Watch Out For Online Scams

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Be warned that Online scams abound even on some of the most reputable websites such as Craigslist. Apparently some buyers are more interested in scamming you than in scoring a great deal.

Alan Munro posted an ad on Craigslist to sell a windsurfer board and was asked to email the prospective purchaser an invoice through PayPal. He did so and got an email that seemed to come from PayPal, saying that a remittance had been made. But since the invoice was in U.S. dollars, he was asked to pay the exchange difference before the money was released. Paypal does not send such emails and this was a scam.

Craigslist and other similar services such as Kijiji, suggest some simple rules to avoid getting taken in:

  • Ensure that all transactions take place locally with local people you can meet face to face. Go to a public place with many people around, such as a coffee shop.
  • Never send or wire money to buyers, which includes mailing cheques or using payment services such as PayPal, BidPay, Western Union or MoneyGram.

Applying just those two simple rules will ensure that you do not get taken in by these ever more prevalent scams.

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Be Rude With Some People

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As the Times Journal advises, Be Skeptical, Be Rude – Don’t Be a Victim

Each year, nearly 25 million Americans are victims of consumer fraud. Senior citizens are more at risk of telemarketing scams than any other age group. Fraudulent telemarketers direct 56 to 80 percent of their calls at older adults.

Evidence indicates that offenders believe older people have more assets and are more susceptible to excitement tactics or appeals to altruism. They have told police their ideal “mark” is an elderly person, who lives alone, with no contact with family members. They know that senior citizens will not give money or personal information to just any stranger. These experienced criminals have made a science of gaining the trust of older adults.

If a smooth talker wants to keep talking and you are concerned about his or her motives, cut the call quickly or even just hang up the telephone.  Follow up some of the principles involved in Assertiveness Training and stay in control of the conversation.  One trick is to have a short phrase that is easy to say, which is guaranteed, when repeated several times, to cause the caller to end the call. That could for example be “This is not for me.”

Scam artists are experts in establishing rapport to steal seniors’ money. There are a variety of approaches including:

  • You have won a prize, but must pay to receive it;
  • Great deals that need immediate payment with no written information;
  • Requests for donations for mysterious charities;
  • Calls from the supposed police, FBI or bank officials asking for “help” and your personal information.

Criminals assume that senior citizens will not report the crime to law enforcement officials because they will be ashamed of being victimized.  They also worry that concerned family members will take control of their finances.

Recognizing scammers is important and you then should report them to the appropriate law enforcement authorities.  This is critical to protect others. When you report a scammer, you help the police prosecute them and this stops the scammer from stealing from someone else.

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Seniors Fall For Ponzi Schemes

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Seniors often have financial concerns as they contemplate their future and their perhaps dwindling assets.  If they rely on Social Security and state pensions, even those are questioned by some who liken them to a Ponzi scheme. The older members who are drawing out now are being paid out of a fund that is being refilled by contributions from younger members who hope they will find there is something they can draw on in the distant future.

It is all very concerning and is made much more worrying by the deep recession that only slowly may be receding.  Many seniors will be worriedly scratching their heads on whether they will have enough to live on, particularly if they are in good health and may have a long life.

Couple that with the many cases of Financial Abuse of Elders that was covered in an earlier post, and you end up with concerned seniors who are not sure who to consult.  Some financial abuse cases are perpetrated by the seniors’ sons and daughters or by other family members.  Who then to turn to?  If a trusted friend suggests a mature person whom they have confidence in, then this may appear less thorny than having to involve the family in your financial matters.

If that mature person gains your trust and confidence, then it may be only a matter of time before they are suggesting ways of investing where you can get better returns than the low interest rates the banks presently offer on savings.  Once on the hook, you may soon find that your goose has been cooked (to mangle metaphors).

It is probable that there are many more Ponzi schemes than actually hit the headlines.  Bernard Madoff was of course the biggest in history, but others have caused equal misery to many seniors.  Last month, we all learned of Earl Jones, the Montreal Ponzi Schemer, who preyed on family members and friends and lived the high life as their savings disappeared.

Last week, here in Vancouver we read that B.C. Ponzi schemers were found guilty of fraud:

Four British Columbia residents, Hal (Mick) Allan McLeod, Kenneth Robert McMordie (aka Byrun Fox), Dianne Sharon Rosiek and David John Vaughan, were ruled guilty of fraud for violating securities laws by a B.C. Securities Commission panel. They lied to investors about how their money was being invested, what they could expect as a return, and the risk level of these investments.  Their Ponzi scheme cost some 800 investors more than $10 million US.

Today the news is that a $50 million Ponzi Scheme Is Alleged in Detroit.

A class action suit in Federal Court claims  that John Bravata and Richard Trabulsy masterminded BBC Equities and Bravata Financial Group, which stole $50 million from hundreds of people in a Ponzi scheme, . They are said to have promised 8 to 12 percent returns in a real estate scam, guaranteeing “safer returns than other investment options,” according to the complaint.  They began by soliciting family and friends for money, then began holding “free lunch” seminars each week to target senior citizens. Half of BBC’s money allegedly came from IRA accounts.

In all these cases, the seniors are likely to see only a fraction of their original holdings.  This is financial abuse of the very worst kind.  The only safeguard is to seek financial counsel and advice from only reputable and knowledgeable individuals who will not benefit in any way from the impartial advice they may give you.

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Grandparents Scam

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Unfortunately the headline from Philadelphia is that Local Seniors Fall Victim To ‘Grandparents Scam’.

Local police departments are warning senior citizens in the region about a phone scam preying on grandparents.  The aptly named “Grandparents Scam” starts with a phone call placed in the middle of the night to a senior citizen. The scammers have been asking the seniors to wire the money using Western Union or Money Gram, services that make tracing the source very difficult.

Police warn that anyone who receives a phone call like this to take the time to verify the authenticity of the call by checking with others in the house or returning a call on a private line like a cell phone, before transferring money.

ConsumerAffairs.com exposed this scam back in November 2006.   A special report by the syndicated TV news program “Inside Edition” found that con artists were scamming seniors out of hundreds and even thousands of dollars by posing as their grandchildren.  It was one of their list of Top 10 Scams of 2006.

In these more troubling economic times, it is important to be even more vigilant so as not to be taken by scams such as this.

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