Insurance swindles and other scams that target senior citizens
January 20th, 2012
Kevin Lyons
Each year, thousands of unsuspecting senior citizens are swindled.
They’re tricked into divulging their Social Security numbers to complete forms for bogus services covered by Medicare. They’re duped into revealing their credit card numbers to immoral telemarketers. They fall for “get rich quick” schemes.
Financial abuse of the elderly is big business, netting criminals upwards of $ 2.6 billion a year, according to a recent study by MetLife. And with more than 38 million Americans over age 65, there are plenty of unsuspecting victims to choose from.
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| Medicare scams are just some of the financial schemes that victimize senior citizens. |
“Seniors are one of the few groups of a society with a regular stream of income from Social Security, and the fraudsters and scammers know this,” Ramsey Alwin, director of the economic security initiative at the National Council on Aging, tells InsuranceQuotes.com. “What folks should know is that if it sounds too good to be true, it probably is.”
Barbara McGinity, program director for the Houston/South Texas Better Business Bureau’s education foundation, says thieves prey on those seniors who believe anything they’re told.
“Sometimes seniors take what they see at face value. They think if (a crook) has just a little bit of information — a telephone number, an address — that that person knows them and they must be legitimate,” McGinity says. “They believe and trust too much. They need to be a little more leery.”
The National Council on Aging recently released a list of the top 10 scams that target seniors. Surprisingly, it’s not always strangers who scam the elderly. More than 90 percent of all reported scams aimed at the elderly are committed by people they know, according to the council.
Alwin says the best way for seniors to avoid being scammed is to stay aware and involved.
“If you are active and involved and something happens that you think is suspicious, then you have a network of friends and family that you can draw upon and they can give you feedback,” Alwin says.
Here are four widely used scams that target the elderly, according to the National Council on Aging:
1. Health care/Medicare/health insurance fraud
What it is: Fraudsters pose as Medicare representatives to persuade seniors to give them personal information, like Social Security numbers. Or they’ll provide bogus medical services, bill Medicare and take the money. Bill Deal, director of the Idaho Department of Insurance, says: “Medicare beneficiaries are easy prey. Most beneficiaries have a supplemental policy that picks up what Medicare does not pay leaving seniors vulnerable to pitches for services or equipment.”
How to protect yourself: Don’t sign blank insurance forms. Don’t give blanket authorization to a medical provider to bill for services. Keep records of all your health care appointments.
2. Counterfeit prescription drugs
What it is: Seniors who don’t have a lot of money may shop online to find low-cost prescription medicines. They send off their money, and oftentimes they wind up with fake drugs that may be harmful to their health.
How to protect yourself: Consult your pharmacist if your prescription drugs look suspicious. Do not purchase medication from unlicensed online distributors. Alert your doctor if your medication causes bad side effects.
3. Funeral fraud
What it is: Crooks will read obituaries in the local paper to single out grieving relatives of the departed. The crooks show up at the funerals, then demand payment of an debt owed by the deceased love one. Also, shady operators of funeral homes will tack on unnecessary charges to bills for funeral or memorial services.
How to protect yourself: If you’re in charge of a deceased person’s estate, check his or her credit report to make sure listed debts match up with what a possible scammer is claiming. Thoroughly read all contracts and purchase agreements before a loved one’s funeral or memorial service.
4. Telemarketing fraud
What it is: This is one of the most common kinds of scams. Often, a crook will call a senior citizen and make up a story about why he or she needs to give money. After natural disasters, for instance, a con artist may solicit money for a fake charity.
How to protect yourself: Say “No thank you” and hang up the phone if you hear phrases like, “You must act now or the offer won’t be good or “You can’t afford to miss this high-profit, no-risk offer.”
“The telephone is more your enemy than your friend,” McGinity says. “I encourage seniors to use an answering machine and screen their telephone calls. Anytime someone tells me, ‘These people keep calling me,’ I say, ‘Stop talking to them.’”
Tamara E. Holmes
Insurance rates are determined by an array of factors, ranging from where a policyholder lives to his or her claims and credit histories. Now, a controversial study by a coalition of public interest groups suggests another factor: Property and casualty insurers — the companies that help protect your car and home — come up with “manufactured crises” to justify rate hikes.
The study, “Repeat Offenders: How The Insurance Industry Manufactures Crises And Harms America,” asserts that the property and casualty insurance industry creates “hard markets,” or periods when insurance becomes more expensive and harder to get. Commissioned by Americans for Insurance Reform, the study says the country is headed for higher insurance rates as a result of a new “hard market.”
“Hurricane Irene in late August 2011, which was greatly hyped by the Weather Channel but wasn’t nearly the catastrophe that was expected, has been used by insurance industry representatives to push the country into a new hard market,” the report says. “This is despite the fact that the industry is perfectly able to handle those claims in addition to having stored away excess profits for decades so that today, it is in an all-time safe position.”
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| A new study accuses insurers of leaning on disasters like Hurricane Irene to justify rate hikes. |
The study’s authors are Robert Hunter, director of insurance at the Consumer Federation of America, and Joanne Doroshow, executive director of the Center for Justice & Democracy at New York Law School. They contend that during these hard markets, insurance executives engage in anti-competitive practices by pressuring their rivals to raise rates. Furthermore, they say, weak state regulatory laws are partly to blame for these hard markets.
“Companies get away with creating these crises without any accountability because the states just don’t act and sometimes don’t have the power to act,” Doroshow says. Additionally, she says, state insurance departments often are understaffed or underfunded, so they can’t focus enough resources on oversight.
A flawed analysis?
Not surprisingly, the insurance industry takes issue with the study.
The industry-backed Insurance Information Institute calls the study flawed, pointing out that the property and casualty industry paid out $ 108 billion in claims in 2011 alone — the second highest amount ever. In the meantime, the institute says, some insurance customers have seen their rates drop. For example, insurance premiums for businesses have fallen 40 percent between 2004 and 2011, the institute says.
“The Americans for Insurance Reform report ignores the fact that trillions of dollars paid by insurers to millions of claimants in recent years is the single most important source of recovery for individuals, businesses and entire communities in their time of greatest need,” Robert Hartwig, the institute’s president, says in a statement. “Despite such large-scale claim activity and global economic turmoil, insurance remains universally available and affordable.”
Others point out that safeguards already are in place to prevent price-gouging. According to the National Association of Insurance Commissioners, state insurance regulators do have mechanisms to review rates for auto insurers, home insurers and other companies in the property and casualty market. Some states require rates to be approved before they take effect, while others allow an insurer to impose new rates while the state reviews them.
The effect on consumers
Despite disagreement about the study, one fact is clear: Periodic price escalations have taken place, and insurance consumers have felt the sting.
“It’s like sticker shock on a policyholder to suddenly get their rates increased by some large amount,” Doroshow says. In some cases, consumers have experienced 100 percent to 200 percent increases, she says. “Rates stay low and then they suddenly shoot up, and people are understandably feeling that they’ve been price-gouged,” Doroshow says.
Yet consumers aren’t totally at the mercy of insurance companies.
If you have questions about a premium increase, you should contact your insurance agent or insurance company, according to the National Association of Insurance Commissioners. What you need to find out is how you were rated by your insurer and whether something in your claims history, credit history or driving record triggered the rate increase. If you’re not satisfied with the answer, contact your state insurance department to file a complaint, the association says.
Doroshow says consumers shouldn’t stop there. If you think you’re being unfairly hit with higher rates, “it doesn’t hurt to let the attorney general of the state or even the governor know what’s going on,” she says. “A lot of times consumers or policyholders feel intimidated and like they have no power to complain, but really they do.”
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