By John Steffee, CPA | Simon Lever LLP
Predators are not always sharks, wolves, or other large animals featured in National Geographic specials. Human predators exist too, and they are often disguised as an e-mail, a phone call, or a friendly investment seminar. And like nature’s predators, human predators feed off the weak, the infirm, and the older members of our society. Senior citizens, many of whom were raised to be polite and trusting, own their homes, have a nice nest egg of assets, and possess excellent credit ratings, are far too often victims of fraud.
Medicare fraud is a common ruse that uses senior citizens to fraudulently bill equipment, lab tests, and other services to insurance companies and Medicare. Seniors are used as unwitting accomplices in schemes designed to steal money. Often, “free products” pitched to senior citizens have no medicinal value even though insurers and Medicare get billed very large sums. Other times, fake tests are administered to generate claims filed. Sometimes, once insurance and Medicare information has been acquired, false invoices are submitted for reimbursement.
Senior citizens should be advised to carefully monitor their insurer’s explanation of benefits and to never sign blank insurance forms. Hopefully, someone also will remind them that there really is no such thing as free equipment or free services. Seniors should talk to their physicians before they sign up for any medical equipment or services.
Counterfeit prescription drugs and fraudulent anti-aging products have become prevalent. Product promotions, special deals, and cost reductions are promised, unfortunately many of the “drugs” and anti-aging products are worthless. Seniors should be very wary of buying drugs over the Internet, and they should talk to their physicians before purchasing any prescriptions. They should completely steer clear of anti-aging products as a general rule of thumb.
Far too often, senior citizens fall victim to funeral and cemetery fraud. High-pressure promotors have been known to sell unnecessary current services, retain the right to bill for additional services in the future, and wrap people up in noncancellable contracts. Seniors should be advised to have an attorney review all contracts. Additionally, it would be helpful if they had the phone number for the Better Business Bureau so that they could call and find out if they are dealing with reputable individuals.
High-pressure telemarketing frauds abound too. Free products, discount vacations, low-cost vitamins, and health care products are offered, but often unstated are the high postage and handling fees that must be paid. Often, unwelcome callers ask for credit card and banking information, and then this information is sold to individuals who run up credit cards charges or wipe out bank accounts. The best advice to avoid these scams is to say “No thank you” and then hang up on every telemarketing call received.
Reverse mortgages can allow senior citizens access to the equity in their homes without the need to sell that home. Unfortunately, some schemes promoted by unscrupulous professionals often end up stealing the equity in these homes. Victims of these scams are often offered free homes, investment opportunities, and refinance or foreclosure assistance. Legitimate reverse mortgages are insured by the Federal Housing Authority. Seniors should be warned against responding to unsolicited advertisements, reminding them that celebrity endorsements are not proof that a product is legitimate and to never sign anything before they thoroughly understand it and have it reviewed.
The best way to help the seniors in your life avoid these scams is to talk to them: make them aware of these frauds, and then to follow up on a frequent basis by asking them if anyone has contacted them about these or other suspicious offers.
Vigilance is the best antidote. Stay in touch and provide an extra set of eyes and ears to those seniors near and dear to you.
John Steffee, CPA, is a partner in the public accounting firm Simon Lever LLP in Lancaster, Pa. Steffee specializes in tax planning for small businesses and individuals.