Protect your Senior from Fraud- Part 2

Fraud: Is your Senior at risk?

Part 2 of 2        Go to Part 1

Con artists know that in many cases a widowed spouse may be inexperienced in financial affairs if the deceased spouse normally handled financial matters. The con artist will use obituaries, publicly available probate information, and home sales to locate elderly targets for their scams.
Never give your Social Security number and mother's maiden name to a caller. This information can be used to steal your identity. One way to spot identity theft is to check your credit rating. Here are the addresses where you can obtain a copy of your credit report.  A small fee may be involved and is $8.50 per report in most states. If you have been denied credit, employment, or insurance within 60 days due to a credit report from that company, there should be no charge for the report:

P.O. Box 105873
Atlanta, GA 30348-5873

P.O. Box 390
Springfield, PA 19064-0390

Experian Information Solutions
P.O. Box 949
Allen, TX 75013-0949
(This was TRW)

Part 2 continues our discussion of fraud.  A key element of prevention is knowledge. 

Telemarketing is a significant source of fraud. If you lose money over the phone, it is probably gone forever. To help protect against telephone fraud, the Pennsylvania Attorney General's Office has provided the following Fraud Tip-Offs in their bulletin Telephone Scams and Older Consumers:

  • You have to act "now" - or the offer won't be good.
  • You've won a "free" gift, vacation, or prize and you pay "only" for "postage and handling" or other charges.
  • You must send money, give a credit card number, or have a check picked up by courier - before you've had a chance to carefully consider the offer.
  • You don't need to check out their company with 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.
  • A courier will come by today to pick up the money.
  • If you hear these- or similar - lines from a telephone salesperson, just hang up the phone.

Remember, the con artist will not sound like a criminal, and will be very friendly, pleasant, and sincere. The con artist will try to exploit some of the qualities that you may value in your dealings with people. For example, you may value politeness. The con artist will use this to keep you on the phone and to keep you in conversation with him. Just hang up.

Home Improvement: Older folks may live in older homes. Repairs that might have once been done by their own hand now require help.

" We just did a job down the street. There's a bunch of material left over. I can give you a special price if you sign today"

"That roof is in bad shape. We have rain coming. Your house could get damaged and cost you thousands. We are in the neighborhood today. Act now to protect your home equity."

"If you want this special introductory price, you have to act now. Sure I can get you all the references you want, but if you don't sign today, it will cost you more. Sign now and I'll give you the references later. You'll be very happy with our work. Trust me. Do I look like someone unreliable?"

'We get 70 percent of the cost up front to pay for the materials."

"Payment has to be in cash for this special discount to apply."

These contractors will NOT save you money. DON'T believe them.

DON'T be embarrassed to ask and investigate. A good contractor will be happy to show off his good reputation.

DON'T conclude that the lowest price is the best value. Shoddy materials or poor workmanship will cost more in the long run, assuming that the job gets finished in the first place.

DON'T make exorbitant deposits to cover the contractor's costs.

DO ask for references.

DO ask to see examples of the contractor's work.

DO be sure that the contractor has a permanent address.

DO get it in writing-including guarantees, start and finish dates, and other promises. If you agree upon a change, get it in writing..

DO investigate the contractor. Take the time.

DO consider checking local banks and suppliers to obtain more information about the contractor.

DO verify that the contractor has insurance. This should include general liability insurance. If the contractor has employees, workers' compensation insurance is also required.

Questions? Call the Pennsylvania Builders Association at 1-800-692-7339. Extension 3016 will get you to the Builders Association in your area. Or try your state's Bureau of Consumer protection.

BEWARE of TAG ALONG Scams: You've told that nice young man that even though you know you need a new roof, that you just can't afford it. It's a shame because he's giving you a special price due to the left over materials from the job down the street. He's so glad that you mentioned this to him. He has a contact that can get you a special loan on your home equity. 

You've made his "gullible" list and now he's coming after your home in addition to your roof.

Older folks may have built up substantial equity in their homes. These folks may be short on cash and yet be sitting on tens of thousands of dollars on home equity. Reputable banks can arrange for ways to tap those funds. But remember, the con artists see the combination of home equity and being short on cash as an opportunity.

Caution: Con artists are often women.


Home Equity Scams- Here are some samples:

- A helpful lender encourages you to pad your income on the home equity loan application, even though your income is not enough to make the payments.. You can't make the payment, and the formerly helpful lender forecloses on your home. No reputable loan agency will even ask you to take out a loan knowing that you cannot make the payments.

- The lender promises to reduce your loan payments dramatically. It turns out that the new monthly payments are so low because you are paying only the interest. At the end of a period specified in small print, the balance of the loan is due in one payment. Can't make the payment? Foreclosure. You lose your home.

- You've gotten in trouble on some payments. Perhaps you've received a letter threatening foreclosure! Happily another lender calls you and promises refinancing that will solve your problem. He does ask that you deed your property to him during the processing of the refinancing. This will ensure that there are no problems with foreclosure. Guess what? Give him the deed and you've now become a tenant in the home that was once yours. Miss a payment and get evicted. He's got the house and you still owe the debt!

Deal with reputable lenders. When in doubt, check with your local Better Business Bureau.


Many older Americans are concerned that they have not saved enough money for their old age and are looking for ways to increase their nest egg. Enter the investment con-artist. This predator is only too eager to sell you a can't lose investment with amazing returns. What a great way to dramatically increase the size of your self-directed IRA account. 

Watch out. These guys are smooth. They are often attractive people and very gracious. They know that people are increasingly suspicious of the telephone and will try other means such as church groups and help organizations. Just because you have met someone in a legitimate surrounding does not ensure a legitimate deal. 

To get in the door, these con artists will sometimes appear to have made a bunch of money for some member of the group. Now your friend becomes an unwitting promotor of the con artist. The Ponzi scheme is one way this is done.

Investors beware:

Regardless of where you have met the person, and regardless of who else you know has invested with them, ALWAYS check out credentials. Here's a link to a story printed by a newspaper called the Morning Call about a very charming fellow named James Tarone. Individuals and churches lost money with the help of this charming , good looking fellow.

The Ponzi Scheme:

A simple idea that has cost people and organizations millions of dollars: Use the money from new investors to make the initial investors look like they are earning really good returns.

As an example, you are one of the first wave of investors in a precious metal deal. Six months later you have doubled your money. This is wonderful. You are telling all of your friends. Well, your added money is in actuality the money contributed by the next layer of investors. That next layer will be larger than the first layer. A third and larger layer of investors next funds the gains of the upper layers, and everything looks wonderful until new investors run out and the bubble bursts for ALL of the investors. They will be fortunate to get back pennies for each dollar lost.

Ponzi schemes come in all kinds of disguises. They could be tax shelters, commodity deals, real estate, collectibles, start-up companies, special portfolios. 

If someone guarantees you higher returns or higher interest that the prevailing market, don't believe it. The guarantee is a common ploy of the Ponzi scheme.


Here's a list of things to watch for. If you see these happening to your senior, it could indicate fraud:
  • Frequent calls from strangers offering awards or opportunities and frequent calls asking for donations
  • Payments being made in cash for pick up by a courier
  • Junk items arriving at the house such as jewelry, health and beauty products, etc.
  • Unfamiliar telephone charges (These may represent a type of scam known as "cramming".)
  • Unexpected changes in account balances.
  • Repeated visits by strangers.
  • An unusual quantity of junk mail coming to the house.
  • Sudden activity involving home improvements 
  • Activity regarding home equity loans with other than known financial institutions 
  • Talk of guaranteed investment returns of once in a lifetime opportunities.

Don't be afraid to get involved. All of these things happen to nice and intelligent people more often than we would like to think. Once lost, the money is rarely recovered.

A useful link from Uncle Sam:

The government's consumer watch site: This link takes you to a page from the Federal trade Commission that lists categories of scams. Clicking on a category will take you to listings of articles and alerts.

Go to Part 1 of this article

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