Fast Facts on Fraud
Telemarketing fraud alone is a $40 billion a year business.
Sixty percent of all callers to the National Fraud Information Center describe themselves as senior citizens.
Scams and frauds conducted by mail and telephone are increasingly coming to you from Canada, Australia, and other countries.
How to Avoid Scams
Ask for written materials before you commit yourself to any offer.
Before you send any money, check out the company and its offer with the Attorney General's Office or the Better Business Bureau.
Don't give your credit card or checking account numbers to someone you don't know.
Keep your social security number confidential.
Walk away from a "deal" if you are being pressured to make an immediate decision.
Seniors Are Targeted for Fraud
Be skeptical because the prize may never be awarded or may not be worth collecting. Sometimes, you won't know you've been scammed until you see the so-called "prize." For instance, the diamond might be the size of a pinhead, and the vacation for two a certificate for poor lodging and a headache. And the entertainment center? Nothing more than a cheap, plastic toy.
Scam artists from the United States and other countries are working hard to entice you to buy into their bogus claims, charities, lotteries and prizes—all with the hope that you will send money to get your reward. All too often you are giving the reward to the scam artist who gets your money and leaves you with little or nothing.
It is hard to spot fraud when it is happening. The Federal Trade Commission estimates that consumers lose more than $40 billion a year to telemarketing fraud. And, if you are in "older" consumer, you are a special target for those selling bogus products and services.
People over the age of 65 make up almost 14 percent of Minnesota's population, but disproportionally represent the number of scam victims.
The disproportionate victimization of older people in connection with consumer fraud is partly based on generational and economic factors. Most seniors grew up in an era when business was done on a handshake; unfortunately, crooks are playing on that trust.
The economic consequences older Minnesotans face when defrauded are often devastating. Most seniors in Minnesota live on fixed pensions and about one-fifth of Minnesotans over age 60 depend solely on Social Security for their income. With fixed monthly pension or Social Security checks, it is nearly impossible to replenish bank accounts or money saved for retirement when it is taken by scams.
Con artists use three methods to contact potential victims: phone, mail, or door-to-door sales. Most scams involve a combination of methods. For example, many swindlers will generate leads by mailing a survey to gauge interest in a product or service. Consumers who indicate interest (usually by returning a postcard) are then contacted by telephone, or a traveling salesperson will stop by to make the sales pitch in person.
This guide identifies common scams that target Minnesota seniors, identifies the common warning signs of each scam, and provides information to help you thwart the con artists and protect your assets.
Scams can be large or small, sophisticated or simple, and come from next door or across the world. But the crooks behind them have two things in common. They want to steal your money, and avoid being caught. Below is a list of common scams. Turn the tables on con artists behind themreport these scams and their perpetrators to the Attorney General's Office.
Telemarketers and/or direct mail solicitations sometimes offer the opportunity to win the Canadian, Australian or other foreign lotteries.
You may be told the odds of winning increase when "group purchases" of lottery tickets are made.
Credit card numbers or checking account numbers are requested.
Foreign lotteries are illegal in Minnesota and violate state and federal laws. Only lotteries approved by the state of Minnesota are legal.
Home Improvement Scams
Itinerant sellers with no local connections (check to see if you can read the license plate on the vehicle, and if so, if it's from out-of-state).
The person offers to pave the driveway, fix windows, do landscaping, repair the roof or paint your house with what is supposedly "supplies left over from another job."
Cash payment is demanded.
Often the final price is much higher than the initial estimate, requiring you to pay more.
Work is completed quickly and poorly (although you might not discover how poorly until the workers are long gone).
A seller who refuses to give you references or a warranty.
The offer is only good that day.
Don't be pressured. Before you allow any work to be done, contact several local contractors for an evaluation and estimate. Compare the bids. Take at least 24 hours to make your decision (any reputable company will give you time to think). Use your time to check into the companies you're considering contracting with. Never pay for work before it's completed. If you think you've been scammed, contact the local police or sheriff's office.
Exorbitant prices are charged for everyday items (for example: a dozen light bulbs for $84.99).
Appeals for contributions are designed to look like bills or invoices.
Little detail is provided about how the charity operates or where the money goes.
Heart wrenching appeals are used with high pressure tactics to force individuals to make quick decisions.
Before you part with any money, do research. Ask for written information and read it carefully before you give. Find out how your contribution will be used and ask if your donation is tax deductible. Contributions by cash are impossible to trace, so pay by check. If you have doubts about a charity, contact the Charities Division in the Attorney General's Office. Minnesota law requires that all charities be registered with the Attorney General's Office. You may also wish to contact the Charities Review Council of Minnesota.
"You Have Won" Calls and Mail
The caller or the mail piece tells you, "You have won a prize."
You must purchase a product (like magazines), pay a processing fee, or pay taxes.
Request for a credit card number, checking account number or a social security number.
Often your money must be sent by overnight delivery to a company in another state or country.
No matter how appealing, hang up the phone or throw away the mail. Never give out your credit card number, checking account number or social security number. Make sure you report the call or mail to the Attorney General's Office.
You get a phone call from someone you don't know. The caller offers you incredible profits, like a "20 percent annual return" or better.
The business selling the investment opportunity is located out-of-state.
You must decide and send money quickly; overnight delivery services often are used to get your payment.
Examples of investments offered include penny stocks, oil and gas leases, precious metals, rare coins, FCC lotteries, and wireless cable.
Do not make investment with anyone over the phone, consult with a trusted financial planner, stockholder or banker for investment advice. Most importantly, never invest money before thoroughly checking into the offer. Check out any phone or mail investment offers by calling the state Department of Commerce.
Medical Equipment and Quackery
A salesperson tells you that today is the only day they are offering a special price.
A medicine or a product is called a "stupendous breakthrough" to treat an age-old medical problem.
One "miracle" product supposedly cures a number of different ailments.
A pushy salesperson pressures you. The salesperson (and often a partner) may stay in your home for a long time, not allow you to confer with others, set up difficult to remove equipment, and push you to sign a long-term contract for thousands of dollars.
Before you buy medical equipment or "break through" products, discuss it with your family or your physician. Their advice will be more sound than the advice of a salesperson you will never see again. Plus, buying may not be your best option. Sometimes it is wise to rent or lease equipment instead. And remember, Minnesota's Home Solicitation Sales law gives you three days in which to cancel most purchases that you make in your home.
Seminar speakers, callers or mail solicitation offer recipients the opportunity to make money with little or no effort.
Statements regarding the honesty and integrity of a company are bolstered by reports of how long the company or individual has been in business.
Seminar speakers, callers or mail "guarantee" the safety of your investment and promise significant financial rewards.
The opportunity is only available to a few people.
The offer is only good right now, and you must act immediately.
Don't do business on the phone with people you don't know. Before committing any money, check out all business opportunities with the Better Business Bureau and the Attorney General's Office.
A salesperson requests highly personal financial information.
A salesperson, untrained in the law, tells you you need a trust or makes misleading statements about trusts such as: "A trust will protect your estate from inheritance taxes."
Thousands of dollars are charged for boilerplate forms.
The sales pitch grossly emphasizes the need to avoid probate and grossly exaggerates the estimate of probate cost.