Avoiding Consumer Fraud on the Phone and at the Door

University of Nevada, Reno
Southern Area Cooperative Extension
Seniors CAN

Lesson Plan

Lesson: Avoiding Consumer Fraud on the Phone and at the Door

Lesson Number: S-3

Overview: The “Avoiding Consumer Fraud on the Phone and at the Door” lesson is designed to reduce the risk that Learners will be victimized by fraudulent telemarketing, door-to-door consumer scams and identity theft.

Learning Overview: The Learner will participate in a lesson designed to teach him/her through role-playing, specific techniques and skills to avoid phone and door solicitations.

Lesson Objectives:

  1. During the lesson, the Learner will be exposed to the following information:
    • Reasons older adults may be targeted by con artists.
    • Some examples of fraudulent consumer scams at the door or on the phone.
    • Techniques for avoiding consumer fraud at the door or on the phone.
    • Ways to prevent identity theft.
  2. During the lesson, the Learner will engage in group discussion regarding telephone and door-to-door solicitation, describing with clarity at least one example from his/her life experience.
  3. During group discussion, either spontaneously or in response to Facilitator request, the Learner will state with clarity that s/he has selected at least one idea presented during the lesson, what that idea is, and that s/he will try this idea during the following week to see if it works for him/her. Alternatively, the Learner will state with clarity that s/he does not want to try out any of the ideas presented, and the reason for the decision.

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Set up at previous meeting:

Next week, we will be exploring how consumer fraud through telemarketing and door-todoor solicitation can be avoided with tips to protect against identity theft.

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Set up immediately prior to this meeting:

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Materials:

Provided by Facilitator:

One of the following for each Learner:

Note: Facilitator should review lesson plan for this week, last week and next week because information provided at the beginning of each lesson plan is needed for a smooth transition between lessons.

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Activities:

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References:

Elder Law News. (2002). New Campaign Warns Seniors about Fraud. Kim Boyer, Certified Elder Law Attorney.

National Institute on Aging. (2005). Health Quackery: Preventing Health Scams [Age Page]. Gaithersburg, MD.

FTC Facts for Consumers. (2005). Your Access to Free Credit Reports. Federal Trade Commission.

Identity theft Fact Sheet. (2005) What is identity theft. Las Vegas Metropolitan Police Department Crime Prevention.

Consumer Sentinel. (2006) Consumer Trends: Fraud and Identity Theft Complaints for Consumers over age of 50. http://www.consumer.gov/sentinel/trends.htm (Accessed 8/1/08)

Federal Trade Commission. (2007). Putting Telephone Scams on Hold [Brochure]. Nevada Attorney General’s Office. (2007). Identity Theft Laws in Nevada. http://ag.state.nv.us/idtheft/info/laws.htm (Accessed 8/20/08).

Lesson:

Begin Lesson:

Transition from last week

Last week we talked about (name of last week’s unit). Each of us selected one idea to try out. Let’s talk about how those worked (or didn’t work) for us, and also what we learned from last week’s meeting.

Anticipatory Set:

Today we will explore how to avoid consumer fraud in telephone and door solicitations. We think this topic is important because:

  1. Each year, Americans lose $100 billion to consumer fraud. People can lose any amount of money—from a few dollars to their life savings.
  2. According to a survey conducted for the National Consumers League, fraudulent telemarketers have approached 9 out of 10 Americans. According to another survey, conducted for the American Association of Retired Persons, three-fourths of consumers say they have had a bad buying experience within the last year, in which they were deceived, defrauded or ripped-off. And one in seven reports that at least once, they went beyond having a bad buying experience and were victims of a major fraud.
  3. Older consumers may be special targets of people soliciting money for fraudulent purposes. People over age 65 account for 30 percent of reported consumer fraud, yet make up only 15 percent of the population. And the amount of consumer fraud reported may be much less than what actually occurs. People who have fallen for a con artist’s scam might not report it because they feel embarrassed about it.
  4. According to the Federal Trade Commission, an estimated 10 million Americans are victims of some form of identity theft every year.

Share the Objective:

  1. We will be talking today about several ideas related to consumer fraud. These are:
    1. Reasons older adults may be targeted by con artists.
    2. Some examples of fraudulent consumer scams.
    3. Techniques for avoiding consumer fraud and identity theft.
  2. During this lesson, I will be providing information, but it is also important that we share information and ask questions in group discussion. I would appreciate it if each of you could bring up at least one example from your life experience.
  3. Also during the lesson today, Im going to ask each of you to select one idea from the lesson to try out on your own over the next week. I’ll pick one, too. Then each of us can share with the group next week how it worked out.

Share the Handout:

This summarizes the main ideas we will be discussing today. [Pass out handout.] Please feel free to take notes on the handouts and ask questions as they arise.

Input:

I. Reasons older adults may be targeted by con artists:

  1. Loneliness
    1. Older adults who have lost friends and family members may miss talking with others, making them more receptive to conversations with friendly solicitors.
    2. Beware of con artists who call you or stop by your house to see you more than once—they may be trying to make you feel as if they are friends, rather than strangers, trying to sell you something.
  2. Problems in vision and hearing
    1. Make it harder to read contracts and literature, harder to hear the solicitor.
  3. Illness
    1. May be motivator in looking for miracle cure or lowcost Medicare supplement insurance.
  4. Limited income
    1. May produce feelings of insecurity about the future, making the senior an easier target.
    2. The con artist may offer free gifts or prizes or vacations. He or she may offer the "investment of a lifetime." It may sound like a very good deal.
  5. Possibility of large amounts of cash on hand
    1. Can be due to mistrust of banks, savings & loans
    2. Cash may come from a lifetime of saving or from a lump-sum pension distribution or life insurance payment.
    3. Large amount of cash on hand makes it easier for an older person to make a quick decision. And a quick decision is what a con artist will usually push for. You may be offered investment opportunities, free gifts or prizes “only if you act right away.”
  6. Retired people may be home more often than younger adults
    1. This makes them more available as targets than younger adults.
  7. Many older adults own their own homes or have a lot of equity built up in their homes.
    1. Some changes in tax law have created the possibility of loans secured by home equity and con artists may take advantage of this situation with home equity loan scams.
  8. Some older adults were raised to be more polite and trusting toward strangers than some younger adults have been raised to be.
    1. It can be very hard to know when a call is legitimate. Con artists are very good at sounding believable when they are actually lying.
    2. It may be difficult to get salespeople off the phone or away from your door without fear you might seem to be rude.

II. Some examples of fraudulent consumer scams:

  1. New scams are constantly being developed by con artists. We focus today on fraudulent offers that come to you over the phone or at your door. But you should also be aware that these scams may reach you by mail, through television “infomercials” or the internet. Here are some examples of scams:
  2. Home Repairs
    1. Often someone comes to your door and offers a quick fix and the bid may seem low-cost.
    2. Services offered could be of any type and might include roof repair, trimming tree branches or repaving the driveway.
    3. Payment is often asked for in advance.
    4. The work paid for is never performed, or is done far below normal work standards.
  3. Miracle Cures/Vitamins
    1. The seller makes all sorts of claims. Even if you do get a product, it doesn’t do what you were told it would. Or you may receive, for example, very inexpensive vitamin pills for which you paid a substantial amount of money. These are common scams for television infomercials, which also convince you to buy what you do not need.
  4. Health Insurance
    1. Claims to be the perfect Medicare supplement insurance and claims to cover everything you ask about. The premium seems to be low. There may be hidden charges and the coverage may not really exist, or may cover very little.
  5. Inexpensive vacation property or travel packages:
    1. You may end up buying something that doesn’t exist.
    2. There may be all sorts of “hidden costs.”
    3. You may end up paying two to three times what the vacation actually costs.
  6. Prize offers
    1. You are notified that you are guaranteed to win a large cash prize or some other prize, such as a free vacation.
    2. Sometimes the organization uses a name that is similar to a well-known organization.
    3. In order to get the “free” item, you have to do something.
      • a. You may have to purchase something else or pay “shipping and handling charges” or some other type of fee to acquire the item. The “free trip” actually requires some costs be paid and has many restrictions.
        1. Keep in mind that in a legitimate prize promotion, the winner cannot be required to pay an “acquisition fee” or to purchase any items in order to collect the prize.
      • b. You may be required to call a number to claim your prize. Chances are, you won’t get a prize, you will get something far less than expected, or will find out you have to pay for something. In the meantime, two other things can happen:
        1. You could get a huge phone bill for the call if it was to a 900 number.
        2. Your name, address, and/or phone number may be sold to other companies as someone who responded to a free prize offer. You could unwittingly open yourself up to many more worthless prize offers.
  7. Investments
    1. Promoters of fraudulent “investment opportunities” have many techniques for appearing legitimate. These appeal to people’s desire to get rich quick.
  8. Charities
    1. Some legitimate charities do ask for contributions by phone. But fraudulent charities do the same thing.
      • a. A fraudulent charity may not really exist. Also, charities may assume a name similar to a reputable charity in order to lend some credence to their organization.
      • b. A fraudulent charity may pay a large part of the donated money to the soliciting organization rather than on the charitable services described.
  9. Recovery scams
    1. If you lose money in a consumer scam, you may get a call from someone who promises to get your lost money back for you. You can lose even more money by paying someone who says they will recover the money you lost. According to the Nevada State Attorney General’s office, this is a common scam.
  10. Other door-to-door or phone scams can include: magazine subscription scams, people posing at the door as utility workers or in need of your help who want to gain access to your home, credit card offers, Medicare scams, fake check scams or fraudulent bank and credit card protection calls, also shop-athome/ catalog sales.
  11. Seniors account for 26 percent of all mail fraud victims and account for 60 percent of those who fall victim to the category of prizes and sweepstakes by mail.
  12. Of reported fraud complaints in 2005 to the Sentinel, 37 percent were internet related. Scams can include “phishing” where con artists use official looking email or websites to get your personal data. Internet scams can also include foreign money offers (Nigerian is common), on-line auctions or lottery scams (also by mail).

III. Techniques for avoiding consumer fraud

  1. Basic concept: If it sounds too good to be true, it probably is. You don’t get something for nothing!
  2. Basic rules to follow
    1. Don’t buy by phone or at your door from unfamiliar companies.
    2. Always take your time making a decision.
  3. Techniques
    1. Remove your personal information:
      • a. To reduce the number of telemarketing calls you receive, register your phone number with the FTC’s National Do Not Call Registry. Register permanently by phone at (888) 382-1222 or online at www.donotcall.gov.
      • b. To receive less commercial advertising mail, register for the DMA's Mail Preference Service. This will reduce unsolicited mail within three months, for three years, but will not stop all mailings. They offer a “do not contact list” for the deceased and caregivers, as well as an option to remove your email from national lists. Contact DMA at www.dmachoice.org or 1-212-768-7277 or by mail (send a letter with your request, signature and $1.00 fee):

        Mail Preference Service
        Direct Marketing Association
        PO Box 643
        Carmel, NY 10512
    2. Learn to say “No,” and mean it.
    3. Recognize ploys that are sometimes used by con artists. Here are some typical ones:
      • a. You must act now for the offer to be good
      • b. You’ve won a free gift, or a prize or a vacation—you pay “only” for certain charges like postage and handling.
      • c. Before you have had time to consider the offer carefully, you are told that you must send money, give a credit card number, give a bank account number or have a check picked up by a courier.
      • d. You don’t need to check out their company with anyone, including your family. You don’t need any written information about their company or their references.
    4. If you never buy from, invest in or donate money to any organization or person contacting you by phone or at the door, you will not lose any money to con artists contacting you by phone or at your door. It’s that simple.
    5. If you do not allow phone and door solicitors to get into conversations with you, they cannot talk you into parting with your money.
      • a. The longer you allow them to talk with you, the more chances they have to get you to say “Yes.”
    6. Hang up quickly on unfamiliar callers. You don’t have to open the door for unfamiliar visitors.
      • a. You may want to screen telephone calls through an answering machine or by using caller identification.
      • b. You don’t have to answer your door to anyone you don’t recognize, or, for that matter, to anyone you do recognize.
        1. The phone, cable, gas, and electric companies call to make appointments to get into your home—or, you call them.
      • c. Remember that it is your right to hang up your phone at any time. It is your right to close the door to your home when you choose to.
        1. You do not need to wait until the person on the phone or at the door pauses or finishes his sentence.
        2. You do not need to answer any questions.
        3. You do not need to explain yourself.
      • d. As soon as you realize that the person calling, or at your door, is selling something, asking for a charitable donation or telling you that you have “won” something free, say “No thank you,” or “I’m not interested.” Then hang up the phone or close the door.
    7. If you decide that you do wish to deal with a solicitor over the telephone or at the door, set some rules for yourself and then follow them.
      • a. Set a rule now giving yourself a minimum amount of time to think over purchases, investments, or donations before committing to them—and then stick to your rule.
        1. For example, decide that you will always give yourself 48 hours to think over any offer or request that comes to you by door or phone before making a final decision.
        2. Any legitimate business, service provider, or charity will understand your need or desire to do this, and will not pressure you.
        3. Con artists, on the other hand, are highly likely to pressure you for a quick decision (e.g., “This opportunity wont last!”). They dont want you to have the time to think things over before you part with your money.
      • b. Ask to receive more information in writing.
        • But be sure you’re interested enough to give out your address.
      • c. Discuss offers and investment opportunities with a trusted advisor, for example, a family member, a friend you know well, your attorney, an accountant.
      • d. Check out organizations with other sources before you buy from, donate to, or invest money with them.
  4. Identity theft
    1. According to the Federal Trade Commission, an estimated 10 million Americans are victims of some form of identity theft each year. The loss to business is estimated at more than $33 billion/year and consumers spend countless hours and money to rectify the damage done to their good name and credit report.

      Identity theft occurs when a thief obtains person and/or financial information about you and then uses it without your knowledge to commit fraud or theft, like opening a credit card account in your name.
    2. What can you do to prevent identity theft from happening to you?
      • a. Shred all discarded personal information; a cross-cut shredder is best.
      • b. Do not give out personal information via the phone, internet or by mail unless you can verify who will be using this information and why.
      • c. Keep an accurate account of your financial information in safe place.
      • d. Never put your mail in the outgoing mailbox as it may be stolen.
      • e. Limit the number of credit cards you carry and NEVER carry your Social Security card in your wallet.
      • f. Obtain a copy of your credit report at least once a year. A free credit report is available from each reporting agency once/year by calling (877) 322- 8228 or online at www.annualcreditreport.com
      • g. A credit report security freeze helps provide you with protection from identity theft because your credit bureau file cannot be shared with potential creditors. Most businesses check a consumer’s credit history before opening any new credit accounts. With your security freeze in place, even someone with your name and Social Security number would probably not be able to get credit in your name. Any consumer may place a “security freeze,” also known as a “file freeze,” on his or her credit report by making a request in writing to each credit reporting agency. For more information visit: www.FinancialPrivacyNow.org [See handout].

Modeling And Guided Practice:

Let’s practice some of these ideas. We are going to do several roleplays.

1. Telephone Role-Play #1

First, I’ll play the part of someone calling on the telephone. I need someone from the group to pretend that they are the person getting the call.

For this role-play, I need you to pretend that you are an older person by the name of Viola (Victor) Smith. Viola has lived by herself for several years. Her family lives 800 miles away and the two close friends she had in her neighborhood died during the last three years. Sometimes Viola will go a whole day, or even several days, without talking to another human being. Although she enjoys watching TV and reading magazines, she sometimes wishes that she could chat more often with family and friends on the phone. When Viola first hears my voice over the telephone, she thinks I remind her of her daughter (son), whom she often wishes would call her more often.

Viola has no idea whether I am a legitimate business person or a con artist. She feels good about the fact that someone has called her on the phone.

2. Door Role-Play #1

For this next one, I’ll be someone who knocks on the door. Can I have (Learner in whose home the group is meeting) play the part of Henry (Henrietta) Jones?

Henry, you live in this house. You are an older person on a limited income. You are bothered by arthritis and you find that it’s a problem to do some of the repair and maintenance work you used to do on the yard (or house, or car) yourself. It bothers you to not keep your yard in good condition, but it’s expensive to hire other people to do it.

Henry, you lived through the Great Depression. When you open your door to me and you hear what I propose, I remind you of how hard people worked to feed their families during the Depression, and you admire me for how hard I am trying.

3. Telephone Role-Play #2

For this role-play, I’m again going to be calling someone on the phone. This time, I’m not trying to defraud you. I work for a company that calls people asking for donations to a legitimate charity. But I’m over-eager, and not really too good at representing the charity. The person I call, of course, has no way during the phone conversation to really know whether or not I’m legitimate. The person I’m calling is Sadie (Sam) Shoe. Sadie was raised to be very polite to others. She also believes in donating a little to charity each year because she was brought up believing that it’s the right thing to do. When she gets my phone call, she hasn’t donated any money to charity so far this year.

Monitoring / Discussion:

Q: How do you usually respond to unfamiliar people calling you or at your door?

Q: Do you have any thoughts on how you might respond differently than you do now?

Q: Are you going to take any action steps, like registering with the Do Not Call list that we discussed today?

Independent Practice:

This can be done at any time during the lesson. It seems to work better when it is not done in the rush at the end of a meeting. "I’d like for each of us to select at least one idea, from what we're learning, to try out this week. Let’s choose something easy to experiment with. Next week we can all compare our experiences and see what worked and what didn't."

Closure/Transition:

Look at next week’s lesson plan for: “Set up at previous meeting.”

It begins: “Next week, we will be exploring . . ..”