Thank the sponsors for the opportunity to present the AARP Fraud Prevention presentation. AARP has developed this project in partnership with the Investors Protection Trust, the Wisconsin Department of Financial Institutions & the Department of Agriculture, Trade & Consumer Protection My name is Mary Volmer and I’m an official AARP Fraud Fighter. I’m really happy to have been asked to be here with you today.
Provide education on how to avoid becoming a victim of investment and consumer fraud Direct consumers who have experienced problems to the appropriate agency for assistance Give educational presentations to clubs, faith-based organizations and other civic groups. Testify at State Capitol on fraud-related bills; such as Assembly Bill 261
From AARP research: People who got duped tended to be optimistic, self-reliant, college-educated, and have above-average income and financial knowledge. Unfortunately as soon as we figure out how to avoid one scam, con artists find another way to separate us from our money and dignity.
While there are many different categories of fraud, we’re going to concentrate on three major ones: identity theft, consumer fraud, and investment fraud
Criminal Identity Theft: When someone steals your identity and presumes to be you in order to commit a crime. Medical Identity Theft: When someone steals your identity to receive medical care Employment Identity Theft: When someone steals your identity to be able to work in the United States. Financial Identity Theft: When someone steals your identity for financial gain.
Why? They’re bullet-proof Targeted by credit card companies Somewhat naïve regarding their credit security They have money and are in the target market How easy is it? Phishing – calling or emailing to say there’s a problem with your account Skimming – attaching a device to the ATM machine Dumpster diving – shred, shred, shred Stealing from your home Stealing from your mailbox; diverting your mail to another address
You will note that the combination of the 50 – 65 and over constitutes 21% of all ID theft complaints in our state, so we are still very much in the right to be discussing consumer fraud and ID theft today. Can you prevent an identity theft? As with any crime, you cannot completely control whether you will become a victim. But you can minimize your risk by managing your personal information cautiously.
Changes in address are now sent to the old address and to the changed address just to make certain that the request was valid. It is illegal for any company to send you an actual credit card, unless you applied for it.
Charity Fraud Con artists raising money for themselves. Find out how much of your donation will actually go to the charity. Get a receipt. Find out if the contribution is tax deductible. Do not give out your credit card over the phone. Credit Card Interest Rate Reduction Don’t give your social security number or credit card number to telemarketers Insist on getting offer in writing before you sign up Research company’s BBB reliability report In September new rules take effect to halt prerecorded calls unless the seller first gets their permission Foreclosure Rescue Never sign any documents related to your home without first getting advice from an independent source you trust, like a legal service attorney or community counseling service Foreign Lotteries Letter or call comes to tell you that you may have already won a prize but in order to receive it you need to give them your bank account number, check or money order to pay ‘fees’ for processing Foreign Money Offers A foreign official offers you a ‘one in a lifetime opportunity’ if you’ll let him transfer some money into your bank account.
House Stealing $10 property transfer forms at office supply store After forging your signature and using the fake IDs, they file these deeds with the proper authorities, and lo and behold, your house is now THEIRS. Bought Empire State Building Receive information about a loan that isn’t yours – contact the FBI Internet Auctions Goods never arrive or aren’t as promised. Check seller’s feedback rating. Buy with credit card and / or an escrow service such as PayPal Phishing Official-looking email that asks you to update your information or validate your billing information. Contact the company that sent this first. Check your credit card and bank statements to know that all the activity is yours. Sweepstakes Publisher’s clearing house Purchase a 5-yr subscription for magazines to assure your chance at winning No refund because they were purchased through contracting companies The letter or call tells you that you’ve won something; however when you call they’ll tell you that you can increase your chances of winning if you purchase their product (which is illegal) Work at Home Scams Attract otherwise innocent individuals, causing them to become part of criminal schemes without realizing they are engaging in illegal behavior
Fraud: Either the person selling the product, or the actual product itself, is not real or misrepresented. Also, if the product is not licensed to be sold in our state, or if the seller is not licensed to sell investment products in our state. Check with the SEC first! Unsuitable recommendations: The broker or agent is not taking the life circumstances and best interests of the investor into consideration when making investment recommendations. For example, variable annuities are not always the best choice of investment for a 90 year old female. Another example is a high risk stock, with no other investments, is not a stand alone good investment for someone in their late 80’s. They need to be concentrating on investments with much lower risks, like bonds and other “steady growth” investments. Unauthorized activity is any shift in investments performed by the broker or agent without the consent or knowledge of the investor.
Usually starts out innocent or valid and then greed sets in . . . Frauders Use Physiological Weapons: Phantom Riches – You’re guaranteed to get all your money back with 25% interest in 90 days Source Credibility – I’ve been in this business for 20 years and I’ve never seen an opportunity like this Social Consensus – My phone has been ringing off the hook with others getting in on this chance Scarcity – I can only hold this offer open to you today because tomorrow all the shares will be gone Reciprocity – I’ll cut my commission in half if you act now Put some time and space between the pitch and the purchase
Investors all took advantage of the “early retirement” program at their employer Most of the Vogt investors lost everything Most investors are no longer retired Most have returned to jobs that are not nearly as good as the jobs they left at Ameritech Her firm was made to pay back investors the money which Ms. Vogt had swindled. Affinity fraud – investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. Exploit trust and friendship that exists in groups
No Free Lunch Annuities often carry high commissions and punishing surrender charges Can complicate your taxes Creates new sales charges, commissions, and penalties that go to into the sales agent’s pockets Older investors may not live long enough to enjoy any benefit What to do: Comparison shop; verify that the product is registered and the sales agent is appropriately licensed Make sure you have a complete list of charges and fees Research the financial stability of the insurance company What benefits will your spouse receive if you should die first? What are the ‘surrender fees’ if you decide you want out of the contract? What has been the historic return on the funds where your money is invested? Make sure the guaranteed interest rate has a good change of being higher than the inflation rate.
Ponzi scheme – the interest is paid out is actually the money paid in by later investors What to watch out for: Phone calls, letters, emails or visits from strangers who offer quick profit schemes requiring an immediate investment from you Promises that you can double your money within a short time Irregular interest payments Stalling by the seller when you ask to withdraw your investment Request for you to recruit more investors If a deal sounds too good to be true, it probably is! What you can do: Check out the investment offer or salesperson – www.nasaa.org File a complaint Call AARP See Smart Investing booklet, Google Bernie Madoff , watch ‘The Guiding Light’
Promissory notes must be registered and the seller must have a securities sales license Watch for ‘risk free’ investment Investments for a start-up company that is label as ‘prime quality’ Note for a period of nine months or less Don’t be pressured to act quickly. Do your research. Sleep on it.
North American Securities Administrators Association calls viaticals one of the top ten investment scams Settlement provider pays you a discounted rate, collects a commission, and then finds an investor to purchase the policy and pick up your premiums. When you die, the investor collects your death benefits. With improved medical care, the ill or older person may live longer than expected and profit declines the longer the person lives The insured person may have purchased the life insurance through fraud, and the company will later refuse to pay the settlement The SEC has taken action against one company in FL that alledgedly defrauded 30,000 investors of $1 billion Sometimes the insured person is not ill at all, so the investor will need to make insurance payment s – sometimes for years – or the investment is lost. The insurance company or viatical settlement company may go out of business – along with your invested money What to do? Comparison shop – get quotes form several viatical providers Be sure you understand how much cash you actually will get Find out the tax implications Know that your creditors could claim your cash settlement
Business Opportunities: Beware of offers to start a business with little or no money down Oil and Gas Schemes: Telemarketers are trained to use high-pressure sales tactics and follow a carefully scripted sales pitch to generate high profits “ I have some swamp land to sell you . . .” Payday Loans: Borrow with terms to pay back when you get your check – with a slight charge Check is short; roll over loan Vicious circle; fees continue to climb Read the small print in the contract – some charge up to 500% interest! Rare Coins / Antiquities: Learn all you can about the coin or antique as well as the person offering it Be wary of promises to buy back the coins at or above the purchase price Get a second opinion Get it in writing
Keep records of all correspondence with the creditors and government agencies you contact. Include the date and the name of contact. Follow up all telephone contacts with a letter and keep a copy. Get a copy of the police report
Ask your bank, doctor’s office, other businesses and your employer how they protect your personal information Never carry your Social Security card, birth certificate, or passport with you unless necessary Do not put your address, telephone number or driver’s license number on a credit card sales receipt Don’t put your social security or telephone number on your check Don’t give identifying information over the phone to someone you do not know
You can get one free copy of your credit report per year from all three of the national consumer reporting companies: Equifax, Experian, TransUnion. Order one every 4 months . . . Cancel unused credit cards You’ll need to give your personal information and an account number or amount of your monthly mortgage or car payment By law, you have 60 days to report a fraudulent charge on your credit card, but this law does not apply to debit cards. The banks have different rules around reporting a fraudulent charge to your savings or checking account. Often, they only allow 3 to 6 days, so it is important to be checking your accounts as often as you can to try to prevent this type of activity. If your wallet was stolen or lost, would you know who to call to report your credit cards missing? What about your driver’s license? Keep a copy, front and back, of all of your cards that you carry in your wallet. Your Medicare numbers are currently your social security numbers, and Medicare says to always carry your Medicare card with you. Luckily, the federal government is beginning to assign alternative member numbers to Medicare recipients, so hopefully within a short period of time, carrying your Medicare card will no longer expose your social security numbers. SSN – needed for wage and tax reporting purposes, credit check, loan . . . Ask: - Why do you need it? How will it be used? - How do you protect it from being stolen? - What will happen if I don’t give it to you?
Cell phones that take pictures have really changed how our personal information can be taken. Don’t leave any sensitive information lying about, it takes only seconds for a thief to walk by your kitchen table and snap a picture of your bank statement that is left lying around. Don’t give out personal information on the phone, through the mail, or on the Internet unless you have initiated the contact. Your mailbox leaves you very exposed to theft, and not only by what you put into it! If you are still receiving credit card offers by mail, or you are still receiving the blank checks from your credit card company, you are leaving yourself very vulnerable to a crime. Criminals watch neighborhoods for patterns – who is home or not home at what times so that they can raid their mailboxes. Opt out of these pre-approved offers. See the blue tri-fold. Use this phone number and web site, it has been vetted by our own Wisconsin Office of Privacy Protection. Call or write to your credit card companies and tell them to stop sending the blank checks, to not upgrade your card unless you call and ask them to and to NEVER raise your credit limit. Some companies will do this over the phone, some require a letter from you. It’s worth it. You leave yourself much less open to ID th eft if you take these small measures.
When you travel, do not sit in a restaurant and call the hotel that you are traveling to that night to make a reservation. Anyone around you could be listening in. Don’t pay for your hotel with a debit card, use your credit card. On your computer: - Update your virus protection software regularly - Install patches for your operation system and other software programs - Don’t open files sent to you by strangers, click on hyperlinks, or download programs - If you need to enter personal information be sure that the site is secure – lock icon - Use a strong password - Protect your personal information - Regularly back up important documents on your computer - Record your laptop’s serial number . . . Story about my laptop - Before disposing, delete all personal information on it; use a ‘wipe’ utility - Watch for those ‘Work from Home’ ads - Don’t send financial information over the internet - Forward any phishing information to [email_address] or check your financial institution’s website for information on where to report problems.
Recently, one of our fraud fighter volunteer’s sister in law was contacted by someone who identified herself as an employee of the US census bureau and tried to bully and persuade her into giving the caller all sorts of valuable information. Luckily, the woman knew not to give out any information over the phone. This was reported to the local police and to OPP. The police took her complaint very seriously. They also told her that if anyone from the census bureau came to her home waving a badge to slam the door in their face and to call 911 immediately. Spoofers are high tech devices that allow a caller to change what appears on your caller ID. So instead of me calling you and it reads insert your name here It may say “Jayne Smith from M & I Bank”. The spoofer also allows the caller to choose a male or a female voice on the call. If they knew you banked with M & I, perhaps because they observed you using your debit card where they worked, then they could try to say they were from the bank trying to verify your personal information because maybe their computer crashed. Do NOT ever give out your sensitive information over the phone unless you have initiated the call!!! A reputable business will never call you and ask for this type of information! Granny Gram
#1 I know many of us were taught that being rude on the phone was unacceptable, but this is truly one of your best weapons against phone sales. Just say “Thank You, I’m hanging up now” and then just hang up. #2 Not many people still encounter door-to-door sales anymore, but if you do, just ask them to leave, or if it feels less rude, ask them to leave a brochure about the product and then call DFI to see if the seller and the product are licensed to do business in Wisconsin. If they are not, that is a big red flag about the sale. #4, 5 & 6 If these offers were so amazing, why are they offering it to you – a total stranger? Why aren’t they calling their own mothers? If their offer is truly so amazing, so time sensitive, so incredibly limited, why are they calling you up out of the blue? Again, ask for a brochure about the product and then check it out thru DFI
There are several legal and honest brokers and investment planners out there in our big, wide world. However, you may not ever be able to tell an honest planner from a dishonest one without checking them out first. Call DFI and ask about the person selling the product, as well as the product itself. The bottom line of investing is that it is always your responsibility to perform due diligence to be certain that what you are investing in is legitimate. It is also your responsibility to understand fully the product that you are investing in. If the seller cannot describe to you, in terms that you can understand, what the product is, then it is probably not a product you want to get involved with.
These are the phone numbers and web sites of DFI. These are also listed on the light green sheets that I passed out (Help Lines and Resource Numbers). You can call the Wisconsin Department of Financial Institution to find out about the investment product you’re considering, as well as the person who’s trying to sell it to you. Remember, you want to find out if the person is LICENSED and the product is REGISTERED for sale in your state. You can also contact them to report anything that you find suspicious about the investment that you’re looking at – or, for that matter, the person who’s offering it. And, if you’ve already been scammed, or know someone who has, please report it. It might help you recover money, but at the very least it will help keep others from being scammed.
Thank you for your time today. Are there any other questions? Is there anyone among you today who is involved in another group that may benefit from my presentation? Let’s talk when I’m finished to trade contact information.
AARP Fraud Fighter 2009
AARP Fraud Prevention 2009 A Part of the AARP Foundation & Investor Protection Trust Fund
My Goal today is to help you to: <ul><ul><li>R ecognize </li></ul></ul><ul><ul><li>R eport </li></ul></ul><ul><ul><li>R esist Fraud </li></ul></ul>AARP Foundation
Recognize <ul><ul><ul><ul><li>IdentityTheft </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Consumer Fraud </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Investment Fraud </li></ul></ul></ul></ul>AARP Foundation
What Defines Identity Theft? <ul><ul><li>Federal Trade Commission (ftc.gov): </li></ul></ul><ul><ul><li>"Identity theft occurs when someone uses your personal </li></ul></ul><ul><ul><li>information without your permission to commit fraud or other </li></ul></ul><ul><ul><li>crimes.” </li></ul></ul><ul><ul><li>However . . . There are actually 4 types of Identity Theft! </li></ul></ul>AARP Foundation
Identity Theft Targets <ul><li>Who Are Targeted? </li></ul><ul><ul><ul><li>18 – 29 Year Olds (males and females equally) </li></ul></ul></ul><ul><li>In 2008, ID Theft rose 15% in Wisconsin! </li></ul>AARP Foundation
Warning Signs of A Crime: <ul><li>Failure to receive expected mail </li></ul><ul><li>Unsolicited Change of Address notice </li></ul><ul><li>Receiving credit cards that you didn’t apply for </li></ul><ul><li>Denied credit, or being offered less favorable credit terms </li></ul><ul><li>Receiving calls or letters from debt collectors or businesses about merchandise or services you didn’t buy. </li></ul><ul><li>Newly opened accounts on your credit report </li></ul><ul><li>Increased mortgage or other insurance rates as a result of a lower credit score </li></ul>AARP Foundation
<ul><li>House Stealing </li></ul><ul><li>Internet Auctions </li></ul><ul><li>Phishing </li></ul><ul><li>Subscriptions / Sweepstakes </li></ul><ul><li>Work at Home Scams </li></ul>AARP Foundation
Investment Fraud <ul><li>The Wisconsin Department of Financial Institutions oversees/investigates Investment Fraud in Wisconsin </li></ul><ul><li>Stats from their office: </li></ul><ul><li>Average 120-130 actual complaints and 1500 inquiries per year </li></ul><ul><li>Top 3 problems include </li></ul><ul><ul><li>Fraud </li></ul></ul><ul><ul><li>Unsuitable recommendations </li></ul></ul><ul><ul><li>Unauthorized activity </li></ul></ul>AARP Foundation
Types of Investment Fraud <ul><li>Affinity Fraud </li></ul><ul><li>Annuities </li></ul><ul><li>Ponzi Scheme </li></ul><ul><li>Promissory Note Scams </li></ul><ul><li>Viaticals </li></ul><ul><li>Miscellaneous </li></ul>AARP Foundation
Affinity Fraud <ul><li>Donna Vogt Case </li></ul><ul><ul><ul><li>Fox Valley </li></ul></ul></ul><ul><ul><ul><li>Targeted young retirees (early 50’s) at phone co. </li></ul></ul></ul><ul><ul><ul><ul><li>They heard about her by word of mouth from other employees </li></ul></ul></ul></ul><ul><ul><ul><li>Unsuitable recommendations </li></ul></ul></ul><ul><ul><ul><li>Employing broker has paid over $10 million to investors so far. </li></ul></ul></ul>AARP Foundation
Annuities <ul><li>You’ve been invited to a meal and an investment workshop </li></ul><ul><li>Urged to switch your investments to variable annuities </li></ul><ul><li>But you need to sign now </li></ul><ul><li>For ‘added security’ </li></ul>AARP Foundation
Ponzi Scheme <ul><li>The Bernard Madoff Case </li></ul><ul><li>Madoff until early December was a New York broker and fund manager </li></ul><ul><li>His funds attracted investors with the promise of consistently high returns and low fees. </li></ul><ul><li>Through his ponzi scheme, he caused financial destruction across the world. </li></ul><ul><li>Investors were primarily members of the wealthy Jewish community in New York, Florida and up and down the east coast of the US </li></ul><ul><li>On turning himself in to authorities on December 11, Mr. Madoff estimated the losses at $50 billion. That figure now stands at more than $65 billion. </li></ul>AARP Foundation
Promissory Notes <ul><li>Investor is making a loan to a company </li></ul><ul><li>Some are legitimate </li></ul><ul><li>Company promises to return the buyer’s fund and make interest payments </li></ul><ul><li>Guarantees that the investment is government backed </li></ul><ul><li>Promise of high return </li></ul>AARP Foundation
Viaticals <ul><li>Converting a life insurance policy to cash </li></ul><ul><li>Purchase life insurance of a terminally ill person at a discounted price </li></ul><ul><li>Ill person gets needed money to help pay expenses </li></ul><ul><li>Investor gets the full face value of the policy when the person dies </li></ul><ul><li>Investor is told that they are helping older people stay financially solvent in their golden years with a high rate of return </li></ul>AARP Foundation
Miscellaneous <ul><li>Business Opportunities </li></ul><ul><li>Oil and Gas Schemes </li></ul><ul><li>Payday Loans </li></ul><ul><li>Rare Coins / Antiquities / Collectibles </li></ul>AARP Foundation
Report <ul><li>Contact Wisconsin’s Office of Privacy Protection </li></ul><ul><ul><li>Mediate your complaint </li></ul></ul><ul><ul><li>Investigate and assist law enforcement </li></ul></ul><ul><ul><li>Provide support and assistance </li></ul></ul><ul><li>File a Police Report </li></ul><ul><li>Notify your Financial Institution and Creditors </li></ul><ul><li>Request your Credit Report </li></ul><ul><li>Place a Fraud Alert on your accounts </li></ul>AARP Foundation
What if a loved one becomes a victim? <ul><li>Follow tips in previous screen </li></ul><ul><li>and – </li></ul><ul><li>Use the FTC’s ‘Do Not Call Registry’ </li></ul><ul><li>Put a short script by the phone </li></ul><ul><li>Consider putting in a change of address to your home </li></ul><ul><li>Consider changing their phone number </li></ul><ul><li>Gather scam mail into an envelope marked ‘Forward to Postal Inspector – suspected mail fraud’ and put in mailbox </li></ul>AARP Foundation
Resist <ul><li>Safeguard your identity </li></ul><ul><li>Be aware that fraud is out there </li></ul><ul><li>Be informed </li></ul><ul><li>Do your homework </li></ul>AARP Foundation
Safeguarding Your Identity <ul><li>Request a credit report and review regularly </li></ul><ul><li>Financial records </li></ul><ul><ul><li>Check your bills and statements upon arrival and report any suspicious activity </li></ul></ul><ul><ul><li>Password protect your accounts if possible </li></ul></ul><ul><li>Do a wallet check </li></ul><ul><ul><li>Photocopy everything in your wallet and place in a secure place </li></ul></ul><ul><ul><li>Do not carry your SSN in your wallet </li></ul></ul>AARP Foundation
<ul><li>At Home </li></ul><ul><ul><li>Place personal documents in a secure place out of plain view of servicemen, sales persons, visitors </li></ul></ul><ul><li>Your Mailbox </li></ul><ul><ul><li>Place outgoing mail in an official mailbox </li></ul></ul><ul><ul><li>Arrange for mail pickup if you are away more than one day </li></ul></ul><ul><ul><li>Opt out of pre-approved offers </li></ul></ul>AARP Foundation
<ul><li>When you Travel </li></ul><ul><ul><li>Be aware of your surroundings when providing information in person or on the phone - someone may overhear </li></ul></ul><ul><ul><li>Use a credit card whenever possible </li></ul></ul><ul><li>On your Computer </li></ul><ul><ul><li>Use virus, spy-ware and firewall protection </li></ul></ul><ul><ul><li>Don’t be a victim of “Phishing” </li></ul></ul><ul><ul><li>Don’t click on pop-ups, they can re-direct you to a site that is not secure or may download key stroke capture files </li></ul></ul>AARP Foundation
<ul><li>On the Phone </li></ul><ul><ul><li>Sign up for the NO CALL List to limit incoming sales calls </li></ul></ul><ul><ul><li>Renew every two years </li></ul></ul><ul><ul><li>Do not give out personal information – legitimate companies will not ask for it </li></ul></ul><ul><ul><li>Be aware of Caller ID [spoofing] scams </li></ul></ul><ul><li>Shred Documents </li></ul><ul><ul><li>“ Dumpster divers” can obtain your identity through your garbage </li></ul></ul><ul><ul><li>Shred all personally identifiable documents (catalogs, pre-approved credit offers) </li></ul></ul><ul><ul><li>Use a shredder that shreds in pieces rather than strips (strips can be re-constructed </li></ul></ul>AARP Foundation
What We Need To Watch Out For: <ul><ul><ul><li>Phone Sales </li></ul></ul></ul><ul><ul><ul><li>Door to Door Sales </li></ul></ul></ul><ul><ul><ul><li>Direct Mail Sales </li></ul></ul></ul><ul><ul><ul><li>Offers that are too good to be true – because they usually are! </li></ul></ul></ul><ul><ul><ul><li>One time offers </li></ul></ul></ul><ul><ul><ul><li>Offers “Just for You” </li></ul></ul></ul><ul><ul><ul><li>Offers by anyone who isn’t a licensed financial professional! </li></ul></ul></ul>AARP Foundation
Who Can Help You Invest Safely? <ul><li>Trained/Licensed Professionals: </li></ul><ul><ul><ul><li>Financial Planners </li></ul></ul></ul><ul><ul><ul><li>Investment Advisors </li></ul></ul></ul><ul><ul><ul><li>Brokers </li></ul></ul></ul><ul><ul><ul><li>But remember, it is your responsibility to understand and review what they have recommended </li></ul></ul></ul>AARP Foundation
Do Your Homework! <ul><li>Check out the person AND the product </li></ul><ul><ul><li>1-800-47-CHECK </li></ul></ul><ul><ul><li>(608) 266-1064 </li></ul></ul><ul><ul><li>www.wdfi.org/fi/securities/ </li></ul></ul><ul><li>If you suspect a scam, REPORT IT! </li></ul><ul><ul><li>1-800-47-CHECK </li></ul></ul><ul><ul><li>(608) 266-1064 </li></ul></ul><ul><ul><li>http://www.wdfi.org/contact_us/complaint.asp </li></ul></ul>AARP Foundation
Thank You! Life long learning begins anytime you want it to . . .
Questions? <ul><li>Mary Volmer </li></ul><ul><li>262-253-1126 / 262-312-4565 </li></ul><ul><li>[email_address] </li></ul>AARP Foundation