[Senate Hearing 109-316]
[From the U.S. Government Printing Office]

                                                        S. Hrg. 109-316



                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION


                             WASHINGTON, DC


                             JULY 27, 2005


                           Serial No. 109-13

         Printed for the use of the Special Committee on Aging

25-878                      WASHINGTON : 2006
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                       SPECIAL COMMITTEE ON AGING

                     GORDON SMITH, Oregon, Chairman
RICHARD SHELBY, Alabama              HERB KOHL, Wisconsin
SUSAN COLLINS, Maine                 JAMES M. JEFFORDS, Vermont
JAMES M. TALENT, Missouri            RUSSELL D. FEINGOLD, Wisconsin
ELIZABETH DOLE, North Carolina       RON WYDEN, Oregon
MEL MARTINEZ, Florida                BLANCHE L. LINCOLN, Arkansas
LARRY E. CRAIG, Idaho                EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania          THOMAS R. CARPER, Delaware
CONRAD BURNS, Montana                BILL NELSON, Florida
JIM DEMINT, South Carolina
                    Catherine Finley, Staff Director
               Julie Cohen, Ranking Member Staff Director



                            C O N T E N T S

Opening Statement of Senator Gordon Smith........................     1
Opening Statement of Senator Herb Kohl...........................     2
Opening Statement of Senator James Talant........................     3

                           Panel of witnesses

Lois Greisman, esq. associate director, Division of Planning and 
  Information, Federal Trade Commission, Washington, DC..........     4
Zane M. Hill, esq., acting assistant chief inspector, United 
  States Postal Inspection Service, Washington, DC...............    19
Anthony R. Pratkanis, Ph.D., professor of Psychology, University 
  of California at Santa Cruz, Santa Cruz, CA....................    40
Denise C. Park, Ph.D., co-director, National Institute on Aging 
  Roybal Center for Healthy Minds, University of Illinois, 
  Urbana-Champaign, IL...........................................    53
Helen Marks Dicks, esq., director, Elder Law Center Coalition of 
  Wisconsin Aging Groups, Madison, WI............................    71
Vicki Hersen, director of operations, Elders in Action, Portland, 
  OR.............................................................    81


Written statement of Melodye Kleinman on behalf of WISE Senior 
  Services.......................................................    93
Written testimony from Stetson University, College of Law, 
  Gulfport, FL...................................................    97




                              ----------                              --

                        WEDNESDAY, JULY 27, 2005

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:32 p.m., in 
room SD-106, Dirksen Senate Office Building, Hon. Gordon Smith 
(chairman of the committee) presiding.
    Present: Senators Smith, Talent, Kohl and Carper.


    The Chairman. Good afternoon, ladies and gentlemen, we 
welcome you all to this hearing of the Senate Special Committee 
on Aging. Today's hearing is the first in a series that will 
examine consumer fraud and identity theft issues relating to 
older Americans.
    According to the Administration on Aging, nearly 40 percent 
of America's seniors rank fear of fraud ahead of their concern 
for health care and the crisis attendant to it and even higher 
than terrorism. In all, the Nation loses $40 billion per year 
to telemarketing fraud and over $50 billion to identity theft. 
These crimes rob America's seniors of their dignity and 
retirement security.
    As we will hear from the Federal Trade Commission, Internet 
auctions, prize and sweepstakes fraud and lottery scams top the 
list of fraud complaints received from Americans age 50 and 
older. What is most disturbing is that these scams routinely 
top the FTC's annual list of top consumer frauds in the nation. 
It seems that even though we are aware of their use, scam 
artists remain successful in pitching old scams to new victims, 
perpetuating the cycle of victimization.
    Through today's hearing I hope we will make progress in 
finding effective means to break this cycle. Fortunately, a 
number of Federal, state and community programs, especially 
groups in Oregon such as Elders in Action, have made a positive 
difference in helping seniors prevent and recover from fraud 
and identity theft crimes. However, I believe we can and should 
do more. Working with my colleagues, I have introduced 
bipartisan identity theft legislation that would, among other 
things, place restrictions on the solicitation of Social 
Security numbers, allow consumers to place a security freeze on 
their consumer credit reports, and require all entities that 
handle sensitive personal information to provide notice to 
affected consumers in the event of a security breach.
    I am also mindful that legislation and consumer education 
must work in tandem. As reflected in the consumer education 
research that will be presented to us today, one size may not 
necessarily fit all when it comes to consumer messaging.
    Throughout this Congress I will be inviting state and 
Federal law enforcement agencies, as well as independent 
consumer protection groups, to embark upon a collaborative 
approach to responsible and effective consumer education 
messaging. To further this goal, I welcome today's 
distinguished panelists and again I thank you all for coming 
    I will turn next to my colleague, Senator Kohl, for his 
comments and then to Senator Jim Talent of Missouri for his 


    Senator Kohl. Thank you, Mr. Chairman, for holding this 
important hearing. We would like to welcome all of our 
witnesses here today as we examine ways to combat consumer 
fraud and identity theft as it impacts our nation's seniors.
    It seems that seniors are being targeted more and more by 
con artists looking for a quick buck. Studies show that up to 5 
million seniors fall prey to financial fraud every year. Just 
last week my Milwaukee office helped a 65-year-old man, who was 
a businessman all of his life, when he responded to an e-mail 
he received encouraging him to invest in a Nigerian business 
venture. The return was supposed to be outstanding. One hundred 
sixty-five thousand dollars later, this man is left with 
nothing but an empty retirement account and his wounded pride. 
Although the FBI was contacted, he was told that these scams 
are so common and so difficult to trace that they could not do 
anything to help him recover the money that he has lost.
    Seniors like this man become targets every day. They are 
trusting and come from a generation when business was often 
conducted on a handshake. Unscrupulous criminals are exploiting 
this trust and using it to their advantage. Preying on the 
elderly is certainly nothing new but in a day and age when many 
seniors are not technologically savvy, con artists have an 
easier time collecting personal information and using it to 
swindle a person out of their savings more than ever before.
    One way to stem the tide of consumer fraud is consumer 
education. We need to explain what seniors need to watch for 
and how not to be victimized. In my home State of Wisconsin we 
have been working to educate seniors on the pitfalls of 
financial exploitation. My office has developed a brochure that 
not only gives seniors an idea of what to watch out for in 
terms of identity theft, credit card scams, telemarketing 
schemes and fraudulent lotteries, but also lists where seniors 
can turn for help.
    I have also been working with the Wisconsin Coalition of 
Aging Groups, the banking industry, and law enforcement in 
Wisconsin, and recently received confirmation from Federal 
agencies that Wisconsin banks can report suspicious activities 
involving a senior's account to law enforcement officials 
without violating Federal privacy statutes. This is good news 
for seniors and their families and we'll continue to work with 
all of our partners to get the message out to seniors on how to 
avoid being victimized.
    As we examine this issue today, it is critical that we keep 
in mind that senior scams are nothing new. Just as con-men and 
-women have new high-tech ways of conducting fraud, we, too, 
must develop new ways of stopping these criminals.
    So I thank you once again, Mr. Chairman, for holding this 
hearing. We look forward to hearing from our witnesses, 
learning more about how we can put an end to schemes and scams 
targeting our seniors. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Kohl.
    Senator Talent.


    Senator Talent. Thank you, Mr. Chairman. I think this is a 
very important hearing and I am not surprised that our senior 
citizens rank fear of fraud so highly. They are a target 
because these con artists know that in many cases they have 
worked very hard and tried to save a little money and I think a 
lot of people have a sense that well, the only people who are 
victims are people who perhaps are naive or maybe do not have a 
lot of experience with the world, but that just is not true. I 
was just leafing through the statements and I know a lot of the 
witnesses are going to say that and we know that in our office.
    This is a very important hearing. I hope there is more we 
can do here in the Federal Government to try and help our 
seniors. I also want to echo what you said about the number of 
good state and local programs that are out there. We have 
several in Missouri. I want to mention in particular the 
O'Fallon, Missouri Police Department Senior Citizens Police 
Academy, which has been very effective because the seniors can 
come in and learn about these scams, and also what Clay County 
is doing with an elderly protection initiative for homeowners.
    So I am glad you are holding this hearing. I am very 
interested in what the witnesses have to say and what we can do 
productively to try to help fight this. Thank you, Mr. 
    The Chairman. Thank you, Senator Talent.
    Our first panel will consist of Ms. Lois Greisman. She is 
the associate director of the Division of Planning and 
Information at the Federal Trade Commission. They will be 
releasing a first-of-its-kind report compiling fraud and 
identity theft statistics on Americans age 50 and older. Ms. 
Greisman, I am pleased that you are here and we welcome you and 
look forward to your testimony.
    She will be followed by Mr. Zane M. Hill, acting assistant 
chief inspector at the United States Postal Inspection Service. 
He will be discussing the agency's law enforcement efforts and 
premier a new consumer education video. Mr. Hill, we welcome 
you, as well, and we will hear first from Ms. Greisman and then 
you will be following her.

                         WASHINGTON, DC

    Ms. Greisman. Thank you very much, Mr. Chairman, Senator 
Kohl. The written testimony submitted represents the views of 
the Commission. My comments and any responses I have to your 
questions reflect my own views and do not necessarily reflect 
the views of the Commission or any individual commissioner.
    I am delighted to have the opportunity this afternoon to 
discuss the Commission's efforts in fighting consumer fraud 
against older Americans. We have worked closely with your 
committee over the years to protect senior Americans and we 
welcome the opportunity to continue these critical initiatives.
    I am also very happy to appear on the same panel as 
assistant chief Inspector Zane Hill. The U.S. Postal Inspection 
Service has been an indispensable partner in the fight against 
identity theft and consumer fraud. Our close working 
relationship has proven both effective in prosecuting 
wrongdoers and efficient in protecting consumers.
    We all are sensitive to the fact that certain fraudsters 
may target older Americans and place them at higher risk than 
the population at large. In 2004 we received almost 650,000 
fraud and identity theft complaints directly from consumers and 
from others. It is this rich source of information that we used 
to develop the extensive report we have provided to the 
committee, which analyzes the complaints received from 
consumers aged 50 and older. As you said, Mr. Chairman, this is 
a unique report that we have produced.
    The FTC uses the information in this report and all other 
complaint information in guiding its law enforcement and 
consumer and business outreach initiatives, and this vital 
complaint information is also made available through our 
consumer sentinel network to over 1,300 law enforcement 
agencies, which in turn use it to identify and prosecute 
crooks. The FTC's report provides a tremendous amount of 
information about what older Americans tell us about being 
victimized. I want to emphasize a few points in that report 
about the fraud data.
    First, older Americans are not immune from any particular 
type of fraud. The most frequent complaints involve fraud about 
Internet auctions, sweepstakes and lotteries, Internet services 
and computers. We see these same complaint categories when we 
look at the entire population, but some things do stand out. 
For example, complaints about sweepstakes rank second for older 
Americans but rank fifth for the entire population and the 
FTC's report shows that the number of sweepstakes complaints 
received increases significantly from consumers aged 70 and 
older, as does the total dollar loss reported by victims.
    The FTC has sued many companies for sweepstakes frauds, 
many of which have been based in Canada. Our goals always have 
been to close down illegal operators and if at all possible, 
get money back to the victims.
    Second, looking at the report it also was striking to see 
that 41 percent of the fraud complaints from older Americans 
are Internet-related. What that means to us as we define it, 
that means that the company initially contacted the consumer by 
the Internet, the consumer responded to a solicitation via the 
Internet, or the solicitation itself concerned an Internet 
product or service. The 41 percent figure itself should not be 
surprising but it is a significant increase from the 33 percent 
figure for consumers aged 50 and older that we saw looking at 
the 2002 data.
    At bottom, we analyzed all the complaint data in the report 
to help us maximize our law enforcement activities. Halting 
fraudulent conduct is a cornerstone of the FTC's consumer 
protection mission in protecting older Americans, whether the 
cases involve alleged sweepstake scams, misrepresentations 
about a purportedly new Medicare program, or health claims 
about the benefits of a dietary supplement called ``Senior 
    Law enforcement, however, is just one tool. We aggressively 
work to reduce fraud and identity theft through consumer and 
business education. We have developed a wealth of educational 
materials that alert consumers to signs of fraud and advise 
them about how to protect their sensitive information. Other 
educational materials inform businesses about how to safeguard 
personal information and how to assist customers who have been 
victimized. The FTC also partners with other agencies and 
organizations to reach a wide audience. The AARP is a key 
partner. Whose many publications frequently include articles 
about how to avoid and report fraud and identity theft. The 
AARP also has cobranded FTC publications and distributed them 
to its members.
    Further, the FTC looks forward to working with this 
committee to ensure that these materials reach senior Americans 
and all other consumers. I have provided the committee with a 
sample of these materials. It is in this large packet of 
information and I would be remiss not to note at the back is a 
``Do Not Call'' fan, which is one of my favorite programs.
    All of these materials are available on our website, in 
both English and Spanish. We hope to continue conducting 
outreach programs and campaigns with your offices and with 
others to make the Commission's consumer education materials 
and our on-line complaint forms available through your websites 
as we continue our efforts to protect older Americans.
    Thank you for the opportunity to describe the Commission's 
activities. I will be happy to address any questions you may 
    [The prepared statement of Ms. Greisman follows:]

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    The Chairman. Thank you very much.
    Mr. Hill.


    Mr. Hill. Thank you very much, Mr. Chairman, members of the 
committee. I want to first of all thank you for the opportunity 
to testify today about crimes against the elderly. The mission 
of the U.S. Postal Inspection Service is to protect the U.S. 
Postal Service as an agency, its employees, and the mails from 
criminal attack and criminal misuse.
    I think I want to show a video at this point in terms of 
our work with crimes against the elderly so you can see what we 
are trying to accomplish here. [Video shown.]
    Before I begin, I would like to acknowledge our Federal 
partner, the Federal Trade Commission, and the wonderful work 
that they have done with us in terms of training initiatives, 
education, legislation, enforcement actions. We have an 
excellent working relationship with them and I think we are 
actually doing some good to protect our seniors from fraud.
    There are countless illegal schemes that violate the 
Federal mail fraud statute, which is the very first consumer 
protection law enacted in 1872. It is still the most effective 
fraud enforcement weapon and postal inspectors have used it for 
over 100 years.
    Last year, for example, we responded to over 82,000 mail 
fraud complaints. Out of that we investigated over 3,000 fraud 
cases and arrested over 1,400 individuals for mail fraud. As a 
result of these investigations there was over $1.2 billion in 
court-ordered involuntary restitution and this was only a 
portion of the total financial impact these crimes had upon 
American citizens.
    Over the years postal inspectors have used the mail fraud 
statute to investigate and prosecute all types of scams. The 
advent of the telephone brought telemarketing scams and then 
the advent of the Internet brought Internet scams. Each of 
these bring their own offerings but really it is in many cases 
the same scam, just a different twist. Eventually the mails 
will become involved in the scheme and that is when postal 
inspectors will become involved in the investigation.
    Because older citizens, the physically challenged and shut-
ins rely on the mail and these other forms of communication for 
many of their purchases and their personal business, they 
become easy prey for these fraud operators. The problem is 
further compounded by fraud operators who sell the names and 
addresses of their victims to other operators, resulting in 
repeated victimization of many elderly citizens.
    The same holds true for telemarketers. Most offers are 
legitimate but unscrupulous telemarketers can be the smoothest 
of operators and they can quickly defraud people out of their 
life savings.
    Losses attributed to telemarketing fraud are estimated to 
exceed $40 billion per year. Unfortunately, senior citizens are 
shown to be particularly vulnerable to these fraudulent 
solicitations. Fraudsters recognize this and they recognize 
that many seniors are widowed, alone, isolated from family and 
friends, and they take advantage of this. A telephone call from 
anyone to some of our senior citizens is welcome and our 
experience has shown that con artists know how to make the most 
of this. Once they have them on the telephone line, then they 
can manipulate them.
    In searches of fraudulent telemarketers' places of business 
we have discovered the files of the operators that they have 
maintained on their victims. These files tell us a great deal 
about how these cons are worked. The information contains 
intimate details of the victim's health, the names of their 
children, vacation and travel memories, and even information on 
deceased spouses.
    Telemarketers in particular use this information when they 
call their victims to give their sales pitch a personal touch, 
a hook if you will. They will mention family names, inquire 
about their health, and very effectively portray themselves as 
being caring and knowledgeable.
    For these victims, these telephone calls may be one of the 
few regular contacts they have with other people and the 
victims actually sometimes value this interaction with someone 
willing to talk with them. Victims often even defend the fraud 
operators in the continued belief that they are, in fact, their 
friends who are trying to help them win a sweepstakes and gain 
some money.
    Sadly, in our investigation some victims will acknowledge 
that they believed that the fraud operator was taking advantage 
of them but explain that they had no one else that they could 
talk to, and this is a sad commentary.
    One particular technique called the ``You have won'' 
scheme, targets elderly victims who have previously 
participated in lotteries, sweepstakes, and other prize-winning 
opportunities. Fraudsters inform these seniors that they have 
own; however, they are required to pay either administrative 
fees, taxes or membership fees before the prize check can be 
mailed. We know how this ends. The victim receives nothing; the 
scam artist receives the fee.
    Another tactic utilized by con artists is to tell a senior 
that they have won a large cash prize and then ask them for 
some identification by providing a credit card number, a bank 
account, or other personal information so that they can verify 
the senior as the winner.
    Armed with this personal financial information, fraudsters 
can quickly clean out the accounts of these unknowing senior 
    One of the most notorious scams that we have seen against 
seniors is what is known as the reload. It is a very offensive 
tactic that bothers all of us in this business. When fraud 
operators are successful in obtaining money from a victim, they 
often make an attempt to gain even more money. This is the 
reload. In a typical reload, the fraud operator contacts the 
victim again and alters the original scam or represents a new 
scam sweepstakes. Winners may be told that their prize has been 
increased but that additional fees are necessary to claim the 
new prize, and then starts the cycle of the reload. Victims in 
fraudulent investment schemes may be convinced to invest more 
money or to convert their investment to another market product 
which invariably is worth even less than what they initially 
had been sold before.
    Also, fraudulent telemarketers often network with other 
operators and sell or exchange target lists. The con artists 
refer to these lists as ``mooch lists'' or ``sucker lists,'' 
and you can tell from the name of the list what they think 
about them.
    If a telemarketer knows a particular senior has fallen for 
several scams, they will call this senior, pose as either an 
attorney or law enforcement officer and advise them that they 
have arrested the con artist from the earlier schemes and 
seized the money. This is the start of the scam. The victim's 
money is described as being held either in a State fund or held 
by the courts. The scam artist will then request a fee to 
release those funds to the victim and in doing so steal from 
the victim again. As you can see from this, there are just 
multiple opportunities under a reload for the victims to be re-
victimized again and again.
    Many seniors have been robbed of their hard-earned life 
savings through illegal telemarketing and mail fraud schemes, 
but also there is a tremendous emotional cost that associates 
with this. The senior victims lose not only their money but 
also their self-respect and their dignity because they have 
been duped. We have interviewed victims in some of our cases 
who have claimed they could not remember sending anything to 
the operators or out of embarrassment would never acknowledge 
how much money they actually lost. Let me give you one example.
    An example of a recent Inspection Service case highlights 
an 86-year-old widower and World War II veteran from 
Pennsylvania who was the victim of a sweepstakes fraud. Over 
the course of 2 years, this senior lost his entire life savings 
to con artists who repeatedly promised him $850,000 in prize 
money provided he would pay in advance a series of customs 
fees, taxes, and legal fees in addition to his savings account. 
In reading the account of this, it was multiple reloads and 
multiple interactions by different groups that just continued 
to victimize him.
    It gets even worse. After he lost his life savings, the 
victim then used his Social Security income and sold his stock 
shares to cover the purported processing fees for the monies he 
had won. He never received any of the prize or any of the 
    Criminal prosecution is an important element in our fraud 
program, but it is not the only tool that we use. We also use 
civil fraud and our administrative authority to shut down the 
use of mails for those fraud operators that are using that as a 
vehicle to commit these crimes. The most important thing that 
we have seen in our good work with the FTC has been in the area 
of consumer education. We think this is probably where we need 
to place a lot of our work and attention to educate them. I 
want to tell you about some of those efforts and the success 
that we have had with them.
    In September 2003, our postal inspectors, in conjunction 
with the Postal Service, the FTC, and other Government agencies 
and private companies, unveiled a national consumer awareness 
program on identity theft known as Operation: Identity Crisis. 
This campaign focused on the ease with which identity theft 
occurs unless consumers take steps to prevent it. The video 
that you watched is one of those types of videos that we do as 
a part of these campaigns.
    Even though this crime affects all age groups, including 
older Americans, according to complaints that the FTC just 
spoke about, the percentage of seniors as a victim group rose 
from 17 to 21 percent, so we are actually seeing an increase in 
the numbers of senior victims to these types of frauds. The 
Inspection Service has recognized for many years that awareness 
in terms of consumer fraud is where our emphasis needs to be. 
We will continue to try to increase those efforts and to 
partner once again strongly with the FTC and other 
organizations to get that message out.
    Prevention efforts must focus on the key factors that play 
the greatest role in identity compromise. Unfortunately, the 
traditional way to steal personal information has not changed 
in terms of identity theft. Obtaining lost or stolen wallets, 
checkbooks, credit cards is still the favorite method, 
according to Congressional Quarterly Research. While this is a 
challenge, it really pales in comparison to the 52 million 
identities that have been compromised through electronic means 
since the beginning of this year. This is why prevention of the 
crime is a priority for the Inspection Service.
    You have all heard the saying ``Crime doesn't pay,'' but in 
this case, it does in a very positive way for some of the 
victims. All of the campaigns that we have been involved with 
have been paid by a unique funding arrangement where we use 
monies received from criminal fines and forfeitures in cases 
where the victims could not be identified and the money could 
not be returned to them, just like the video that you saw. In 
addition, this money also pays for funding for public service 
announcements and other very proactive consumer campaigns that 
we are involved with.
    As you understand, the more that we can get the message out 
to that part of our population, the more we can tell them 
things to look for. They are very knowledgeable. They can 
identify some of these factors. We think that we will be very 
effective there if we can continue that very aggressive push in 
terms of the education.
    Another campaign that we actually did also in 2004 was to 
raise awareness about investment fraud and help consumers avoid 
becoming victims of those types of scams. This one, perhaps you 
remember, was called ``Dialing for Dollars,'' and it included a 
video portraying investment scheme that actually targets older 
    This past February, in February 2005, we teamed up with the 
Postal Service consumer advocate and other Federal, State, and 
local consumer protection agencies, and launched a campaign to 
inform consumers how to avoid fraudulent work-at-home schemes. 
A multimedia approach conveyed the message with ads placed in 
newspapers and magazines reaching over 45 million readers.
    Last month, the Inspection Service and the Direct Marketing 
Association announced a nationwide consumer education 
initiative to educate Americans on how to avoid being scammed 
by the fraudulent sweepstakes like you just saw. In August, a 
foreign lottery campaign is planned to protect the public from 
those scams that take the money with the purchase of 
``tickets'' and then charge a fee to collect the fictional 
    Americans trust the Postal Service and the mail. Seniors 
have relied on this mail system their entire lives for their 
financial and their personal business. The Inspection Service 
is totally committed to continue its work of ensuring that the 
mails are secure and not used for criminal and fraudulent 
purposes. We will continue to be vigilant for those fraud 
schemes that target our senior citizens.
    In closing, Mr. Chairman, I would like to extend an 
invitation to you and the committee to join us in a National 
Fraud Prevention Campaign that we are planning to kick off 
during Consumer Protection Week in February 2006. This will 
focus specifically on educating senior citizens about the 
various fraud schemes that target their age group.
    That concludes my remarks. Thank you.
    [The prepared statement of Mr. Hill follows:]

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    The Chairman. Thank you both so very much.
    Zane Hill, is this a public service video? Is it shown on 
the airwaves? Where is it shown if not on television?
    Mr. Hill. We have sent it to target groups, and we have 
used it with some video news releases, but we have not done a 
public service campaign with it, Senator.
    The Chairman. It is very good, and it seems to me that 
there are probably some television programs where a public 
service announcement like that would be very, very effective.
    Just a question and a comment as an observation. I have 
seen some of your educational materials. They seem to me 
excellent. Do you do any research testing their effectiveness? 
Do you have a sense are you reaching consumers? Is it getting 
through how they can protect themselves?
    Ms. Greisman. We do an enormous amount of internal testing 
before we disseminate any sort of consumer----
    The Chairman. Do focus groups and----
    Ms. Greisman. Probably not quite on that level, but we do 
have an Office of Consumer and Business Education, which is 
staffed with people who have enormous expertise on how to reach 
a broad range of consumers and also how to communicate 
information in a way that is most likely to be received. We 
certainly have done copy testing on occasion when we think it 
is warranted.
    The Chairman. Lois, I owe you an apology. I think I 
mispronounced your name. It is Greisman, right?
    Ms. Greisman. That is correct. No problem.
    The Chairman. I apologize for that.
    A question about restitution to victims. When you identify 
them and you get a conviction or apprehend someone, do you ever 
retrieve their money?
    Ms. Greisman. I will start. If at all possible, we do, and 
the best key to enable us to do that is to be able to seize 
assets at the outset when we are dealing with criminals, people 
engaged in fraud. We, of course, are a civil law enforcement 
agency. If we are able to obtain ex parte relief and freeze 
their assets before they hide it, send it abroad, or do 
whatever they will with it, we are most likely to be able to 
preserve assets and then provide it to consumers in the form of 
redress at the end of the day.
    The Chairman. You have enforcement powers, but you do not 
have police powers in the same sense as the Justice Department. 
Do you work with them, the FBI?
    Ms. Greisman. We work very closely with them, as we do with 
Postal Inspection Service, FBI----
    The Chairman. Attorneys General in the States?
    Ms. Greisman. Attorneys General, U.S. Attorney's Offices. 
We have found that partnering our civil enforcement with 
criminal enforcement is indispensable, and that is where we get 
the main deterrent effect.
    The Chairman. Are there any Sentencing Guidelines for elder 
    Ms. Greisman. I would have to defer to my colleague on the 
criminal side.
    Mr. Hill. Yes, Senator. I know there are some in terms of 
vulnerable victims, in terms of the fraud guidelines that talk 
about where the scheme targets individuals, I think, over the 
age of 55 or where you have multiple targets of a fraud scheme.
    The Chairman. These are Federal Sentencing Guidelines?
    Mr. Hill. Yes, sir.
    The Chairman. Lois, I think in your testimony you spoke of 
the schemes that come from across our borders--Canada, you did 
not mention Mexico. Are there some from that southern border as 
    Ms. Greisman. Certainly we have seen cross-border fraud 
from many countries throughout the world. It is not limited to 
Mexico or to Canada.
    The Chairman. Say it is Mexico or Canada or anywhere else, 
what do other nations do in terms of coordinating with you and 
stopping it as it might emanate from their countries? Do they 
wait until their people are victimized, or do they work well 
with you, particularly our closest neighbors with whom we have 
the greatest commercial relationships?
    Ms. Greisman. We have an enormous history of collaborative 
efforts with our Canadian counterparts, and increasingly so 
with our Mexican counterparts. We have a lot of project 
initiatives in the pipeline with Canadian law enforcement, but 
it can be difficult, and part of what the FTC has sought in 
order to better enhance our ability to deal with cross-border 
fraud is the introduction and passage of the U.S. Safe Web Act. 
We think that would provide us with additional tools to 
effectively combat cross-border fraud.
    The Chairman. So as not to be blaming it on Canada, are 
there U.S. fraud schemes that victimize Canadians?
    Ms. Greisman. Absolutely. There is no question about it. In 
fact, we receive a lot of complaint data from what is called 
Canada's Phone Busters, and most certainly those involve some 
Canadian citizens complaining against U.S. companies.
    The Chairman. You feel like the relationship between 
nations on these issues is seamless and effective?
    Ms. Greisman. Very much so.
    The Chairman. That is very good to hear.
    What about recidivism rates? Someone you find, apprehend, 
in some cases, I am sure, imprisoned, when they come out do you 
get a lot of repeat offenders? What do you find, Zane?
    Mr. Hill. Yes, Senator, we do. There are more scams than we 
can possibly count and these people are very creative. The old 
saying ``There is a sucker born every minute,'' then they take 
advantage of that, and they will just, you know, when 
prosecuted, when sentenced, then they will come out and they 
will look for other creative ways to dupe American citizens out 
of their money.
    To your other question about cross-border type work, 
unfortunately--the good thing about the information age and all 
these new means of communicating is this is really good. The 
bad thing is this type of fraud becomes very global, and these 
operators can set up in any number of countries, some of which 
we have not yet had the opportunity to create that good 
partnership relationship like we have in other countries where 
we have actually worked with them to combat this. So you have 
to go to where the schemes are originating and where the 
operators are residing. That is where you have to go to seize 
the assets to do all those things to shut them down.
    The Chairman. Is there any place particularly in the world 
that seems to have a concentration of it? Or is it just 
    Mr. Hill. Well, I think if you were to ask us that, I think 
probably parts of Eastern Europe. You know, we have seen an 
increase in the number of operators out of there, but, you 
know, the way telecommunications can be routed and switched and 
so on and so forth, sometimes even the place where you think 
they are might not be where they are actually working from.
    Ms. Greisman. If I may?
    The Chairman. Yes.
    Ms. Greisman. When a consumer complains to us, the consumer 
knows only what the company may have told him about where the 
compared is located. So, for example, a company can certainly 
say, yes, I am in the U.S. and there is a U.S. drop box, but 
it, in fact, maybe in Eastern Europe or in Canada or elsewhere.
    The Chairman. It is appalling, but I appreciate your 
forthcoming answers.
    Senator Kohl.
    Senator Kohl. Ms. Greisman, your report indicates a general 
upward trend in consumer fraud and identity theft complaints 
from consumers of 50 and over. Aside from an obvious increase 
in scams, is this also due to an increase in awareness and, 
therefore, reporting? Are seniors becoming more familiar about 
whom to turn to?
    Ms. Greisman. Yes, we think that is absolutely right. Each 
year that we have better enabled consumers to contact us, we 
have seen a substantial increase in the number of complaints, 
both on the fraud and identity theft side.
    Senator Kohl. So that the upside in numbers clearly does 
indicate a problem, but it is not apples and apples. It is that 
more people are familiar with what is happening and, therefore, 
are reporting what is happening.
    Ms. Greisman. That is correct. It does not tell you 
anything about the actual incidence of fraud or identity theft 
across the country, which is why we use surveys to get at that.
    Senator Kohl. All right. As I understand it, the complaints 
from consumers that you receive are all reported by victims 
themselves. We have seen that there is much stigma associated 
with being victimized and, therefore, many crimes go 
unreported. Is there a way to extrapolate from these numbers 
the actual number of seniors who are being defrauded?
    Ms. Greisman. I am afraid I do not think we can do that at 
this point. We would have to look at our fraud survey and 
techniques used in conducting that survey to see if you could 
determine the actual incidence impacting the elderly.
    Senator Kohl. Mr. Hill, in your testimony, you describe how 
raids of fraudulent telemarketers' places of business turned up 
files containing very personal information about their victims, 
such as spouse and children's names, their health conditions, 
and their travel histories. How is such information being 
    Mr. Hill. Senator, you have people in the business of 
gathering personal information about American citizens, and 
this is what their job is, any number of open source public 
records they go to. They have very aggressive research groups 
that gather this information for them, and then they compile it 
in lists, basically customer lists that they use. It is not a 
unique situation for the fraud operators. It is done in a lot 
of marketing strategies for consumer marketing campaigns. 
Unfortunately, the unscrupulous operators use those same types 
of lists to then victimize the seniors as a target audience 
that they know that they can go after and that they would be 
very susceptible to those types of scams.
    Senator Kohl. All right. I understand that the Postal 
Inspection Service has developed a series of consumer DVDs, 
education DVDs. How are these being disseminated to seniors? Do 
you have any feedback on how they are being received and what 
kind of impact these DVDs are having?
    Mr. Hill. To another question about a focus group, we have 
done focus groups with seniors on some of our DVDs, and they 
have been very positively received. They think it tells the 
right message in the right way so that seniors will understand 
what things to be aware of. We are going to do more of this 
with the other public awareness campaigns that we do to make 
sure that the message that we put together is, in fact, 
reaching the target audience with the things they need to do to 
protect themselves.
    Senator Kohl. Thank you.
    Mr. Chairman, thank you.
    The Chairman. Thank you, Senator Kohl.
    Senator Talent?
    Senator Talent. Thank you, Mr. Chairman.
    Mr. Hill, I notice in your testimony on page 8, you present 
five questions people ought to ask themselves if they are 
contacted or they see something on the Internet. I was actually 
going to ask about that. I can remember on a number of 
occasions seeing public service announcements actually from the 
post office explaining what to do if people want you to send 
money up front or something. Are you making an effort to get 
out this information about key questions to ask regarding 
potential transactions or deals like this?
    Mr. Hill. Yes, Senator, we are. We are going to continue to 
really focus with these types of questions. As the scams 
change, then these questions will also change. But basically 
the one that you pointed out, when you have to give money up 
front to get something that you have won, that is just a red 
flag automatically.
    So these are the things that we will continue to do. As 
these scams continue to evolve, we will continue to pull out 
these key questions and build those into each of these public 
awareness campaigns that we are doing.
    Senator Talent. This is very frightening to me, Mr. 
Chairman, because I can easily see a lot of people, not just 
seniors asked to confirm something and providing some financial 
information and then, bang, their whole savings are just gone. 
I hope we can come up with some way for really getting this 
word out in a way that people can understand.
    Thank you, Mr. Hill. Thank you, Mr. Chairman.
    The Chairman. I have a few questions on the second round, 
so if any of my colleagues have additional questions, we will 
go to them.
    Back to the question of public service announcements, to 
either FTC or Postal Inspection, do you have the authority to 
get these on the air or do you have the funding necessary to 
get these on the air? Because it does seem to me that that 
could be perhaps quite effective if we could get them more 
broadly distributed, these messages that may be produced in the 
form of 30-second television ads. Do you have funding or need 
authority that Congress can provide?
    Ms. Greisman. We do conduct an enormous number and 
different types of consumer educational campaigns. To the best 
of my knowledge, we have not done video news releases, which is 
not to say it is not something we would not think about. But we 
have reached, we think, an enormous audience through our print 
and online materials as well as through some radio I know we 
have done. In fact, in the near future we will be doing an 
enormous outreach campaign focusing on identity theft as part 
of the FACT Act amendments.
    The Chairman. I would sure encourage you to think about 
what you need from Congress to better broadcast the materials 
that I think are excellent that you have produced, because I 
think there is an education curve out there that could really 
put a dent in this that maybe we can more effectively 
    I want to ask you about methamphetamines, not that you have 
anything to do with it, but my State of Oregon--and I suspect 
it is true of other States increasingly, tragically--just has a 
plague of methamphetamines. In fact, in Washington County, OR, 
over 90 percent of identity theft cases last year were 
connected to meth trafficking. The U.S. Attorney's Office in 
Eugene, OR, says the statistics are similar for what they 
regard as routine ID theft cases such as shoulder surfing, 
dumpster diving, and mailbox theft.
    Can you both elaborate on what, if any, experience your 
respective agencies have with this component to elder abuse?
    Ms. Greisman. I am not aware of a specific component with 
respect to seniors. Certainly we are well aware and the law 
enforcement community is well aware of the link between 
identity theft and methamphetamines, and what we have seen is 
that either people who are addicted or people who are 
trafficking it are using identity theft as a quick way to get 
quick cash to fund the labs. Part of what we are doing in 
response to that is ensuring that as many complaints as 
possible get into the Consumer Sentinel Network because that is 
accessible to 1,300 law enforcement agencies throughout the 
U.S., Canada, and Australia, and we think that will enable them 
to connect dots to locate thieves in a way that they do not 
otherwise have available.
    Mr. Hill. Senator, from our perspective, in the last 
probably 8 years or so, whenever you have seen that increase in 
meth usage and a meth problem in a community, you see these 
types of very low-level white-collar type crimes that are going 
on, the identity theft, trying to--purse snatching, vehicle 
break-ins to get purses or any type of personal information. 
You referenced other theft of mail. All of those things go hand 
in hand with that type of crime that the methamphetamine users 
seem to gravitate to. For them, it is not a very high-risk 
crime. It is something that they can do fairly anonymously if 
they can get the information. They do not have to confront 
someone. They do not have to brandish a weapon at them. They 
can do a great deal of damage to a community with those types 
of what we call probably low-tech white-collar crimes in terms 
of stealing that information.
    The Chairman. I am sure you are very much aware that Health 
and Human Services is in the process of implementing a Medicare 
Part D program, a prescription drug benefit for Medicare 
patients. Obviously, we are talking about people who are 
elderly. I suspect that as we speak there are many scams being 
developed trying to springboard off of Medicare Part D. Are my 
suspicions well founded? Are you starting to see prescription 
drug fraud schemes being developed?
    Ms. Greisman. Well, sir, over the years we have, 
unfortunately, seen no shortage of frauds involving various 
drugs, various dietary supplements, both in terms of the claims 
promised about what they can do for you, but also in terms of 
their availability. In fact, one of the settlements referred to 
in the Commission's testimony involves a scheme in which people 
allegedly were selling a Medicare program.
    What we have done, because we are anticipating a possible 
surge in such types of fraud, is talk to our colleagues over at 
HHS to try to find the best way to ensure consumers who are 
defrauded or who think they are defrauded know where to file a 
complaint and can access information that will ensure that they 
can differentiate between, distinguish between what is 
fraudulent and what is real.
    The Chairman. I am glad to hear you are already working 
with HHS because I suspect that scenario, as we implement this 
prescription drug benefit, that there is going to be a world of 
new opportunities for people who would commit these frauds.
    Senator Kohl, do you have any additional questions?
    Senator Kohl. No.
    The Chairman. Senator Talent.
    Senator Talent. No.
    The Chairman. We have just been joined by the Senator from 
Delaware. Do you have an opening statement or a question of 
these witnesses?
    Senator Carper. Not an official statement, but just 
something I would like to say, and then a question, if I may. 
As I walked through the room, I heard part of my question being 
asked, so maybe the rest of it has been asked as well.
    In our State, Delaware, we had about 40, 45 different drug 
discount cards that people could apply for. It was very 
confusing. I was thinking about trying to explain things so 
that my mother, who just passed away, could have understood 
them and trying to couch them in those terms. It is hard enough 
for folks the age of my mother or my aunt and uncle to 
understand the benefit that is being offered to them, and it is 
all the more difficult when there are folks out there that are 
trying to defraud them.
    We saw a fair amount of that fraud not so much in Delaware 
during the last year or so with the drug discount card, but 
what lessons have we learned from the fraud that grew up around 
the drug discount card that might enable us to reduce the 
incidence of fraud with respect to the next step, the 
implementation of the Part D benefit?
    Mr. Hill. I will just speak from the U.S. Postal Inspection 
Service standpoint. I am not aware of us seeing a real increase 
in the numbers of investigations that we have done of that 
nature. I could be wrong, but I do not know if we have really 
looked at that to the level of concern that the committee has 
expressed, and we will do so to see what kind of numbers. But 
obviously you are right, Senator, anytime that someone is 
misrepresenting what service they can provide to those card 
users, then there is a strong possibility that they could be 
deprived of services needed. So that will be something that we 
will most certainly take a look at.
    Ms. Greisman. I will add just briefly, that the importance 
of education can never be underestimated, and I think the point 
you are making is critical, which is that it is important to 
communicate in a way that people understand what you are saying 
and can use that information. That is something we spent a lot 
of time and energy ensuring that we get right, and we are 
constantly re-evaluating it. The prescription drug world is 
certainly a challenge, but it is one that we think we can deal 
with, working with HHS.
    Senator Carper. On the one hand, it is hard enough for 
folks the age of our parents and grandparents to figure out do 
I want to use this benefit, the Part D benefit. Do I want to 
use it? Do I know enough to understand it to make a right 
decision? Is the person that I am talking to on the phone 
someone who is there to help me or someone who is there to take 
my money and to defraud me?
    My mom used to live down in Florida just outside of 
Clearwater for a number of years, until my sister and I moved 
her up to Kentucky in the last years of her life. I remember 
the last few years my mom was there--my dad had passed away--my 
mom put a roof on their house that did not really need one. My 
mom built an extension to the house that I am sure was not 
really needed. She was living there by herself. I remember the 
time when my mom bought a vacuum cleaner, and she paid more for 
that vacuum cleaner than I paid for my first car or two that I 
bought. It is a good vacuum cleaner, but--and it should have 
been for what she paid for it, for as long as she paid for it.
    But, on the one hand, somebody tried to sell her once a 
long-term nursing home plan, and she bought it. My sister and I 
had no idea that someone had tried to sell her that kind of 
nursing home plan, but she bought it. When the time came for us 
to move her and all of her earthly goods from Florida up to 
Kentucky, my sister came across this long-term nursing home 
plan that my mom had bought for a relatively small amount of 
money and found out that it was worth 2 years of paying for her 
to stay in a private nursing home, and in that case--so we were 
not all that happy about the vacuum cleaner and the roof on the 
house and some other things, but we were glad that my mom had 
the good sense, the presence of mind to take out that long-term 
care plan, which did a lot of good for her and for us.
    Thanks very much.
    The Chairman. Thank you, Senator Carper.
    Lois and Zane, thank you both very much for your presence 
and testimony today and your public service. We are grateful to 
you and your agencies for what you are doing for America's 
senior citizens.
    The Chairman. We will now call up our second panel that 
will consist of four individuals: Dr. Anthony Pratkanis, a 
professor of psychology at the University of California at 
Santa Cruz, serves as a member of the AARP multidisciplinary 
research team.
    He will be followed by Dr. Denise Park, who is the co-
director of the National Institute on Aging Roybal Center for 
Healthy Minds at the University of Illinois, and she will be 
presenting the results of NIA-funded research illustrating the 
role of cognitive science in developing effective consumer 
education materials for older Americans.
    Then we will hear from Ms. Helen Marks Dicks, the director 
of the Elder Law Center, the Coalition of Wisconsin Aging 
Groups, and she will testify about the center's work in 
educating and empowering seniors to recognize, report, and 
combat scams and other fraudulent practices.
    Also, we are very pleased to welcome from my home State of 
Oregon Ms. Vicki Hersen. She is the director of Operations at 
Elders in Action. Ms. Hersen will testify about Elders in 
Action community education program which provides seminars and 
ombudsman counseling on many topics, including senior scams, 
fraud, and identity theft.
    Dr. Pratkanis, go right ahead.


    Mr. Pratkanis. Chairman Smith, Ranking Member Kohl, and 
Senator Talent, every year Americans lose almost $100 billion 
in telemarketing, investment, and charity fraud. While this 
dollar figure is staggering, it does not capture the true costs 
of this crime. Fraud not only impoverishes victims financially, 
but it can also impoverish them emotionally and drive a wedge 
between victims and family members. Economic fraud crimes have 
societal consequences as well, resulting in a loss of trust 
that impacts the business community and erodes the very fabric 
of life in American society.
    But I want to report some good news in the right against 
economic fraud crimes.
    For the last 8 years, I have been a member of a team of 
researchers and fraud fighters consisting of myself, Doug 
Shadel, the state director of AARP in Washington State; Bridget 
Small, the director of Consumer Protection for AARP here in 
Washington, DC; and Melodye Kleinman, of WISE Senior Services, 
whose written testimony you received today.
    Our team has conducted surveys of victims, carried out 
experiments investigating the effectiveness of intervention 
strategies, developed educational materials, trained volunteers 
to fight this crime, and have warned over a quarter of a 
million potential victims personally about fraud crimes. As a 
result of our work, we have developed an understanding of the 
nature of the crime and some strategies for preventing it. I 
want to tell you four things that we have learned, and I want 
to discuss with you three opportunities or challenges that I 
think we will face in fighting this crime.
    First, we have learned that the weapon that is used in 
fraud crimes is social influence. No one knowingly gives their 
hard-earned cash to a con criminal. They think they are making 
an investment, winning a prize, providing for a charity, or 
some similar positive goal. The con criminal is a master at 
using one high-powered influence tactic after another to sell a 
deception. Given that the weapon in a fraud crime is an 
invisible one--social influence as opposed to a gun or a 
knife--there is a tendency by both victims and observers not to 
recognize economic fraud crime for what it really is--a crime.
    Recently, Doug Shadel and I analyzed over 250 undercover 
tapes used in fraud investigations. In these taps, law 
enforcement took over a victim's telephone line and then tape-
recorded the con criminal's pitch. In listening to these tapes, 
we found that con criminals would play different roles--
authorities, friends, even dependents--to create a platform of 
trust. They would then use many well-established social 
influence tactics to sell the crime. For the most part, these 
sales pitches are sweet and charming, although nonetheless 
deceptive and effective. However, at times it can also be 
abusive, frightening, and intimidating.
    Mr. Chairman, with your permission, I would like to play a 
portion of some of these tapes to illustrate the abusiveness 
that can occur in these crimes.
    The Chairman. Without objection.
    Mr. Pratkanis. The first selection is a montage of fraud 
pitches taken from two different undercover tapes. First you 
will hear two cons, Victoria and Sean, who are working together 
for a company that they call WMT. The company claims to be 
offering credit card protection. In reality, they are 
attempting to get the victim--in this case, Helen, who is 
played by a seasoned investigator--to make what is known as a 
verification, to give her name and other personal information 
over the phone, which they will then record and then use 
subsequently to withdraw money from Helen's account.
    In another scam, which you will also hear interspersed 
between these two, you will hear from Robert, who has told 
Ardelle, a real victim in this case that is being tape-recorded 
as part of a law enforcement investigation, that Ardelle has 
won a prize and needs to send money to claim her prize. Ardelle 
has been a repeat victim and now is out of money, and thus 
Robert is making one last attempt to steal whatever he can from 
her. [Taped played.]
    Mr. Chairman, with your permission, I would like to play a 
second portion of the section of our tapes that will give you 
an additional feel for the abuse. This time we will look at a 
little more detail about that WMT company. This was a call 
recorded in March 2003, and again, WMT is trying to get a 
verification from the victim. They have told them they are 
credit card protection, but what they are really trying to do 
is get a verification where the victim reads their personal 
identification number over the phone, which they tape-record 
and then use to withdraw from their account.
    Senator Talent. This is a law enforcement officer on the 
other end?
    Mr. Pratkanis. Yes, Senator. The first one was a victim. 
    The Chairman. Maybe they got away.
    Mr. Pratkanis. It is in the written testimony as well, so 
we can move on if you would like.
    The Chairman. Why don't we do that? We will put it in the 
written record.
    Mr. Pratkanis. Thank you, Mr. Chairman.
    The Chairman. I understand Senator Talent had a question 
for you before he had to leave, and if you want to ask that, 
    Senator Talent. Actually, I just want to clarify about the 
tape, and I got the answer.
    The Chairman. OK. Thank you, Senator Talent.
    Go right ahead, Doctor.
    Mr. Pratkanis. Mr. Chairman, a second thing that we have 
learned is just about anyone can fall prey to this crime. It 
impacts a large cross-section of our society, as Senator Talent 
said in his opening remarks. Con criminals go where the money 
is, and thus, older Americans with their nest eggs are a prime 
target for this crime. The stereotype of a frail or lonely 
victim does not stand up in our surveys of victims. While some 
victims are indeed lonely, others are quite active in their 
communities and can be leaders in their communities.
    Indeed, what we find is that con criminals profile their 
victims, as Mr. Hill said earlier, and they profile their 
psychological and other characteristics to find their Achilles' 
heel. We all probably have one. They find that Achilles' heel 
to construct the exact pitch that is likely to be most 
effective with each victim.
    For example, in one of our surveys, we found that victims 
of lottery fraud, a crime which emphasizes luck, believe that 
the world controls them, a psychological trait known as 
external locus of control; whereas, investment fraud victims--
and this crime emphasizes a mastery of one's fate--they believe 
that they control the world, or a trait known as internal locus 
of control. In other words, the con criminal was pitching the 
exact scam to take advantage of the person's psychological 
    The third thing that we have learned is we have identified 
effective strategies for preventing this crime. In her written 
testimony, Melodye Kleinman described the reverse boiler room 
approach of WISE Senior Center. At WISE, senior volunteers 
contact potential victims with a warning message. The 
volunteers call potential victims whose names appear on 
criminal call or mooch lists that have been recently seized by 
the FBI. These can be quite active lists. It is not uncommon 
for us to call people and find out that they just sent in some 
money to a con criminal.
    Our volunteers then call and talk with these potential 
victims. They explain the nature of the crime, and then they 
help them develop their own strategies for preventing the 
crime. In a series of experiments, we tested the effectiveness 
of this intervention. We first had our volunteers call the 
victim with a prevention message, and then a few days later 
professional telemarketers attempted to take the victim in a 
simulated scam. We found that our interventions were effective 
in reducing victimization rates by about 50 percent. In other 
words, peer counseling is an effective tool in our fight 
against economic fraud crimes.
    Finally, as a result of our research and work with victims, 
we have identified components of a prevention message that are 
most effective. Successful prevention messages are ones that 
provide the potential victim with specific warnings about the 
crime and, most importantly, coping strategies for dealing with 
the crime that build a sense of self-efficacy, a feeling that 
``I can take charge of the situation and hang up'' on the 
criminal. We encourage everyone to develop their plan for 
getting off the phone and have it ready to go when the need 
arises. On the other hand, our research has found that some 
messages that increase fear and create a defensiveness not only 
do not work but oftentimes boomerang, and in one study actually 
increased victimization rates slightly.
    Our research suggests three opportunities and challenges 
for those interested in preventing this crime.
    First, it is important to remember that economic fraud is a 
crime. There is a tendency to blame the victim in this crime 
and to believe that ``there must be something about them'' that 
led to victimization. Instead, our research shows the power of 
the fraud criminal's weapon of influence. Victim blaming is 
harmful to victims and hinders law enforcement's ability to 
obtain accurate and timely information about this crime. The 
victim of economic fraud should be included in any Victim's 
Bill of Rights. Sentencing for economic fraud crime should 
match the magnitude of the crime and not the charm of the con. 
We need continuing Federal efforts in investigating and 
enforcing these laws.
    Second, we now have the tools, knowledge, and strategies 
which have been proven effective in preventing economic fraud. 
This information needs to be disseminated to fraud fighters 
everywhere. Doug Shadel, in collaboration with Washington State 
Attorney General McKenna, has trained over 2,500 volunteer 
fraud fighters since October 2003 who have in turn educate 
close to 100,000 people in their communities about fraud. This 
fall they will begin a series of peer counseling events to 
reach those whose names have been stolen by identity thieves. 
We need more of this sort of intervention. I would like to see 
the tools for effectively dealing with this crime in the hands 
of every victim's advocate in local and State prosecutor's 
offices, the efforts of Washington State duplicated in other 
areas, and the creation of regional centers to fight economic 
fraud patterned after the remarkably successful program at WISE 
Senior Center.
    Finally, we need research that focuses on the chronic 
victim, the 50 percent or so of victims that we did not 
successfully reach in our call center research. Our research 
shows that the chronic, repeat victims find themselves in a 
rationalization trap of being confronted with two discrepant 
thoughts: ``I am a good and capable person,'' on the one hand, 
but yet, ``I just sent my hard-earned money to a scammer.'' In 
such a situation, it is difficult to admit that one has been 
taken in a fraud without damaging self-esteem, and thus 
defensiveness is common. We are currently investigating 
strategies for resolving this rationalization trap in the hopes 
of finding effective interventions for use with the chronic 
    Chairman Smith and Ranking Member Kohl, this concludes my 
testimony. I thank you for the opportunity to inform you about 
our research, and I thank you and each of the members of your 
committee for the leadership you are taking in fighting this 
    Thank you, sir.
    [The prepared statement of Mr. Pratkanis follows:]

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    The Chairman. Thank you, Doctor. That was wonderful 
testimony, very helpful to learn from.
    Our next announced witness is Dr. Denise Park. Dr. Park?


    Ms. Park. Thank you. Good afternoon, Chairman Smith, 
Senator Kohl, and other members. My name is Denise Park. I am a 
cognitive neuroscientist and professor at the Beckman 
Institute, which is part of the University of Illinois in 
Urbana-Champaign. I direct the Roybal Center for Healthy Minds 
at the University of Illinois, a center funded by the National 
Institute on Aging that is designed to take the results of 
basic laboratory research on aging and determine how these 
results can be used to improve function in older adults in 
their everyday lives. I have been involved with the NIH by just 
completing a stint Chairing an NIH Review Panel recently, and I 
also just completed a term on the Board of Directors of the 
American Psychological Society.
    Thank you for inviting me today. My research for the past 
two decades has focused on the aging mind. Today, I would like 
to alert you to how changes in cognitive function with age make 
older adults particularly susceptible to being victimized by 
charlatans who exploit certain aspects of the aging cognitive 
    How are we doing on the visual aids here? OK, great.
    Here is a figure based on data collected from my laboratory 
that has been published in scientific journals as well as USA 
Today and Newsweek. I call this figure the ``Aging Mind'' 
slide. It represents data collected on many different cognitive 
tests from adults aged 20 to 90 who were selected from a group 
of exceptionally able and healthy older adults. What you will 
see in this figure is the focus of my first important take-away 
point. Basic lab research demonstrates very clearly that as we 
age, beginning in our 20's, like many other systems in the 
body, our cognitive system shows signs of gradual 
deterioration. With age, we become slower at processing 
information; our memory becomes somewhat less effective; and 
our ability to take in a large quantity of information at one 
time and reason about it decreases. At the same time, these 
declines are not as important for function in everyday life as 
they might appear, because with age, as this figure shows, 
knowledge also increases, conferring a buffer against the 
impact of cognitive aging. Nevertheless, we do become 
increasingly ``cognitively frail'' with age, and this frailty 
has the greatest impact when we cannot rely on our knowledge or 
experience to help us out. So when older adults are 
unexpectedly faced with offers to buy things or have repairs 
done, they have less ability than younger adults to process all 
aspects of the message that they are receiving. This can result 
in them attending to the most attractive parts of the message 
or the simplest part of the message and agreeing to purchase 
things that they neither want nor need, or worse yet, signing 
contracts for which they never receive any services or 
contracts that they do not understand.
    A second take-away point that will give you further insight 
into why older adults are more easily exploited by consumer 
scams is the following: There is conclusive evidence that older 
adults have a bias toward the processing of positive 
information. Studies conducted by Laura Carstensen and her 
colleagues at Stanford University suggest that with age, we 
learn to ignore negative information and direct more of our 
attention and limited cognitive resources toward positive 
information. This is generally good news, suggesting the 
resilience that characterizes so many of our elderly citizens. 
But at the same time, this tendency to process positive 
information at the expense of negative can make older adults 
particularly vulnerable to unscrupulous characters.
    Research in my lab conducted with Oscar Ybarra has 
demonstrated the following: We presented young and older adults 
with both positive and negative information about an individual 
and then tested their memory for the traits we used to describe 
the individuals. Older adults tended to recall more positive 
traits and less negative traits, whereas young adults were more 
balanced between positive and negative information. These 
results suggest that when older adults meet a charming 
charlatan, they are going to be biased toward processing the 
positive information about the individual--his niceness, 
attractiveness, and warm toward them--and be less likely to 
note the inconsistency of his story or tendency to gloss over 
specifics, which would make him seem untrustworthy to a younger 
adult. This problem is exacerbated by the somewhat more limited 
cognitive abilities that occur with age that, again, result in 
increased vulnerability to exploitation. The types of effects I 
am describing will be particularly pronounced for our oldest 
citizens and for those with less experience, that is, less 
knowledge, with making financial decisions. So, for example, a 
new widow over age 75 might be particularly vulnerable to 
    The third point that I want to make is that with age, we 
tend to remember less explicit detail about events and more of 
the gist of what we hear. With age, individuals are 
particularly poor at remembering the details or context in 
which they learned something. So the point about gist memory 
will become particularly important when you consider my fourth 
point, and that is this: Information that feels familiar to an 
individual seems like it must be true. This is called the 
``illusion of truth effect.'' Knowing that older adults 
remembered gist over detail, and that familiar information 
feels true, my colleagues Ian Skurnik, Norbert Schwarz, Carolyn 
Yoon, and I set up an experiment that was designed to 
demonstrate that information that individuals believe to be 
false at the time they learn it will later seem true. Here is 
what we did.
    We had older adults--aged 60 and over--and young adults--
aged 18 to 25--come into our lab, and we presented them with a 
series of statements about health and told them whether the 
statements were true or false. For example, they would see 
statements like ``Most cold medicines cause the eye's pupils to 
dilate,'' or ``DHEA supplements can lead to liver damage, even 
when taken briefly.'' Some of the statements they saw only once 
and some they saw three times. Thus, all participants studied 
some statements that they were told three times were false. 
Now, remember that older adults tend to remember gist but not 
the details of what they see or hear. Remember that familiar 
information seems true. So what did we predict? We predicted 
that people would be more familiar with the statements that 
they heard three times were false than the statements that they 
heard one time were false. We also expected that older adults, 
because they forget details, would not remember whether the 
statements were true or false.
    So 3 days later, when we brought our participants back to 
our lab, what did we find? We showed people the statements they 
studied earlier as well as some new ones, and we asked people 
to judge whether the statements were true, false, or new. What 
we found was very surprising on the surface, but also exactly 
what we predicted. We found that old, but not young, adults 
were more likely to call a statement true that they had been 
told was false three times, compared to a statement they heard 
was false only once. So the more often participants had been 
told a medical statement was false, the more likely 3 days 
later they were to believe that this statement was true. Why is 
this? It is because the statements they heard were false 
multiple times felt familiar, and information that feels 
familiar seems true. So young adults did not show these effects 
because they could remember the explicit details about what 
they had studied.
    So these findings explain how pernicious the effects of 
false claims can be for older adults. An older adult might not 
believe that ``shark cartilage cures arthritis'' if they read 
it as a headline in a tabloid at the grocery store checkout. 
But later, when they encounter the shark cartilage in the 
store, they might remember that they heard somewhere that it 
was a cure for arthritis and decide to purchase it, not 
remembering that they disbelieved the information when they 
initially read it. These findings provide insight again into 
not only how older adults might be exploited, but also provide 
guidelines for providing warnings to older adults. When 
presenting information to older adults as a warning, it is very 
important to present information clearly and in a positive 
way--for example, ``Do this,'' rather than ``Never do this''--
if we want older adults to accurately remember it. Here is an 
example of a way not to present information to older adults 
taken from an actual pamphlet about living trusts.
    Here is the claim: A living trust--this was taken from an 
actual pamphlet. A living trust will preserve your legacy to 
loved ones by helping you avoid probate costs and estate taxes. 
Then it goes on to say: But here is the truth. Most people do 
not need to worry about probate or estate taxes. Most living 
trusts are not designed to avoid estate taxes. There are many 
easier, cheaper ways to avoid probate than a living trust.
    Older adults, however, a few days later, if they read this, 
might only remember that they learned something about how 
living trusts are important for avoiding probate, and they 
think that they need one, even if they initially understood 
that living trusts are rarely needed to avoid probate.
    A better way to phrase this might be as follows: Living 
trusts are usually unnecessary and rarely save money for 
people. If you think a living trust is for you, get advice from 
an estate planning attorney.
    Presenting false claims about health or taxes to older 
adults and then explaining why they are wrong is a dangerous 
business for helping older adults avoid fraud.
    What I would like to do now is to critique several public 
service ads intended to educate older Americans about consumer 
fraud from the point of view of a cognitive psychologist. I 
will be pointing out some features that make the materials more 
easily comprehended and remembered by older adults and also 
presenting some examples that have some significant problems 
that will limit their effectiveness. As we look at these ads, 
keep in mind that designing materials for older adults can be 
particularly difficult due to the range of cognitive ability 
present in this population. There are, of course, a majority of 
older adults who are functioning at an extraordinarily high 
level and will be quite insulted by materials that are so 
simple that they appear to talk down to them. At the same time, 
there is a significant proportion of very old adults who are 
cognitively compromised and who may also have a limited social 
network, and these may be most susceptible to fraud. It can be 
quite a challenge to design materials that speak to both 
groups. Nevertheless, I will try to show you some materials 
that succeed for both groups and others that are problematic in 
their design.
    First I will show you some examples of problems. The first 
example here is material about Alzheimer's disease designed by 
a nonprofit Alzheimer's support organization. This particular 
brochure illustrates the point I just made. Remember that I 
mentioned that older adults tend to remember the gist of what 
they read rather than details and that information that is 
believed to be false at the time they read it may feel true 
later on. So when this information is presented as a set of 
itemized myths, there is a good chance that the information 
will later be remembered as truth. For example, an older adult 
reads the statement, ``MYTH: There Is No Hope for an 
Alzheimer's Person.'' At the time he or she reads it, they 
understand the statement is false. Days later, however, all the 
individual remembers is that he or she once read somewhere that 
there was no hope for people with Alzheimer's, completely 
forgetting the context in which it was read. Had the 
information been presented in a straightforward and positive 
way--``FACT: There are things that can be done to help people 
with Alzheimer's''--such a misunderstanding could have been 
    The next example is a consumer fraud fact sheet published 
by the Federal Trade Commission that warns against ``phishing'' 
scams, a type of e-mail scam to which older adults, due to more 
limited experience with the Internet, may be especially 
vulnerable. The problem with this ad is that those individuals 
most likely to be taken in by a phishing scam are probably 
going to think it has something to do with the sale of seafood 
that does not exist. So the people who most need to read this 
article would be likely to pass it by when they encountered 
this brochure because they would not know what a phishing scam 
is and that it would have any importance to their everyday 
life. Perhaps a better headline would be, ``Have you been 
getting e-mail requests to update financial records or to help 
secure funds for someone in another country? It is a scam.'' 
Then the next line might read, ``How Not to Get Hooked by a 
Phishing Scam.''
    The next excerpt is from a pamphlet on Medicare/Medicaid 
fraud put out by the Department of HHS and the Administration 
on Aging, and it is another example of helpful information 
being presented in a difficult and inaccessible format. Here we 
see once again that the main title, ``Be Informed, Be Aware, Be 
Involved,'' does not convey any useful information about what 
this pamphlet is actually about. The section headings also give 
no sense of what the topic of the pamphlet is. It is only upon 
careful scrutiny that one is able to notice that it is about 
health care and Medicare fraud. Finally, in small print, it 
indicates that if one suspects that fraudulent charges have 
been made to Medicare on their bill, one should call the number 
on the back of the pamphlet. But actually there is no number 
provided. The title of this pamphlet might read instead, 
``Check Your Medical Bills. Be Alert to Medicare Overcharges 
and Medicare Fraud.'' Ms. Park. The next advertisement 
developed by the Department of HHS, the American Hospital 
Association, and the AMA is a good example of a well-crafted 
message that is easily accessible to older adults at all levels 
of cognitive function. The text is simple and succinct. The 
title and headings are eye-catching and easy to understand. It 
is possible to gather the gist of the message simply by 
glancing at the bold text alone. However, anyone who is 
interested in more detail can chose to read the small print as 
    The pictures, while adding to the overall attractiveness of 
the ad, also serve to reinforce the main points and make them 
more memorable and easier to process.
    The Chairman. As you have evaluated these, Dr. Park, how 
much of the Government's information is good and how much is 
    Ms. Park. That is an interesting question. Your Committee 
sent me 10 or 15 pamphlets of this sort, and I selected 6 
without any difficulty to critique, and, you know, I would 
guess at least--this is a guess. Of the materials I was sent, I 
would guess 25 percent had serious problems. I didn't have to 
look hard to find these examples, and there were many more in 
the materials that were sent to me.
    The Chairman. You mind if we give them your number?
    Ms. Park. I might mind. No, I think that actually that's my 
closing comment, and maybe I should get to that.
    Very quickly, this is another example of a good add. It is 
really clear what this ad is about. Stop calling me. How to 
remove your name from marketing lists. Then you can see that 
there is clear headers, and you can look at what your 
particular problem is and get more information on the second 
page of the web site.
    This is a web page. Here is another one that is really very 
good. Nice integration of visual and verbal information. If you 
just bought something online about a medical device, you would 
be sure to look at this and sure to know that this is about how 
to be warned.
    I like that they showed the FDA as a clear and credible 
source that was very visible on this ad, and it is also easy to 
figure out how to get more information from this ad.
    So to conclude, I hope you all remember the following: 
normal aging is accompanied by declines in cognitive function 
that result in older adults remembering gist rather than 
details. Never present older adults with false statements as 
examples, because, later on, they will feel true to the older 
    Older adults have a bias to process positive information. 
This can lead to exploitation due to their tendency not to 
process negative information about shady characters.
    Finally, I would like to note that cognitive aging 
scientists can play an important role in designing effective 
and memorable materials for older adults that will help them be 
less vulnerable to fraud. The work I have presented today is 
only a small example of the help cognitive scientists can offer 
in designing effective materials for older adults to protect 
them against fraud, as well as to aid in designing materials 
that clarify information about taxes, forms, medical 
conditions, and Social Security.
    The research I presented today was supported by the 
National Institute on Aging, and is a good example of how basic 
laboratory research can result in important outcomes for 
understanding everyday behaviors. It has been an honor and a 
pleasure, Senator Smith and Senator Cole, to share with you the 
work conducted under the auspices of the NIA Roy Ball Center 
for Healthy Minds, and I would also like to thank your 
Committee staff for their support and the National Institute on 
Aging for the support of the research that contributed to this 
presentation. Thank you.
    [The prepared statement of Ms. Park follows:]

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    The Chairman. Dr. Park, it has been enormously helpful and 
insightful the academic approach you have taken. A question if 
I may.
    How sophisticated do you think the scam artists are? Do 
they know what you know in terms of positive messages and how 
to tell negative things in ways that will ultimately seem 
truthful to them?
    Ms. Park. I think that is a really good question. I think 
there are people who intuitively know how to defraud people and 
recognize that they need to present themselves as warm, 
charming--how to deal with lonely elders--and also are very 
good at, based on a few cues in a conversation as to what this 
person needs and wants to hear. So there is, you know, I would 
guess a really sophisticated con artist is a natural 
psychologist. He is informal. They also learn over time with 
what works and what doesn't work, and they will unconsciously 
learn things about what works that they can't even verbalize, 
but they may implicitly recognize what will be effective.
    The Chairman. Well, certainly this hearing and this 
Committee will be pursuing your suggestions on improving the 
materials and their effectiveness so that they are not wasting 
time, but actually making a difference. So.
    Ms. Park. OK. Thank you, Senator Smith.
    The Chairman. Thank you so very much. Helen Dicks is from 
Senator Kohl's State of Wisconsin and, we are very thankful for 
your presence and invite your testimony now.


    Ms. Dicks. Thank you. Good afternoon, Chairman Smith, 
Ranking Member Kohl, and members of the Special Committee on 
Aging. I appreciate this opportunity to testify.
    The Elder Law Center observes three types of financial 
exploitation of older Americans. Most easily recognized are the 
traditional fraudulent practices where a third party defrauds 
the senior and obtains their assets and their identities. The 
abusers are strangers to the seniors. This is the type that we 
have talked about the most today, and the type that we identify 
mostly as a consumer protection issue.
    The second issue that we deal with is the occurrence of 
waste, abuse, and other fraud within Medicare and other public 
benefit programs. With the introduction of a new and complex 
Medicare Prescription Drug Program this fall, marketing to 
seniors will reach a new, intense level.
    The CWAG Elder Law Center anticipates that scam artists 
will use this development to exploit seniors and people with 
disabilities who receive Medicare.
    Previously, you had asked what happened around the drug 
cards introduced last year as a transition before this benefit 
started. We had a lot of experience in Wisconsin with people 
charging applicants who apply for a public benefit. We had 
people pretending to be a Medicare approved card company, 
getting people's personal information, and then charging their 
credit cards to the tune of $299 for a card that was not a 
Medicare approved card. There were several organized scams 
around the discount cards.
    We presume that the same level of sophistication and greed 
will come out in the Part D marketing this fall.
    The third type of exploitation is the most common, the most 
under reported, and actually the most appalling type of elder 
abuse. It is the financial abuse of seniors by family members 
and other trusted people. These people use legal documents, 
such as Powers of Attorney, to drain seniors of their lifetime 
savings and assets. Trusted family members and professional 
advisors use estate planning as a means of gaining access to 
savings accounts, real estate, and other personal possessions.
    Seniors are reluctant to report these crimes simply because 
they involve family members. Law enforcement is often reluctant 
to get involved because they see this as a family issue.
    To address these concerns, the Elder Law Center has been 
using a fourfold approach.
    We provide consumer education on identifying and preventing 
financial elder abuse, benefit fraud, and other forms of 
exploitation. This education includes our publications, which I 
have provided to each Senate office.
    Additional consumer materials were given in my testimony 
    Since we anticipate major fraud activity around the new 
Medicare Drug Benefit, we have a section on our Part D web site 
www.wismedrx.org specifically dealing with fraud and a separate 
e-mail address to report fraud to us as people become aware of 
this type of activity.
    Two, we provide legal assistance and emergency 
representation for victims of elder financial exploitation. 
Most work in this area comes in to us through our financial 
exploitation helpline. Our oldest caller was 102. She asked for 
assistance in revoking a Power of Attorney that a family member 
had been misusing.
    The third way we work to eliminate abuse is to encourage 
the reporting, investigation, and prosecution of financial 
elder abuse, benefit fraud, and other exploitation through 
training for seniors, professionals, government employees, and 
community advocates.
    Our professional training includes working with bankers and 
lawyers. We have specific publications on both the civil 
litigation and criminal prosecution of elder abuse cases. We 
are currently working with our Attorney General's office, 
training law enforcement personnel.
    In addition, our office hosts one of the Senior Medicare 
Patrol projects, working to train seniors to spot and report 
Medicare fraud.
    Fourth, we advocate for improvements in the law and 
additional public funding to support prevention and prosecution 
of elder financial exploitation. We have successfully lobbied 
for increased funding by the state to our counties for elder 
abuse investigations. The Wisconsin legislature is currently 
reviewing both our guardianship laws and our protective 
placement laws.
    Financial abuse of elders is now where domestic violence 
was 20 years ago. No one wants to admit how extensive the 
problem is.
    Unfortunately, elder financial abuse is a low priority 
among the general public, among law enforcement, and within our 
government. We need to change this. We need greater 
coordination between social service agencies and the law 
enforcement community. We need to create a dialog between those 
who have direct contact with vulnerable seniors and those who 
can take actions to protect them.
    We need to realize that this is not just a family matter. 
We need a major change in the public attitude toward the 
victimization of seniors. This will require the reintroduction 
and passage of the Elder Justice Act and funding to support 
increased coordination between the aging network, financial 
institutions, and law enforcement.
    In closing, I am proud of the work that the Coalition of 
Wisconsin Aging Group, its Elder Law Center, and the other 
elder justice advocates have done, but limited resources means 
limited results.
    We need to empower our local communities with financial and 
legal means to prevent and prosecute elder the financial 
    If we do not do so, there will only be more victims and 
more abusers.
    [The prepared statement of Ms. Dicks follows:]

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    The Chairman. Thank you very, very much.
    Vicki Hersen is from my State of Oregon. Thank you, Vicki, 
for coming all this way, and we invite your testimony.

                      ACTION, PORTLAND OR

    Ms. Hersen. OK. Thank you.
    Good afternoon, Chairman Smith and Senator Kohl. I am Vicki 
Hersen, director of Operations for Elders in Action, and I am 
honored to be here today, and thank you for convening this 
hearing to address the critical issue of ``Old Scams, New 
Victims: Breaking the Cycle of Victimization.'' Elders in 
Action is a powerful voice for local seniors in the Greater 
Portland area. We have a 37-year history of tackling important 
issues of concern for seniors, and we believe quality of life 
should never depend on age.
    Our small staff relies on the time and talent that 200 
volunteers provide in delivering key services, including our 
ombudsmen and community education program.
    The ombudsman philosophy embodies the neighbor-helping-
neighbor approach. Our volunteers provide personal support, 
information, guidance, and advocacy to fill gaps in meeting the 
needs and solving problems for our growing senior population.
    For seniors who are alone, confused, or afraid, or have 
nowhere else to turn, our volunteers provide a lifeline. More 
than 2,400 elderly victims of crime in the Portland area have 
been helped by Elders in Action ombudsmen since this innovative 
program began in 1998.
    Victims of Crime Act funds, through the Oregon Department 
of Justice, help support this vital service. This is for 
seniors who live independently in their own home and it is not 
to be confused with the--long-term care ombudsmen program, 
which is funded through Older Americans Act money. But this is 
for folks who live in their own home or apartment.
    We helped individuals such as Georgia, who was terrified 
when a friend of her sons moved in and began stealing from her 
and threatening her. With our help, Georgia filed a restraining 
order and was able to take the steps necessary to live in an 
abuse-free environment.
    Then there was May, who had hired a contractor for some 
maintenance on her home, and ended up being a victim of his 
    Last year, we helped victims of scams and fraud recover 
over $90,000 in benefits owed and funds lost to crime. Our 
volunteers have the time and the heart to keep working with the 
seniors for a positive solution.
    When an urban renewal area became a hotbed for opportunists 
to buy houses from seniors, we were there to assist. One 82-
year-old victim was targeted by a man with a high pressure 
sales pitch, convincing her to sell her house for $88,000. 
Later, she was confused about what had transpired, and she 
called our ombudsmen services, and after reviewing the 
paperwork and making phone calls on her behalf, we were able to 
reverse the below market agreement and we saved her from a 
$48,000 loss when she sold the house for $136,000 a few months 
    Our community education volunteers work to prevent local 
seniors from becoming victims in the first place by providing 
practical information and resources about senior scams, fraud, 
ID theft protection, home security and safety and predatory 
lending schemes.
    Last year, we provided 7,100 seniors with important 
consumer information at 94 community events. Such senior-to-
senior prevention education is critical in helping seniors 
become more attentive to their surroundings. These include the 
many fraudulent schemes that are becoming rampant via mail, 
phone, door-to-door, and e-mail.
    One of our volunteers says, you can be robbed by a gun or 
you can be robbed by the phone, and the phone is a lot easier.
    She provides practical tips to her peers on cutting down 
the paper, credit cards, and sensitive ID information that 
people carry with them.
    Elders in Action volunteers advise seniors to keep their 
antenna up for things that just don't seem right. The old adage 
holds that if it sounds too good to be true, it probably is.
    Communication and prevention of isolation of seniors is 
crucial to breaking the cycle of victimization. We encourage 
seniors to call Elders in Action to see if mail that they may 
have received or an e-mail or a door-to-door offer or a phone 
offer is real.
    Our volunteers help file reports to our State Attorney 
General's Financial Fraud and Consumer Protection Division, the 
Construction Contractors' Board, the Oregon Division of Finance 
and Corporate Securities, and other consumer protection groups.
    Creating opportunities for seniors to get involved in their 
neighborhood or at their local senior centers is also a way to 
break barriers to isolation.
    We encourage seniors to talk with each other if they're 
suspicious, or if they have been a victim of a crime so that 
their peers may be informed.
    In fact, one of our victims of identity theft, luckily knew 
not to give the person information, but someone had actually 
taken out a credit card in her name. She came to us and one of 
our volunteers assisted her in getting it cleared up. She is 
now one of our ombudsmen volunteers, so she shares in the 
community her experience to be alert and informed.
    A local senior service agency case manager has said that 25 
percent of their elderly clients have been a victim of ID theft 
or scams. One key solution to ID theft is to install mail slots 
or locked mailboxes, to pick up new checks at your bank, and to 
only put your mailing address on checks with your first 
    Unfortunately, Medicare Part D prescription drug benefit 
that people have been mentioning about that takes effect in 
January creates new fodder for scammers and other opportunists.
    Already we've received calls from three types of schemes 
who are taking advantage of seniors' uncertainty about the 
upcoming changes. One involved an insurance company using heavy 
handed sales by phone and not fully disclosing all information, 
not allowing the consumer to make an informed choice. A second 
came by mail and stated that the President has announced the 
guidelines for Medicare reform and went on making it sound like 
an official notice, then asking for phone, name, address, and 
birth dates of the Medicare beneficiary and spouse. No company 
name or contact information was listed on the return postcard, 
and the return address was a post office box, which is also a 
red flag.
    The third involved a company calling a woman in an assisted 
living facility. They made it sound like they were an official 
Medicare company and offered her $20 to answer a questionnaire, 
which lasted an hour. In reality, they were fishing for 
confidential information.
    There's a significant link to financial loss from robbery, 
ID theft, and health deterioration. Most of the victims we 
assist live on low, very fixed incomes, and a loss of a few 
hundred dollars can tear their world apart. The trauma of a 
stolen purse exacerbated an already existing health condition 
in one of the seniors we assisted, and she ended up in a 
nursing home as a consequence.
    The criminal was a repeat offender who stole the client's 
ID, wrote checks, and cashed her tax refund.
    Please consider the following solutions: Provide help and 
assistance within the police and court system for aging 
awareness training, tracking of scams, and more investigations, 
and I really appreciate the elder friendly materials that you 
were sharing with us, because we use a lot of focus groups with 
our local media and with just different groups, because we have 
seniors who are willing to share their information, and the 
importance of large enough fonts, colors, certain colors that 
people find hard to see on web sites and things like that are 
in print. So that's really great.
    Present senior-sensitive messages--TV spots, newspaper 
stories, and ads--about where to get help. Provide more 
significant funding for programs that educate seniors so they 
know how to avoid being victims of fraud, and provide funds for 
programs to train peer advocates for senior victims of crime.
    Thank you for the opportunity to share how Elders in Action 
works to prevent problems and solve difficult situations for 
seniors. Our elders deserve much more, given the contributions 
they have made to our society. Let us translate this into funds 
for those who really need it and create ways to gather the 
talent and wisdom that our elders can give to our community. 
Thank you.
    [The prepared statement of Ms. Hersen follows:]

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    The Chairman. Thank you very much, all of you, and Vicki, 
if you could tell us what are the two or three biggest sorts of 
scams going on in Oregon right now? Is it Medicare Part D?
    Ms. Hersen. Well that's new, but like the identity theft 
and, as you know, meth is just so rampant in the West Coast. 
It's really bad, and we found a lot of victims have sons or 
grandsons living with them and financially exploiting them, and 
so we've been working with them to get restraining orders, and 
work with adult protective services. So that's really--identity 
    The Chairman. Relatives with a pernicious motive living 
close by?
    Ms. Hersen. Yeah. It was interesting, when Senator Carper 
mentioned three of the issues with regard to his mother are 
issues that we have all helped with--aggressive vacuum cleaner 
sales people. This is really hard, because sometimes the person 
may be selling a legitimate item, but it is their tactics, and 
we do have one volunteer who I love--she's this particular 
vacuum maker's kind of advocate or anti-advocate--because the 
people came at six o'clock in the evening and came to the 
woman's house and were there for over an hour and she ended up 
buying a $1,300 vacuum, and she has wood floors. But really to 
get them out of her house.
    So we were able to reverse that, and everything. Then they 
made some really sly comments. She says, ``Well, I can't lift 
this upstairs where my carpets are,'' and they said, ``Oh, we 
will come over and help you every time you need to.'' Just give 
us a call.
    So it is things like that. Also construction fraud and 
scams. That is why we really educate people not to respond to 
flyers or people coming buy and saying ``Oh, I see your gutters 
need to be repaired or a roof.'' wee advise people to call 
first and how to do that in a positive way.
    The Chairman. I think it is clear from the testimony we 
have heard from all of you that, you know, Oregon, Washington 
was mentioned; California certainly. There are some very 
excellent programs to help the elderly avoid these things that 
have a national focus on this. Are there other states that we 
should mention who have good programs or states where they 
really need to shore it up?
    Ms. Park. I guess I think this is in some ways more of a 
national, from my point of view, the structuring of information 
and warnings to elders. It might be very useful--I have been 
thinking about how to solve this for the government, to set up 
a best practices standard and perhaps if some short-term 
requirement were made to have materials for seniors put out by 
Federal agencies reviewed. If that happened for a period of 6 
months or a year after developed in conjunction with 
scientists, it might be the case that that would become part of 
the culture of developing materials for elders.
    The Chairman. If I asked you, Dr. Park, what is the best 
thing the Federal Government can do to help stem this, would 
that be your answer?
    Put up--you know, put together kind of a clearinghouse of 
best practices?
    Ms. Park. From the point of view of the kind of thing that 
I do, yes. I think the other thing is to be really clear about 
how do you effectively warn seniors. So I can--we can design 
the very best messages and the clearest, but the problem is 
they have to reach people. With the Internet, 200 television 
channels, radio, it is less clear how to get people to process 
messages. I was telling your staffer I was very impressed. 
Someone in town where I live felt that our president of the 
university was very unpopular to him, not to others. It was a 
lawyer, and he put a billboard in town criticizing this 
individual and ultimately resulted in this individual resigning 
and taking another job.
    I think everyone in town saw that billboard and those are 
cheap and effective, and when you think of when you were a 
little kid, Smokey the Bear, Only You Can Prevent Forest Fires. 
We all know that. I think getting some billboards. This is 
just. This is what I think. It's not what I know, if you see 
the difference. I haven't done research on this. But I think 
presenting a short message so that--Afraid You're Being Scammed 
or something like that a phone number or an Internet web site 
that people can check and having some kind of branding of this 
so that people know this is a national priority and there is a 
place to go if you just think there is any chance you might be 
defrauded so that they can get the information that they need. 
So one is to be effective. The other is to make sure you 
    The Chairman. But it is truly an excellent suggestion. As 
we look to reauthorize the Older Americans Act, we ought to--
Senator Kohl and I ought to work together on an amendment that 
will create this kind of best practices center and create this 
branding, and create these simple messages that can be of 
assistance to the States.
    Dr. Pratkanis, you spoke of the Wise Senior Center's, 
telemarketing victim call centers. Is this the kind of thing we 
are talking about?
    Mr. Pratkanis. Yes, there is a number of approaches to take 
depending on the level of victimization, and the call center is 
excellent for getting people who are at risk or who may be in 
the process of being victimized. For those, I don't think the 
mass-marketed communications necessarily is the most impactful. 
They need somebody, such as Oregon, where there is an advocate 
in their camp. So the Wise Senior Center could serve as a model 
for that through its reverse boiler room where they're 
contacting people who are vulnerable, on the mooch list right 
now, and they are also have services there to help folks when 
they have similar situations that Ms. Hersen described in her 
    But personally, I would like to see that duplicated as much 
as possible.
    The Chairman. Are other States doing it? I mean you 
mentioned Washington.
    Mr. Pratkanis. I'm not aware of that, Senator.
    The Chairman. But Washington State is doing it?
    Mr. Pratkanis. Washington State has a different set of 
programs. They don't have the call center at Washington State. 
What they have is AARP does education for community leaders--
people at nursing homes and so forth--that teach them about the 
crime and then they go out and teach other people in their 
    But it would be nice to have in different regions, 
different areas, these kinds of centers that could serve as a 
focus to disseminate information, to set up best practices, to 
continue to do the kinds of research that it needs to fight the 
next round of crime.
    The Chairman. Helen Dicks, do you have a comment?
    Ms. Dicks. I was going to say one of the things that we 
have done to try to reach the isolated elderly is we have 
recently produced a piece about financial exploitation that 
listed services for seniors and put them in home delivered 
meals. That was one way we thought of reaching people who were 
not coming into senior centers and didn't have regular contact 
with other people. We included--I put this in our packet that 
we gave a card, one side is about financial exploitation; the 
other side is a more general piece about other services 
available to seniors.
    The Chairman. Senator Kohl.
    Senator Kohl. Thank you. Helen, you are so experienced in 
our State with respect to these issues--I mean there are so 
many things that we could list. What are one or two of the most 
important things that we need more of? Law enforcement? Do we 
need more resources? Do we need more publications? If you could 
manage to get accomplished two or three things that would 
reduce the level of victimization, what would they be?
    Ms. Dicks. I think the two biggest things that I would do 
is one education of professionals, that is, the law enforcement 
community, with the real emphasis that this is truly a crime. 
It is not a consumer protection, regulatory issue. This is not 
a question of a family matter. Elder abuse is being minimized. 
We really need to convince law enforcement and the general 
community that this is a serious crime and it has to be treated 
like a criminal matter.
    Then the other part, in order to change of the attitude of 
professionals, is we have to change the general public 
attitude. If we had good publicity coming out of criminal 
prosecutions, I think it would help scare off the abusers. I 
think we talk a lot, and I do a lot in terms of educating 
seniors so that they don't become victims, but we also have to 
do something strong to limit the influence and the activity of 
the abusers. I don't think we have enough emphasis in that 
particular area, and I don't think the law enforcement 
community has enough resources to pursue this such a comment 
was made earlier. We need to provide seniors who are going to 
go through the criminal justice system as witnesses with some 
kind of support and background so that they aren't traumatized 
again by the court system after being victimized by the crime.
    Senator Kohl. Those are good comments.
    Mr. Pratkanis, would you like to comment?
    Mr. Pratkanis. No, I agree wholeheartedly with that. You 
know, victim advocates right in the court system.
    In addition, the other thing that I worry about is some of 
the FBI agents are switching some of their focus into the War 
on Terrorism, and that leaves some gaps at the Federal level in 
terms of investigation. I understand their priority. I have 
made a similar kind of switch in my research, but that doesn't 
mean the gap doesn't go away, and real success on this crime in 
terms of prosecution started in the late 1980's, and with 
Operation Disconnect and a few other FBI operations. As agents 
get switched over to other areas, there leads to be that gap, 
and it has to be Federal and international.
    Senator Kohl. Helen, I know you have developed many 
publications around the issue of victimization of our seniors. 
In your experience, what is the best way to get these 
publications into the hands of seniors?
    Ms. Dicks. Well, we kind of have a several-fold approach. 
One is that we go to every conference, every gathering of 
seniors every time we can get together with either seniors or 
their advocates and get the information out that way. We also 
do as much as we can through publicity within the aging 
network. We give a certain amount of our materials out without 
charge. Unfortunately, we can't do a great deal of that because 
of financial restraints.
    The other thing that we do with our publications I don't 
know what the professor would think of this--but our 
publications that are for seniors are very clearly distributed 
as senior publications, and we keep them at a very low cost. 
For professional publications, we make it more obvious that 
they are more dense. They are written differently. They 
encourage the professional community to start taking actions in 
this area.
    I also find that we get a good response when we use talk 
radio and radio broadcasts that are specifically focused on 
senior issues. Of course, in Wisconsin, since we are dealing 
with a very rural population, ``Farm Hours'' and other programs 
of that nature are also useful in getting out information and 
the weekly shoppers.
    Senator Kohl. That's very good. Any other comments from 
members of the panel on issues? Yes. Dr. Park.
    Ms. Park. I would just like to make one other small 
comment, Senator Kohl, and that is the--I think the Committee 
on Aging should also be concerned about an inadvertent kind of 
fraud and I hesitate to use the word fraud, but the 
presentation of materials, such as this Medicare Section D 
Plan, that people can't understand, and they can't understand 
the benefits that are available to them and how to secure them 
because the options are too many. They don't--people can't 
process that many choices, and they don't have enough 
information to make good decisions.
    So I think when laws are passed for seniors that implicate 
things like their health care, again, there should be some 
sense that the options available to them can readily be 
processed and acted upon by the people these laws are intended 
to help.
    I think that is a major concern as things become more 
complex with these different plans.
    Senator Kohl. Thank you.
    Ms. Hersen. Yeah. No, those are good comments. I agree. We 
have seen that as far as confusion, and we want to make sure 
people are informed and are able to make wise choices, but with 
the confusion, it makes it more difficult, and I agree. It is 
really important to educate law enforcement and the 
prosecution--in providing aging awareness training to them, so 
they do take these crimes seriously. I mean we have had 
examples--luckily, we have one--an elder crimes unit in the 
Portland Police, which we helped start back in the 1990's, but 
some officers, it is just not up there, you know, and they 
don't realize. One perfect example was a woman called us and 
she had put her car for sale. This is a perfect scam. Someone 
can go through the newspaper. Look who's selling cars. Her name 
was kind of an old fashioned name. If you heard her on the 
phone, you could tell that she was very elderly. The guy ended 
up coming or giving her a deposit of $50 and said can I test 
drive it? Well, he test drove, and, of course, stole her car.
    So when she reported it to the police, well, the first 
police officer didn't take it seriously. Well, it is just too 
bad. Well, losing $750 meant a lot for someone on a fixed 
income. That was probably a couple months of prescription 
drugs, food, fuel to heat her apartment. So someone from the 
Elder Crimes Response Team did start looking into this, but it 
is that attitude not realizing the importance of having 
investigators and reporting. This is probably going on in all 
of Oregon for people who are abusing meth, as an easy way to 
get money. They make these phone calls, and they play the 
lottery. They will call like 20 or 30 people and then find out, 
oh, this person wants to sell their car, and then steal it.
    So it does need to be taken seriously by both law 
enforcement, and any way we can help. We do have senior 
volunteers who provide aging awareness training and so actually 
today and yesterday our Portland Police was having a training 
involving citizens on better communication techniques.
    The Chairman. Thank you, Senator Kohl. To each of our 
witnesses, please accept our heartfelt thanks for your 
willingness to travel here, and to share your skills and your 
experience. You have added measurably to the Senate's public 
record. You have given us many good ideas to work on at the 
Federal level. We are grateful to you.
    We also thank C-SPAN for covering this hearing, because, 
frankly, the more we get information out and heighten 
awareness, the more successful we will be in apprehending, 
prosecuting, fining, and jailing those who would prey on the 
    We say to those who would do such a thing that if we don't 
catch you, we trust there is a hot place in Hell for you. So 
each of you beware and all of you who have helped us today, we 
thank you, and we are adjourned.
    [Whereupon, at 4:31 p.m., the committee was adjourned.]

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