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Working With CommunitiesFraud & Corruption

Elder Abuse - Consumer Scams and Fraud

Unfortunately, many different scams target the elderly. Those who have been victimized are not only stripped of their dignity, but are often swindled out of their life savings. The following information will describe how some consumer scams and fraudulent schemes operate and how you can protect yourself.

TELEMARKETING SCAMS

Fraudulent telemarketers who know an elder is likely to have retirement savings, good credit, and the time to talk on the phone often victimize seniors. Many telemarketers are very aggressive, persuasive, and intimidating. Keep in mind: if it sounds too good to be true, it probably is. You have the right to refuse calls from telemarketers. Just say "no" and hang up the phone.

Note: Often a person who has sent money to a fraudulent telemarketer will continue to get telemarketing phone calls. Fraudulent telemarketers have been known to sell lists of easy targets to other scammers placing those victims at risk for further abuse.

  • Prize and Sweepstakes Fraud:

Beware:

  • If the first thing you hear from a telemarketer is, "Congratulations! You have just won a ____ (trip to Las Vegas, $5,000 prize, etc.)," be careful. They often want your money.
  • When youíre told to send money in order to claim your prize or a sweepstakes requires you to buy a product in order to receive your prize. As a common rule, never buy anything over the phone unless you initiated the call.
  • If you are asked to call a "900," "976" or other unknown telephone number in order to claim a prize. Making such calls can result in a very expensive phone bill Ė one that you will be responsible for. In California, it is a crime to require a person to call a "900" or "976" telephone number in order to collect a prize. If this happens to you, immediately report it to the L.A. County Department of Consumer Affairs at (213) 974-1452.

When to suspect a telemarketer may be up to no good:

  • When the telemarketer does not give you their telephone number and name when you ask for it and quickly changes the topic so as to distract you;
  • When the telemarketer uses pressure tactics, telling you the award expires today unless you act immediately;
  • When the telemarketer asks you for your social security number, birth date, or credit card number;
  • When the telemarketer asks you to "wire" the money as soon as possible to ensure you receive your prize or limited-time only special price.

Remember, you can always say, "Iím not interested, good-bye."

  • Pyramid and Ponzi Schemes:

A pyramid scam works by recruiting people to pay money to participate in an investment scheme that has minimal or no legitimate purpose. The objective of most pyramid schemes is to recruit people in order to pay back those at the top of the pyramid. Eventually, no more investors are willing to participate and those at the bottom of the pyramid Ė typically the most recent investors Ė lose out. The Federal Trade Commission has reported that almost 90% of investors lose money through pyramid schemes.

Ponzi scams are "get-rich-quick" investment frauds. Promoters often use the early investorsí own money to pay back bogus profits. This encourages the investors to put up even more money and recruit friends to also make a qui1ck profit. Rather than invest the money as promised, the promoter eventually disappears with it.

Many of these "get-rich-quick" scams target the elderly because of their available income and time. Both pyramid and ponzi scams are illegal. Both schemes usually fold quickly, leaving most victims with less than what they started with.

Protect yourself and beware:

  • Be suspicious of any offer to make money by recruiting others, particularly combined with promises of earning huge profits while working at home with little effort. Again, if it sounds too good to be true, it probably is.
  • If the salesperson is overly aggressive in recruiting you, it may be a desperate attempt to recover some of the money already paid to those higher on the pyramid. Donít be pressured into investing in a business, especially if you are asked for a large initial investment.
  • Before signing a contract or writing a check, consider consulting with a trusted family member, friend, or financial advisor.

  • If someone wants you to invest in securities or commodity investments, you can verify if such a company exists. The California Department of Corporations [(213) 576-7500] can tell you if the investment company is a registered corporation. If the corporation does not appear to exist, the securities, land, or commodities they offer also may not exist.
  • Be wary of Internet investing with a company you donít know. It can be extremely difficult to trace where your money went, especially if the Web page disappears.

When to suspect an investment opportunity may be no good:

  • A salesperson offers you a business opportunity involving the sale of a product, but charges you a substantial start-up fee in order to sell the merchandise or service. Most legitimate companies do not charge their sales force in order to sell their product.
  • A salesperson invites you to invest in his company, pays you a quick return, and encourages you to invite your friends to also invest. To lend credibility to the scheme, some early investors may even be repaid their original investment on demand. Be leery of any offer to make money by recruiting others.
  • Be wary of bold representations claiming that the investment is legal. Rarely do legitimate companies make such claims up front. They donít need to!

  • Fraudulent Charities:

Criminals engage in numerous fraudulent charity scams that exploit and capitalize on the kindness of strangers, especially seniors. All legitimate charitable organizations are registered. To make sure your money is going to the good cause you intended it for, check with the following:

California Registry of Charitable Trusts
P.O. Box 903447
Sacramento, CA 94203-4470
(916) 445-2021
http://caag.state.ca.us/charities/

BBB (Better Business Bureau) Wise Giving Alliance
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203
(703) 276-0100

A listing of charitable organizations can be found at: http://www.give.org/reports/index.asp

If the charitable organization is legitimate, its representatives will give you the opportunity to confirm that it is a bonafide charity. Aggressive pressure tactics are often signs that the charitable organization may be fraudulent.

Things to consider:

  • A fraudulent charity may have a very legitimate sounding name, but that does not mean it sends any money to the cause it represents. Some fraudulent charities intentionally have names that are very similar to well-known charities so as to confuse would-be donors. Ask to review written materials on the charitable organization before donating. Legitimate charities willingly send informational material to prospective donors. Always double-check with the registries above to make sure the charities are reputable.
  • Scam artists may falsely claim to be well-known charitable organizations (like the American Red Cross or United Way) or to be affiliated with such charitable groups when in fact they are not. Ask them to whom your check should be made. If youíre told to make the check out to a business of some kind rather than the well-known charitable organization, donít do it. Likewise, if youíre asked to write the check out to an individual, donít do it.

When to suspect a so-called charitable organization may be up to no good:

  • The charitable organization insists on having you pay over the phone with a credit card or asks for your checking or savings account numbers. Do not give strangers personal information that will give them access to your money. As a general rule, only give people your credit card or bank information if you initiate the call and have checked that the organization is a legitimate charitable business.
  • The charitable organization tries to entice you by telling you that they will give you a gift if you donate. Charities need to raise money, so they usually are not in the business of giving prizes or gifts. Trust your instincts, if it doesnít make sense, it may not be a legitimate charity.

FRAUDULENT LIVING TRUSTS

Fraudulent businesses and unethical individuals are taking advantage of the current consumer trend of placing assets in living trusts to avoid probate. Many scam artists tell seniors that "living trust kits" can save them thousands of dollars. In reality, these kits often are very costly, lack proper instructions, and simply may not fit your financial planning needs. An attorney or a financial planner whom you trust is best suited to evaluate whether a living trust is appropriate for you.

Beware when:

  • A salesperson pressures you into creating a living trust after asking you only a few questions about your assets and will. It is impossible for any salesperson to make a legitimate determination as to whether you should create a living trust based on only a few minutes of conversation. Remember, you have the right to end the presentation or hang up the phone at any time.
  • A salesperson avoids answering direct questions about the costs, fees, and withdrawal penalties associated with the living trust. If your questions are not answered or if the answers are unclear, do not sign any documents. Reputable businesses make their services and fee policies as clear as possible. Vague or unclear answers are often signs of fraud or possible future problems.
  • A salesperson or phone telemarketer wants you to decide right away, rather than letting you talk to your family or close friends.
  • Shortly after creating your living trust, you begin receiving offers in the mail to liquidate or convert your assets in the trust for an exorbitant fee. The living trust company may simply be looking for a way to take more of your money. Any offer to liquidate or convert your assets should be reviewed by an attorney or a financial planner.

Door-to-Door Sales and Home REPAIR FRAUDS

Criminals know that seniors may be retired and at home during the day. As a result, many scam artists target elders at home. As a general rule it is good to be very cautious with any salesperson or contractor who solicits your business out of the blue.

Beware when:

  • A contractor or repair person says, "We want to check your _______ (heater, air conditioner, roof, plumbing, etc.) for free to make sure itís in good condition." Con artists may also try, "I just did a repair at your neighborís house and I have some leftover supplies. If you want I can do the same work for you for dirt cheap." Unscrupulous contractors use such ploys to get into your home, make simple inspections, and then suggest unneeded costly repairs. Get a second opinion before making any costly repairs, especially if you did not initiate the contractorís first visit to your home.
  • A door-to-door salesman tells you he or she has a gift for you as long as you give him a few minutes of your time. This scam enables dishonest salespeople to get into your home in order to pressure you to buy what they are selling.
  • The oral sales presentation is done in your language, but the written contract is given to you in another language. Never sign anything you do not understand.

When to suspect a door-to-door salesperson or contractor may be up to no good:

  • He insists on reading only key portions of the contract aloud to you or tells you there is no need for you to read it. If they have nothing to hide, they will let you read the entire contract and let you ask questions.
  • The salesperson has no form of identification or the contractor or repairperson cannot prove that they are licensed to do the needed work. Even if proper identification or a license is provided, it does not mean you are dealing with a legitimate business. Honest business people will offer you their business cards and give you time to decide whether you want their product or service. Ask for and check their references.
  • The contract is mostly handwritten and may be so sloppy that it is difficult to read key sections. If itís not readable, you should not sign it.
  • The salesperson or contractor tells you that you must act today or their offer is off. Unethical salespersons often use pressure tactics to close a deal. If they want your business, the offer should remain on the table for a reasonable length of time. All offers or estimates should be in writing. Always ask them if you will have some time to change your mind and cancel the contract even after you sign it.
  • If you feel you may be a victim of fraud and would like to explore your civil legal options, contact Public Counsel Law Center at (213) 385-2977 or Bet Tzedek Legal Services at (323) 939-0506.

SWEETHEART SCAMS

Seniors may also be susceptible to what are known as "sweetheart scams." These cons are much like other consumer scams, except what these con artist are peddling is their time and affection Ė all in an attempt to get the victimís money. Often, they promise a love relationship, but seldom do they follow through. Meanwhile, the victimís confidence is gained, the con artist begins to tap and exploit the senior for money, personal expenses, car repairs, etc. Once they get what they want, the scam artists often disappear, leaving the senior feeling exploited and ashamed.

Beware when:

  • A stranger approaches you at a store, library, park, or another everyday setting and quickly shows interest in you and seems to want to spend time with you. He or she may be trying to pull a sweetheart scam. Be particularly careful if the interested person is much younger and appears too eager to go out with you, especially since you just met.
  • You go out on a date with someone new, and they soon ask you to help them financially.

AUTO SALES FRAUD

Seniors often are the target of unethical auto dealers. These scam artists frequently conceal the poor condition of used cars or lure consumers with advertisements of cars they donít have or do not intend to sell. When the customer asks for the advertised car, he or she is told the car was "just sold." Having the customer at the dealership, the salesperson then persuades the customer to buy a more expensive vehicle ("bait and switch"). Other dealer scams include attempting to inflate the interest rate at the time of financing, and/or adding unnecessary items to the purchase price of the car (extended warranty, paint protectant, etc.).

Protect yourself and beware:

  • Always review the vehicle sales contract before signing it. Make sure the terms of the car loan and your car payment amount are as promised. If the car dealership changes the terms of its offer at the time of signing the sales contract (price increased, interest rate jumps, etc.), leave the dealership immediately. A tip: Never demonstrate your enthusiasm for a vehicle until the car is yours.
  • If a salesperson says you can qualify for a car that appears beyond your budget, clarify whether the dealership is offering a sales or lease package. If you are leasing a vehicle, the terms of the lease should be explained, particularly:
  • the length of the lease,
  • costs you may incur for damages or repairs upon returning the vehicle,
  • and the penalties for going over the annual mileage limits.
  • If a salesperson or friend asks you to sign as a "co-signer," be advised that you will be fully responsible for the car payments regardless of whether you ever drive the car.
  • If you negotiate the terms of the contract primarily in Spanish, you are entitled to a Spanish translation of the contract. Ask for one.

When to suspect a car dealership may be up to no good:

  • A salesperson asks you what monthly car payment amount youíre seeking. To protect yourself, always focus the deal on the total price of the car, not on monthly payments that appear to minimize the vehicleís cost.
  • A car salesperson tells you the dealership will not honor the offer if you walk away. Do not be pressured into buying a car you are unsure about. Talk to friends or family about the vehicle offer before signing the sales contract. Think about it. Under California law, once you sign the sales contract, the car is yours, with very few exceptions, such as cases of odometer fraud and salvaged vehicle title.
  • If you feel you may be a victim of fraud and would like to explore your civil legal options, contact Public Counsel Law Center at (213) 385-2977 or Bet Tzedek Legal Services at (323) 939-0506.

AUTO REPAIR FRAUD

In order to take your money, unscrupulous mechanics may falsely claim that your vehicle needs expensive repairs. Often mechanics scare seniors into believing their vehicle is unsafe and needs immediate repair. For example, what was supposed to be a simple oil change suddenly becomes a major tune-up or costly brake job.

Beware when:

  • An auto mechanic refuses to give you a written estimate for the cost of repairs. As a general rule, you should always get a second opinion on the vehicleís repairs. Donít be intimidated into making an over-priced or unnecessary repair.
  • An auto mechanic tries to pressure you into car repairs by telling you that it is unsafe to drive the vehicle off his property. Use your judgment. Aside from an overheated engine, a flat tire, or very bad brakes, you can probably drive your car to another local mechanic to get a second opinion. If you feel your car is unsafe, you can have it towed to the nearest mechanic of your choice.
  • An auto mechanic claims you need to replace some parts, but insists that they need to keep the original parts. If the auto part truly needs replacing, the part is useless and no one should have an interest in keeping it. Unless your repair is through a vehicle extended warranty, there is no reason why you cannot get the original parts back. If you suspect fraud and would like to file a complaint, call the Bureau of Automotive Repair at (800) 952-5210.

IDENTITY THEFT

One of the fastest growing frauds Ė identity theft Ė can be financially and emotionally devastating. The identity thief attempts to obtain your personal information, such as your birth date and credit card and Social Security numbers. With this information, the imposter can assume your identity and establish credit or bank accounts in your name. Seniors can be victimized by unscrupulous caregivers or others who can steal mailed credit applications and fraudulently use them and other personal information to make purchases or borrow money.

Protect yourself:

  • Shred all unwanted mail as soon as it is received, particularly unsolicited credit applications.
  • Have mail delivered to a post office box and have it picked up on a regular basis. Never leave mail out for pick-up. Thieves can steal your mail and gain access to your personal identification information Ė including bank account numbers. They also can tamper with personal checks, altering them in order to steal your money.
  • Be careful about giving out personal information, including your address, Social Security number, or bank account numbers. Provide this information only when absolutely necessary, and only to a business or agency you know to be legitimate. Avoid giving out this information on sweepstakes application cards, commercial surveys, or over the Internet.
  • Immediately report identity theft to your local police station. Law enforcement officials are required to take an identity theft report from a local resident. California law allows a victim to send a photocopy of a police report to the major credit bureaus so that derogatory credit information resulting from identity theft can be quickly removed from the victimís credit history.
  • If you feel you may be a victim of identity theft and would like to explore your civil legal options, contact Public Counsel Law Center at (213) 385-2977 or Bet Tzedek Legal Services at (323) 939-0506.
  • For more information on identity theft and solutions for victims, click here.

HEALTH FRAUD

Fraudulent miracle cures abound and seniors are primary targets of the quacks who peddle them. Those suffering from serious illnesses such as cancer, arthritis, and heart problems desperately try "cures" that are of no help and often divert them from traditional medical treatment. Current health scams include male potency drugs, miracle weight-loss pills, and sure-fire cancer cures.

Protect yourself:

  • Discuss any health care product with your doctor or a reputable health care professional.
  • For serious illnesses, don't be pressured into buying any health product that claims to be able to cure your illness or save your life.
  • Be sure that the health product does not conflict with medications you are already taking.
  • Do not stop taking prescription medication without first discussing it with your physician.

  • Prior to making a purchase, ask for written details on any costs for returning a product. Fraudulent remedies with "money back guarantees" often include undisclosed charges.

STAGED AUTO COLLISIONS

Organized fraud rings target seniors for staged auto collisions in several ways. These con artists can intentionally cause an accident with a senior in order to collect on fraudulent insurance claims. Some may then ask for cash for the alleged damages and request that the settlement be confidential, telling seniors not to report the "accident" because they could lose their license or insurance. Finally, some criminals may steal money or identification cards and credit cards from the seniorís wallet or purse at the accident scene.

Most people who are victims of staged collisions donít realize the "accident" was staged. Auto collision stagers target seniors and drivers of expensive cars or business vehicles. They choose victims they anticipate have insurance and/or money to pay for the alleged damages.

Protect yourself:

  • Staged auto collisions usually involve two drivers, working together to "swoop and squat." The "swoop" car driver maneuvers to seemingly cause the "squat" car to stop suddenly in front of the victim, who canít avoid rear-ending the "squat" car. (Itís called "squat" because the car squats or stops suddenly, and the passengers squat to minimize the impact they know is coming.) It is very difficult to anticipate staged accidents, but you can protect yourself by immediately calling the police when youíre involved in a collision. If you feel unsafe or threatened, wait in your car until the police arrive.
  • Another staged auto accident involves a suspect who befriends the elder and suggests they go for a drive along a specific route. Along the way, the senior hits a pedestrian, who claims serious injury. Often the pedestrian is never actually injured, but the elder is convinced by the stranger that the accident occurred.
  • Notify law enforcement of any auto collision involving injury or death. If anyone claims to have been seriously injured, call "911." Inform the Department of Motor Vehicles of collisions resulting in more than $500 damage.
  • Keep a disposable camera in your car. If you can do so safely, take photographs of the vehicles involved in the collision and of the passengers. Photo documentation is helpful in criminal investigations and prosecution, but never put yourself in harmís way to take the photos.

When to suspect another driver may be up to no good:

  • You start exchanging information with one driver and notice that other individuals involved in the accident are leaving the scene. Insist on obtaining relevant identification information on all persons involved in the collision, including their names, addresses, phone numbers, vehicle license plate, driversí licenses, and insurance carriers. Be suspicious of any driver or passenger who refuses to give you his/her personal information.
  • The car that hit you has lots of rubber tires or other objects in it to cushion the occupants from the impact of the collision.
  • The driver of the vehicle you hit insists on settling the matter between the two of you without involving the police or auto insurance. Do not be intimidated by threats of future lawsuits that you will lose your driverís license. Play it safe and donít give cash to anyone at an auto crash scene as a way to settle damages.
  • Soon after the collision, someone comes to your home to ask for cash to settle an auto accident claim. Report the individual to law enforcement immediately. Any offers to settle an auto accident claim should be made directly to your insurance carrier.
  • The other driver asks for your wallet to write down personal information from your driverís license and insurance card. Never give your wallet to anyone at an accident scene. In providing identity information, display only your driverís license and proof of insurance card. Criminals will often steal money and credit cards from seniors at the scenes of staged collisions.

REAL ESTATE FRAUD

Most seniorsí primary asset is their home. When seniors are victimized through mortgage loan fraud or when caretakers and others defraud them out of title to property, elders risk losing their home or tying up title in a legal mess.

Fraud artists search public records to find mortgage-free homes or homes with significant equity, many of which are owned by seniors. Posing as the homeowner, these criminals fraudulently obtain mortgage loans and disappear with the money. When mortgage payments are not made, the lender forecloses, which could result in the senior losing his or her home or having to pay a lawyer to clear the title.

Protect yourself:

  • If you receive a letter from a mortgage company notifying you of a mortgage on your home that you never applied for, immediately call the L.A. County Department of Consumer Affairs Real Estate Hotline at 1(800) 973-3370. Also notify the mortgage company that you did not apply for the loan. The L.A. County Real Estate Hotline helps prevent homeowners, particularly seniors, from becoming victims of real estate fraud.
  • If you receive a notice from the County regarding the recording of a deed, call (800) 973-3370. When a loan, lien and/or deed to real property is recorded in L.A. County, the owner is sent a copy of the document and a postcard with notification. If you receive such information, read it carefully. If you donít understand it, ask someone you trust to look it over.
  • Some lenders violate consumer protection laws by targeting seniors with offers of mortgage loans that do not fully disclose the cost of a loan. The senior is then committed to repaying a high-cost loan he or she canít afford and risks losing the home. The law requires mortgage lenders to make full disclosure of all costs of a loan and payment amounts. Never sign anything without being sure you know the full consequences of what youíre signing. If you have any doubts, discuss them with someone you trust.
  • Do not give any personal information such as your Social Security number to a stranger or loan salesperson. Donít give personal identification information to a stranger on the phone or to a loan salesperson who comes to your door. Never provide personal information in response to a mail solicitation.
  • If you are told that your loan documents are ready for "closing" but you have not received any disclosures in advance specifying the amounts of the closing costs and fees, do not sign any closing documents until you have had a chance to review all the fees and closing costs.

When to suspect a mortgage lender may be up to no good:

  • You are urged to take out a second mortgage on your home in a "canít miss deal" in order to get out of debt (from credit cards, etc.) fast. The fraud artist submits false financial information so that you qualify for the new loan, but then pockets your closing costs. Now youíre stuck with unaffordable mortgage payments.
  • A lenderís representative contacts you about refinancing your mortgage. Youíre told you are under no obligation, but the representative asks you for personal identification information (Social Security number, etc.). Now the thief can use your personal information to obtain a loan or other bogus credit.
  • Caretakers and/or caregivers may persuade seniors to sign a deed conveying property to the caretaker/caregiver or sign loan documents in order to take out a mortgage against the seniorís property. The caretaker/caregiver can then appropriate the property or money for her or his own use. Do not take out a loan or convey property unless trusted family members or friends agree that it should be done and they witness the proposed transaction.
  • If you feel you may be a victim of real estate fraud and would like to explore your civil legal options, contact Public Counsel Law Center at (213) 385-2977 or Bet Tzedek Legal Services at (323) 939-0506.

Reverse Mortgages:

A reverse mortgage is a home equity loan that allows homeowners to convert some of the equity in their homes to cash while they retain ownership. Reverse mortgages work much like traditional mortgages, but in reverse. Rather than making a payment to your lender each month, the lender pays you. Unlike conventional home equity loans, most reverse mortgages do not require any repayment of principal, interest, or servicing fees as long as you live in your home. Funds you obtain from a reverse mortgage may be used for any purpose Ė personal expenses or housing expenses such as taxes, insurance, and maintenance costs. However, all reverse mortgages come with the risks associated with traditional home mortgages Ė the main one being that you may lose your home if you do not repay the loan.

Protect yourself and beware:

  • Reverse mortgages are designed for people who are "house-rich, but cash-poor." Because your home is such a valuable asset, you should consult with your family, attorney, or financial advisor before applying for a reverse mortgage.
  • Although they provide a monthly payout, reverse mortgages are rising-debt loans. Each payment will have to be repaid with interest. Keep in mind that if you move, sell your home, reach the end of the loan term or pass away, the loan will become due and you or your heirs will have to repay the loan, either in full or by refinancing the loan into a traditional (forward) mortgage. You may even lose your home.
  • One of the best protections you have with reverse mortgages is the Federal Truth-in-Lending Act, which requires all lenders to inform you about the planís terms and costs. The law requires lenders to disclose the Annual Percentage Rate (APR) and payment terms. On plans with adjustable rates, lenders must provide specific information about the variable rate feature. On plans that provide you with a credit line, lenders must also inform you of any charges to open and tap the account. Be sure you understand all the terms of the reverse mortgage and do not sign any document until the terms have been explained to you or to someone you trust.

Elder Abuse Section
Los Angeles County District Attorney's Office
201 North Figueroa Street, 12th Floor
Los Angeles, CA. 90012
Phone (213) 580-3383
http://da.lacounty.gov/seniors/


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