that protect senior citizens or your legal rights as a senior citizen, contact the Attorney General’s Victims and Citizens Services experts at (919) 716-6780 or [email protected].

To see the Attorney General’s video, “Standing Up, Fighting Back: North Carolinians Guarding Against Fraud,” which includes interviews with North Carolinians to explain how scammers operate and how you can avoid them: http://www.ncdoj.com/getdoc/a20fbb51-92de-4be6-a876-cddac4c30c2e/Senior-Fraud- Videos.aspx For the Attorney General’s Tips to Help Protect You from Frauds and Scams http://www.ncdoj.com/getdoc/0fd999a9-5ca5-4310-b1df-2ddf351e1592/Standing-Up- Fighting-Back-video-Tip-Sheet.aspx N.C. General Statute § 108A-99. Protection of the Abused, Neglected or Exploited Disabled Adult Act.

http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_108A/Article_6.ht ml Department of Social Services County Directory http://www.dhhs.state.nc.us/dss/local/ For additional help, call the North Carolina Department of Health and Human Services CARE-LINE toll free within North Carolina at 1-800-662-7030.

https://www.fbi.gov/scams-safety/fraud/fraud

The following are some of the most common scams that the FBI investigates and tips to help prevent you from being victimized. Visit our White-Collar Crime and Cyber webpages for more fraud schemes.

To report cases of fraud, use our online tips form or contact your nearest FBI office or overseas office.

Telemarketing Fraud

When you send money to people you do not know personally or give personal or financial information to unknown callers, you increase your chances of becoming a victim of telemarketing fraud.

Here are some warning signs of telemarketing fraud—what a caller may tell you:

• “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 their company or their references.” • “You can’t afford to miss this ‘high-profit, no-risk’ offer.”

If you hear these or similar “lines” from a telephone salesperson, just say “no thank you” and hang up the telephone.

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.

Nigerian Letter or “419” Fraud

Nigerian letter frauds combine the threat of impersonation fraud with a variation of an advance fee scheme in which a letter mailed from Nigeria offers the recipient the “opportunity” to share in a percentage of millions of dollars that the author—a self-proclaimed government official—is trying to transfer illegally out of Nigeria. The recipient is encouraged to send information to the author, such as blank letterhead stationery, bank name and account numbers, and other identifying information using

a fax number provided in the letter. Some of these letters have also been received via e-mail through the Internet. The scheme relies on convincing a willing victim, who has demonstrated a “propensity

for larceny” by responding to the invitation, to send money to the author of the letter in Nigeria in several installments of increasing amounts for a variety of reasons.

Payment of taxes, bribes to government officials, and legal fees are often described in great detail with the promise that all expenses will be reimbursed as soon as the funds are spirited out of Nigeria. In actuality, the millions of dollars do not exist, and the victim eventually ends up with nothing but loss. Once the victim stops sending money, the perpetrators have been known to use the personal information and checks that they received to impersonate the victim, draining bank accounts and credit card balances. While such an invitation impresses most law-abiding citizens as a laughable hoax, millions of dollars in losses are caused by these schemes annually. Some victims have been lured to Nigeria, where they have been imprisoned against their will along with losing large sums of money. The Nigerian government is not sympathetic to victims of these schemes, since the victim actually conspires to remove funds from Nigeria in a manner that is contrary to Nigerian law. The schemes themselves violate section 419 of the Nigerian criminal code, hence the label “419 fraud.”

Tips for Avoiding Nigerian Letter or “419” Fraud:

. If you receive a letter from Nigeria asking you to send personal or banking information, do not reply in any manner. Send the letter to the U.S. Secret Service, your local FBI office, or the U.S. Postal Inspection Service. You can also register a complaint with the Federal Trade Commission’s Complaint Assistant. . If you know someone who is corresponding in one of these schemes, encourage that person to contact the FBI or the U.S. Secret Service as soon as possible. . Be skeptical of individuals representing themselves as Nigerian or foreign government officials asking for your help in placing large sums of money in overseas bank accounts. . Do not believe the promise of large sums of money for your cooperation. . Guard your account information carefully.

Identity Theft

Identity theft occurs when someone assumes your identity to perform a fraud or other criminal act. Criminals can get the information they need to assume your identity from a variety of sources, including by stealing your wallet, rifling through your trash, or by compromising your credit or bank information. They may approach you in person, by telephone, or on the Internet and ask you for the information.

The sources of information about you are so numerous that you cannot prevent the theft of your identity. But you can minimize your risk of loss by following a few simple hints.

Tips for Avoiding Identity Theft:

. Never throw away ATM receipts, credit statements, credit cards, or bank statements in a usable form. . Never give your credit card number over the telephone unless you make the call. . Reconcile your bank account monthly, and notify your bank of discrepancies immediately. . Keep a list of telephone numbers to call to report the loss or theft of your wallet, credit cards, etc. . Report unauthorized financial transactions to your bank, credit card company, and the police as soon as you detect them. . Review a copy of your credit report at least once each year. Notify the credit bureau in writing of any questionable entries and follow through until they are explained or removed. . If your identity has been assumed, ask the credit bureau to print a statement to that effect in your credit report. . If you know of anyone who receives mail from credit card companies or banks in the names of others, report it to local or federal law enforcement authorities.

Advance Fee Schemes

An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value—such as a loan, contract, investment, or gift—and then receives little or nothing in return.

The variety of advance fee schemes is limited only by the imagination of the con artists who offer them. They may involve the sale of products or services, the offering of investments, lottery winnings, “found money,” or many other “opportunities.” Clever con artists will offer to find financing arrangements for their clients who pay a “finder’s fee” in advance. They require their clients to sign contracts in which they agree to pay the fee when they are introduced to the financing source. Victims often learn that they are ineligible for financing only after they have paid the “finder” according to the contract. Such agreements may be legal unless it can be shown that the “finder” never had the intention or the ability to provide financing for the victims.

Tips for Avoiding Advanced Fee Schemes:

If the offer of an “opportunity” appears too good to be true, it probably is. Follow common business practice. For example, legitimate business is rarely conducted in cash on a street corner.

. Know who you are dealing with. If you have not heard of a person or company that you intend to do business with, learn more about them. Depending on the amount of money that you plan

. on spending, you may want to visit the business location, check with the Better Business Bureau, or consult with your bank, an attorney, or the police. . Make sure you fully understand any business agreement that you enter into. If the terms are complex, have them reviewed by a competent attorney.

. Be wary of businesses that operate out of post office boxes or mail drops and do not have a street address. Also be suspicious when dealing with persons who do not have a direct telephone line and who are never in when you call, but always return your call later. . Be wary of business deals that require you to sign nondisclosure or non-circumvention agreements that are designed to prevent you from independently verifying the bona fides of the people with whom you intend to do business. Con artists often use non-circumvention agreements to threaten their victims with civil suit if they report their losses to law enforcement.

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.

Redemption / Strawman / Bond Fraud

Proponents of this scheme claim that the U.S. government or the Treasury Department control bank accounts—often referred to as “U.S. Treasury Direct Accounts”—for all U.S. citizens that can be accessed by submitting paperwork with state and federal authorities. Individuals promoting this scam frequently cite various discredited legal theories and may refer to the scheme as “Redemption,” “Strawman,” or “Acceptance for Value.” Trainers and websites will often charge large fees for “kits” that teach individuals how to perpetrate this scheme. They will often imply that others have had great success in discharging debt and purchasing merchandise such as cars and homes. Failures to implement the scheme successfully are attributed to individuals not following instructions in a specific order or not filing paperwork at correct times.

This scheme predominately uses fraudulent financial documents that appear to be legitimate. These documents are frequently referred to as “bills of exchange,” “promissory bonds,” “indemnity bonds,” “offset bonds,” “sight drafts,” or “comptrollers warrants.” In addition, other official documents are used outside of their intended purpose, like IRS forms 1099, 1099-OID, and 8300. This scheme frequently intermingles legal and pseudo legal terminology in order to appear lawful. Notaries may be used in an attempt to make the fraud appear legitimate. Often, victims of the scheme are instructed to address their paperwork to the U.S. Secretary of the Treasury.

Tips for Avoiding Redemption/Strawman/Bond Fraud:

. Be wary of individuals or groups selling kits that they claim will inform you on to access secret bank accounts. . Be wary of individuals or groups proclaiming that paying federal and/or state income tax is not necessary. . Do not believe that the U.S. Treasury controls bank accounts for all citizens. . Be skeptical of individuals advocating that speeding tickets, summons, bills, tax notifications, or similar documents can be resolved by writing “acceptance for value” on them. . If you know of anyone advocating the use of property liens to coerce acceptance of this scheme, contact your local FBI office.

Investment-Related Scams

Letter of Credit Fraud

Legitimate letters of credit are never sold or offered as investments. They are issued by banks to ensure payment for goods shipped in connection with international trade. Payment on a letter of credit generally requires that the paying bank receive documentation certifying that the goods ordered have been shipped and are en route to their intended destination. Letters of credit frauds are often attempted against banks by providing false documentation to show that goods were shipped when, in fact, no goods or inferior goods were shipped.

Other letter of credit frauds occur when con artists offer a “letter of credit” or “bank guarantee” as an investment wherein the investor is promised huge interest rates on the order of 100 to 300 percent annually. Such investment “opportunities” simply do not exist. (See Prime Bank Notes for additional information.)

Tips for Avoiding Letter of Credit Fraud:

. If an “opportunity” appears too good to be true, it probably is. . Do not invest in anything unless you understand the deal. Con artists rely on complex transactions and faulty logic to “explain” fraudulent investment schemes. . Do not invest or attempt to “purchase” a “letter of credit.” Such investments simply do not exist. . Be wary of any investment that offers the promise of extremely high yields. . Independently verify the terms of any investment that you intend to make, including the parties involved and the nature of the investment.

Prime Bank Note Fraud

International fraud artists have invented an investment scheme that supposedly offers extremely high yields in a relatively short period of time. In this scheme, they claim to have access to “bank guarantees” that they can buy at a discount and sell at a premium. By reselling the “bank guarantees” several times, they claim to be able to produce exceptional returns on investment. For example, if $10 million worth of “bank guarantees” can be sold at a two percent profit on 10 separate occasions—or “traunches”—the seller would receive a 20 percent profit. Such a scheme is often referred to as a “roll program.”

To make their schemes more enticing, con artists often refer to the “guarantees” as being issued by the world’s “prime banks,” hence the term “prime bank guarantees.” Other official sounding terms are also used, such as “prime bank notes” and “prime bank debentures.” Legal documents associated with

such schemes often require the victim to enter into non-disclosure and non-circumvention agreements, offer returns on investment in “a year and a day”, and claim to use forms required by the International Chamber of Commerce (ICC). In fact, the ICC has issued a warning to all potential investors that no such investments exist.

The purpose of these frauds is generally to encourage the victim to send money to a foreign bank, where it is eventually transferred to an off-shore account in the control of the con artist. From there, the victim’s money is used for the perpetrator’s personal expenses or is laundered in an effort to make it disappear.

While foreign banks use instruments called “bank guarantees” in the same manner that U.S. banks use letters of credit to insure payment for goods in international trade, such bank guarantees are never traded or sold on any kind of market.

Tips for Avoiding Prime Bank Note Fraud:

. Think before you invest in anything. Be wary of an investment in any scheme, referred to as a “roll program,” that offers unusually high yields by buying and selling anything issued by “prime banks.” . As with any investment, perform due diligence. Independently verify the identity of the people involved, the veracity of the deal, and the existence of the security in which you plan to invest. . Be wary of business deals that require non-disclosure or non-circumvention agreements that are designed to prevent you from independently verifying information about the investment.

“Ponzi’ Schemes

“Ponzi” schemes promise high financial returns or dividends not available through traditional investments. Instead of investing the funds of victims, however, the con artist pays “dividends” to initial investors using the funds of subsequent investors. The scheme generally falls apart when the operator flees with all of the proceeds or when a sufficient number of new investors cannot be found to allow the continued payment of “dividends.”

This type of fraud is named after its creator—Charles Ponzi of Boston, Massachusetts. In the early 1900s, Ponzi launched a scheme that guaranteed investors a 50 percent return on their investment in postal coupons. Although he was able to pay his initial backers, the scheme dissolved when he was unable to pay later investors.

Tips for Avoiding Ponzi Schemes:

• Be careful of any investment opportunity that makes exaggerated earnings claims. • Exercise due diligence in selecting investments and the people with whom you invest—in other words, do your homework.

• Consult an unbiased third party—like an unconnected broker or licensed financial advisor— before investing.

Pyramid Schemes

As in Ponzi schemes, the money collected from newer victims of the fraud is paid to earlier victims to provide a veneer of legitimacy. In pyramid schemes, however, the victims themselves are induced to recruit further victims through the payment of recruitment commissions.

More specifically, pyramid schemes—also referred to as franchise fraud or chain referral schemes— are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses. At the heart of each pyramid scheme is typically a representation that new participants can recoup their original investments by inducing two or more prospects to make the same investment. Promoters fail to tell prospective participants that this is mathematically impossible for everyone to do, since some participants drop out, while others recoup their original investments and then drop out.

Tips for Avoiding Pyramid Schemes:

. Be wary of “opportunities” to invest your money in franchises or investments that require you to bring in subsequent investors to increase your profit or recoup your initial investment. . Independently verify the legitimacy of any franchise or investment before you invest.

Market Manipulation or “Pump and Dump” Fraud

This scheme—commonly referred to as a “pump and dump”—creates artificial buying pressure for a targeted security, generally a low-trading volume issuer in the over-the-counter securities market largely controlled by the fraud perpetrators. This artificially increased trading volume has the effect of artificially increasing the price of the targeted security (i.e., the “pump”), which is rapidly sold off into the inflated market for the security by the fraud perpetrators (i.e., the “dump”); resulting in illicit gains to the perpetrators and losses to innocent third party investors. Typically, the increased trading volume is generated by inducing unwitting investors to purchase shares of the targeted security through false or deceptive sales practices and/or public information releases.

A modern variation on this scheme involves largely foreign-based computer criminals gaining unauthorized access to the online brokerage accounts of unsuspecting victims in the United States. These victim accounts are then utilized to engage in coordinated online purchases of the targeted security to affect the pump portion of a manipulation, while the fraud perpetrators sell their pre- existing holdings in the targeted security into the inflated market to complete the dump.

Tips for Avoiding Market Manipulation Fraud:

• Don’t believe the hype. • Find out where the stock trades. • Independently verify claims. • Research the opportunity. • Beware of high-pressure pitches. • Always be skeptical.