David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, forensic accounting, and marital dissolution services in Philadelphia and the Delaware Valley.

Fraud against Senior Citizens (also known as Elder Fraud) has been increasing in recent years.  Last year, the United States Senate Special Committee on Aging released a report identifying the top 10 frauds targeting seniors.

In this week’s blog, forensic accounting expert David Anderson of David Anderson & Associates, Certified Fraud Examiner in Philadelphia, will discuss the top three such frauds in detail and offer tips for helping seniors avoid such frauds.  Next week, he will do the same for the next three most frequent frauds perpetrated against the elderly, and the following week, he’ll address the remaining four most frequent frauds targeting seniors.

The top fraud perpetrated against senior citizens is the IRS Impersonation Scam (which has been the subject of several of his blogs over the past few years).  Not only is this fraud complained about by seniors more than twice as much as the next highest fraud, but also it’s the top fraud perpetrated against the elderly in Pennsylvania, New Jersey, and Delaware.

Under the IRS Impersonation Scam, the senior citizen receives a call from a fraudster posing as an IRS agent.  The fraudster falsely accuses the senior citizen of owing back taxes and penalties, and further informs the senior citizen that if these are not paid immediately, the IRS will immediately seize his/her  house, car, and other assets.  In some instances, the fraudster claims the police have been called, and the senior will be arrested if payment is not made immediately.

The senior is told to go to the nearest grocery store or drug store and immediately purchase some type of prepaid card – either a prepaid VISA/Mastercard or gift card (in one instance, the senior was advised to purchase a prepaid iTunes gift card).  After purchasing the prepaid card, the senior is told to immediately call back and provide the card’s information to the “IRS agent”.  In this case, the fraudster relies upon the fear of the senior citizen that he/she did something wrong and must immediately fix the problem to avoid loss of assets or to avoid going to jail.

To help prevent such frauds, senior citizens should be educated that:

• The IRS never will contact them via phone or e-mail with such threats (similar variations of this scam rely upon e-mails with the same types of threats);
• The IRS normally contacts people via U. S. mail, and gives them time to address issues regarding back taxes and penalties (weeks, not minutes or hours); and
• They should, when receiving such a call, immediately hang-up and contact either their tax preparer or a knowledgeable relative or friend to discuss the matter.

The second most frequent elder fraud is robocalls and other targeted unwanted calls. (It is the second most common fraud perpetrated against elderly Pennsylvanians and the fourth most common fraud perpetrated against New Jersey residents.) These calls are made by fraudsters in the hope the senior citizen will answer the phone.  An increasing variation on these types of calls is the use of spoofing to make it seem the call is coming from someone with the same exchange as the senior citizen (the exchange is the set of three numbers immediately following the area code).

Upon answering the phone, the senior citizen is faced with a number of possible scams.  For example:

• There is a problem with the senior’s bank account that needs to be resolved immediately;
• There is a problem with the senior’s credit card that needs to be resolved immediately;
• The caller is from the senior’s credit card company and advises the senior that he/she is eligible for a credit line increase;
• The warranty on the senior’s car has expired, but the caller can immediately renew it;
• The caller is from a charity that is experiencing financial problems and needs help to continue (for example, the local animal shelter that, if it doesn’t get financial help, will have to close and euthanize all the dogs and cats).

The purpose of these calls is to obtain personal financial information from the senior which can be used to, among other things: drain bank accounts, make unwanted charges on the senior’s credit cards, or enable identity thieves to open new accounts in the senior’s name.

To help avoid such frauds, senior citizens should be educated that they should never give out personal financial information over the phone to persons they do not know.  For example, if they are advised there is a problem with their bank account, they should immediately hang up and call their local branch to find out if there really is a problem.

Similarly, for credit cards, they should immediately hang up, get their latest credit card statement and call the number listed on their statement.  Another possibility is to have the senior citizen sign up for a service such as Nomorobo which can screen out robocalls.  Although Nomorobo does not work with traditional copper-based land lines, it is free for VOIP landlines and only $1.99 per month for smartphones.  Another similar service is Robokiller ($0.99 per month).

The third most frequent scam perpetrated against seniors is the Sweepstakes Scam (also known as the Jamaican Lottery Scam).  Under this fraud, the fraudster calls the senior and advises him/her that he/she has won a sweepstakes prize – usually something in the neighborhood of $50,000 to $100,000. (In one variation, Anderson was contacted by such a fraudster and advised he had won a top-of-the-line Mercedes Benz, but needed to pay the taxes on the prize before he could receive it.)

In order to claim the prize, the senior is told that he/she must pay a small processing fee or a local tax (usually anywhere from $250 to $1,000).  The senior is advised to pay the fee in a variety of ways:  via wire transfer; via Western Union wire; via use of prepaid VISA/Mastercard or gift card; via purchase and mailing or a money order; or even by sending cash in the mail.  After the fraudster receives the payment, he/she calls the senior citizen back and persuades the senior citizen to pay another small amount; for example, the fraudster claims to have made a mistake in the processing fee amount or states that he/she forgot that there also is a local tax that must be paid, etc.

The fraudsters will continue to call back the senior with requests for additional amounts as long as the senior keeps making payments.  The fraudsters also sell the senior’s information to other fraudsters (which can be quite lucrative since the senior has shown a propensity to pay).  In one variation of this fraud, after the senior had paid over $20,000 and not received the promised prize, the senior was contacted by a person who wanted to help the senior recover the “stolen” funds.  This person offered to do so for just $1,000 (and so began another scam of the senior).

To help seniors avoid being victimized by such scams, they should be educated to never send money to claim such a prize and to hang up the phone and immediately contact a knowledgeable family member or friend. Such assistance also is available from a Certified Fraud Examiner working with an experienced firm that provides forensic accounting services in Philadelphia and the Delaware Valley. The Philadelphia forensic accounting firm of David Anderson & Associates can be reached by calling David Anderson at 267-207-3597 or emailing him at david@davidandersonassociates.com.

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, fraud deterrence, litigation support, economic damage analysis, business consulting and outsourced CFO services.  Company principal David Anderson is a forensic accounting expert who has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.