Beware of Scams
Fraud and scams are on the rise, and everyone is a potential target. Criminals are becoming more and more creative in their attempts to part people from their money and property. While many insurers offer the option for identity protection coverage in their policies, voluntarily parting with property is excluded under most insurance policies. Helping clients understand their exposures to fraud loss and how to avoid becoming victims of scams is another value-added service of the true insurance professional.
According to the Federal Trade Commission(FTC), 2024 was a record year for scams, totaling over $12.5 billion in the United States – up 25% from 2023. Globally, it is estimated that losses to scammers exceeded $1.03 trillion. Senior citizens are especially vulnerable to scams – losing $4.8 billion in 2024. According to the FBI, the average loss sustained by those over age 60 in 2024 was $83,000. Schemes include exploitation scams, where the victim is conned into such things as hidden shipping charges or magazine subscriptions, quack dietary or weight loss products, or faulty investments. There are also con artist scams, such as fake lottery or sweepstake winnings, and sweetheart scams (pretending to be in love to get money).
Some reasons seniors are targeted include the fact that they are seen as having retirement savings, are used to shopping over the phone, or, as people age, they may become more forgetful. Scammers call pretending to be someone the senior has done business with previously, or claiming they are owed money, and threatening legal action. A particularly nasty scam is someone calling and posing as a grandchild, and asking for money to help them out of a jam. Money is to be wired. And, oh, please don’t tell my parents. Investment scams are also common- – who can forget Bernie Madoff and his $50 billion fraud?
Every U.S. citizen over the age of 65 is eligible for Medicare, and fraud in that system is rampant. For example, the scammer provides “free” or discounted equipment or services and then insurers are billed for unnecessary services or equipment.
Windshield or auto repair is another type of scam. Some scammers go door to door, pointing out cracks or damage in windshields/vehicles and offering to replace the windshield for “free”, or repair the damage at a discount. Fraudulent repairs and windshield replacement are not “free” – they increase insurance costs for everyone. In addition, the replacement may be substandard, putting auto operators and their passengers at risk. In any case, once the scammer has insurance information, they may continue to bill the insurance company for medical equipment or services or duplicate windshield replacements.
Telephone fraud comes in various forms, including spoofing, sweepstakes winnings, free vacations or great investment opportunities. Spoofing is when a scammer hijacks someone’s phone number and it shows up on the caller ID of the intended victim, leading them to believe they are talking to someone they know, or a trusted source, such as a financial institution. Email addresses can also be spoofed.
Offers of “free” vacations or discounted services abound. Often, the caller insists that this is a limited time offer, and a decision must be made right away. Never provide personal information to anyone who calls you. This includes social security, bank account or credit card numbers, or any passwords or PINS.
The federal “Do Not Call” list blocks most but not all unsolicited calls. Scammers will often ignore the law and contact numbers on the list. Such callers should be reported to www.donotcall.gov. There are also services available that can block calls from robots (robocallers) or known scammers.
If you decide to make a charitable donation, or a purchase, ask the caller to send you something in writing. Ask how the charity uses the money they receive. A good resource is Charity Navigator, (www.charitynavigator.org) who offers ratings on over 8000 charities.
Anyone who suspects they are a victim of fraud or attempted fraud, should report the incident to the FTC (www.ftccomplaintassistant.gov). One of the stated goals of the FTC is “Protect Consumers: Prevent fraud, deception, and unfair business practices in the marketplace.” (www.ftc.gov) Another resource for fraud prevention is the Financial Fraud Enforcement Taskforce (www.stopfraud.gov/protect-yourself.html).
Remember, if the offer is too good to be true it usually is. Helping clients understand the potential risks of scams, and how to reduce their exposure, is another sign of the true insurance professional.