Minnesota Attorney General's Office
1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101
M - F 8 am - 5 pm
Beware of Fraud
Seniors Legal Rights
Today's marketplace is an ocean of goods and services offering us so many choices about where to spend our money. Whether it is buying a particular product, purchasing a needed service, or giving financially to a cause we believe in, we want to feel in control of our resources and use them to benefit ourselves and others.
Unfortunately, while providing us many opportunities, that vast marketplace has its share of crooks and thieves eager to swindle unsuspecting consumers. If you are an "older" consumer, you are a special target for con artists. People over the age of 50 represent about 56 percent of scam victims.
Scams come in sizes large and small and can range greatly in complexity. Scams may originate from someone as close to you as your next door neighbor, to a stranger halfway around the world. Despite all these differences, crooks that create these scams have one thing in common. They want to steal your money.
Clues to a Con
Be alert to crooked callers and con artists. Don't fall for their scams. It might help to know they usually use tactics like this:
- Watch out when you are asked for your credit card number or checking account number.
- Watch out when you are pressured to act quickly.
- Watch out when a salesperson wants to pick up your cash or check immediately, or have you wire money to them.
- Watch out if someone uses persuasive language and persistence to get you to trust them.
- Watch out when callers reach you when you're lonely. They may call day after day until you feel it's a friend, not a stranger, trying to sell you something.
- Watch out if you find it hard to get salespeople off the phone even if they're selling something you don't want. You don't want to be rude, but hanging up is the smart thing to do!
- Watch out when a salesperson is reluctant to provide written materials about their products or company.
- Watch out if someone promises you prizes for buying products such as pens, office supplies, vitamins, beauty and health products, or "Say No to Drugs" merchandise. These products are usually sold at ridiculously high prices. You may be asked to pay $500 to $2,000 for items that are worth less than $100.
- Watch out when someone promises to recover money you have lost to "bad" companies.
Someday you or someone you know will encounter a scam run by a con artist willing to say just about anything to steal money. It is always a good rule of thumb to remember that when a deal sounds too good to be true, it probably is. If someone offers you something big for little or nothing in return, it's time to walk away.
Most seniors grew up in an era when business was done on a handshake; unfortunately, crooks are playing on that trust. Minnesota "nice" also works against us. Con artists know that Minnesotans are a polite bunch, and are more willing to hear them out. The longer a con artist holds your attention, the more likely it is you'll start believing the pitch.
The economic consequences of fraud can devastate older Minnesotans. Most seniors in Minnesota live on fixed pensions and about one-fifth of Minnesotans over age 60 depend solely on Social Security for their income. With fixed incomes it is nearly impossible to replenish bank accounts or money saved for retirement when it is taken by scams.
Scams can be large or small, sophisticated or simple, and come from next door or across the world. But the crooks behind them have two things in common: They want to steal your money, and avoid being caught. Learn the warning signs of each scam, and know how to protect your assets and thwart the con artists.
Following are thumbnail sketches of some of the most prevalent scams the Attorney General's Office is currently hearing about. But remember con artists are creative, and they're constantly devising new ways to steal your money.
"You-Have-Won" Calls and Mail
"Congratulations, you've just won a fabulous prize. You can choose a diamond ring, deluxe vacation for two, or an entertainment center." This seemingly good news might quicken your pulse, but do not let it override your good judgment.
Be skeptical because the prize may never be awarded or may not be worth collecting. Sometimes, you won't know you've been scammed until you see the so-called "prize." For instance, the diamond might be the size of a pinhead, and the vacation for two a certificate for poor lodging and a headache. And the entertainment center? Nothing more than a cheap, plastic toy.
You can spot this scam almost right away if you look for these messages:
- The caller or the mail piece tells you, "You have won a prize."
- You are asked to send money to get a prize. You may be asked to purchase a product like magazines, pay a processing fee, or pay taxes.
- You must provide your credit card number, checking account number or a social security number to get the prize.
- A quick decision is required. You will be asked to send a large amount of money in 24-48 hours.
- You will be asked to send your money by overnight delivery to a company in another state or country.
You might be tempted to play along, but your best protection is to hang up the phone or throw away the mail. Never give out your credit card number, checking account number or social security number. Remember, if you really win a prize, you will get it absolutely free, with no strings or fees attached Minnesota law says so. Make sure you report the call or mail to the Attorney General's Office.
When someone offers you "better odds" to win a lottery, they are offering you nothing but the chance to be taken. Watch out for lottery scams by recognizing these sure signs of a losing proposition:
- Telemarketers or mail solicitations offer the opportunity to win the Canadian, Australian or other foreign lotteries.
- You are told the odds of winning increase when "group purchases" of lottery tickets are made.
- Credit card numbers or checking account numbers are requested.
Participating in foreign lotteries is illegal in Minnesota and violates state and federal laws. Only lotteries approved by the state of Minnesota are legal.
Home Improvement Scams
If someone offers to do work on your home or lawn at a discount, be wary. When you've never had contact with a company or individual before, and you don't know anything about them, take time to do a little checking. Otherwise you might be getting set up for poor quality work done at a high price. You can detect a home improvement scam by watching for these signs:
- You will be solicited by itinerant sellers who have no local connections.
- The person offers to pave the driveway, fix windows, do landscaping, repair the roof or paint your house with what is supposedly "supplies left over from another job."
- Cash payment is demanded.
- Often the final price is much higher than the initial estimate.
- Work is completed quickly and poorly (although you might not discover how poorly until the workers are long gone).
- The seller refuses to give you references or a warranty.
- The offer is only good that day.
Don't be pressured. Before you allow any work to be done, contact several local contractors for an evaluation and estimate. Compare the bids. Take at least 24 hours to make your decision (any reputable company will give you time to think). Never pay for work before it's completed. If you think you've been scammed, contact the local police or sheriff's office.
Scam artists work hard to sell their business opportunities to you, pitching "opportunities of a lifetime" at seminars, on television, in newspaper advertisements, and through mailings. Typical business scams share some common characteristics that give them away:
- Seminar speakers, callers or mail solicitations offer recipients the opportunity to make money with little effort.
- Statements regarding the honesty and integrity of a company are bolstered by reports of how long the company or individual has been in business.
- The safety of your investment is "guaranteed" and you are promised significant financial rewards.
- The opportunity is only available to a few people.
- The offer is only good right now, and you must act immediately.
Don't do business on the phone with people you don't know. Before committing any money, check out all business opportunities with the Better Business Bureau and the Attorney General's Office.
Deceptive contests lead participants to believe they have won, or are about to win, cash or extravagant prizes. Some Minnesota victims have lost tens of thousands of dollars by spending only $5 to $20 at a time. Watch for these warning signs:
- The solicitations are covered with phrases like, "You Are In First Place," and "You Are Tied For A First Place Grand Prize."
- Contest companies require you to complete quizzes which begin with very simple questions designed to be answered correctly by the vast majority of people.
- You are required to mail in "entry fees" ranging from $5 to $20. This process is repeated over and over again, as the contest promoters continue to mail more solicitations to the same people, informing them that they have "advanced" to another stage, and that another "entry fee" is required.
Don't play along. These contests offer nothing but the chance to be taken. Be wary of contests that seem ready to trick you with stages of competition to get through, or impossible puzzles to solve.
Don't be confused or misled by the many companies that sell products by mail and use contests or sweepstakes to catch your attention. Remember:
- Businesses take part in sweepstakes offers in order to sell consumers products or services and to attract consumers' attention to the products or services they sell.
- You have not won. Sweepstakes are a game of chance. If you enter, your entry will have the same chance to win as every other entry. No one knows who the winner is until after the sweepstakes ends.
- Enter for free.. You don't have to buy anything to enter a legitimate sweepstakes.
- Buying will not help you win. Your chances of winning without purchase are the same as the chances of someone who buys something. It is illegal to give any advantage to buyers in a sweepstakes.
- The odds of winning are small. The mailing must state the actual odds of winning the advertised prize.
- Sweepstakes companies must remove you from their mailing lists if you inform them of this request by mail. (See page 16 for more information on reducing junk mail and sales calls).
Remember, you do not have to order merchandise or pay money to enter a contest or sweepstakes. Avoid the contests and sweepstakes that want your money first.
A caller offers to help you recover the money you paid to a dishonest company when you were hoping to receive a prize. The caller asks you to pay a fee ranging from $200 to $800, for helping you "get your money back." These services are usually worthless. Often these companies just give you a form letter to fill in and send to the Attorney General's Office. (The Attorney General is not connected with these companies in any way. The Attorney General does try to help consumers who have problems with sweepstakes, contests and other prize offers, but there is never a charge for this help.)
If you have lost money to a scam, report it to your local law enforcement and the Attorney General's Office. It is difficult to recover money lost to scams, but the Attorney General's Office will try to get your money back for you. There is no charge for this service.
These letters promise instant riches while assuring the recipient that the letter is legal. In fact chain letters are illegal. The promised "payoff" will supposedly come to the participant after he or she follows the directions for continuing the chain. However, this "pyramid" always collapses, creating many losers.
Get-rich-quick schemes just don't pay off. It is impossible to bring in enough new recruits to keep a pyramid scheme afloat. The original promoters may make money, but everyone else down the line will probably lose everything they've invested. Ask a persistent caller if they would be willing to explain their proposal to your attorney, accountant or the Attorney General.
In the Bank Examiner Scheme, a swindler poses as an FBI agent, a bank examiner, a police officer, or detective. The con artist will ask to meet with you, pretending to need your help with an investigation. You will be asked to withdraw your money and give it to the phony official. The swindler promises to redeposit your money to you, but you won't see the money ever again.
Banks don't use citizens to help conduct investigations. If you are contacted by a con artist hoping to use this scheme to steal money from your bank account, contact your local law enforcement agency.
Many con artists set up fake businesses and charities, using the actual or similar names of real businesses and charities. They want to convince you the business is real so you'll send money. Fake or "look-a-like" scams often aim big in the past they have used well-known names of national organizations.
Do a little homework so you know who you are really dealing with.
Advertisements are placed in local newspapers and small neighborhood papers promising guaranteed earnings of $500 or more per week. The tasks vary but common scams include stuffing envelopes, preparing mailing lists, and making simple products (such as jewelry or fishing lures). You are asked to send money to obtain the plan. Sometimes you won't receive anything. Other times you will receive instructions telling you to duplicate the process by which you were conned.
Remember if it sounds too good to be true, it probably is.
You may receive a letter from a person representing himself as a Nigerian "prince," "chief," or "doctor." The letter proposes that you let this person use your bank account to transfer money to this country. The amounts proposed for this transaction are often $10,000,000 or more. You are offered a percentage of the money (often 30 percent) for assisting with the transfer of funds. To prove your honesty, you will be asked to pay a tax or fee up front. Of course, the person who contacted you is phony, and you won't see your money again.
Throw away the mail solicitation, and contact the United States Postal Inspector.
Pen Pal Schemes
Prison inmates often disguise their prison addresses to secure pen pals. Through correspondence, these "pen pals" will try to gain your confidence so they can rip you off. One common scheme run by inmates involves money orders. They have someone outside of prison purchase a money order for a small amount of money. Then, the inmate doctors the money order so it looks like it's worth a lot more than it really is. They will send the fraudulent money order to you, asking you to cash it and send the money back to them. When the discrepancy in dollar amounts is noticed, the fraud will catch up with you, and you will be responsible to pay the difference.
Be careful. Doing a favor for an inmate could get you into trouble.
Credit Card Scams
Unless you initiate the call and expect to be charged for something, don't give anyone your credit card number for any reason. Consumers who give their credit card numbers to strangers over the phone often have expensive and troublesome results. Giving your credit card number to someone is like handing over a signed, blank check.
A variation of this scam involves telemarketers who say they need your credit card number or its expiration date for "verification." Once they "verify" who you are, you will receive a free offer or a "prize." Don't fall for it.
Another common scam is the offer for a "guaranteed" credit card. If you actually get anything for your money, it might just be a listing of banks that offer credit cards.
Use your credit wisely. Watch out for shrinking grace periods, quick due dates, and high fees for late charges, over-the-limit charges, and others.
Guard your credit card numbers and other personal information. Don't ever give out your credit card number or checking account number to callers you don't know. Know that con artists sell information to other con artists. If you enter one contest, or give your credit card number to one con artist, chances are this information is now in the hands of more dishonest people who will contact you.
Some legitimate products are sold door-to-door, but con artists may also come calling. If you are considering making a purchase from a door-to-door seller, get everything in writing including price, warranties, and all conditions. Tell the seller you'll check it out and get back to them. Be firm. Don't buy on impulse. You can do business on your own terms. Take the time to investigate both the seller and the offer. And follow these guidelines:
- Don't feel pressured to let strangers into your home. Never let strangers into your home when you're alone.
- Ask to see the credentials of any door-to-door salesperson. Many localities require door-to-door sellers to obtain permits. Ask to see it.
- Compare the price of products or services with those of local merchants.
- Make sure the salesperson informs you of your right to cancel any door-to-door contract within three business days after the contract is signed.
- If you do purchase products or services, make sure all terms are in writing and signed by the seller and you.
- Never sign a contract you don't understand or one that contains blank spaces, regardless of what you are told by the salesperson.
- Ask if the sales price includes delivery and
installation. If you want those ser
vices included, tell the salesperson to put that in the contract, detailing the types of service and the date by which they will be performed.
- Check the company or salesperson's reputation with your city and county offices as well as your Chamber of Commerce and the Better Business Bureau.
Do business on your terms. You don't need to be polite to strangers who you did not invite to visit your home.