Consumer Fraud

CONSUMER FRAUD:
Protect Yourself!

Bill Taylor
University of Wyoming
Community Development Area Educator

The University of Wyoming is an 1
equal opportunity/affirmative
action institution.

Fraud in Wyoming
 Cheyenne residents targeted
 Scammer claimed to have known
Ferdinand Marcos and had gold
certificates worth billions
 Would receive $1 million for an
application fee of $10,000 as part of
a ‘self liquidating loan’
 50 investors lost $1 million

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Development Education

Warning signs of fraud
Be suspicious if you hear
 You’ve won a prize or free gift
 You’ve been selected to receive a special
offer
 You must act immediately or lose out
 You must pay for shipping your prize or free
gift
 Give us your credit card number and
expiration date to verify that you are a credit
cardholder
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More warning signs of fraud
 You’re asked for personal information
 You’re asked to donate to an agency
whose name sounds like a well known
charity
 You’re one of only a chosen few to
receive this offer
 A courier will come to your home to get
your payment
 Little risk and large, short term profits

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Sucker lists
 If you often respond to sweepstakes or
contests, your name might be added to
lists sold to con artists
 A sucker list contains the names of
people who have been, or are good
candidates to be, victims of fraud
 People on the lists may hear from crooks
who claim they can help recover, for a
fee, money lost to a con artist

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Types of scams
 Following are various types of scams
 This list is not exhaustive
 www.scambusters.org list 227 present
scams, with more added as they appear

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Phishing
 A term used for emails that claim to be
from your bank, a reputable business or
a government agency
 Criminals ask for personal information
such as Social Security numbers or
account numbers to steal funds and/or
steal identities

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Grammar

A phishing email. . .
– preys on fears
– nothing is safe

Spelling

action institution.

Nigerian letters
 E-mails that ask recipients to provide
their bank account number to help them
share in a big pot of money
 If you respond to these letters you will
lose your money

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Sweepstakes and lotteries
 You’re told that you’ve won a
sweepstakes or the Canadian
lottery
 You’re asked to pay for
processing, taxes or delivery, or
provide a bank account number to
verify your identity
 No one ever receives a penny
except for the thieves

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Travel scams
 Before buying travel packages
 Get the offer in writing
 Check to see if the company is
legitimate:
 the Better Business Bureau
 state attorney general’s office
 your local consumer protection agency
 the U.S. Dept. of Transportation (DOT) at
202-366-2396
 Always use a credit card to purchase
travel
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Charities
 ‘Sound-alike’ names can be tricky

 Nonprofit and charitable groups
must file IRS Form 990
 Check 990s at GuideStar
www.guidestar.org

 Before you donate, check to see if
the charity is legitimate
 www.charitywatch.org: 773-529-
2300

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Work-at-home scams

 Do not respond—these offers are scams
 If you respond, you’ll be asked to pay for
supplies upfront
 Might ask you for your credit card, bank
account or Social Security numbers for
fraudulent uses

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Credit card fraud
 Keep an eye on your credit
cards at all times
 Unscrupulous employees
might steal the information
from your credit card and use
it to make counterfeit cards
 Shred all credit card
statements, receipts and
solicitations before throwing
them away
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Dumpster diving
 Crooks look in garbage cans and
elsewhere for discarded credit card
statements and receipts to obtain the
card numbers
 These papers can be used to steal your
identity and set up credit in your name
 Shred sensitive papers

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Real estate fraud
 Before purchasing property out of state,
contact a national real estate firm with
licensed brokers
 Before you purchase land contact:
 The state department of real estate
where the land is located
 The U.S. Department of Housing and
Urban Development at 202-708-0502

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Contractor fraud
 Traveling contractors are rarely licensed
or insured and often take a large cash
payment up front
 They will probably never return to
complete the work
 When you need a contractor for a home
improvement job, get at least 3
estimates from reputable local
contractors

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Home equity loan fraud
 Often working with unscrupulous
lenders, door-to-door salespeople offer
“easy financing” for improvements and
home repairs that may not be needed at
all
 Often the work they do is shoddy or
incomplete
 The loans they arrange are secured by
your home and often carry very high
interest rates and other costs

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Refinancing scams
 Brokers solicit homeowners to
refinance their existing mortgages
and replace them with bad loans
 Bad loans have inflated fees and
interest and high monthly payments
that homeowners cannot afford to
pay
 The homeowner falls into default and
the home is foreclosed on
 The crooks buy up the real estate at
deflated prices

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Deed forgeries
 Scam artists forge the
homeowner’s signature on a
blank deed in order to transfer
ownership of their property
 Never sign blank contract
documents

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Fly-by-night lenders
 Phony lenders
 Set up offices in low income and minority
neighborhoods
 Get homeowners’ signatures on loan
documents
 Disappear with the loan money
 Loans may be resold to another lender
who then forecloses on the homes

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Investment fraud
 Everyone would like to see his
or her money grow faster
 Crooks try to convince people
to buy phony investments
with promises of unusually
high returns

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Analysis of Audio Tapes
Investment fraud criminals use a wide array of influence
tactics. The research found 1,100 separate uses of the
influence tactics in 128 transcripts. The most
frequently-used tactics were:
 Phantom Fixation – “These gas wells are
guaranteed to produce $6,800 a month in income.”
 Commitment – “You can vote to stop drilling, but if
you do, all the rest of what you have invested will be
lost.”
 Authority – “I have been in the oil business for over
30 years and I have seen it all.”
 Social Consensus – “I know it’s a lot of additional
money to spend, but I am in this thing just as deep
as you are and I say its worth every dime.”
 Scarcity – “There are only two units left in this well.”

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Avoid investment fraud
 Do your homework about investments
 If you are targeted with questionable
investment offers, notify the U.S.
Securities and Exchange Commission
(SEC)
 Call your state attorney general’s office
to file a complaint

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Checking investments
 Check with the SEC before
investing
 Has the offering been cleared for
sale in your state? Call your state
securities department
 Check disciplinary actions against
brokers with the Central
Registration Depository (CRD)
 The National Association of
Securities Dealers (NASD) may
provide a disciplinary history on
a broker or firm. 800-289-9999
or www.nasd.com
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Pyramid schemes
 Promoters recruit investors and use
them to recruit more investors
 Investors are promised a fabulous
return, such as 20% a year
 Some investors might receive
money but eventually, the
organizers run off with everything
 Pyramid schemes are often called
“investment clubs” or “gifting
circles,” and can involve the sale of
products or distributorships
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ID theft
ID theft criminals use your personal
information to apply for credit or
government benefits
 Your name
 Your birth date
 Your Social Security number
 Your address
 Your bank account or credit card
numbers
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Fake cashier’s checks
 Crooks scan want ads looking for victims
 Answer ads and offer to pay by “cashier’s
check” for more than the sales price
 Ask you to wire the remainder of the
money back to them or to give the extra
money and the merchandise to a
“shipper”
 Check turns out to be a fake and you lose
the merchandise and the money

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Credit card loss protection
 Don’t buy the worthless credit
card loss protection and
insurance programs sold by
telemarketers
 Your liability for unauthorized
credit card charges is limited
to $50

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Protect your property and assets

 Financial exploitation is often committed by
a person that is trusted by the victim
 Keep all important financial documents
under lock and key in your home
 Store valuables in a bank safe deposit box

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Medicare fraud
 Medicare prohibits companies offering its
approved drug cards from calling you,
sending emails or coming to your home
unless you ask them
 If you are interested in the benefits
available to you as a Medicare
beneficiary, visit the federal
government’s Medicare web site
(www.medicare.gov) or call 800-
MEDICARE (800-633-4227)
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Health fraud
 Signs of health fraud include:
 Promoters of cures who claim that the
medical establishment is keeping
information away from consumers
 Testimonials from people who
supposedly have been cured
 “Secret formulas” that no one else has
 The use of infomercials—programs that
look like news, but are just lengthy ads
paid for by the promoter
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Living trusts
 Living trusts are a legitimate estate-
planning tool
 Typically, consumers with low income
and small estates do not need them
 Consider a living trust only if your
estate’s value is higher than the state’s
minimum limit for probate, which is
$100,000 in Wyoming

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Funerals and burial scams
 While it makes sense to plan your
funeral and burial in advance, it is
not a good idea to pay for these
services in advance
 Draw up your plans with a
reputable funeral business and
save a copy for your survivors
 If you want cover the cost of your
funeral include funds to do so in
your will

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Warning signs of fraud
 Be suspicious if you hear
 You’ve won a prize or free gift
 You’ve been selected to receive a special offer
 You must act immediately or lose out
 You must pay for shipping your prize or free
gift
 Give us your credit card number and
expiration date to verify that you are a credit
cardholder

UW Community 35

More warning signs of fraud
 You’re asked for personal information
 You’re asked to donate to an agency
whose name sounds like a well known
charity
 You’re one of only a chosen few to
receive this offer
 A courier will come to your home to get
your payment

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Protect your assets
Never
 reveal your financial information to
someone who calls you on the phone
 allow strangers to come into your home
 believe that a stranger will use your
money for a good purpose
 assign power of attorney to people you
don’t know very well
 sign contracts that have any blank lines
in them

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What is ID theft?
Criminals use your personal information
to apply for credit or government
benefits
 Your name
 Your birth date
 Your Social Security number
 Your address
 Your bank account or credit card
numbers
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What can be done with a false ID?
 Open credit cards, buy goods
 Take out loans
 Get cell phones
 Open bank accounts
 Seek employment
 Open credit accounts
 Pay bills

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What is account fraud?
Unauthorized charges, withdrawals or
new accounts
Crooks use:
 Identification
 Credit card numbers
 Social security numbers
 Bank account information

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It pays to prevent ID theft
Victims spend an average of 600 hours
recovering from ID theft often over a
period of years.
It is estimated that every victim of ID
theft spends $1,400 in out-of-pocket
expenses to clear their names

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Are you already a victim?
 Check your credit report
 Look for
 Accounts you don’t recognize
 Inaccurate information

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Credit reports
 Check your credit reports regularly.
 Free credit reports can be obtained
once a year from each of the 3 credit
reporting agencies
 Equifax
 Experian
 TransUnion

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Credit reporting agencies
 Equifax, 800-525-6285,
www.equifax.com
 Experian, 888-397-3742,
www.experian.com
 TransUnion, 800-680-7289,
www.transunion.com

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Free credit reports
 Annual Credit Report
 www.annualcreditreport.com
 (877) 322-8228
 Annual Credit Report, Request Service,
PO Box 105281, Atlanta, GA 30348-5281

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Victims - be watchful
 Dispute fraudulent accounts immediately
 Close all affected accounts
 Follow up your phone call with a written request
 Get letters stating disputed accounts have
been closed
 Create new passwords for all of your
accounts
 Avoid easy-to-guess passwords

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Social Security number (SSN)
 Memorize your Social Security number
(SSN)
 Don’t carry your Social Security card
 Don’t print your SSN on your driver’s
license or bank checks
 Keep all papers listing your SSN hidden or
locked away
 Shred all documents with SSNs before you
throw them away

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Financial information
 Check bills, bank and credit card
statements
 Report any unauthorized transactions
immediately
 Track statements, new credit cards or
check orders in the mail
 Call the companies immediately if you
notice
 Unauthorized transactions
 Missing credit cards or checks

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Cards and account numbers
 Shield ATM keypads when entering
passwords
 Memorize your PINs
 Watch your cards while they are with
sales clerks or waiters
 Lock your own mailbox
 Use US post boxes for outgoing mail that
contains account numbers

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Phone and Internet
 Don’t answer callers or e-mails asking
for personal information
 Remember, you may be overheard on a
cell phone
 Always make sure you are dealing
with reputable companies

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Marketing
 Read your bank’s privacy notice
 Stop or ‘opt out’ of pre-screened
credit offers
 (888) 5OPT-OUT

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Monitor your mail
 Missed bills, credit card statements,
etc. may signal trouble

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Always question …
 Charges, bills or collection calls that
are not yours
 Complain immediately
 Denials of credit when you have good
credit
 Get a free copy of the credit report used
to make the decision
 Check for mistakes or fraud

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ID theft clean up
 Document the crime
 File a police report with your local police
department
 Get a copy of the police report
 Contact appropriate state and federal law
enforcement agencies
 Complete a free ID Theft Affidavit from the
FTC
 www.ftc.gov/idtheft

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Password accounts
 Place passwords on your credit card,
bank and phone accounts
 Don’t use easy-to-guess names and
numbers
 Ask businesses not to use SSN or
mother’s maiden name

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What can you do: General

1. Do not give your telephone calling
card, credit card, or bank account
numbers to strangers by telephone or
mail unless you initiated the order for
goods or services.
2. Do not be pressured by salespeople
into buying NOW.
3. Do not pay to receive a free gift.
4. Shut the door. Hang up the phone.

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What can you do: Telemarketers

1. Register with the FTC’s Do-Not-Call
Registry (to cut down on
telemarketers) donotcall.gov or (888)
382-1222.
2. Be very careful about sharing personal
financial information.
3. Be skeptical about unsolicited phone
calls, especially about investments.
Say: "Sorry, I do not do business over the phone."
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What you can do: Investments
1. Ask for information about the
company, price information, and
written estimates from door-to-door
salespeople before doing business
with them.
2. Examine investments carefully.
3. Exercise caution about can’t miss
deals.

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What you can do: Contractors
1. Ask the contractor for local references. Find out
if other customers were satisfied with the work.
2. Check with the Better Business Bureau for
complaints against the contractor.
3. Demand to review the contractor's business
license and insurance certificate. Refuse to deal
with anyone who will not provide this
information.
4. Do not pay up-front for home repairs. Divide
payments up to ensure you are not left with an
empty bank account by an unethical contractor.

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Elder Abuse: Background
 Often traced to family
members, caregivers and
trusted friends
 Adult Protective Services
(APS) agencies report
more cases of financial
abuse than physical
abuse each year
 Only 1 of 14 cases of
domestic vulnerable adult
abuse incidences is
reported
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Elder Abuse Perpetrator Profiles

1. Adult children, grandchildren, or
other relatives
2. Professional or hired caretakers
3. Friends or others in a position of
trust
4. Professional crime groups that target
elders and dependent adults

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Caretaker crimes
 Be alert for caregivers
 who try to isolate you from your friends
and family
 who ask about your will and investments
 who ask to be given power of attorney
 who try to dominate or influence you
 Tell family members or call adult protective
services

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Relative and Caregiver Offenders
Methods of financial exploitation include:
 Simply taking the victim’s money
 Signing or cashing the person’s pension or social
security checks without permission
 Forging a signature to cash checks
 Deceiving or coercing the victim into signing
checks, documents (will, contract)
 Transferring title on, or re-encumbering, real
property
 Improper use of conservatorship, guardianship, or
power of attorney.

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Spot the Warning Signs: Behavior
1. Change in the elder's spending patterns,
such as buying items he or she doesn't
need and can't use.
2. Lack of personal amenities, such as
appropriate clothing and grooming items.
3. The appearance of a stranger who begins
a new close relationship and offers to
manage the elder's finances and assets.
4. Parents suddenly become secretive or
defensive about their finances.

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Spot the Warning Signs: Banking
1. Numerous unpaid bills when someone else has been
designated to pay the bills.
2. Abrupt or unexplained change in durable power of
attorney
3. Allegations of missing funds from a senior's account
4. Sudden increase in credit card activity or a flurry of
bounced checks
5. Checks written out of their numerical order
6. Financial statements sent to an unauthorized address
7. Signature that seems unusual or suspicious
8. Checks or other documents signed when the elder
cannot write or understand what he or she is signing.

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Spot the Warning Signs: Other
 Junk mail for
contests, free trips,
and sweepstakes
 Calls from strangers
offering awards or
moneymaking deals
 Cheap items like
costume jewelry or
mini-flashlights

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Tips to Identifying Family Fraud
1. Monitor your credit card and bank account
activity.
2. Be wary if a distant relative offers to help
you with your finances.
3. If you suspect something, find another
family member you trust to talk to.
Look for . . .
 A change in a caregiver’s lifestyle – a grander
lifestyle?
 Isolation of an elder by the caregiver.

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What can you do: Family/Caregivers
1. Arrange for direct deposit of Social Security checks
and other retirement benefits.
2. Carefully choose someone to appoint as power of
attorney and in completing or revising a will.
3. Be careful about permitting family, friends or tenants
to live in your house. Have a written agreement about
expectations of services to be performed or rent paid.
4. Treat home attendants like employees, not friends.
5. Keep valuables hidden if someone comes into the
house on a regular basis.
6. Maintain contact with family, friends, neighbors
and/or your community center. The more active you
are, the less likely you are to be exploited.

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What can a relative do?
 Stay involved, even if it’s over the phone.
 Observe what they receive in the mail.
 Know who is in their social circle.
 Look at financial statements for unusual
activity.
 Take a visual inventory of the home and note
changes.
 Encourage seniors to complain to the police.

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What can a relative do? (2)

 Talk about common
scams.
 Perform background
checks on caregivers.
 Take charge.
 Create a trust.

Remember: Everyone does stupid things.

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What to do if your fears are
warranted
 Don’t lecture them.
 Call the police
 You may need a police report to help you
prove that you were a victim
 Contact your state and local law
enforcement agencies such as your
district attorney’s office or the
Wyoming Attorney General

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National Association of Securities
Dealers Findings
Investment fraud victims are more financially literate than non-
victims

Fraud pitches are tailored to match the psychological needs of
the victims

Investment fraud criminals use a variety of tactics, from
friendship to fear and intimidation, to defraud victims

Investment fraud and lottery fraud victims are more likely to
listen to sales pitches than non-victims

Fraud victims often have experienced more difficulties from
negative life events than non-victims

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Vulnerable Consumers
Assume They Are Experts. Vulnerable
consumers do not seek information about
a subject or "opportunity". They may not
admit their lack of necessary knowledge
or skills.
Do Not Use Common Sense. Vulnerable
consumers let "getting something for
nothing" overtake sound reasoning. They
do not question what sounds too good to
be true. They accept the deal rapidly for
fear they might miss the opportunity.

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Search for Good Health. Vulnerable
consumers let universal desire to be
healthy overtake good judgment. They
believe in false cures for an illness or
chronic condition.
Believe Misleading Ads. Vulnerable
consumers assume publications accept
advertisements from reputable sources
only. They assume information in
advertisements has been verified as true.

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Feel Intimidated. Vulnerable consumers
buy a product or service out of assumed
obligation to the seller. They feel
threatened when they question price or
quality of goods or services.

Do Not Know or Use Their Legal Rights.
Vulnerable consumers do not seek legal
counsel when needed. They often fail to
report being swindled to law enforcement
agencies.

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If you become a victim...
 Call the police
 You may need a police report to help you
prove that you were a victim
 Contact your state and local law
enforcement agencies such as your
district attorney’s office or the
Wyoming Attorney General

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Resources
 Wyoming Attorney General
 AARP
 Wyoming Adult Protective Services
 Consumer Action
 North American Securities Association
 National Fraud Information Center
 National Association of Attorneys
General
 National Consumers League
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Additional resources
 FTC ID Theft Clearinghouse / ID Theft Hotline
 US Department of Justice
 Federal Bureau of Investigation
 Federal Deposit Insurance Corporation
 United States Postal Inspection Service
 United States Secret Service

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Non-profit organizations
 Consumer Action
 www.consumer-action.org
 Identity Theft Resource Center
 www.idtheftcenter.org
 National Fraud Information Center
 www.fraud.org
 Privacy Rights Clearinghouse
 www.privacyrights.org

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Questions?

action institution.

Consumer Fraud

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