Buyer Beware: Scams Proliferating
Author : By Carole Fleck    -   Subject : Finance

A dizzying range of scams is targeting older Americans these days despite the best efforts of law enforcement and consumer advocates to thwart fraud and deceptive practices.

Some of the scams, law enforcement officials say, are old standbys that seem impossible to stamp out. They include everything from investment, telemarketing, home repair and auto fraud to sweepstakes cons and garden-variety swindles.

One tried-and-true hustle that keeps turning up, officials say, is bogus phone sales of magazine subscriptions.

Other deceptions are old scams, but they're more imaginative today. A leading example: the sale of credit-card protection plans. (Such plans are unnecessary because federal law limits a cardholder's liability to $50.)

Still others are quite innovative, even bizarre. One exploits an individual's religious faith; another wrongfully guarantees profits from the public offering of new stock.

"Crooks never stop coming up with new ways to get people, even as they put new twists to old scams," says Susan Grant, director of the National Fraud Information Center at the National Consumers League.

Whatever the scam, most have one thing in common, says Grant. They have "a disproportionate impact" on older consumers, who continue to file complaints with government and consumer organizations.

Consumer advocates and law enforcement officials say older people are targeted in part because they tend to be more trusting. Scammers also believe they have more money than their younger counterparts.

While all scams remain troublesome, three right now pose a particular threat to older Americans:

PHONY HOME REPAIR SCHEMES
"Home repair fraud is growing across the country," says Paul Daymond, an FBI community outreach specialist in Washington, "[and] we're seeing more reports."

Christine Pritchard, a spokeswoman for the New York attorney general's office, says the culprits usually are transient hustlers. "They go door to door" and tell homeowners their roof looks in need of repair, she says.

Often, the con artist will say he's working at another job down the street and has extra material to spare, explaining that for a discount, he can fix the roof, driveway or any other part of the home.

"Some get paid up front and never do any repair," Pritchard says. "The perpetrators are so transient they're very difficult to find" and arrest.

How do swindlers know which homes are likely to be occupied by an older resident? Joe Case, a spokesman for the Ohio attorney general's office, describes one method hustlers used recently in his state: "These criminals targeted homes that flew American flags out front because they suspected older people lived there."

He adds that his office is getting "more and more complaints" about schemes aimed at older people.

Consumers also should be aware of unscrupulous contractors who agree to do repair or renovation for one fee, then hike the cost sharply when the job is completed. To curb such fraud, New York and some other states recently imposed tougher fines and penalties on contractors who deliberately target older Americans.

QUESTIONABLE STOCK OFFERINGS
Though the volatility of today's stock market may dampen investors' enthusiasm, a number of people continue to be snared by bogus deals involving initial public stock offerings of new companies.

The deal seems innocuous at first. A telemarketer offers what seems like an incredible opportunity to buy stock in a small but growing company that's about to go public. The listener hears about the importance of getting in on the ground floor of what's called a pre-initial public offering (IPO). The telemarketer describes double-digit profits with little risk.

"When [solicitors] sell something as a pre-IPO investment, there's no guarantee of an initial public offering ever," says Evan Rosser, associate vice president at the National Association of Securities Dealers, Inc. "When it's contingent upon some future event that may or may not occur, it is very risky."

Rosser says pre-IPO pitches also turn up on the Internet and in e-mails, particularly in times of a flat stock market, when investors are eager to make large profits in a short time.

"These scams are on the rise because more people are getting involved in capital markets instead of keeping their money in a CD (certificate of deposit) or in a bank," says Deborah Bortner, president of the North American Securities Administrators Association (NASAA).

"They're seeking higher interest rates and low-risk investments," she says. "Unfortunately those are usually fraudulent because there's no such thing as high reward and low risk."

EXPLOITING SPIRITUAL BELIEFS
Investment scams that take advantage of a person's spiritual beliefs are increasing. In the last three years, says NASAA's Bortner, 90,000 would-be investors—most of them older—have lost nearly $2 billion in faith-based investment schemes.

Regulators say some swindlers prey on an individual's religious beliefs to promote an investment pitch by claiming they will reinvest a portion of the profits in a worthy cause.

The Greater Ministries International Church reminded parishioners, for example, to "give and it shall be given unto you." That vow netted $500 million from churchgoers and investors alike who believed they would double their money by investing in gold, silver and diamond mines in Africa. Bortner says its founder, Gerald Payne, was recently sentenced to 27 years in prison for fraud.

"Religious-based scams are growing," says Daymond of the FBI. "Some [of the perpetrators are] fly-by-night preachers who say they're raising money to build a church."

Dennis Marlock, a retired fraud investigator for the Milwaukee police department, says some hustlers scour newspaper death notices to find out where widows or widowers live.

Several days later, the swindler, dressed as a delivery person, arrives at the survivor's home with a package containing a Bible or other religious symbol, waiting to be paid. The survivor assumes the deceased ordered the item before his or her death and pays an outrageous fee for it.

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