[Senate Hearing 115-175]
[From the U.S. Government Publishing Office]
S. Hrg. 115-175
STOPPING SENIOR SCAMS: DEVELOPMENTS
IN FINANCIAL FRAUD AFFECTING SENIORS
=======================================================================
HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
FEBRUARY 15, 2017
__________
Serial No. 115-1
Printed for the use of the Special Committee on Aging
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.fdsys.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
26-817 PDF WASHINGTON : 2018
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
SPECIAL COMMITTEE ON AGING
SUSAN M. COLLINS, Chairman
ORRIN HATCH, Utah ROBERT P. CASEY JR, Pennsylvania
JEFF FLAKE, Arizona BILL NELSON, Florida
TIM SCOTT, South Carolina SHELDON WHITEHOUSE, Rhode Island
THOM TILLIS, North Carolina KIRSTEN E. GILLIBRAND, New York
BOB CORKER, Tennessee RICHARD BLUMENTHAL, Connecticut
RICHARD BURR, North Carolina JOE DONNELLY Indiana
MARCO RUBIO, Florida ELIZABETH WARREN, Massachusetts
DEB FISCHER, Nebraska CATHERINE CORTEZ MASTO, Nevada
----------
Kevin Kelley, Majority Staff Director
Kate Mevis, Minority Staff Director
CONTENTS
----------
Page
Opening Statement of Chairman Susan M. Collins................... 1
Prepared Statement........................................... 36
Statement of Ranking Member Robert P. Casey Jr................... 3
Prepared Statement........................................... 37
PANEL OF WITNESSES
Phillip Hatch, IRS Impersonation Scam Victim, Portland, ME....... 6
Timothy P. Camus, Deputy Inspector General for Investigations,
Treasury Inspector General for Tax Administration, Washington,
DC............................................................. 7
Lois Greisman, Associate Director, Division of Marketing
Practices, Bureau of Consumer Protection, Federal Trade
Commission,Washington, DC...................................... 9
Diane A. Menio, Executive Director, Center for Advocacy for the
Rights & Interests of the Elderly, Philadelphia, PA............ 10
APPENDIX
Prepared Witness Statements
Phillip Hatch, IRS Impersonation Scam Victim, Portland, ME....... 38
Timothy P. Camus, Deputy Inspector General for Investigations,
Treasury Inspector General for Tax Administration, Washington,
DC............................................................. 39
Lois Greisman, Associate Director, Division of Marketing
Practices, Bureau of Consumer Protection, Federal Trade
Commission, Washington, DC..................................... 52
Diane A. Menio, Executive Director, Center for Advocacy for the
Rights & Interests of the Elderly, Philadelphia, PA............ 74
Additional Statements for the Record
Endorsement letters submitted by Senator Collins................. 82
STOPPING SENIOR SCAMS: DEVELOPMENTS IN FINANCIAL FRAUD AFFECTING
SENIORS
----------
WEDNESDAY, FEBRUARY 15, 2017
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 2:32 p.m., in
Room SD-562, Dirksen Senate Office Building, Hon. Susan Collins
(Chairman of the Committee) presiding.
Present: Senators Collins, Flake, Tillis, Rubio, Casey,
Gillibrand, Blumenthal, Donnelly, Warren, and Cortez Masto.
OPENING STATEMENT OF SENATOR SUSAN M. COLLINS, CHAIRMAN
Chairman Collins. Good afternoon. That was to wake all of
you up.
[Laughter.]
I am pleased to welcome both new and returning members to
the Committee, and I am delighted that my good friend Senator
Casey will be serving as the Committee's new Ranking Member
during this Congress. I want to specifically welcome Senator
Catherine Cortez Masto from the great State of Nevada to the
Committee. We look forward to having you join our work. And, of
course, it is wonderful to welcome back Senator Gillibrand who
has been so committed to this issue, and the other issues that
we have explored as well.
Speaking of Senator Gillibrand, I understand that her son
Theo is here today. He is doing a special class project, so he
got an excused absence to be at our hearing today for the
project that he is doing, and I know that is going to be a very
interesting project.
My apologies also that this hearing had to be delayed from
when it was first scheduled on February 1st due to a long
series of votes on the Senate floor.
During this Congress, this Committee will continue its
focus on three major issues:
First, retirement security. We want to make sure that our
seniors have sufficient resources so they do not outlive their
savings or find that their golden years end in poverty.
Second, biomedical research investments for diseases like
Alzheimer's and diabetes that disproportionately affect
seniors.
And, third, financial schemes and other scams targeting
older Americans, and that is the subject of today's hearing.
Last summer, an 81-year-old constituent came into my office
in Portland, Maine, with an alarming story of deception and
cruelty. A con artist claiming to be an IRS agent had just
cheated him out of $8,000, and he narrowly avoided losing
$15,000 more.
After reporting the crime to the local police, my
constituent, Philip Hatch, and his son came into my office. My
staff gave him a copy of the Fraud Book that this Committee
produced last year as well as a special postcard that we
created with tips on how to avoid scams. Mr. Hatch told us that
the tactics described in the materials provided were exactly
those that were used by the scammer. If only he had received
that information sooner, he might have recognized the scam and
avoided losing his hard-earned savings.
Mr. Hatch was very willing to testify today and to share
his story, but health issues prevent him from traveling.
Instead, he graciously and courageously provided a video in
order to share his experience, and we will see that video in a
moment.
This episode demonstrates two important points.
First, the criminals who prey on our seniors are
relentless. They will harass seniors over and over again until
they have drained every penny from their life savings.
Second, this Committee's longstanding dedication to
fighting fraud against seniors is raising awareness and
prompting enforcement actions that are making a real
difference. We must redouble our efforts to educate seniors,
their families, and their caregivers.
The stakes are extremely high. According to the Government
Accountability Office, America's seniors lose a staggering $2.9
billion each year to an ever-growing array of financial
exploitation schemes and scams.
Today's hearing coincides with the release of our
Committee's 2017 Fraud Book. Like the book that we published
last year, it lists the top 10 scams being perpetrated against
seniors, along with information on how to recognize, avoid, and
report them. In both years, the IRS Impersonation Scam was the
leading offender.
These lists reflect the calls made to our Committee's toll-
free hotline. In 2015, hotline staff fielded more than 1,100
calls. Last year, the hotline's call volume doubled to more
than 2,200 calls. It is clear that our efforts are raising
public awareness, and more important, our efforts are producing
real results.
I look forward this morning to the testimony of the
Treasury Inspector General for Tax Administration's office on
recent evolutions in the IRS imposter scam, such as the demand
for payment in iTunes gift cards, to which Mr. Hatch and many
others have fallen victim. Raising awareness about the IRS scam
is particularly timely, as we are in the midst of tax filing
season.
Last May, thanks to the work of our hotline investigators,
the IG arrested five individuals in connection with the IRS
imposter scam. Federal authorities believe that these suspects
stole almost $3 million from more than 1,200 victims. In
October, 56 individuals and 5 call centers in India were
indicted in another important case. In addition to producing
criminal charges, these efforts are making it more difficult
for criminals to find victims.
I also look forward to hearing from the Federal Trade
Commission on other scams that are targeting our seniors, such
as those involving grants, counterfeit checks, and romance
schemes, which are particularly timely with yesterday being
Valentine's Day.
As our 2017 Fraud Book makes clear, while we are certainly
making progress, far too many victims are still losing money
and often their retirement savings. Law enforcement, consumer
advocates, Area Agencies on Aging, AARP, and financial
institutions play vital roles, but alert citizens are still our
first and best line of defense. I am proud of our Committee's
work on this crucial issue to help seniors become more aware
and more informed and to put criminals on notice that they will
be stopped and brought to justice.
I now am very pleased to turn to our new Ranking Member,
Senator Casey, for his opening statement.
OPENING STATEMENT OF SENATOR ROBERT P. CASEY JR., RANKING
MEMBER
Senator Casey. Chairman Collins, thank you very much for
your leadership and for convening this hearing, the first
hearing of the Committee on Aging, the Special Committee on
Aging, for the 115th Congress to discuss senior scams, as she
just outlined.
Also, I want to thank her for working with me to address
issues impacting older Americans even before the start of this
Congress.
I would also like to welcome new members of the Committee.
I know right now we have Senator Cortez Masto here--we are
grateful that she is with us--and, of course, Senator
Gillibrand who has been with the Committee for a number of
years. We are grateful for that help, especially on these
critically important issues for our families.
The Aging Committee has historically been a committee that
fosters both collaboration and bipartisanship on issues facing
older Americans, and that was again abundantly clear by the
voice vote we held off of the Senate floor 2 weeks ago to
approve the Committee budget and the Committee rules. And I
think I was late for that hearing, but----
Chairman Collins. I was not going to mention that.
Senator Casey [continuing]. Somehow my voice got recorded.
But I want to thank the Chairman for that.
It is my sincere hope that that will continue, and I am
sure that it will. The future of key programs for older
Americans like Medicare, Medicaid, and others is also
critically important to the agenda of this Committee. We have a
responsibility, I believe, to protect these vital programs for
older Americans.
Today we have the opportunity to hear from experts who will
give us testimony on the challenging issue of combating fraud
and scams, which, of course, target older Americans--in effect,
older Americans as well as their families. Experts testifying
today include Diane Menio from Pennsylvania, from a senior
advocacy organization that I have worked with over many years,
CARIE, and I will talk more about Diane in a moment. But I want
to thank her and her organization's work for what you have done
for years to help those who are potential victims of these
kinds of scams.
I am also pleased to have joined Senator Collins in
releasing a Committee report detailing the top 10 scams
targeting our Nation's seniors that you saw a moment ago. The
report is based upon the experiences of more than 2,200
individuals who contacted the Committee's Fraud Hotline over
the past year. It will inform the work of this Committee going
forward.
I was also happy to join with the Chairman in reintroducing
the Senior$afe Act last week. This important legislation both
encourages financial institutions to disclose suspected
exploitation of seniors when they see it and protects them from
being sued for making these reports if they have appropriately
trained their staffs and made good-faith reports.
In the Commonwealth of Pennsylvania, more than one in six
residents is 65 years or older. In 2015, 22,000 cases of
suspected elder abuse and neglect were reported to the
Pennsylvania Department of Aging's protective services program.
That is why last spring I held a field hearing in Wilkes-
Barre, Pennsylvania, to hear directly from constituents--both
those affected by scams and those trying to prevent these
scams. Just by way of example, a constituent from Kingston
Township told the heartbreaking story of a scam artist
attempting to steal the identity and use the credit cards of
her husband of 43 years after his death. The Luzerne County
District Attorney highlighted the most common type of scam
happening today, at least in that area: the sweepstakes or
lottery scam. Victims are promised lottery winnings if they
just pay often sizable so-called taxes and fees up front. The
district attorney recalled one older victim being scammed out
of $85,000 in the hope of retrieving $1 million in fake lottery
winnings.
While experts struggle to estimate the total financial
impact of scams targeting seniors, mainly because it is so
underreported, they know that it adds up to nearly $3 billion a
year in lost savings--and potentially billions more. It is not
just money that is lost in these scams. It is older Americans'
sense of security and financial independence. It is outrageous
that people who have worked very hard all their lives are being
targeted for their nest eggs when they are at their most
vulnerable. And it is wrong that seniors still feel afraid to
report these schemes. They should not be embarrassed or
ashamed. They should know that we have their backs and we are
here to help them fight back.
That is why enforcement is such a critical part of this
discussion. While it may not be easy to track down these
increasingly sophisticated scammers and their domestic and
international networks and hold them accountable, we must do so
for the safety and security of our parents and grandparents.
Recently, Senator Collins and I applauded the Federal Trade
Commission and the Justice Department settlement with Western
Union in which the company admitted to criminal anti-money-
laundering violations that have disproportionately affected
aging Americans. This settlement, $586 million in the
settlement, will be used to compensate victims of fraud where
Western Union agents were complicit in the scams.
But there is more work to do. We will continue to use the
spotlight of this Committee to both help consumers understand
the threat and highlight the need for action. It is for this
reason that I will continue to fight to ensure that the
Consumer Financial Protection Bureau has the resources that it
needs. The CFPB houses the only Federal office solely focused
on sharing financial information with seniors and educating
seniors about how to prevent becoming the victim of fraud.
Until recently, this office was led by former Pennsylvania
Secretary of Aging, Nora Dowd Eisenhower, who is in the first
row at our hearing today.
We also need to help keep up the fight to ensure that the
Affordable Care Act fraud and abuse provisions are in place. We
know that the Government has realized a record-breaking $10.7
billion in recovery of health care fraud in the last 3 years,
having new tools that increased Federal sentencing guidelines
for health care fraud and on from there.
We also know that proposals that I will oppose, like block-
granting Medicaid, could present States with real challenges
when it comes to addressing waste, fraud, and abuse in
programs.
Finally, in order to continue the good work of the
witnesses here today, as well as others, and to support our
colleagues in other parts of the Government, the Social
Security Administration and other departments, in maintaining a
skilled workforce, I am seriously concerned about the impact of
the Federal hiring freeze and how that will affect middle-class
families.
So I look forward to hearing from our witnesses, and I
again want to thank our Chairman for gathering us today on this
important topic.
Chairman Collins. Thank you very much, Senator Casey.
I want to welcome another new member of our Committee,
Senator Marco Rubio. Senator Rubio represents the State with
the highest percentage of senior citizens. I represent the
State with the oldest median age. That is because a lot of my
seniors go to Florida, though they tend to spend exactly 6
months and 1 day there. I am not quite sure, but I have a
feeling it has to do with taxes. But it is great to have you as
a member of the Committee.
And I want to welcome back Senator Warren, who was here
briefly and I am sure will be returning as well. We will now
turn to our panel of witnesses.
First, we are going to view a brief video from Mr. Philip
Hatch. He is from Portland, Maine, and he will share his
personal experience dealing with the IRS impersonators that I
mentioned in my opening statement.
Next we will hear from Tim Camus. He is the Deputy
Inspector General for Investigations at the U.S. Treasury
Department's Office of Inspector General for Tax
Administration. That may be one of the longest titles of any
witness that we have ever had. But his office has done
extraordinary work, and I want to thank him.
Next we will welcome back to the Committee Lois Greisman,
who is the Associate Director of the Division of Marketing
Practices at the Bureau of Consumer Protection at the Federal
Trade Commission, better known as the FTC.
And Senator Casey has already introduced our final witness
for the day, Diane Menio, and we are very happy to have her
here, too. Menio. Did I get it right that time? Thank you.
I want to thank you all for joining us, and we will now
start with the video.
STATEMENT OF PHILIP HATCH, IRS IMPERSONATION SCAM VICTIM,
PORTLAND, ME (BY VIDEO)
Mr. Hatch. My name is Philip Hatch. I am 81 years old and I
am from Portland, Maine, born and raised.
I received a telephone call. I answered the phone, and the
man said he was a representative from the Internal Revenue
Service. I said, ``What can I do to help you?'' He said,
``Well, we have gone through the records, and there has been a
mistake here on your returns, and you owe us $5,988 and some
odd cents.'' So I said, ``Fine. Tell me who I make the check
out to and where do I mail it?'' He said, ``Well, we cannot do
that. We have a warrant out for your arrest, and the marshals
will be in your house within an hour.'' And I said, ``Well,
what would you like me to do to help resolve this?'' They said,
``You can go to CVS and get those iTunes cards, and just when
you come back you can read the numbers off to us.'' I said,
``That does not sound like a very professional way to do it.''
He said, ``Well, it is either that or the marshals are coming.
If we can do this, we can tell them not to come.''
So I did. I went and got these little iTunes cards, came
back, read the numbers off them, and they said, ``Okay. Now,
you cannot tell anybody about this.'' I said, ``What do you
mean I can't tell anybody about this? I am going to tell my guy
that makes up my tax returns. I am a little mad at him.'' You
know, I said, ``He made a mistake.'' He said, ``Well, no, do
not do that. Everything will be taken care of.''
This started at 4:00 in the afternoon and went until 8
o'clock at night. They called me the next day, and they said
there was mistake. I said, ``What do you mean a mistake?'' ``It
wasn't $5,900 something dollars; it was $23,000.'' They had
somebody call me on the regular phone--I am still on my cell
phone--who said that he was a Portland police officer and that
they had a local warrant out for my arrest. So I put my son on
the phone, and he goes, ``Who is this?'' And they said, ``Well,
who is this?'' And he goes--he gave him a phony name and said
he was an FBI agent. And they said, ``Whoops.'' And they hung
up, and that was the end of it. But I had already sent in
$8,000 to these people.
Being in the military and being--working for the
Government, you know, when the Government calls up, you say,
``Aye, aye, sir. What do you need? Can I help you? Okay.'' And
maybe if I had not had that background, I would not have been
so cooperative. But I got--I was mad, upset that I was taken
in. Just give me 5 minutes in a room alone with those people
and I would be happy.
All I can say is just be wary, you know? You know, just be
careful. And when it comes to someone going after your money,
just say, ``Listen, I will think about it tonight and you can
get back to me tomorrow,'' and then contact someone and find
out. That is the best advice I could do.
Chairman Collins. As you can see, this is really outrageous
and illustrates the lengths to which these criminals will go.
And a lot of times, they do target people who are either
isolated or have been in the military--we did a whole hearing
on scams that are directed at those who have been in the
military--and they will stop at nothing. They kept Mr. Hatch on
the phone for 4 hours, from 4:00 p.m. to 8:00 p.m., getting him
to go from place to place to buy the iTunes card, which is a
new variation that we are seeing on the IRS imposter scam. And
it frightens people when they get a call from someone claiming
to be from the IRS. It frightens all of us to get that kind of
call. And it has become so sophisticated that these con artists
can spoof the number so it looks like--if they have caller ID,
it will say ``U.S. Treasury.'' So that makes them think that it
is for real. And it just shows that they will stop at nothing.
I would now like to call on our first witness who is
actually here with us, Mr. Camus, for his testimony.
STATEMENT OF TIMOTHY P. CAMUS, DEPUTY INSPECTOR GENERAL FOR
INVESTIGATIONS, TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION, WASHINGTON, DC
Mr. Camus. Thank you, Senator. Chairman Collins, Ranking
Member Casey, and members of the Committee, thank you for the
opportunity to testify on the topic of financial frauds
affecting seniors.
Over the past 3 years, TIGTA has conducted numerous
investigations on the issue of IRS-related frauds and scams.
Telephone impersonation scams, sweepstakes or lottery scams,
and email and phishing scams are among the top 10 fraud schemes
used by criminals to target senior citizens. I will highlight
two major IRS-related scams we have been investigating.
The first is a telephone impersonation scam in which more
than 1.8 million Americans reported to us that they have
received unsolicited telephone calls from individuals falsely
claiming to be IRS employees.
The second is the so-called sweepstakes or lottery scam,
which has reemerged as a significant threat to the integrity of
tax administration.
The telephone impersonation scam continues to be one of
TIGTA's top priorities. No one is immune from receiving these
calls. I have received calls myself.
TIGTA has made numerous arrests in connection with this
scam, and we have a number of significant investigations that
are still underway. For example, this Committee made a direct
referral to TIGTA involving a senior citizen located in Florida
who was so frightened by the impersonators that, following
their directions, he immediately drove to his local Walmart
while remaining on the phone with him. During the drive, he
crashed his vehicle and continued on foot in order to obtain a
MoneyGram payment as demanded by the impersonators.
TIGTA special agents worked diligently on this referral and
ultimately identified five suspects in Miami, Florida. These
suspects were arrested by TIGTA special agents for wire fraud
and conspiracy to commit wire fraud.
In October 2016, after an extensive 3-year joint
investigation, the Department of Justice obtained an indictment
on 56 individuals, 24 of whom were located in the United
States, and 5 call centers located in India. The investigation
identified approximately $272 million of total fraud and
thousands of victims involving multiple fraud schemes. This is
the largest single law enforcement action to date involving the
IRS impersonation scam, and the operation's success is a result
of excellent cross-agency collaboration and the efforts of
hundreds of TIGTA employees who participated in this
investigation.
In addition, TIGTA has taken numerous other steps to fight
this crime. For example, we created a strategy designed to shut
down the impersonators' callback numbers. We have also
developed an outstanding working relationship with the Federal
Trade Commission and the Federal Communications Commission to
combat this scam. We have worked with the AARP and the Veterans
Administration on public warning messages.
TIGTA has also employed a public awareness campaign. We
have recorded five videos that received over 71,000 views, and
we have provided approximately 100 print and media interviews
resulting in over 4,400 news stories in both large and small
media markets, resulting in an estimated 113 million views.
We also worked with the private sector such as Walmart and
Apple, who were used in this massive fraud. These companies are
now helping us to warn consumers about the scam.
As a result of all of these efforts, the impersonation
scam's impact on the public has been significantly reduced.
Today there are 92 percent fewer reported calls each week and
93 percent fewer victims reported to us that they paid the
scammers money. However, the problem has not gone away
entirely, and the volume is starting to come back.
For example, we received on average 1,000 reported calls
per week in early January, and our data for last week shows we
received over 4,600 calls for the week. I believe sustained
investigative efforts and ongoing outreach to ensure people do
not become victims in the first place is critical to our
success in fighting this scam.
Another fraud scheme, the lottery scam, has continued to
target and victimize senior citizens. Its premise is simple:
The scammers contact victims to advise them that they have won
a lottery or sweepstakes, but first they need to pay a non-
existent Federal tax or fee in order to receive the prize. Over
the last few years, TIGTA has conducted investigations that
have identified over 30 individuals who are responsible for
defrauding victims out of millions of dollars. We have obtained
some prosecutions, and we are working on others to address this
crime.
In summary, we at TIGTA take seriously our mandate to
protect American taxpayers and the integrity of the Internal
Revenue Service. As such, we plan to provide continuing
investigative coverage in this area, and we look forward to our
continued collaboration and discussions on ways we can fight
these types of frauds and scams in the future.
Chairman Collins, Ranking Member Casey, and members of the
Committee, thank you so much for your support and for the
opportunity to share my views.
Chairman Collins. Thank you very much.
Ms. Greisman.
STATEMENT OF LOIS GREISMAN, ASSOCIATE DIRECTOR, DIVISION OF
MARKETING PRACTICES, BUREAU OF CONSUMER PROTECTION, FEDERAL
TRADE COMMISSION, WASHINGTON, DC
Ms. Greisman. Thank you, Chairman Collins, Ranking Member
Casey, and members of the Committee. I am very happy to appear
before you again to discuss the FTC's broad efforts to protect
seniors against fraud, which is a critical part of its consumer
protection mission.
These efforts are driven through the FTC's law enforcement
work, its coordination with U.S. and international partners,
and, with a tremendous emphasis, its education and outreach
initiatives.
First, just a quick overview. As you know, the population
of older Americans is growing rapidly. By 2030, more than one-
fifth of U.S. residents will be over age 65.
Now, throughout our law enforcement work, we train a
deliberate eye on whether fraudsters are targeting specific
consumer populations and, in particular, whether they are
targeting seniors. We do see that certain types of fraud, such
as Medicare imposter scams, deceptive pitches for medical alert
devices, brain training programs to treat cognitive impairments
such as Alzheimer's, or supplements to address or eliminate
joint pain, all may well be directed specifically to seniors.
In other areas, such as the technical support scam, where
scammers impersonate, for example, Dell or Microsoft and lead
you to believe that your computer is in dire straits and that
only they have the remedy to fix it, we do think seniors may be
disproportionately impacted. And with TIGTA, and as Deputy
Inspector Camus has just indicated, we have strong partners in
our work and particularly in combating the IRS imposter scam.
But as a practical matter, scammers care little about their
victims' age. As a result, we see seniors impacted across the
entire spectrum of our consumer protection work, from
investment in business opportunity frauds to bogus health care
products to time share resales frauds. I want to take a moment
to highlight, as Ranking Member Casey referred to, the recent
$586 million settlement with Western Union. A good many
iterations of fraud flowed through Western Union's money
transfer system, but we know, based on the investigation, that
lottery scams, so-called emergency scams such as the
grandparents scam, and the online dating or romance scams were
well represented among the complaints the company received, and
we know that these types of scams often target and impact older
consumers.
In addition to the more than half-billion-dollar
settlement, the FTC's order requires Western Union to implement
a comprehensive anti-fraud program that, among other things,
will require suspension or termination of problematic agents
under certain requirements. And as you mentioned, the
Department of Justice entered into a deferred prosecution
agreement with the company at the same time.
Not only has the FTC proceeded against money transfers,
this morning we announced a settlement with a Florida man and
his company that allegedly helped telemarketers in India dupe
consumers in the U.S. into paying hundreds or even thousands of
dollars for taxes they did not owe. These telemarketers, as we
heard from Mr. Hatch, often pretended to be from the IRS or in
this case from another Government agency that had grant money
to dole out, and told consumers to pay via MoneyGram or Western
Union.
The defendants with whom we settled were the U.S.-based
entities that orchestrated having runners literally driving up
and down the Florida coast to various retail stores to collect
the money transfers before consumers realized they had been
scammed and could take some action.
And as you know, FTC law enforcement regularly collaborates
with our partners here, State and Federal, as well as
internationally, and for these purposes, I want to simply note
that we and our colleagues have spent considerable time working
with law enforcement and other stakeholders here and in India
to curb illegal telemarketing hitting the U.S.
Finally, we continue to improve upon and build out our Pass
It On education effort. I am sure you are familiar with this.
We have shared it with you many times. It is aimed at active
adults, and this is our signature initiative. It reaches
seniors in social clubs, libraries, senior centers, veterans
facilities, and we recently added a new video about how an
imposter scam harmed a retired teacher.
We also recently posted another new video about the Pass It
On campaign itself, highlighting how important it is for an
older consumer to be the one who helps friends and families to
avoid being victimized. We continue to use these resources and
to promote them with our State and Federal partners.
In sum, through aggressive law enforcement, strategic
policy initiatives, and innovative consumer education, we will
continue to tackle scammers that exploit older consumers.
I look forward to your questions. Thank you.
Chairman Collins. Thank you very much.
Ms. Menio.
STATEMENT OF DIANE A. MENIO, EXECUTIVE DIRECTOR, CENTER FOR
ADVOCACY FOR THE RIGHTS & INTERESTS OF THE ELDERLY,
PHILADELPHIA, PA
Ms. Menio. Good afternoon. My name is Diane Menio, and I am
the executive director of the Center for Advocacy for the
Rights & Interests of the Elderly. I just thought I would say
the full name so that you would know why we have a girl's name
for a name.
Chairman Collins. Thank you.
Ms. Menio. Thank you, Senator Casey, Chairwoman Collins,
and members of the Committee for your interest in financial
exploitation, fraud, and scams against the elderly and for the
opportunity to present testimony today.
Two weeks ago, Charlotte Kitler from Nanticoke,
Pennsylvania, a volunteer in our Pennsylvania Senior Medicare
Patrol program, accompanied me here to the hearing.
Unfortunately, she could not make it today, but I know she is
here in spirit. She was very excited to be at the Senate. And
she works very hard with us.
Today I am going to talk about health care fraud. I am also
going to talk about abuse, scams, and financial exploitation
targeting the elderly and how CARIE is working to protect
seniors across the State of Pennsylvania.
Founded in 1977, CARIE is a nonprofit organization
dedicated to improving the quality of life for frail older
adults. CARIE works to protect the rights of older adults and
promote awareness of their special needs and concerns. In
addition, we provide a range of services to help older victims
of crime, abuse, and financial exploitation, including a
program that helps elder victims through the court process and
assists with victim impact statements and Crime Victim's
Compensation. In addition, CARIE coordinates Pennsylvania's
Senior Medicare Patrol program to help fight Medicare and
Medicaid fraud. We have more than 75 retired Medicare
beneficiaries who provide that peer education about health care
fraud and share information about how to prevent being
victimized.
While we talk about the great toll that financial
exploitation exacts on its victims, it is important to note
that the problem of exploitation impacts many people whether
their net worth is in the millions, the thousands, or even the
hundreds.
Every day CARIE peer volunteers like Charlotte talk to
individuals who have been victims of these horrendous crimes
and look for solutions to provide guidance to prevent scams
from occurring in the first place.
Additionally, we send out ScamWire alerts that help to
identify new threats to the aging community that seek to
involve elders in fraud through mailings, email, community
meetings, and phone calls. I would like to share just a few
stories about cases we hear every day.
Seventy-one-year-old Mary from Philadelphia was contacted
by an individual representing himself as a spokesman for
Publishers Clearing House. Mary was told that she had won
several hundred thousand dollars but had to pay the taxes on
the prize. She initially sent them $200. Then she was contacted
again, and they told her that she misunderstood and she needed
to send another $2,850 in cash via the United States Postal
Service. Mary finally thought better of what she did and filed
a police report. She initially admitted to the first mailing,
but then after talking to our victim advocate revealed the
second amount that she sent. And she told us that she was very
embarrassed and that is why she had not reported it right away,
and that is why she was only willing to talk about the $200 at
first because she felt that that was not so bad. But the extra
money made her very embarrassed. So she did, after talking to
our victim advocate, talk to the police about that, gave them
the information that she was given, the address and the phone
number of the person that had called her. But, of course, they
could not find that person anymore. Unfortunately, she could
not get the money back from the Crime Victim's Assistance Fund
because there is a time limit involved with that. We just
really need to offer some of these people more security and
more ability to resist these crimes.
Gloria, who is 88 and from Delaware County in Pennsylvania,
received a phone call from a person claiming to be her
grandson. When she questioned why he did not sound like
himself, he said he was in an auto accident and the airbag hit
his face. So she was scammed out of--it ended up being about
$7,000 with the iTunes cards. Older people do not even know
what iTunes card is about, but they are told to go and get
these. So this was, again, one that the 2-year period had
expired.
On an encouraging note, Mrs. Smith, who is a homebound
beneficiary and lives in central Pennsylvania, called us to
thank us and to let us know that she received our ScamWire
alert in the morning, which was included in her home-delivered
meal package. That same afternoon, she received a phone call
from a scammer and wanted us to know that she knew not to give
out any personal information because of the alert. It is
stories like these that keep us at it every day. We have seen
many similar cases. You will see many more examples in my
testimony, and I could even give you more.
The need to prevent financial exploitation is a national
imperative. We know that adults and their families must talk
about and plan for possible incapacity as well. For those
showing early signs of dementia, this is particularly
important, as they may eventually lose all capacity to make
decisions. Financial capacity is often the first to go.
We do try to work toward positive change. My time is
running out, so I am going to conclude here. We are very
pleased at the bipartisan attention to elder fraud that the
Committee is working on and the Senior$afe Act which builds on
lessons learned from organizations like ours.
Thank you again, and we are very pleased to work with you
on this issue and are here for anything you need. Thank you.
Chairman Collins. Thank you so much for your testimony.
Mr. Camus, you mentioned the direct referral from our
Committee's hotline to your office that resulted in the arrest
of five suspects who allegedly were responsible for almost $3
million in schemes that defrauded more than 1,200 victims, and
this truly was an appalling case that we passed on to you. The
senior citizen was so upset that he crashed his car on the way
to the local Walmart to get the debit card. And he was
convinced that he was going to be arrested immediately, so he
leaves the scene of the crash and walks the rest of the way to
Walmart.
We were able to determine that the money was sent and
picked up in Minnesota and provided your office with that
information, and I really appreciated that you acted on it.
Could you please give us an update on that case since the
arrest last May?
Mr. Camus. Yes, Senator, I would be proud to. One of the
subjects has pled guilty, and he has been sentenced to 2 years
in prison, and he has been ordered to pay $98,000 in
restitution to multiple victims. The other defendants are going
through the various stages of the legal system right now, but
we anticipate they, too, will be brought to justice here in the
very near future.
Chairman Collins. That is great news to hear.
Ms. Greisman, I am also really pleased to hear the FTC has
stepped up its efforts, and you mentioned the agreement or the
settlement with Western Union that had been made. And I am
interested in whether or not that $586 million is going to end
up compensating any of the victims. Were you able to trace the
money that had been lost? And will some of the victims be
compensated?
Ms. Greisman. Thank you, Chairman. That is precisely the
goal of the settlement. The Department of Justice, pursuant to
the two agreements, the two settlements, will be the claims
administrator, and they will take it upon them to do their best
job to try to reach out to victims and provide redress.
Chairman Collins. That is so important because in the vast
majority of these cases, once the money has been wired, it is
gone forever, and it is very difficult to trace. And that is
why I really appreciated not only the settlement with Western
Union that is going to lead to some restitution, but the quick
work of the Inspector General's Office for Tax Administration
that really stopped a fraud in progress. That is the kind of
cooperation we need across Government.
One of the things that truly frustrates me about these con
artists is that they are very clever and they are always
changing their tactics to stay ahead of the consumer education
efforts that we organize, as well as law enforcement. And I
think we are all making a difference, but the fact is that the
calls to our hotline doubled last year to more than 2,200. I am
going to bring up a chart which demonstrates why scammers--it
is a little hard to read, it is a little busy there--but why
they are continuously changing their strategies. Let me explain
it since it is a bit busy, as I said.
Between November 2014 and early 2016, the losses per month
in the IRS impersonation scam averaged approximately $1
million. That is $1 million lost per month. However, starting
in the spring of 2016, the losses per month increased to $2 to
$4 million, and I can see Mr. Camus nodding his head in
agreement. And it stayed at about that level through the end of
last year.
What happened during that time is the scammers made a
change and they are no longer using the Walmart debit card as
much. They have gone to the iTunes card, which struck me as
very strange because I thought you used those to buy records.
But perhaps I am out of it.
But, Mr. Camus, I would like you to comment on whether the
change in tactics plus the relentlessness that we have heard
about from Mr. Hatch where they call again and again and the
next day with more demands, has that made scammers more
successful in terms of the money they are bringing in, even if
the number of victims has declined?
Mr. Camus. Yes, we noted in April, Senator, April 2016,
that there was a shift to the iTunes card as a method of
payment. They also redoubled their efforts on their auto-dialer
program, so they are able to make hundreds of thousands of
telephone calls in a very short order.
To your point exactly, when the scam first started, it was
individuals calling one on one. And then when they shifted to
the auto-dialer technology, they were able to blanket
individuals with hundreds of thousands of calls, leaving a
callback number.
At about the same time, they shifted to the iTunes card,
and what we learned in our investigation was the iTunes card
makes it very easy for them to flip the money. They are no
longer paying middlemen to convert payments into money orders.
They are now selling the iTunes cards on a third-party market
and then pocketing the money immediately. And, also, it is very
difficult for law enforcement to trace that transaction.
Chairman Collins. Thank you.
Senator Casey.
Senator Casey. Thanks very much.
Diane, I am going to start with you, and not simply because
you are a Pennsylvanian but most especially because of your
long work. I mentioned as well in my opening comments the
acronym, and I want to put the words behind the acronym. Diane,
you have worked for, we will call it, a couple of years----
Ms. Menio. Yes, just a few.
Senator Casey. Just a few. I guess I can say decades.
Ms. Menio. It is 28 years.
[Laughter.]
Senator Casey. For the Center for Advocacy for the Rights &
Interests of the Elderly, so-called CARIE. So we are grateful
for that work. One question I had was: How do you coordinate in
your work with both State authorities and Federal authorities?
Sometimes the most difficult challenge in any investigation is
the coordination of it. How do you do that? And is there
anything we should know about those issues?
Ms. Menio. Yes, it sure is challenging sometimes. But in
Pennsylvania, we actually have a network of elder abuse task
forces that operate in various counties across the State. In
Philadelphia, our task force is specifically focused on
financial exploitation, and so we have bankers and others at
the table.
I think that is one of the best ways to coordinate, is to
actually know these people, to be able to sit around the table
and talk about the problem. Sometimes we do case reviews, so,
you know, you get to talk about how this case got played out
through the system and it helps us.
Last year, you know, I know the Committee had a hearing
about the drug mules that were being used, and one of the calls
about that came into our office about a gentleman who was from
Pennsylvania and jailed in Japan. And we were frustrated by
that because we started calling everybody we could think of,
and we found no help for that family. But, eventually, he did
get out.
But when we were at our task force meeting, we talked about
that case, and someone from Homeland Security was there, and we
shared--they gave us their card and said, ``Can we share
this''--you know, ``Can you share the information about the
family?'' And so we talked to the family, and we were able to
connect them with Homeland Security.
So it is that kind of collaborative work, I think, that is
very important because we have to know one another. And
reaching out to community groups that are in the community that
actually work with older adults, working with law enforcement--
I mean, we do this in our health care fraud program as well. It
is very important that we can get to the OIG's office, that the
FBI is involved, all these other groups so that we can get to
the bottom of this. It is not always the same agency. So we try
to work in collaboration as much as we can.
Senator Casey. I want to ask as well about the--you
mentioned health care fraud. The so-called Senior Medicare
Patrol, I know you have worked very hard with that patrol. We
are having a big debate here about the Affordable Care Act, and
this is one area where there is a very strong set of numbers
that aligns with the progress that has been made over the last
couple years in combating Medicare fraud.
To the extent that you can give an opinion on what happens
with regard to the ACA, if it were to be repealed, say if it
were repealed and not replaced--I know that is a big subject of
debate, but just give us your sense of the impact of the
Medicare fraud patrol?
Ms. Menio. Well, there are a number of issues that I think
that have impacted health care fraud, you know, uncovering
health care fraud, but also just Medicare and other provisions
as well that we think are very important, looking at nursing
homes and a number of other issues. But one of the things the
Affordable Care Act did--and it is sort of related to your last
question--is it allowed agencies like CMS, Medicaid, Department
of Veterans Affairs, Social Security Administration, and others
to data-share, to help them identify criminals who are
defrauding. Sometimes, you know, we will get a call--we had a
lady in Philadelphia who was a podiatrist, and she went into
Chinatown. She was part of that community. And she started
basically getting people's Medicare numbers and billing. It
turned out she was billing like hundreds of thousands of
dollars--it actually was in the millions. At one point she was
vacationing in Paris when those bills were submitted.
It is really important, you know, because we had a couple
complaints from these beneficiaries, and that is probably not
going to rise to the level of a major investigation. But once
you start looking at the data, you can see what is happening.
And so that is extremely critical. So it is important to see
because these criminals are going across programs. They are
similar to the other scammers. They are setting up business
where it is opportunistic business.
The other thing that I think is important is that they have
created--the Affordable Care Act created a Medicare fraud
strike force, and I think that costs about $350 million, and so
far it has recovered more than $10 billion. So there is real
good economic advantage to doing this work, because when they
do find these scammers, as I said, a lot of them are very large
scale. The one I talked about was probably small compared to
some of the large scale. I know in Florida, for instance, there
were these groups, these storefronts set up to basically pay
Medicare beneficiaries for their Medicare numbers. And so it
made these beneficiaries complicit in the fraud. They certainly
did not understand what was happening. They were getting $10 or
$20 or something like that, but they did not understand what
was going on.
So we really need to continue to do this work to make sure
that we are combating this stuff. And just sometimes to us,
when we are getting the complaints, it seems all too easy, and
sometimes the solution seems easy, too. So we really need to
make sure that we are looking at how we can make these systems
work, and I think the more this--what was provided for in the
Affordable Care Act has created some results, and we need to
continue doing that.
Senator Casey. I appreciate that. I am out of time, but
will come back. Thanks.
Chairman Collins. Thank you.
Senator Rubio.
Senator Rubio. Thank you, Madam Chair.
I want to continue to build on what you just mentioned
about the storefronts, and it is a topic that a lot of people
are not aware of. What we have in Florida, what we in South
Florida in particular today is an outrageous crisis of Medicare
fraud, and let me describe it. And I say this to you as a Cuban
American with both deep regret and sometimes shame about this
reality. We have literally 50 to 100 individuals, mostly recent
arrivals from Cuba, who arrive into the United States, somehow
figure out a way to set up a Medicare company. Usually it is a
storefront, often just a P.O. box. They then acquire Medicare
numbers from a runner, from somebody who works at a hospital,
and they begin to bill those Medicare numbers for no services
provided. And I am talking about to the tunes of hundreds of
thousands of dollars.
I have been flat out told by law enforcement in Florida, in
South Florida in particular, that if they do not get greedy and
are just willing to steal $200,000 to $300,000 a month, they
are probably not going to get caught. They are stealing to the
tunes of millions of dollars.
If you look at the list of the top most wanted Medicare
fraudsters in America, they are almost entirely from South
Florida and almost entirely recent arrivals from the island of
Cuba. And when we are about to arrest them--they know they are
coming--they leave to Cuba with millions of dollars. It is an
outrage. It is grotesque. It has been extensively covered by
the press in South Florida. And people may think that seniors
are not victims, they are just used. They are victims. Number
one, it is helping to further exacerbate the financial troubles
of Medicare, and in many cases--you are absolutely right--
seniors are being told there is nothing wrong with this, it is
legal, just come in, all you got to do is sit down for an
interview, give us your Medicare number, and before you know
it, it is their account that is being billed for all this
amount. And sometimes they get wrapped up in it.
So I hope that we will have a chance to focus on it. We had
a chance to discuss it. When I tell people this, they do not
believe it can--this is organized crime. In every other sense,
it is organized crime, and they are brazen about it. And they
laugh about it, because they know they can just leave and are
protected if they leave the country.
My mother is a senior--this is why I want to ask you this
question--and she has been the target in the past. And I just
recalled this as we were having a conversation. After she
suffered a stroke in 2011, she is largely home-ridden except
she goes to therapy and so forth. She gets a call about taxes
she owes, and I know enough about my mom and her finances to
know she has not made a lot of money ever, but certainly in the
last couple years she has not been employed. She relies almost
exclusively on Social Security and small savings.
So we get this number, and we tried to--even though I am in
this position of public service, first of all, I did not even
know who to call about it at the time. Number two, it is a
caller ID, so there is nothing I can do about it. But even if I
had been able to lure them into an extensive conversation, I am
not sure if I should have gone to local government or the FBI.
There was a little bit of confusion about who to take it to.
That is number one.
The second is her caregiver. She has people that come
during the day and watch her a little bit, you know, for some
time to make sure she is taking her meds. They are often the
people answering it. So we have to figure out a way to educate
them as well.
And the third, quite frankly, especially in Florida, for a
lot of a seniors is a language barrier. My mother speaks
English, but her first language is Spanish. That is where she
watches the soap operas every night, which I do not fully
understand these soap operas and why they are so popular, but
she watches them on the Spanish language networks, and a lot of
the people that are being targeted for this are also being
targeted because of the language barrier.
So I guess in all of that is embedded the following
questions: What can we do to improve the awareness of
caregivers who might be the people answering the phones when
these calls are coming? What can we do to facilitate for them
exactly to know who to--like do we recommend that they actually
talk to these people, engage them, and try to play detective?
Or do we just tell them to hang up and do not deal with them?
And the third is: What can we do or should we do to ensure that
communities, particularly enclaves of seniors that perhaps are
getting the majority of their news and information in a second
language like Spanish, that we are doing enough to inform them
about these scams and these things that are occurring?
Ms. Menio. Yeah, I think that the public education is
critical. I do think that another issue you might be interested
in in the future is looking at why people become subject to
scams. You know, we talk about people with dementia, but there
is also an issue around financial capacity. Someone may be able
to function very well in their life, but their ability to
manage finances goes down. And one of the reasons older adults
are targeted so often is because they are the ones who are at
home and answer the phone. And they might be lonely. And these
guys, not only do they come up with the latest best scams, but
they also know how to engage people and become their friends.
So it is very challenging--I say that because it is very
challenging, even when we are doing the education, to get
people to pull back from this.
When you talk about the caregivers, the caregivers
certainly should be educated about this as well, because they
are on the front lines and they will see this happening. I
will, though, caution that sometimes we do see caregivers being
the exploiters as well. So it is really important for families
to be vigilant about this.
We certainly also deal with people with limited English as
well. One time we did a presentation in Chinatown, and I think
it was simultaneously translated into about eight different
languages so that people could get that information. So we try
to do as much as we can to reach people and to also train
gatekeepers in those communities so that, you know, if it is a
Spanish-speaking community, we can train people in that
community to take that message to individuals, those people who
are going into the home, for instance, who are working in the
housing sites. We have housing coordinators who are working
with people individually.
So that is where--and we have had scams--we had a scam by
somebody telling them they were the cable company. It happened
in senior housing throughout the city. And so we were able
through that--and one of them was at a housing site where most
of the people speak Spanish, and that is where we actually were
able to tackle the problem because they got it----
Senator Rubio. And I know I am out of time. Just a
suggestion. We may want to talk to the two primary Spanish
language networks about public service announcements as part of
their FCC license. I think it would be really useful,
especially for the programming that is geared towards an older
audience.
Ms. Menio. And we have been able to get those on our local
Spanish language stations.
Senator Rubio. Good.
Chairman Collins. Thank you very much, Senator Rubio. As
you were talking, I was thinking that we should get this
postcard translated into Spanish as well so that----
Senator Rubio. Do you want me to do it? I will do it. I can
translate it.
[Laughter.]
I even know how to do the accents.
Chairman Collins. I have no doubt of that.
Senator Rubio. We will call you ``Susana.''
Chairman Collins. And I love the idea of including it with
Meals on Wheels because that would reach a lot of homebound
seniors. So that is something we can look at also.
Senator Gillibrand.
Senator Gillibrand. Thank you, Madam Chairwoman, and thank
you, Mr. Ranking Member. This is such a vital hearing. You
know, I have traveled around New York State asking community
centers and senior centers, you know, ``Have you been
affected?'' And, overwhelmingly, almost every hand in the room
is raised, because someone has gotten the IRS scam, someone has
gotten the grandparent scam, somebody has gotten the
sweepstakes scam. And it is heartbreaking, and some of these
seniors have lost tens of thousands of dollars. And there is no
protection for them, so I have three sets of questions.
First, what should we do as the Senate Committee to--all of
you have said, yes, there must be public education. How must
there be public education? What legislation should we write
about how to educate all seniors about these scams?
Specifically, how do we reach all seniors in this country?
Number two, every one of these scams has public
participation on some level. The CVS counter that sells the
iTunes card, the Target that sells the iTunes card, the credit
union, the bank--thank goodness one New York woman, she went to
her bank to take out $5,000 to pay the IRS scam, and someone
sitting outside waiting for her to bring the money, and the
teller so smartly says, ``Ma'am, you look so nervous. Are you
okay?'' And she is like, ``No. I have got the IRS on the phone,
and I have to give them the money right now.'' The woman was
smart enough to say, ``Give me the phone,'' hung it up, said
that the IRS will never call you.
Should we not be having conversations directly with any
place you can purchase an iTunes card? Shouldn't there be a
notice that is on every cash register, if someone buys an
iTunes card, please confirm it is to purchase an iTunes card
for music, or for a video game, it is not to give to the IRS?
Why aren't we posting at every vendor that sells iTunes? Every
bank, every teller should be trained on this. I do not think we
are doing enough to prevent these horrible crimes from
happening.
And all of you have said these are significant criminal
networks. I have heard some are run by the Russian mob, for
God's sakes. Like if we knew massive criminal networks were
targeting our seniors, our families, I would think we would be
doing much more than we are doing. But for some reason, we are
not taking this as seriously as we should. It is, oh, these
seniors are being duped, the money is gone. Well, if we had
some huge mob cartel bringing drugs into this country, we would
have Federal action. We would be sending money to address it.
And I do not feel like we are doing that.
And the degree of the scam is much bigger than we have even
disclosed. We only have what has been reported. But we know 40
percent is not even reported because it is so embarrassing.
This happened to my aunt. She got the IRS scam. She sent the
money. She never told my mother who does all her finances. She
was so embarrassed. So we are not even getting the full report.
So from each of you, I would like to know what you
recommend to us to prevent this from warning various parties
that are involved in these scams unwittingly, the people who
sell the iTunes cards, the banks. I have a senior who went to
her bank and took out an advance. And you know what the bank is
doing to her now? Charging her interest because she cannot pay
the money back because it is gone. And no relief from her bank.
So this is a problem.
So from each of you, direct recommendations for us.
Mr. Camus. Thank you so much, Senator. You are right on
target with what we are trying to do. We agree that once the
money is gone, it is gone, as the Senator pointed out. Public
education is the number one way to combat this. Criminals will
continue to go for the vulnerable, in this case senior
citizens, as long as they get money.
Senator Gillibrand. Specifically, what kind of public
education and in what form?
Mr. Camus. We send our special agents out, and we look
forward to invites for town hall meetings, especially at senior
centers, and we have had very good feedback on those. So we
think we can penetrate into that segment by actually
participating with Members of Congress at various town hall
events, and we would be proud to have a special agent come and
speak to this very issue. So that is just one idea I would
have.
As far as the vendors, right now we are working on a
project with Walmart to do exactly as you describe, that is,
post placards and train their cashiers, and when somebody comes
through with a handful of iTunes cards, that there is some sort
of a dialogue that goes on prior to that purchase being
consummated: ``There is a scam going on. Are you aware of the
scam? Have you been told that these iTunes cards are for taxes?
If you have, it is a scam.''
We have been successful with MoneyGram, for example, that
when individuals go on to the MoneyGram kiosk in a CVS, one of
the warnings that pops up early in the transaction is: ``If you
have been told to pay your taxes with a MoneyGram, you are
being scammed. Please stop the transaction.''
So we totally agree with you that we have to leverage the
retailers and get them to cooperate, and in some cases we have.
A recent shift that we have seen is primarily Walmart was being
used as the retailer, and now our data is telling us within
just this past month that it is now being shifted to Target. So
just yesterday, I had one of my executives reach out to Target,
and we are going to insist that Target work with us the same
way Walmart did.
But for us as a small agency, a small law enforcement
agency, we think that every person that we protect is a
victory. That is how we view this. It is not just a law
enforcement aspect. It is every single person that does not
become a victim is a victory. But how do we collectively--to
your point, how do we collectively come together and make a
bigger impact?
So certainly working with the FTC is something that we have
really enjoyed doing, but there is still more that could be
done. But I just want to give you the assurance that we are
doing a lot behind the scenes.
Ms. Greisman. Thank you. I appreciate the opportunity to
address the points you raise. It is very serious, and I do not
want to have you think in any way that this is not a top
priority for the Federal Trade Commission.
In terms of prevention, I would urge each of you, if you do
not already use our Pass It On materials--put them up again--
these are tested. This is, we think, a very effective way to
reach seniors where they are and to provide them with the tools
they need so that they are the ones positioned to assist
friends and family members not to be victimized. There is a
specific piece on IRS imposter scams.
The intermediaries, there are two things we do. One, we sue
them. That is what the settlement with Western Union is about.
We had a settlement years before with MoneyGram. Through
amendments to the telemarketing sales rule, we made illegal
wire transfers in connection with telemarketing, and we also
prohibited other types of reloadable cards being used. So law
enforcement is front and center in terms of the intermediaries.
Also, as Deputy Inspector Camus referred to, we have lots
of conversations with Apple, with Walmart, with the trade
associations for relevant industry members. The Western Union
settlement, like the MoneyGram, imposes specific requirements
to make it more likely that the company will intercept and
prevent the transfer of money, because as we have all
discussed, once it is gone, it is gone. And that is exactly why
the scammers are using those types of payment instruments.
So that is where we are. We will continue to work with
industry members to get better signage, to get other analytical
tools in place so that they can identify where the bad actors
are and how the transfers are going forward. Thank you.
Ms. Menio. I cannot agree more with what you said, but I do
want to put a plug in for the Senior$afe Act, which is one
thing that you can do. One of the biggest problems we have had
with financial institutions is making these reports.
In my written testimony, you will see a story about a lady
who was bilked out of $800,000. That was basically everything
she had. She was in her 80s, and she thought she was winning
the lottery. And so she kept paying money and did not tell her
family until it was way too late. And I think it was finally--
she and her husband had invested their money with an investment
firm for, you know, all their adult life, and her husband had
died, and that was their money in the bank. And no one made a
report, and eventually the money got transferred to another
bank, and she continued to buy these Walmart cards and
everything to pay this thing. And, finally, that second bank
made a report, but that was after $800,000 was lost.
So we need to do something to make them feel better. I
mean, you know, we keep pulling out the Gramm-Leach-Bliley Act
and saying, ``You can do this. You are covered.'' But they
still are not doing it. And sometimes--I can tell you what
happens--in some of the cases that work out well, it is the
teller who is making the report. They are not necessarily
authorized by the guys at the top, but it is the teller who is
coming in and they are seeing all these withdrawals taken. So
that gets to your point of training the people who see it
happening, the people who are--the tellers at the bank--
although we have fewer and fewer of those these days--and the
people who are at the stores.
The other thing is that we need to encourage age-friendly
services in those institutions. We need to have fraud
technology. There is a lot of technology out there these days.
I remember sitting in a meeting with the bankers and saying,
well, you know, if I am out of town and I use my credit card--
like I was somewhere, in Chicago I think, and suddenly my card
got shut off. Well, you know, it was legitimate charges, but
they shut off my card because they were monitoring it. I said,
Why can't you do that for some of these cases? And they are
very shy about doing that. They will not do it.
But those technologies really need to be used for this.
They need to come into action. And the age-friendly services
are also important, to make sure that they have protections,
like encouraging them to plan for incapacity, offering age-
friendly account features, like having someone who has access
to your account. Maybe they cannot take money out, but the
daughter, for instance, can get in and monitor online to make
sure nothing is going wrong.
And so all of those kinds of things I think can be done. I
hope that we can do more to combat this, and we need to--you
know, when you talk about education, sometimes it really is
just as easy as putting up a sign at the cash register so the
person managing that cash register sees somebody buying--an
older person, somebody who is 80, 82 years old, buying all
these iTunes cards, that is a flag. I cannot imagine why you
would not report that. So we need to do exactly what you are
saying.
Chairman Collins. Thank you.
Senator Cortez Masto.
Senator Cortez Masto. Thank you. I am very excited to be a
member of this Committee, so thank you very much. And thank you
to all of you for what you do.
I was fortunate to be able to work with the FTC as the
Attorney General of Nevada and had great partnership, and many
of you we have worked with on so many different levels. This
area was important for me as Attorney General. That is why I
created a unit in my office to address elder abuse, neglect,
and exploitation. Every single one of the scams that you
identify here happens in Nevada, and we had some great
partners.
I want to talk on a couple of levels, though. The first one
is the public education, because to me this is the first step
in prevention, and it is so hard to do. It really is. There are
many of us that are trying to do our outreach and get out and
talk to folks, but it has to be on a constant basis. You cannot
just say I am throwing this out there, we will it overnight,
and that is done. The education occurs all the time. All the
time.
I have been--I always say this--just about to every senior
center in Nevada to reach out to our seniors. But it is not
just reaching out to seniors. It is reaching out to their
caregivers. It is reaching out to family. It is reaching out to
service providers. So for my purposes--and this is what I am
going to ask with your help--I had put on conferences in the
State of Nevada, just bringing people in for the training, for
the public education, bringing the experts in to talk about it,
how we educate, how we train, and how we constantly get that
information out. That is one thing that I would love your help
with in Nevada, to continue down that road.
The next one, however, is challenging for me when it comes
to law enforcement, and this is a question I have for our law
enforcement folks. Given the aging population--in Nevada it is
growing, but also we are constantly evolving with technology
and technological scams--what additional resources or
innovations does law enforcement need to keep up with the
financial threats posed to seniors now? And when you talk about
it, talk also about how we examine also the money transfer
systems, which make it much easier for some of these criminal
elements to engage and scam our seniors.
Mr. Camus. Just a couple ideas. Thank you, Senator, and we
do look forward to working with you in Nevada.
One of the ideas you could come up with would be--there is
a 72-hour right of rescission on large transactions, so maybe
it could be considered that on any wire transaction, instead of
it being rapid and instantaneous, there is some sort of a 72-
hour right of rescission, because many of the victims that we
spoke to, they realized it, but just a little bit too late. By
the time they realized or talked to a family member about being
scammed, the money was already gone, and there is no way to get
it back. But if we could get that frozen for just a period of
time to allow a recognition, a family discussion, or law
enforcement to intercede, we might be able to save people a lot
of money and save their lives actually.
But as far as some of the other ideas, the challenge for
law enforcement is the money moves so quickly and the ability
to convince somebody to put their Federal income tax payment on
an iTunes card, that is really difficult. As I said in my
testimony, we estimate that just through media on our own as a
small agency, we believe that we--we had 113 million views,
over 100 media interviews, and it is constant with us. We had
Apple agree to fund a pilot program where over the air in CVS
stores and other drug stores, the message over the air as they
were shopping was, ``Do not use Apple iTunes cards to pay
public debt. Do not use Apple iTunes cards to pay Government.
It does not work that way.'' And we think that that worked, but
it is very, very expensive. That project cost Apple I believe
$140,000 to fund that. But it was a pilot.
So if we could get more of that type of cooperation, a fund
set up where some of these retailers and companies are required
to put aside some money to help educate and continuously
educate--because it is so difficult to penetrate. You know, I
am not a journalism major, but I am astounded by how difficult
it is and how--and I take calls myself at my desk. And just
this morning, I took a call from a victim, and they had no idea
that there was any such thing as an impersonation scam. And it
perplexes me. I am, like, ``What more could we all do, what are
other things that we can do to try to reach that?''
Senator Cortez Masto. Yeah, and that is why it is constant.
The education has to be constant, because people are not really
listening. And let me just say one thing as well, and I found
this in Nevada. Part of it, too, is when they become victims--
and we have heard it here, but they are embarrassed to come
forward. They are embarrassed to say that this happened to
them. And we have to give them a venue to be able to say it did
happen, it is all right, it is happening across this country,
to make sure that they are willing to come out and educate
themselves and educate others about this type of scam.
Ms. Greisman. Thank you, Senator, and we have enjoyed the
cooperative relationship with your former office as well.
You mentioned how do we get out into the community. Well,
we have had some 33 common-ground conferences throughout the
country. One was in Vegas with the help of your former office.
There we are working with grassroots members, people from the
Chamber of Commerce, legal service providers, obviously the
Attorneys General offices, local law enforcement. And the
discussions vary nationwide, but a lot of focus is on issues
affecting seniors in the community. And we learn from those
conferences. We push out our consumer education materials. We
will continue to do more on that front.
Money transfer services, well, I would like to sit here and
be cautiously optimistic that the near half-billion-dollar
settlement with Western Union will squeeze some of the fraud
out of that system, and I think it will. It is an order with
very rigorous requirements that, if they adhere to them, should
make a difference. Of course, if we are squeezing money out of
that system, then it is just going to find another path of less
resistance to move to.
There is no silver bullet in this. Education has to
complement law enforcement, and that is what we are committed
to doing. We certainly look forward to working with each and
every one of you to build upon what we have been doing.
Senator Cortez Masto. Thank you. And let me just add one
final thing. Diane, the Senior Medicare Patrol unit was in my
office. It is instrumental. I will always continue to support
it. I cannot tell you how many seniors not only were excited to
be a part of it, but we were able to uncover fraud. And I
cannot say enough about the journals, the diaries, the health
care diaries and journals that we would hand out to
individuals. It matters. They really pay attention when you
talk about it and when you have their peers talking to them
about how we address Medicare fraud and Medicaid fraud, which
we handled in my office. It made a difference. So I will
continue to support programs and advocacy, so thank you for
what you do.
Ms. Menio. Thank you.
Chairman Collins. Thank you, Senator.
Senator Flake.
Senator Flake. Thank you, Madam Chair. Thank you. Sorry if
I am plowing old ground here, but could you tell me what
innovative programs are already out there that the States have
come up with for addressing these senior scams? Anybody who
wants to start there.
Mr. Camus. As far as the States are concerned?
Senator Flake. Yes.
Mr. Camus. We work with multiple States, and we work with
law enforcement agencies, local and other Federal partners. And
I am not uniquely aware that any of the States that we are
working in have come up with innovative approaches, but I am
probably not the one that is best suited to answer that.
Senator Flake. All right.
Ms. Greisman. Many States have wonderful, robust programs
addressing fraud targeting seniors. Many have discrete offices
that directly focus on that, and to the extent possible, we
work closely with them. I had mentioned earlier our Pass It On
materials. We freely distribute those to the States. We urge
everyone to put their own name on it. We have no copyright
interest in it. We just want to pass on those materials so that
they can be used.
Senator Flake. Okay.
Ms. Menio. And can I just add that one of the tools we have
at the State level is the Older Adult Protective Services
Office, which often gets the first report on these cases. And I
just want to say that one of our recommendations is to make
sure that those programs are strong enough to do what they need
to do.
One of the things that they often lack is forensic
accountants, for instance, to be able to actually take on a
case and figure out what is happening. So we need more
resources in that program. And at the same time, we are aware
that the social services block grant funding is under question
at this point, and that is the money that often supports those
programs at the State level. So, you know, while we need to
enhance the funding for those programs, we need to at least
maintain the funding for those programs, because they are often
the first line. When Senator Rubio asked who to report to, I
did not answer his question, but what I meant to say was just
report it, it does not really matter, because when you report
it to one place, it will get to the right place eventually. And
that is what Protective Services does. It is the first line,
and it is very helpful to be able to get that person into the
system.
Senator Flake. Well, thank you, Ms. Menio. You mentioned in
your testimony that a beneficiary called to thank you for the
timely ScamWire alert she received in her home, and they
delivered a package shortly thereafter. Are there any
reoccurring services that seniors use where companies can
include these fraud alerts so that they can be delivered more--
--
Ms. Menio. Yes. We also distribute those to public
libraries, senior centers, senior housing. We distribute them
to a large number of places where we know--grocery stores,
places where people gather, where older people do business. And
the home-delivered meals project that we do is really focused
on people that we will not reach by going to a library or a
senior center or those kinds of places. It is the people who
are homebound and do not get out and would not get that message
otherwise. But we are trying to do that through many different
public venues.
Senator Flake. All right. Thank you, Madam Chair.
Chairman Collins. Thank you, Senator Flake.
Before you were here, Ms. Menio mentioned the Senior$afe
Act, which you were a cosponsor of in the last Congress and
which we have reintroduced. Senator Casey is a cosponsor. And
just yesterday, AARP has endorsed that bill along with we have
endorsements from Legal Services for the Elderly, the National
American Securities Administrators Association, the Conference
on State Bank Supervisors, the National Association of
Insurance Commissioners, and a wide variety of regulatory
groups, and that is one concrete action we could take in this
Congress that would really make a difference in empowering
those front-line tellers that our witnesses were describing and
who can make a real difference in stopping fraud right up
front. So I am going to ask unanimous consent that all of those
endorsement letters be entered into the record.
[The letters referred to are in the Appendix.]
Chairman Collins. Senator Warren.
Senator Warren. Thank you very much, Madam Chair, and thank
you very much for holding this hearing, you and the Ranking
Member. And I want to just follow up. I think your point about
how better to empower people on the front lines is really
important. I just want to look at another aspect of that.
As we know, the con artists who perpetuate IRS
impersonation scams, identity theft, and other forms of
financial exploitation often target seniors. And when a senior
needs to report that they were the victim of fraud, it is
frequently the men and women who work in our Government
enforcement and consumer protection agencies in Washington and
in all 50 States who are on the front lines taking their calls
and investigating their cases.
So it seems pretty obvious to me that one easy way to
protect America's seniors from fraud is to strengthen that
workforce. But instead of staffing up the workforce that cracks
down on scammers and fraudsters that hurt our seniors, on his
first full day in the Oval Office, President Trump issued an
Executive order freezing Federal hiring and starving our
enforcement agencies of their most important resource--American
workers.
So, Mr. Camus, you are Deputy Inspector General for
investigations at the Treasury Inspector General for Tax
Administration. Your job is to protect seniors against scammers
who pretend that the IRS is calling and trying to collect back
taxes. Almost 2 million people have reported this scam to your
office, and these scams have cost Americans more than $54
million. That is a lot of money.
Does a hiring freeze help you achieve your goal of
protecting seniors from fraud?
Mr. Camus. As you point out, Senator, these are--it is a
huge issue, and every one of these victims is a significant
challenge on our resources. So, naturally, I have been told I
am not allowed to pander for resources at these events, but----
Senator Warren. Okay. We will let you know if you have
crossed the line into pandering here.
[Laughter.]
Mr. Camus. I can tell you I am very proud and we are very
efficient agency, but certainly this has stretched our agency
very thin. We are seeking the exemption in the President's
order under a public safety clause, at least for the special
agent portion of our workforce.
Senator Warren. Well, I appreciate that, Mr. Camus. You
know, according to testimony from your office back in 2016,
``Reduced staffing has affected the IRS' ability to deliver its
priority program areas, including customer service and
enforcement.'' Given that your enforcement team is already
understaffed, I worry that this kind of hiring freeze is music
to criminals' ears.
Now, Mr. Camus, you also work with the Department of
Justice to help protect seniors from criminals who are trying
to defraud them. Will the hiring freeze help you with the DOJ?
Mr. Camus. Again, you know, it is--we are only limited, all
of us are only limited by how much resources we have, and we
are all very passionate about protecting all Americans, but
most especially our most vulnerable. That is why I took the
oath to be a law enforcement officer. So it is a challenge.
Resources are a challenge on a good day. So any disruption in
that is certainly a cause for concern.
I am not sure whether the Internal Revenue Service or the
Department of Justice have any exemptions available to them
under the order.
Senator Warren. All right. But if they do not?
Mr. Camus. I could not comment. I do not know the impact.
Senator Warren. You know, I just want to point out we have
seen this movie before. A 2011 hiring freeze at the Social
Security Administration eliminated 15 percent of the agency's
workforce and closed 64 field offices. Ms. Menio, you are the
executive director at the Center for Advocacy for the Rights &
Interests of the Elderly in Philadelphia.
Can you explain how the 2011 Social Security personnel
freeze affected the seniors that your center works with every
day?
Ms. Menio. Well, certainly it takes a lot longer to make an
appointment.
Senator Warren. So increased wait times.
Ms. Menio. I can tell you that we are--you know,
interestingly, the Social Security--I am in downtown
Philadelphia, and the Social Security office is in our
building. They have the top floor. And the way that it works is
no one goes upstairs until the guard lets them go upstairs, so
they get the message, ``You can send more people up.'' And that
line gets quite long, and people are standing there with their
walkers and their canes and waiting to go upstairs. And so that
is something I see every day.
I can also tell you that my staff spends a lot of time when
they are helping consumers doing three-way calls because we are
not--you know, we like to empower people and work with them,
but sometimes it is difficult for them to make that call on
their own. So we will sit with them, and they tell me it is 30
minutes to an hour sometimes they are waiting for that call to
get through.
We had a client who called us recently from the western
part of the State. Her husband died and she was collecting--she
wanted to switch her Social Security so she could collect on
his account, I believe something like that. And what happened
was--and, you know, I think this is illustrative of the short
staffing. She got lost in the system. She did not get a check
at all for 3 months, and that meant her Medicare Part B was not
being paid. And so she did not even have her health care during
that time. Eventually, we were able to help her get that back,
but, nevertheless, it was a very stressful time for her. It
should not have happened that way. It probably took more man-
hours from the Social Security office to fix this than it would
have taken to help her in the first place. So those are some of
the kinds of things we are seeing.
I also know that the Center on Budget and Policy Priorities
put out a report, and they said that less than 1 percent of
their expenses are spent on overhead. I cannot run my agency on
less than 1 percent--I wish I could, to be honest with you, but
I cannot. And so that just is not realistic. How can you
continue to provide the level of services to this aging
population, to many of us who are ready to, you know, go into
the Social Security system, into Medicare? We need to be able
to get that information as quickly as we can and work with
people without going through a lot of red tape and spending
hours on the phone and in offices.
Senator Warren. And I appreciate that. I just want to add a
couple of statistics if I can, and then I will quit. Thank you,
Madam Chair.
You know, appeals times also go up. She is talking about
helping people apply. But the appeals times go up. Almost
20,000 people died waiting for a disability eligibility
discussion in fiscal year 2016. You know, with all of these
negative consequences, you would at least hope that these
freezes save money. But what the data actually show is that
they do not save money, that we have a workforce that is just
more stressed, more inefficient. You spend more time trying to
fix the problems that are broken because you did not solve it
early on.
I just want to say I appreciate the work you are doing, and
I hope that we can give you better support to do it. Thank you.
Thank you, Madam Chair.
Chairman Collins. Thank you.
Senator Tillis.
Senator Tillis. Thank you, Madam Chair, and thank you all
for coming before the Committee and, at least in one case,
returning to the Committee.
I have got a more general question. This Committee is
intended to provide insights into seniors' abuse, caregiver
programs, those sorts of things, over the course of the last 2
years that I was on it. And then we have had some discussions
about legislative proposals here at the Federal level, and we
have talked about potential best practices down in the States.
But it does not seem to me we have made much progress, so could
you give me in any of your opinions, in the capacity before
this Committee, of examples of where I should be kinder in my
assessment? What kind of progress are we making at the State or
Federal level that you think is really moving the ball
substantially in the right direction? Mr. Camus, want to start
with you?
Mr. Camus. One of the biggest challenges I have, Senator,
is--and I have been working with staff here--as we investigate
crimes, we learn. We learn how they are doing it; we learn how
they are shifting. And as Senator Collins pointed out, the
criminals are watching every single thing that we do from all
over the world, and then they are adapting to what we do. It is
literally a cat-and-mouse game, and they will continue to
victimize our most vulnerable citizens because they can get
money. So any ideas that we have, we are happy to meet with
staff and talk about this is how the crime happened, so
legislatively, what are some of the areas that could be
explored.
One of the things we are excited about is in our
investigation through the FTC's help, we started working with
the Federal Communications Commission, and what we learned was
they have task forces under the U.S. Telecom Consortium that
are actually working on technology to block robocalls that are
coming in spoofed. And in one pilot, in the IRS----
Senator Tillis. Not political ones, right? No, I am
kidding.
[Laughter.]
Mr. Camus. In the robocall area, in a pilot, they were able
to block about 2 million spoofed calls that were coming in that
could have hit the seniors. How many people would have been
victimized by those calls?
And then the other area that we are excited about the
technology is there is a trace-back task force as well, and
what that will allow us to do as law enforcement is be able to
figure out, when the bad guys are calling in from offshore,
quickly determine where that call came from and then work with
partners offshore to try to get them investigated or taken out
of service.
Senator Tillis. How do we get to a point where we are
scaling some of those things to where we are going from kind of
a good proof of concept to a pervasive capability that--clearly
something like that could have a significant effect on a lot of
the nets that are being cast and then capturing seniors and
then taking advantage of them. So I think that is more of--we
will go down and just get an assessment for why I should feel
better about things that we can scale, but give me your read
down the panel.
Ms. Greisman. Thank you, Senator. I appreciate the
opportunity to be here again.
Aggressive continued law enforcement is ongoing, and it is
making a dent. It may not be a sustained dent, but you have
got--that is not a reason not to do it. I will point again to
the recent Western Union settlement, $586 million, with
significant injunctive relief requiring the company to change
how it does business in terms of fraud prevention.
The recent crackdown by DOJ with TIGTA on entities in the
U.S. and in India, targeting U.S. consumers with the IRS
imposter scam, those make a difference. We need to figure out
how to sustain them and implement them on a more permanent
basis.
Mr. Camus just referred to some of the work going on with
robocalls. We have been at this for years, and what has
happened as a result of it is that new technologies have been
developed, they are in the marketplace. One of the first ones
was a result of an FTC challenge back, I think, in 2012. These
are call-blocking technologies that work. And then there is
more great cooperation and coordination among industry and
Government to bring these technologies to the forefront and
also to develop--though it is not going to happen overnight--
caller ID authentication. That will provide a significant tool,
technological change that will prevent some of these calls from
hitting consumers. So I think there is good reason to be
optimistic.
Ms. Menio. Well, I wish I had some of their answers for
you, but we are not on that scale. But I think on a very large
scale, in a sense, our Senior Medicare Patrol is a good example
of this work, and it is in every State in this country. And I
can tell you right now we are working--we had some consumers,
some beneficiaries call us about something that we think is a
scam, not totally--we are not sure yet, and I am not going to
say what it is because it is being investigated right now. But
what we were able to do is get on the phone with people from
your State and from, I believe--I am not sure if it is Maine or
not, but it is one of the New England States--a number of
States with our colleagues who are doing the same work we are
doing, and we were finding out that the same scam is--or the
same situation is happening in each of those places, which made
it a lot easier for us to go to the Inspector General with
this. And so it is being investigated now. We think it might be
a very large scale issue. That is the way--but, again, it gets
back to that working in collaboration with other people is so
important, because we get two calls, we will say maybe it is a
problem, maybe it is not. It sounded fishy, so we definitely
wanted to look into it further. But with those two calls,
nothing was going to happen when we called the OIG. But once we
get our colleagues from other States identifying these problems
as well, then that makes a case. And I think something can
happen to protect people in the future through that situation.
Senator Tillis. Well, thank you, and I know that the Chair
has put together great proposals for programs that have worked
their way through Congress and authorizing maybe additional
initiatives that will be helpful. But it really also points to
why we have got to get to a regular order appropriations
process so that we then have the financial resources behind
these programs to scale them and get them implemented, and so
that we can come back and start measuring what I think are the
results that can come about. A lot of great ideas, a lot of
great pilots, a lot of great proofs of concept, a lot of great
law enforcement actions that we have just got to scale. And
then, also, if I had more time--I am way over now. At the end
of the day, most of what we are talking about here are the
cure. We have got to work on the prevention side, which means
that we have to continue to focus on education, destigmatizing
public acknowledgment that you have been abused, and doing
those kinds of things so that you very early in the cycle of
abuse prevent it from ever happening.
Thank you.
Chairman Collins. Thank you very much, Senator. I certainly
agree with your comments about the appropriations process. I
would indicate that, compared to the very first hearing that we
held on scams, we have come a long, long ways. Law enforcement
has stepped up to the plate, has started aggregating these
scams rather than dismissing them because they are only $2,000
here or $3,000 here. And when GAO came out with $2.9 billion
annually, I really think that helped, and our hearings helped
raise the awareness of the public and the need for aggressive
enforcement, the cases that were described earlier today. So I
am actually encouraged that we are making progress, but these
criminals are relentless and will continue.
Senator Tillis. Me, too, Madam Chair. I am just mad at the
people that do this, and I want them to suffer badly as a
result of it, as quickly as possible.
Chairman Collins. Well, there is nothing like putting
people in jail to be a good deterrent, that is for sure.
Senator Blumenthal.
Senator Blumenthal. Thank you, Madam Chairwoman, and thank
you for having this hearing and your very, very persistent
drive to increase the effectiveness of our laws and the
enforcement of them. And like my colleague from Nevada, I was
State Attorney General for some years--in fact, 20 years--and
we established a unit quite a while ago to focus on elder abuse
and criminal activity that victimizes them. And I agree as well
that education is among the best preventive steps. An ounce of
prevention is worth a pound of cure. Recovering money after the
fact is very difficult, but it is possible. And educating the
bad guys is important, at least as important as educating the
good guys, because educating them through deterrence, the Chair
is absolutely right that prison time teaches a very valuable
lesson.
So with that in mind, I introduced a bill called the
``Robert Matava Criminal Victim Abuse Prevention and
Restitution Act.'' It became, with bipartisan support, the
Elder Abuse Prevention and Prosecution Act, which was approved
by the Judiciary Committee. In fact, it is bipartisan. Senator
Grassley and I together lead it, and it would improve the
current law in a number of ways. It is now out of Committee. It
is on the House floor. We can approve it if we get bipartisan
support there; and if our distinguished leadership there puts
it on the floor, I am sure it will be approved near
unanimously.
It would expand data collection and information sharing to
better prevent and respond to elder abuse and exploitation. It
would increase training, improve information sharing among
agencies, and it would increase penalties for perpetrators of
these crimes. So the anger that my colleagues feel could be
channeled very positively and effectively against those bad
guys by passing this measure, including mandatory forfeiture to
deter future offenses.
Everybody here knows that what drives these crimes is
money. If you require mandatory forfeiture, it hits them where
they live. And mandatory forfeiture, in fact, will enable more
restitution so that we prevent by deterring but we also make
people whole, or at least work to make them whole.
So to any of you who would like to answer, do you believe
that mandatory forfeiture, restitution, and increased penalties
for perpetrators will be effective in deterring future criminal
activity? That is the softest ball that anybody has thrown to
you in quite a while.
[Laughter.]
Mr. Camus. As a career law enforcement man, yes. We work
really hard and we dedicate resources to investigate these, and
there is nothing like at the end of the day when my agents can
go to court and the perpetrator especially picking on our
vulnerable citizens gets a significant sentence. So the more
that we could punish them and the more that we can rapidly
recover any monies that are available--in many cases, there may
or may not be assets available--the better for us. So we
wholeheartedly agree with increased deterrence through
increased penalties.
Ms. Greisman. Senator, it is a delightful softball. We are
a civil law enforcement agency, so I cannot speak to it. I have
to defer to my criminal colleagues. I will say, though, that
anything that ramps up deterrence and helps us on the civil
side would be greatly appreciated.
Senator Blumenthal. Thank you.
Ms. Menio. And I would just like to add that I think one of
the reasons that elderly are targeted is that oftentimes the
perpetrators feel that they are not going to--and I am talking
more about that homespun type of financial exploitation that
happens. They just think they are going to get away with it,
because they do. And so one of the things we are advocating for
in Pennsylvania is enhanced sentencing for people who commit
crimes against the elderly.
So I think it is very, very important because the other
issue that we have often with crimes against the elderly is
that if someone does have dementia, oftentimes we are finding
that the police are not arresting because that person is not a
good witness in court, they are not a good reporter. So we have
got to get past that as well. And I can tell you of some
horrendous crimes that have been committed against people who
are without capacity. And we have got to come up with a system
to make sure that there is a reason for people not to do this,
that they are going to be a little afraid of taking advantage
of the elderly. So thank you for that.
Senator Blumenthal. Thank you all for your support, and
thank you for your great work. Thank you, Madam Chair.
Chairman Collins. Thank you.
I want to thank all of our witnesses today for your very
important contributions, whether it is law enforcement or
education or civil actions against those who would rip off some
of the most vulnerable citizens in our country, our Nation's
seniors.
As we have heard today and as our Committee's new Fraud
Book makes clear, criminals are relentless in their pursuit to
swindle seniors out of their hard-earned savings. We see
infinite varieties of these scams. Once one is closed down,
another pops up. I, too, have had those phone calls on my home
answering machine in Bangor, Maine, and I called the IG's
office up immediately because I was so excited. I thought I
could help entrap one of these criminals, and it turned out
that the numbers expire after 3 days. So that by the time I got
home for the weekend, the numbers were no good. I was so
crushed because I thought I could help bring these people to
justice, which is exactly what is the commitment of each and
every one of us here.
While much remains to be done, I am proud that this
Committee has been just as relentless as the criminals in
fighting back against this fraud, and the important work that
all of you are doing really contributes to our efforts.
I look forward to continuing to work with our Ranking
Member and with our returning and new members of the Committee
as we continue this fight in the new Congress. Committee
members will have until Friday, February 24th, to submit
questions for the record.
As a reminder, at the risk of sounding like one of those
late-night infomercials, the Committee's toll-free fraud
hotline number is 1-855-303-9470. 1-855-303-9470. The reason I
mention that is those 2,300 calls that we got last year enabled
us to identify new scams so that we could warn people and come
up with tips for avoiding people becoming victims. So we have
distributed so many copies of our Fraud Book and our postcard,
and we are going to continue those educational and prevention
efforts as well.
I would call on our Ranking Member if you have any
concluding remarks that you would like to make, Senator Casey.
Senator Casey. Thank you, Madam Chair. 1-855-303-9470.
[Laughter.]
Thank you for the message. Thanks very much.
Chairman Collins. Thank you. This concludes our hearing. It
is now adjourned.
[Whereupon, at 4:19 p.m., the Committee was adjourned.]
=======================================================================
APPENDIX
=======================================================================
=======================================================================
Prepared Witness Statements and Questions
for the Record
=======================================================================
Prepared Statement of Senator Susan M. Collins, Chairman
Good afternoon. I am pleased to welcome both new and returning
Members to the Committee, and I am delighted that my good friend,
Senator Casey, will serve as the Committee's new Ranking Member. My
apologies that this hearing had to be delayed from when it was first
scheduled on February 1st due to a long series of votes on the Senate
floor.
The Committee will continue its focus on three primary issues this
Congress: retirement security; biomedical research investments for
diseases like Alzheimer's and diabetes that disproportionately affect
seniors; and financial schemes and other scams targeting older
Americans--the subject of today's hearing.
Last summer, an 81-year-old constituent came to my office in
Portland, Maine, with an alarming story of deception and cruelty. A con
artist claiming to be an agent of the Internal Revenue Service had just
cheated him out of $8,000. He narrowly avoided losing $15,000 more.
After reporting the crime to local police, my constituent, Philip
Hatch, and his son came to my office. My staff gave him a copy of the
Fraud Book that this Committee produced last year and a post card that
we created with tips on avoiding scams. Mr. Hatch told us that the
tactics described in the materials we provided were exactly those used
by the scammer. If only he had received that information sooner, he
might have recognized the scam and avoided losing his hard-earned
savings.
Mr. Hatch was very willing to testify today, but health issues
prevent him from traveling. Instead, he graciously and courageously
provided a video in order to tell his story. We will see that in a
moment.
This episode demonstrates two important points. First, the
criminals who prey on seniors are relentless. They will harass seniors
until they have drained every penny in their life savings.
Second, this Committee's longstanding dedication to fighting fraud
against seniors is raising awareness and prompting enforcement actions
that are making a real difference. We must redouble our efforts to
educate seniors, their families, and caregivers.
The stakes are extremely high. According to the Government
Accountability Office, America's seniors lose a staggering $2.9 billion
each year to an ever-growing array of financial exploitation schemes
and scams.
Today's hearing coincides with the release of our Committee's 2017
Fraud Book. Like the book we published last year, it lists the top 10
scams being perpetrated against seniors, along with information on how
to recognize, avoid, and report them. In both years, the IRS
Impersonation Scam was the leading offender.
These lists are the result of calls made to our Committee's toll-
free fraud hotline. In 2015, Hotline staff fielded more than 1,100
calls. Last year, the Hotline's call volume doubled to more than 2,200.
It is clear that our efforts are raising public awareness. More
important, our efforts are producing real results.
I look forward to the testimony of the Treasury Inspector General's
Office today on recent evolutions in the IRS imposter scam, such as the
demand for payment in iTunes gift cards, to which Mr. Hatch and many
others have fallen victim. Raising awareness about the IRS scam is
particularly timely, as we are now in the midst of tax filing season.
Last May, thanks to the work of our hotline investigators, TIGTA
arrested five individuals in connection with the IRS imposter scam.
Federal authorities believe these suspects stole almost $3 million from
more than 1,200 victims. In October, 56 individuals and five call
centers in India were indicted in another case.
In addition to producing criminal charges, these efforts are making
it harder for criminals to find victims.
I also look forward to hearing from the Federal Trade Commission on
other scams targeting seniors, such as grant scams, counterfeit check
scams, and romance scams, which is timely with yesterday being
Valentine's Day.
As our 2017 Fraud Book makes clear, while we are making progress,
far too many victims are still losing money and, often, their
retirement savings, to these criminals. Law enforcement, consumer
protection, Area Agencies on Aging, and financial institutions play
vital roles, but alert citizens are our first and best line of defense.
I am proud of the Committee's work on this crucial issue to help
seniors become more aware and informed, and to put criminals on notice
that they will be stopped and brought to justice.
I now turn to Senator Casey for his opening statement.
__________
Prepared Statement of Senator Robert P. Casey Jr., Ranking Member
Good afternoon. I am pleased to join Chairman Collins in convening
this first hearing of the Special Committee on Aging for the 115th
Congress. I am glad to take on the role of Ranking Member of this
Committee at such a crucial time, knowing that the future of key
programs for older Americans like Medicare and Medicaid are on the
agenda of the new Administration. It is essential that we protect these
vital programs for older Americans, and the Aging Committee has an
important role to play in this work.
For today's hearing, we have the opportunity to hear from expert
witnesses on the challenging issue of combatting fraud and scams
targeting older Americans. Experts testifying today include Diane Menio
from the Pennsylvania senior advocacy organization CARIE, a group that
works every day to help older Americans live with dignity. Diane is
accompanied by Charlotte Kitler, a lawyer from Nanticoke, Pennsylvania
who is volunteering in her retirement years to protect her peers from
fraud through her work with the Senior Medicare Patrol. I look forward
to their comments as well as the testimony from our agency experts.
I'm also pleased to join with Senator Collins in releasing a
Committee report detailing the top 10 scams targeting our Nation's
seniors. This report is based on the experiences of more than 2,200
individuals who contacted the Committee's Fraud Hotline over the past
year. What we learned from these older Americans and their families not
only provided us an opportunity to help individual citizens, but it
also will inform the work of this Committee going forward. And, I am
pleased to have joined with Senator Collins in reintroducing the
Senior$afe Act last week. This important legislation both encourages
financial institutions to disclose suspected exploitation of seniors
when they see it and protects them from being sued for making these
reports if they have appropriately trained their staffs and make good
faith reports.
In the Commonwealth of Pennsylvania, more than one-in-six residents
is aged 65 or older. As a result, I know all too well how vulnerable
older Americans can be to fraudsters and scam artists and other abuse.
In fact, in 2015, over 22,000 cases of suspected elder abuse and
neglect were reported to the Pennsylvania Department of Aging's
protective services program.
That is why, last Spring, I held a field hearing of this Committee
in Wilkes-Barre, Pennsylvania to hear directly from my constituents--
both those affected by scams and those trying to prevent them. One
constituent from Kingston Township told the heartbreaking story of scam
artists attempting to steal the identify and use the credit cards of
her husband of 43 years after his death. Also at the hearing, the
Luzerne County District Attorney highlighted the most common type of
scam happening in the county--the sweepstakes or lottery scam. This is
one of the top 10 scams documented in the Committee's report and one
that we will hear about from some of today's witnesses. Victims are
promised lottery winnings if they just pay often sizable so-called
``taxes and fees'' up-front. The D.A. recalled one older victim being
scammed out of $85,000 in the hopes of retrieving $1 million in fake
lottery winnings.
Other common schemes include scammers impersonating IRS officials
demanding payment of unpaid tax bills; those claiming to be computer
support technicians to gain access to personal information stored on
the computer under the guise of ``fixing'' it; or those claiming to be
grandchildren in desperate need of a grandparents' money for bail or a
hospital bill or some other emergency. While experts struggle to
estimate the total financial impact of scams targeting seniors, mainly
because it is so underreported, they know it adds up to nearly $3
billion a year in lost savings--and potentially billions more. It isn't
just money that is lost in these scams, it is also older Americans'
sense of security and financial independence. It is outrageous that
people who worked hard all of their lives are being targeted for their
nest-eggs when they are at their most vulnerable. And, it is wrong that
seniors still feel afraid to report these schemes. They should not be
embarrassed or ashamed. They should know that we have their backs and
are here to help them fight back.
That is why enforcement is such a critical part of this discussion.
While it may not be easy to track down these increasingly sophisticated
scammers and their domestic and international networks and hold them
accountable, we must do so for the safety and security of our parents
and grandparents. I know that the tireless work of this Committee and
the federal agencies here today has helped make progress toward this
goal.
In fact, the Chair and I applauded the Federal Trade Commission and
the Justice Department settlement with Western Union in which the
company admitted to criminal anti-money laundering violations that have
disproportionately affected aging Americans. In some instances, Western
Union employees were directly responsible and aided in the fraud by
willfully ignoring warning signs. The $586 million settlement will be
used to compensate victims of fraud where Western Union agents were
complicit in the scams.
But there is more work to do, and we will continue to use the
spotlight of this Committee to both help consumers understand the
threat and highlight the need for action. It is for this reason that I
will continue to fight to ensure that the Consumer Financial Protection
Bureau has the resources to help. The CFPB houses the only federal
office solely focused on sharing financial information with seniors and
educating seniors about how to prevent becoming the victim of fraud.
Until recently, this office was led by former Pennsylvania Secretary of
Aging, Nora Dowd Eisenhower.
We also need to keep up the fight against health care fraud and
abuse that we launched through the Affordable Care Act. In fact, the
government has realized a record-breaking $10.7 billion in recoveries
of health care fraud in the last three years. Thanks to the ACA, we
have new tools like increased federal sentencing guidelines for health
care fraud and enhanced screening for providers and suppliers who may
pose a higher risk of fraud or abuse. And, the law provides an
additional $350 million over 10 years to boost anti-fraud efforts. We
also know that proposals to block grant Medicaid could present states
with a significant barrier to addressing waste, fraud, and abuse in the
program. Block grants could jeopardize funding for program integrity
resources, as states would lose federal program integrity resources
that currently go along with Medicaid matching dollars.
I look forward to hearing from our witnesses about what more we can
all be doing to fight fraud and abuse.
__________
Prepared Statement of Philip Hatch
My name is Philip Hatch. I'm 81 years old, and I'm from Portland,
Maine, born and raised.
I received a telephone call. I answered the phone and the man said
he was a representative from the Internal Revenue Service. I said what
can I do to help you? He said, ``well we've gone through the records
and there has been a mistake on your returns and you owe $5,988 and
some odd cents.'' So, I said fine--tell me who I make the check out to
and I'll mail it. He said ``well we can't do that. We have a warrant
out for your arrest. The marshals will be in your house within the
hour.'' I said well what would you like me to do to help resolve this?
They said, ``you can go to CVS and get those iTunes cards and when you
come back you can read the numbers off to us.'' I said this doesn't
seem like a very professional way to do this. They said, ``well it's
either that or the marshals are coming. If we do this I can tell them
not to come.'' So I did. I went and got these little iTunes cards and
read them off to them and they said ``alright you can't tell anybody
about this.'' I said what do you mean I can't tell anybody about this?
I'm gonna tell the guy who does my tax returns. I'm a little mad at
him. He made a mistake. He said, ``No. Don't do that. It will all be
taken care of.'' This started at four in the afternoon and went on to
eight o'clock at night. They called me the next day and said there was
mistake. I said what do you mean a mistake? It wasn't $5,900 something
dollars it was $23,000. They had someone call me on the regular phone
who said he was a Portland Police Officer and that they have a local
warrant out for my arrest. So I put my son on the phone and he says
``who's this?'' They asked who this was and he gave them a phony name
and said he was an FBI agent and they said ``whoops'' and they hung up.
That was the end of it. But I had already sent in $8,000 to these
people.
Being in the military and working for the government--you know when
the government calls up you say aye aye sir. What do you need? Can I
help you? Okay.
Maybe if I hadn't had that background, I wouldn't have been so
cooperative. But I was mad--upset that I was taken in. Just give me
five minutes in a room alone with these people and I'd be happy.
All I can say is just be wary. Just be careful. When it comes to
someone going after your money just say `I'll think about it tonight
and get back to you tomorrow and contact someone about it.'''
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Prepared Statement Lois Greisman
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
=======================================================================
Additional Statements for the Record
=======================================================================
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]