[Senate Report 113-305]
[From the U.S. Government Publishing Office]


113th Congress   }                                     {       Report
                                 SENATE
 2d Session      }                                     {      113-305                                                               
_______________________________________________________________________

                                     


   FIGHTING FRAUD: LESSONS LEARNED FROM THE SENATE AGING COMMITTEE'S 
                            CONSUMER HOTLINE

                               __________

                              R E P O R T

                                 of the

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


               December 11, 2014.--Ordered to be printed
               
                                      ______

                         U.S. GOVERNMENT PRINTING OFFICE 

49-010                         WASHINGTON : 2014             
               
               
       
       
       
       
       
       
       
               
               
                       SPECIAL COMMITTEE ON AGING

                     BILL NELSON, Florida, Chairman
BOB CASEY, Pennsylvania              SUSAN COLLINS, Maine
CLAIRE McCASKILL, Missouri             Ranking Member
SHELDON WHITEHOUSE, Rhode Island     BOB CORKER, Tennessee
KIRSTEN GILLIBRAND, New York         ORRIN HATCH, Utah
JOE MANCHIN, West Virginia           MARK KIRK, Illinois
RICHARD BLUMENTHAL, Connecticut      DEAN HELLER, Nevada
TAMMY BALDWIN, Wisconsin             JEFF FLAKE, Arizona
JOE DONNELLY, Indiana                KELLY AYOTTE, New Hampshire
ELIZABETH WARREN, Massachusetts      TIM SCOTT, South Carolina
JOHN WALSH, Montana                  TED CRUZ, Texas

                       Kim Lipsky, Staff Director
                    Priscilla Hanley, Staff Director
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                         LETTER OF TRANSMITTAL

                              ----------                              

                                       U.S. Senate,
                                Special Committee on Aging,
                                 Washington, DC, December 11, 2014.
Hon. Joe Biden,
President, U.S. Senate,
Washington, DC.
    Dear Mr. President: Under the authority of Senate 
Resolution 253, agreed to on October 3, 2013, I am submitting 
to you a report of the U.S. Senate Special Committee on Aging 
entitled: Fighting Fraud: Lessons Learned from the Senate Aging 
Committee's Consumer Hotline.
    Senate Resolution 4, the Committee Systems Reorganization 
Amendments of 1977, authorizes the Special Committee on Aging 
``to conduct a continuing study of any and all matters 
pertaining to problems and opportunities of older people, 
including but not limited to, problems and opportunities of 
maintaining health, of assuring adequate income, of finding 
employment, of engaging in productive and rewarding activity, 
of securing proper housing and, when necessary, of obtaining 
care and assistance.'' Senate Resolution 4 also requires that 
the result of these studies and recommendations be reported to 
the Senate annually.
    I am pleased to transmit this report to you.
            Sincerely,
                                             Bill Nelson, Chairman.
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                            C O N T E N T S

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                                                                   Page
Executive Summary................................................     1
  I. Introduction.....................................................1
 II. Computer Scams...................................................4
III. Grandparent Scams................................................6
 IV. Health-Related Scams.............................................8
  V. Identity Theft..................................................10
 VI. Lottery Scams...................................................12
        a. Jamaican Lottery Scams................................    13
VII. Social Security Fraud...........................................17
VIII.Timeshare Scams.................................................18

 IX. Fraud Involving Guardianship....................................19
  X. Conclusion......................................................20
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
113th Congress   }                                      {        Report
                                 SENATE
 2d Session      }                                      {       113-305

======================================================================



 
   FIGHTING FRAUD: LESSONS LEARNED FROM THE SENATE AGING COMMITTEE'S 
                            CONSUMER HOTLINE

                                _______
                                

               December 11, 2014.--Ordered to be printed

                                _______
                                

    Mr. Nelson, from the Special Committee on Aging, submitted the 
                               following

                              R E P O R T

                              ----------                              


                           EXECUTIVE SUMMARY

    Recognizing the epidemic of fraud perpetrated against 
seniors in the United States, and the extent to which the 
victims of fraud are often unsure of where they should turn for 
help, the United States Senate Special Committee on Aging 
launched a Fraud Hotline in November 2013. In the Hotline's 
first year, Committee staff has responded to more than 1,900 
reports of fraud impacting seniors. Categories of fraud 
commonly reported to the Hotline included phone scams, such as 
international lottery scams and impostor scams, identity theft, 
Social Security fraud and tax-related fraud. Every day, the 
Hotline not only shares valuable information with older 
Americans and their loved ones who reach out for assistance, 
but it also provides crucial information to the Committee by 
offering a real-time glimpse into the nature and variety of 
scams targeting seniors--information the Committee has used to 
better focus its investigations, hearings and efforts to 
educate and protect older consumers.

                            I. INTRODUCTION

    In the 113th Congress, the U.S. Senate Special Committee on 
Aging has pursued an aggressive agenda aimed at protecting 
older Americans from fraudulent and deceptive practices. As 
Chairman and Ranking Member of the Committee, Senators Bill 
Nelson and Susan Collins have held hearings to examine a 
variety of scams often targeted at seniors. At the beginning of 
2013, the Committee focused its attention on the Jamaican 
lottery scam, a widespread scheme in which fraudsters lead 
victims to believe they have won a lottery but must pay upfront 
fees or taxes before their winnings can be released.\1\ The 
following month, the Committee held a hearing to explore ways 
to combat tax-related identity theft,\2\ a crime that grew 
rapidly from 2008 to 2012, according to the Internal Revenue 
Service Taxpayer Advocate Service.\3\ The Committee then held a 
hearing to spotlight the targeting of Social Security benefits 
by identity thieves in which it examined steps the Social 
Security Administration (SSA) and the Department of Treasury 
were taking to combat this fraud.\4\
---------------------------------------------------------------------------
    \1\U.S. Senate Special Committee on Aging, 876-SCAM: Jamaican Phone 
Fraud Targeting Seniors (March 13, 2013) (online at http://
www.aging.senate.gov/hearings/hearing-876-scam-jamaican-phone-fraud-
targeting-seniors)
    \2\U.S. Senate Special Committee on Aging, Tax-Related Identity 
Theft: An Epidemic Facing Seniors and Taxpayers (April 10, 2013) 
(online at http://www.aging.senate.gov/hearings/tax-related-identity-
theft-an-epidemic-facing-seniors-and-taxpayers)
    \3\Taxpayer Advocate Service, 2012 Annual Report to Congress (Dec. 
31, 2012) (online at http://www.taxpayeradvocate.irs.gov/userfiles/
file/2012-Annual-Report-to-Congress-Executive-Summary.pdf)
    \4\U.S. Senate Special Committee on Aging, Social Security Payments 
go Paperless: Protecting Seniors from Fraud and Confusion (June 19, 
2013) (online at http://www.aging.serate.gov/hearings/social-security-
payments-go-paperless-protecting-seniors-from-fraud-and-confusion)
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    In March of 2014, the Committee examined fraud in the 
Medicare program and ways in which fraud prevention measures 
might be strengthened to protect seniors and taxpayers.\5\ The 
following month, the Committee released the findings of a year-
long Committee staff investigation into unscrupulous precious 
metals firms and held a hearing to explore its findings.\6\ 
Also in April of 2014, the Committee released an investigative 
report that detailed potentially widespread deception in the 
promotion of sweepstakes popular among seniors.\7\
---------------------------------------------------------------------------
    \5\U.S. Senate Special Committee on Aging, Preventing Medicare 
Fraud: How Can We Best Protect Seniors and Taxpayers? (March 26, 2014) 
(online at http://www.aging.senate.gov/hearings/preventing-medicare-
fraud-how-can-we-best-protect-seniors-and-taxpayers)
    \6\U.S. Senate Special Committee on Aging, Exploring the Perils of 
the Precious Metals Market (April 30, 2014) (online at http://
www.aging.senate.gov/hearings/exploring-the-perils-of-the-precious-
metals-market)
    \7\U.S. Senate Special Committee on Aging, Pushing the Envelope: 
Publishers Clearing House in the New Era of Direct Marketing, Senate 
Report 113-153 (April 11, 2014) (online at: http://
www.aging.senate.gov/imo/media/doc/PCH_REPORT_4_20141.pdf)
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    In July of this year, the Committee revisited the scourge 
of phone scams, with particular emphasis on the grandparent 
scam--in which a con artist impersonates a family member or 
friend--and heard testimony from the Federal Bureau of 
Investigations (FBI) and Federal Trade Commission (FTC) about 
their efforts to track down the fraudsters.\8\ Most recently, 
the Committee examined the role of the private sector in 
stemming the tide of phone scams.\9\
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    \8\U.S. Senate Special Committee on Aging, Hanging Up on Phone 
Scams: Progress and Potential Solutions to this Scourge (July 16, 2014) 
(online at http://www.aging.senate.gov/hearings/-hanging-up-on-phone-
scams-progress-and-potential-solutions-to-this-scourge)
    \9\U.S. Senate Special Committee on Aging, Private Industry's Role 
in Stemming the Tide of Phone Scams (Nov. 19, 2014) (online at http://
www.aging.senate.gov/hearings/private-industrys-role-in-stemming-the-
tide-of-phone-scams)
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    As the Committee has examined this array of scams in its 
investigations and hearings, two issues that have arisen 
repeatedly include the frequency with which victims do not 
report fraud and the difficulty they encounter in determining 
where they should turn when they wish to report a scam to law 
enforcement. These concerns are not new, but rather, they are 
well documented. For example, an AARP study found that 75 
percent of victims age 55 and over did not report the 
fraud.\10\ A study by the National White Collar Crime Center 
found that, even when victims did report a scam, only 12 
percent reported to a criminal justice entity.\11\
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    \10\AARP, AARP Foundation National Fraud Victim Study (March 2011) 
(online at http://assets.aarp.org/rgcenter/econ/fraud-victims-11.pdf)
    \11\National White Collar Crime Center, The 2010 National Public 
Survey on White Collar Crime (Dec. 2010) (online at http://
www.nw3c.org/docs/publications/2010-national-public-survey-on-white-
collar-crime.pdf?sfvrsn=8)
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    In the context of these concerns, the Committee launched 
its Fraud Hotline, an innovative resource to which individuals 
can report instances of fraud or scams affecting seniors. The 
Hotline is consistently staffed during business hours with 
investigators who have experience with investment scams, 
identity theft, bogus sweepstakes and lottery schemes, Medicare 
and Social Security fraud and a variety of other scams of which 
seniors are often the victims.
    The Hotline seeks to assist individual consumers by 
providing callers with personalized advice regarding steps that 
can be taken when a senior is the target of a scam, including 
where to report the fraud and ways to reduce the likelihood 
that the senior becomes a victim or repeat victim. Seniors are 
typically referred by investigators to the local, state and/or 
federal law enforcement entities with jurisdiction over the 
particular scam. In addition to law enforcement, Committee 
staff may also direct seniors to other resources, such as 
consumer protection groups, legal aid clinics, Congressional 
caseworkers or local nonprofits that provide aid to seniors.
    When appropriate, seniors are also provided with steps they 
can take to reduce the likelihood that they become victims or 
repeat victims. For example, when a senior reports an instance 
of identity theft, he may be advised to place a fraud alert on 
his credit report with a major, national credit bureau; order 
free credit reports to ensure that he is aware of all attempts 
to fraudulently open accounts using his identity; contact his 
bank, credit card company or any other financial institution; 
and create an identity theft affidavit by reporting the theft 
to the FTC and filing a police report.\12\ The victim should 
also report it to the Internal Revenue Service (IRS), who will 
flag his account and take precautions against someone 
fraudulently filing a tax return.
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    \12\Federal Trade Commission, Immediate Steps to Repair Identity 
Theft (August 2012) (online at http://www.consumer.ftc.gov/articles/
0274-immediate-steps-repair-identity-theft)
---------------------------------------------------------------------------
    Meanwhile, the Hotline allows the Committee to keep a 
detailed and current record of common fraud schemes impacting 
seniors, which informs the efforts of the Committee, and 
ultimately the work of the U.S. Congress. With the goal of 
protecting the hard-earned life savings of older Americans, the 
Committee has used information gained through the Hotline to 
inform its investigations, hearings and efforts to educate 
older consumers--and to bring greater awareness to the epidemic 
of fraud perpetrated against our nation's seniors.
    The resources offered by the Hotline were highlighted in 
numerous news articles across the country, including the 
January/February 2014 AARP Bulletin, which described the 
Hotline as a new effort aimed at shrinking the estimated $2.9 
billion that older Americans lose to fraud each year.\13\ 
Additionally, the New York Times featured the Hotline in a 
November 2013 article that explained that the resource ``will 
give harried seniors and family members another place to turn 
besides local law enforcement, the Federal Trade Commission and 
adult protective services agencies.''\14\ The Hotline was also 
featured in various local publications.\15\ Since its November 
2013 launch, the Hotline has already responded to more than 
1,900 individuals over the phone or through its online form.
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    \13\Steve Mencher, Taking a Bite Out of Fraud, AARP Bulletin (Jan.-
Feb. 2014), p. 6.
    \14\Paula Span, A New Way to Report Fraud, New York Times (Nov. 26, 
2013) (online at http://newoldage.blogs.nytimes.com/2013/11/26/a-new-
way-to-report-fraud/?_php=true&_type=blogs&_r=0)
    \15\See, e.g., Sheryl Harris, Senate Aging Committee Creates Fraud 
Hotline for Seniors: Plain Dealing, cleveland.com (Nov. 19, 2013) 
(online at http://www.cleveland.com/consumeraffairs/index.ssf/2013/11/
senate_aging_committee_creates.html); Senate Aging Committee Launches 
Anti-Fraud Hotline: 1-855-303-9470, St. John Valley Times (Nov. 13, 
2013) (online at http://www.sjvalley-times.com/view/full_story/
24048871/article-Senate-Aging-Committee-launches-anti-fraud-hotline--1-
855-303-9470); and Alejandra Matos, Senate Launches Anti-Fraud Hotline 
for Seniors, Star Tribune (Jan. 20, 2014) (online at http://
www.startribune.com/local/blogs/241188101.html)
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    This report serves as an overview of scams reported to the 
Hotline. The most common fraud schemes are highlighted, with a 
description of the scam and real-life stories of victims from 
across the country. Victims' names have been changed to protect 
their confidentiality and prevent the possibility of 
revictimization. It should be noted that some victims' 
experiences overlap into multiple categories of scams. For 
example, once an individual becomes the victim of identity 
theft, his information may also be used to commit fraud by 
redirecting his Social Security payment or by claiming his tax 
refund.
    The most common scams reported to the Hotline include:
           Computer scams;
           Grandparent scams;
           Health-related scams, especially medical 
        alert device scams;
           Identity theft, including reports of tax-
        related identity theft;
           Lottery scams, including reports of the 
        Jamaican lottery scam;
           Social Security fraud;
           Timeshare scams; and
    In addition to these categories, the Hotline has received 
more than 800 miscellaneous consumer complaints, which include 
many reports of deceptive business practices. The Hotline has 
also received a number of reports regarding guardianship 
issues, which typically involve financial abuse of a senior.

                           II. COMPUTER SCAMS

    Increasingly, fraudsters have utilized computers to acquire 
personal information from victims. They often target seniors, 
who may be less technologically savvy than younger consumers. 
In a common variation of the scam, often referred to as a 
``tech support'' scam, fraudsters gain the victim's trust by 
pretending to be from a well-known technology company, such as 
Microsoft, Dell or McAfee, claiming they can stop an impending 
computer hack or virus. In a typical variation of the scam, the 
fraudster will direct the senior to a screen on his computer 
that displays an activity log of the system, which the scammer 
will claim shows that the computer has been compromised. In 
reality, what is displayed on this screen is normal and does 
not indicate that there is any problem. Preying on the senior's 
fear, the scammers will then insist upon gaining remote access 
to a computer in order to fix the so-called emergency. Once 
they have gained access to the device, hackers will change the 
computer's settings to increase the computer's vulnerability, 
enroll the victim in worthless computer warranty programs, 
request credit card information to bill for supposed computer 
protection services, install malware to steal sensitive data or 
personal information and/or direct a victim to a fraudulent 
website to purchase software with a credit card.\16\
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    \16\FTC, Consumer Information: Tech Support Scams (Jan. 2014) 
(online at http://www.consumer.ftc.gov/articles/0346-tech-support-
scams)
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    In October 2012, the FTC announced an international 
crackdown on tech support scammers, charging six operations, 
mostly based in India, with contacting consumers over the phone 
and pretending to be from legitimate computer companies.\17\ 
The scammers tricked consumers into believing their computers 
were riddled with malware and then charged them to ``fix'' the 
problems. According to the FTC, the companies utilized 80 
different domain names and 130 different phone numbers. Earlier 
this year, a U.S. District Court ordered the scam operators to 
pay more than $5.1 million.\18\
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    \17\FTC, FTC Halts Massive Tech Support Scams (Oct. 3, 2012) 
(online at http://www.ftc.gov/news-events/press-releases/2012/10/ftc-
halts-massive-tech-support-scams)
    \18\FTC, Federal Court Orders Tech Support Scammers to Pay More 
Than $5.1 Million (July 24, 2014) (online at http://www.ftc.gov/news-
events/press-releases/2014/07/federal-court-orders-tech-support-
scammers-pay-more-51-million)
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    Depending on the extent of a computer scam victim's 
experience, investigators may direct the victim to several 
resources, including:
           The Internet Crime Complaint Center, also 
        known as IC3, which is a partnership between the FBI 
        and the National White Collar Crime Center.\19\ The IC3 
        receives Internet-related complaints and refers them to 
        federal, state, local or international law enforcement 
        and/or regulatory agencies for whatever investigation 
        they deem to be appropriate. The IC3 also provides 
        information on current Internet schemes. In its 2013 
        annual report, the IC3 noted that the total combined 
        losses for individuals over the age of 60 from reported 
        Internet-related scams in 2013 were $160,129,686;\20\ 
        and
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    \19\The Internet Crime Complaint Center, About IC3 (online at 
http://www.ic3.gov/about/default.aspx)
    \20\The Internet Crime Complaint Center, 2013 Internet Crime Report 
(May 2014) (online at http://www.nw3c.org/docs/IC3-Annual-Reports/2013-
ic3-internet-crime-report.pdf?sfvrsn=4)
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           The FTC, which is a beneficial resource for 
        victims who would like more information on current 
        Internet scams. The FTC also manages a scam email 
        account for those who would like to report phishing 
        emails.\21\
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    \21\FTC, Consumer Information: Phishing (Sept. 2011) (online at 
http://www.consumer.ftc.gov/articles/0003-phishing)
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    The Hotline has received a number of reports of computer 
scams, including the following stories:
     Margaret, a Florida resident, called the Hotline 
with concern about her husband, who was the victim of a 
computer scam. A fraudster, who claimed he was calling on 
behalf of Microsoft, contacted Margaret's husband and convinced 
him to send $400 via Western Union money transfer to pay for 
virus protections services. Margaret requested that an 
investigator speak to her husband to give him information about 
the prevalence of these scams and advice on how he might 
protect himself in the future. Like many seniors who contact 
the Hotline, Margaret's husband was very embarrassed about what 
had occurred. An investigator spoke with Margaret's husband and 
explained the prevalence of this scam and ways he might protect 
himself in the future. She was also encouraged to report the 
scams to the FTC.
     Steven, from Boston, Massachusetts, received a 
phone call from a scammer posing as a representative from 
Microsoft. The scammer claimed Steven's computer needed 
maintenance. The scammer was able to gain remote access to his 
computer and showed Steven a list of files that supposedly 
needed to be removed. Steven provided the scammer with his 
debit card information to pay for $10 service fee. Later, 
Steven realized that he had actually been charged $800. He 
contacted his bank to report the scam, but he was informed that 
the bank would be unable to recover his money. He is still 
receiving phone calls from fraudulent computer companies 
claiming he needs additional maintenance on his computer. An 
investigator encouraged Steven to report the scam to the FTC. 
The investigator also explained that Steven could contact his 
phone service provider to inquire about blocking some of the 
numbers from which he is still receiving the harassing calls.
     Bill from New York was scammed out of $750 after 
he received a phone call from someone claiming he had a virus 
on his computer that needed to be removed. After gaining remote 
access to his computer, the scammer convinced him to send a 
check to an address in Arizona. Bill did not realize that he 
was the victim of a scam until after the check had been cashed, 
and he has been unable to recover any of the money. Bill had 
already reported the scam to the New York Attorney General's 
office, which was looking into the matter, but he wanted to 
also make the Committee aware of this scam.

                         III. GRANDPARENT SCAMS

    The Committee has received an alarming number of reports of 
scammers posing as a family member in need of help. Scammers 
claim they are with a family member, often a grandchild, who is 
in urgent need of money to cover medical care or fix a legal 
problem, such as money for bail or legal services after a 
supposed arrest. Scammers may obtain personal family 
information from social networking sites, which they use to 
make their stories more convincing.\22\ In many cases, scammers 
will ask a victim to send money via a wire transfer service or 
purchase a prepaid debit product, such as the Green Dot 
MoneyPak.\23\ The FTC categorizes grandparent scams as a subset 
of scams known as impostor scams. Impostor scams were the 
fourth most prevalent scam in 2013, with a total of 121,720 
incidents reported to the FTC.\24\
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    \22\Federal Bureau of Investigations, The Grandparent Scam: Don't 
Let it Happen to You (April 2, 2012) (online at http://www.fbi.gov/
news/stories/2012/april/grandparent_040212)
    \23\Green Dot, About MoneyPak (online at https://www.moneypak.com/
AboutMoneyPak.aspx)
    \24\FTC, Consumer Sentinel Network Data Book for January-December 
2013 (Feb. 2014) (online at http://www.ftc.gov/system/files/documents/
reports/consumer-sentinel-network-data-book-january-december-2013/
sentinel-cy2013.pdf)
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    The Committee held a hearing on July 16, 2014, to examine 
the role of the federal government, especially the FTC and FBI, 
in combating phone scams, with particular attention paid to the 
grandparent scam.\25\ An Ohio grandfather explained how he lost 
$7,000 after he received a call from someone impersonating his 
grandson and claiming he had been arrested and needed bail 
money immediately.\26\ The victim transferred money to the 
fraudsters using Green Dot MoneyPaks, which are PIN-based 
reload cards that allow a scammer to remotely receive payment 
from a victim in a manner that is very difficult to trace. Last 
year, Americans reported losing $42.86 million to schemes 
involving prepaid products.\27\ The MoneyPak is the prepaid 
reload card of choice for many scammers and a product the 
Committee has examined closely, along with two corresponding 
products: InComm's Vanilla Reload\28\ and Blackhawk Network's 
Reloadit Pack.\29\ During the hearing, Chairman Nelson 
announced that Green Dot would be discontinuing their MoneyPak 
product in the coming months.\30\ Additionally, InComm recently 
announced that it would also be pulling its Vanilla Reload in 
the first quarter of 2015, and Blackhawk shared with the 
Committee its plans to introduce enhanced security 
features.\31\
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    \25\U.S. Senate Special Committee on Aging, Hanging Up on Phone 
Scams: Progress and Potential Solutions to this Scourge (July 16, 2014) 
(online at http://www.aging.senate.gov/hearings/-hanging-up-on-phone-
scams-progress-and-potential-solutions-to-this-scourge)
    \26\Cincinnati.com, Local Testifies About `Grandparent Scam' Before 
Senate (July 16, 2014) (online at http://www.cincinnati.com/story/news/
crime/2014/07/16/cincinnati-man-grandparent-scam-senate/12762055/)
    \27\Matthew Goldstein, MoneyPak, a Popular Prepaid Money Card, 
Opens Path to Fraud Schemes (July 31, 2014) (online at http://
dealbook.nytimes.com/2014/07/31/popular-prepaid-money-card-opens-path-
to-fraud-schemes/?_php=true&_type=blogs&_r=0)
    \28\See Vanilla Reload, How Reload Works (online at https://
www.vanillareload.com/howitworks)
    \29\See Reloadit, How it Works (online at https://www.reloadit.com/
HowItWorks)
    \30\U.S. Senate Special Committee on Aging, Hanging Up on Phone 
Scams: Progress and Potential Solutions to this Scourge, Opening 
Statement of Chairman Nelson (July 16, 2014) (online at http://
www.aging.senate.gov/imo/media/doc/Nelson_7_16_14.pdf)
    \31\U.S. Senate Special Committee on Aging, Private Industry's Role 
in Stemming the Tide of Phone Scams, Testimony of Skeet Rolling and 
William Y. Tauscher (Nov. 19, 2014) (online at http://
www.aging.senate.gov/hearings/private-industrys-role-in-stemming-the-
tide-of-phone-scams)
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    Resources to which victims of grandparent scams are 
referred include:
           State Attorneys General;
           State consumer protection agencies;
           Local law enforcement authorities;
           The Department of Homeland Security's 
        Immigration and Customs Enforcement (ICE) tip line; and
           The FTC.
    Committee staff continues to explore what can be done to 
help seniors defend against fraudulent calls before they pick 
up the phone.
    Grandparent scam victims have reported the following 
stories through the Hotline:
     Mary, who lives in Illinois, received a phone call 
from a scammer posing as her grandson. He claimed he was on 
vacation in the Dominican Republic and was calling because he 
had been arrested for drug possession. He pleaded that she keep 
the arrest a secret from his parents until he was safe. The 
scammer sounded just like her grandson and gave Mary specific 
directives on what she should say at the bank in order to 
withdraw a significant amount of money without raising 
suspicions. The scam continued to evolve, and he later asked 
for money for a lawyer. In the end, Mary lost over $25,000. She 
had already reported the scam to local, state and federal law 
enforcement, but she had been unable to recover any money. She 
contacted the Hotline to share her story so that others could 
be educated and avoid the difficulty she had experienced.
     Emily in Louisiana received a phone call from a 
scammer who she believed was her son. The scammer said he was 
in jail in Mexico City and asked Emily to contact a bail 
bondsman as soon as possible. Emily sent the scammers $20,000. 
The next day, Emily received a phone call from her son, who was 
at home in California. He informed her that he was never in 
Mexico City. Emily contacted the Hotline in search of guidance 
on what law enforcement entities might be able to investigate 
this crime. An investigator provided Emily with the contact 
information for the ICE tip line, the FTC and her state 
Attorney General to report the scam for further investigation.
     Mark's grandmother, a resident of California, was 
contacted by an individual claiming to be from the United 
States Embassy in Mexico. He alleged that Mark had been 
arrested on drug charges. The scam went on for over a month and 
Mark's grandmother sent the scammers more than $70,000, costing 
her nearly all of her life savings. Mark contacted the Hotline 
to share his grandmother's story, hoping it could be used to 
educate other seniors and prevent future scams. The Committee 
was ultimately able to connect Mark with a journalist who was 
interested in writing about his grandmother's story to warn 
unsuspecting seniors of this scam.
     Robert, a California resident, received a call 
from a scammer posing as his oldest grandson. He claimed he had 
been in an accident and was in a hospital in Mexico. He asked 
Robert for money to pay his hospital bill, which he said he had 
to do before he would be allowed to leave the country. Robert 
sent money, but he soon found out he was the victim of a scam. 
He contacted the Hotline to inquire about whether he might have 
any recourse. An investigator provided Robert with the contact 
information for the FTC, the ICE tip line and his state's 
Attorney General.

                        IV. HEALTH-RELATED SCAMS

    The Committee has sought to address the significant 
challenge of Medicare fraud with consistent oversight of the 
Department of Health & Human Services' (HHS) fraud prevention 
efforts targeted at Medicare payments.\32\ Although estimating 
how much money is lost each year to Medicare fraud presents 
various challenges, there is no doubt the number is staggering, 
with one estimate of $60-$90 billion.\33\
---------------------------------------------------------------------------
    \32\Department of Health and Human Services, Center for Medicare & 
Medicaid Services, Medicare Fraud & Abuse--Prevention, Detection, and 
Reporting (Aug. 2014) (online at http://www.cms.gov/Outreach-and-
Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/
Fraud_and_Abuse.pdf)
    \33\Merrill Matthews, Medicare and Medicaid Fraud is Costing 
Taxpayers Billions (May 2012) (online at http://www.forbes.com/sites/
merrillmatthews/2012/05/31/medicare-and-medicaid-fraud-is-costing-
taxpayers-billions/2/)
---------------------------------------------------------------------------
    In March 2014, the Committee held a hearing titled: 
``Preventing Medicare Fraud: How Can We Best Protect Seniors 
and Taxpayers?''\34\ The hearing highlighted expanded authority 
granted by the Affordable Care Act to the Centers for Medicare 
and Medicaid Services (CMS) to use in its fight against fraud. 
The cost of Medicare fraud, however, is not limited to the 
number of dollars lost, and the Hotline is a reminder of the 
toll Medicare fraud can take on the life of a vulnerable 
senior.
---------------------------------------------------------------------------
    \34\U.S. Senate Special Committee on Aging, Preventing Medicare 
Fraud: How Can We Best Protect Seniors and Taxpayers? (March 26, 2014) 
(online at http://www.aging.senate.gov/hearings/preventing-medicare-
fraud-how-can-we-best-protect-seniors-and-taxpayers)
---------------------------------------------------------------------------
    The majority of health-related scams reported to the 
Hotline involve seniors receiving fraudulent calls about 
medical alert devices. A medical alert device is an electronic 
device, typically worn on a bracelet or necklace, which is used 
to alert responders of an emergency situation. Medical alert 
device scammers attempt to collect personal information or 
convince a senior to pay for a device or service he never 
ordered.\35\ If collected, personal information will likely be 
used in identity theft schemes, such as opening lines of credit 
in a victim's name or redirecting a victim's Social Security 
benefits.
---------------------------------------------------------------------------
    \35\Sid Kirchheimer, `Free' Medical Alert Device Offers Harm, Not 
Help, AARP Bulletin (July 2013) (online at http://www.aarp.org/money/
scams-fraud/info-07-2013/free-medical-alert-device-offers-hurt-more-
than-help.html)
---------------------------------------------------------------------------
    A typical medical alert device scam begins with an 
automated phone call informing the target that someone, usually 
a family member or friend, has ordered a medical alert device 
for the senior. The recording explains that the device has 
already been paid for, and sometimes free groceries are offered 
as an added incentive. A phone menu gives the target the option 
of opting out--which likely only confirms that the phone number 
is active--or speaking to a representative about confirming 
delivery. If the target chooses the latter, the representative 
will tell the victim that, although the device has already been 
paid for, he must provide payment for monthly or annual 
operating fees. This fee may be as much as $35 a month.\36\ The 
scammer may also claim that personal information is needed to 
confirm delivery.
---------------------------------------------------------------------------
    \36\Gitte Laasby, Robocalls Targeted Elderly, Shut-Ins, Milwaukee 
Journal Sentinel (Jan. 2014) (online at http://www.jsonline.com/
watchdog/pi/judge-halts-suspected-medical-alert-device-scam-
b99182956z1-239947171.html)
---------------------------------------------------------------------------
    The medical alert device scammers should not be confused 
with companies that legitimately provide real services. Unlike 
scammers pretending to offer a service as a way to gain 
personal information and payment, legitimate companies provide 
real equipment and services, and they charge only for systems 
customers have actually ordered. Legitimate companies are 
usually registered with organizations like the Better Business 
Bureau and do not solicit through an automated phone call.
    Depending on the category of scam reported, investigators 
may direct victims to a variety of resources; for example:
     Callers wishing to report suspected cases of 
Medicare fraud, waste or abuse may be referred to the HHS 
Office of the Inspector General (OIG), which accepts tips and 
complaints about potential fraud, waste, abuse and 
mismanagement in the agency's programs.
     If a caller has questions or concerns regarding 
billing, and the investigator is unable to assist him, he may 
be encouraged to contact CMS or the Medicare Rights Center.\37\
---------------------------------------------------------------------------
    \37\The Medicare Rights Center is a national nonprofit consumer 
organization that provides information on Medicare rights and benefits.
---------------------------------------------------------------------------
     Callers reporting medical alert device scams may 
be referred to their state Attorneys General, the FTC and the 
Federal Communications Commission (FCC).
    Health-related scam victims include:
     Edward, a resident of Massachusetts, received a 
phone call from a health company claiming he was eligible for 
two knee braces under Medicare. This company had information 
about his Medicare, causing Edward to believe it was 
legitimate. Once the two knee braces arrived, they were not 
what Edward was told he was ordering and he is unable to use 
them. Medicare was charged $1,700. Edward is in desperate need 
of knee braces, but he will not be eligible to receive another 
pair for five years. Edward was referred by an investigator to 
the OIG and his State Health Insurance Assistance Program for 
further assistance.
     Tom received phone calls from a company that 
claimed it was contacting him to arrange the delivery of the 
medical alert system he had ordered, even though he never 
ordered any such system. When this company called, his phone 
displayed ``Alert'' in the Caller ID field, which piqued his 
curiosity and led him to answer the phone. Fortunately, Tom was 
aware that these calls were part of a scam. Committee staff 
recommended that Tom register for the National Do-Not-Call 
Registry and then file complaints about any unsolicited calls. 
Tom was also advised to contact the FTC.
     Sarah, a senior living in Colorado, received phone 
calls claiming a family member purchased a medical alert device 
for her. She received as many as 10 calls in a single day. It 
is difficult for Sarah to get to the phone, and she does not 
have Caller ID to screen these fraudulent calls. Sarah is in a 
constant state of frustration because she cannot stop the 
calls. An investigator encouraged Sarah to simply not answer 
these calls--as answering the calls will often only lead to 
more calls--and provided her with the contact information for 
the FTC.

                           V. IDENTITY THEFT

    Identity theft occurs when a fraudster uses someone's 
personal information without permission. Thieves access 
personal information through numerous means, including stealing 
a wallet, purse, or mail; posing as a legitimate company and 
requesting information in a phone or email scam; sifting 
through the trash; accessing information provided to an 
unsecured Internet site; and obtaining credit reports by posing 
as a landlord or employer.\38\\39\ The FTC has reported 
identity theft as the number one consumer complaint for 14 
years in a row.\40\ Additionally, of the total number of 
identity theft complaints in 2013, the FTC reported that 20 
percent came from victims age 60 and older.\41\
---------------------------------------------------------------------------
    \38\IRS, Identity Protection Tips (October 2014) (online at http://
www.irs.gov/uac/Identity-Protection-Tips)
    \39\U.S. Department of Education Office of Inspector General, How 
Identity Theft Happens (July 2009) (online at http://www2.ed.gov/about/
offices/list/oig/misused/how.html)
    \40\Ben Popken, ID Theft Tops FTC's Consumer Complaint List, Today 
(Feb. 27, 2014) (online at http://www.nbcnews.com/business/consumer/id-
theft-tops-ftcs-consumer-complaint-list-n40356)
    \41\FTC, Consumer Sentinel Network Data Book for January-December 
2013 (Feb. 2014) (online at http://www.ftc.gov/system/files/documents/
reports/consumer-sentinel-network-data-book-january-december-2013/
sentinel-cy2013.pdf)
---------------------------------------------------------------------------
    Medical identity theft can occur when scammers pose as 
representatives of Medicare. If successful, the scammer will 
obtain a person's Social Security number or Medicare number and 
use it to receive medical care, purchase drugs or submit fake 
billings to Medicare in the victim's name.\42\ Among other 
tricks, scammers often ask the target to confirm certain 
personal information in order to supposedly receive information 
on Medicare services for which he is eligible. It is important 
to note that representatives of Medicare will never come to an 
individual's home uninvited to sell products. Also, 
representatives of Medicare are not allowed to ask for a 
person's Social Security number, bank account information or 
Medicare number over the phone.\43\
---------------------------------------------------------------------------
    \42\Stopmedicarefraud.gov, Medical Identity Theft & Medicare Fraud, 
U.S. Department of Health and Human Services, HHS Office of the 
Inspector General, Center for Medicare and Medicaid Services, and U.S. 
Department of Justice (online at http://www. stopmedicarefraud.gov/
toolkit/documents/fightback_brochure_rev.pdf)
    \43\Center for Medicare & Medicaid Services, Protect Medicare and 
You from Fraud (Aug. 2014) (online at http://www.medicare.gov/pubs/pdf/
10111.pdf)
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    Tax-related identity theft is a growing variation of 
identity theft. Based on complaints reported to the FTC's 
Consumer Sentinel Network during 2013, around 30 percent of 
identity theft complaints involved tax-related identity 
theft.\44\ A September 2014 Government Accountability Office 
(GAO) report found that in the 2013 filing season, the IRS paid 
out $5.2 billion to fraudsters, an increase of $1.6 billion 
from what the agency's inspector general identified in the 2012 
tax-filing season.\45\
---------------------------------------------------------------------------
    \44\FTC, FTC Announces Top National Consumer Complaints for 2013 
(Feb. 2014) (online at http://www.ftc.gov/news-events/press-releases/
2014/02/ftc-announces-top-national-consumer-complaints-2013)
    \45\Government Accountability Office, Identity Theft: Additional 
Actions Could Help IRS Combat the Large, Evolving Threat of Refund 
Fraud (Aug. 2014) (online at http://www.gao.gov/assets/670/665368.pdf)
---------------------------------------------------------------------------
    The Committee held a hearing in April 2013 titled: ``Tax-
Related Identity Theft: An Epidemic Facing Seniors and 
Taxpayers.''\46\ The hearing examined how fraudsters carry out 
their tax-related identity theft schemes and what taxpayers can 
do to protect their personal information. A victim of tax-
related identity theft, Marcy Hossli, shared her story with the 
Committee. After receiving a letter from the IRS informing her 
she was the victim of tax fraud, Ms. Hossli spent three years 
trying to fix what had occurred. She reached out to several 
federal agencies to assist her, but she received no significant 
assistance. Chairman Nelson's office was the first resource she 
contacted that actually helped to fix her problem.
---------------------------------------------------------------------------
    \46\U.S. Senate Special Committee on Aging, Tax-Related Identity 
Theft: An Epidemic Facing Seniors and Taxpayers (April 10, 2013) 
(online at http://www.aging.senate.gov/hearings/tax-related-identity-
theft-an-epidemic-facing-seniors-and-taxpayers)
---------------------------------------------------------------------------
    Based on information provided by victims, investigators 
may:
           Encourage a victim to file a report with his 
        local police department, which can be used to prove 
        that he has been a victim of identity theft;
           Advise a victim to establish a fraud alert 
        with the national credit bureaus;
           Direct a victim to the FTC to file an 
        identity theft affidavit. The FTC will also provide the 
        victim with information to better understand the 
        process of repairing his identity and prevent against 
        further compromises;
           If the victim is a target of tax fraud, he 
        will be encouraged to contact the IRS's Identity 
        Protection Specialized Unit or his local taxpayer 
        advocate; and
           If a Social Security number was obtained by 
        a fraudster, the victim will be provided with the 
        contact information for the SSA to report the theft of 
        a Social Security number.
    Of the many reports of identity theft received by the 
Hotline, the following victims paid a significant price:
     Martha's wallet was stolen and the perpetrator 
began using her information to accumulate $13,000 of debt in 
Martha's name. Although she has filed a report with her credit 
card company and local police department, she has been 
unsuccessful in her attempts to remove this debt from her 
credit report. Martha contacted the Hotline for help in her 
dealings with the credit bureaus and assistance with how she 
might protect herself from a future compromise of her personal 
information. An investigator provided Martha with basic steps 
she could take to protect her personal information and directed 
her to the FTC for additional information on identity theft. 
The investigator also referred her to the Consumer Financial 
Protection Bureau and explained how it might be able to help 
her in her dispute with the credit bureaus.
     Mindy's mother, who lives in Missouri, was visited 
by a door-to-door salesman who claimed she could sign up for a 
service that would bring a doctor to her home to explain what 
Medicare services she was eligible to receive. Mindy's mother 
signed the forms, which asked for her Social Security number 
and Medicare number. Mindy contacted the Hotline to receive 
assistance in preventing her mother from becoming the victim of 
identity theft. Mindy was referred to the SSA to report the 
theft of her mother's Social Security number and Medicare 
number. An investigator further encouraged Mindy to contact the 
national credit bureaus and the FTC to file an identity theft 
affidavit.
     Julie has been a victim of identity theft since 
2007, when someone began using her name and Social Security 
number to apply for credit cards and loans. In 2011, a 
fraudulent IRS tax return was submitted using her name, home 
address and Social Security number. Julie contacted the Hotline 
looking for help with this matter with which she has struggled 
for years. An investigator referred Julie to the FTC to report 
the fraud and to file an identity theft affidavit. She was 
further referred to the SSA to report the fraudulent use of her 
Social Security number. She was also referred to the IRS's 
Identity Protection Specialized Unit.

                           VI. LOTTERY SCAMS

    An especially prevalent scam often targeted at unsuspecting 
seniors involves telephone calls and direct mail, usually 
originating overseas, that claim the targets have won a 
lottery. Scammers explain that victims must make an advanced 
payment to cover taxes or fees in order to claim their 
winnings. Scammers typically request payment via wire transfer, 
such as MoneyGram or Western Union, or ask the victim to 
purchase a prepaid debit reload card, such as the Green Dot 
MoneyPak.
    Over time, the scammer's story evolves, with various 
excuses as to why the winnings have not been delivered. All the 
while, the fraudster continues to ask for additional payments. 
The scammer may assert that another winner has not claimed the 
jackpot, and, therefore, the victim is entitled to additional 
payments as soon as the additional taxes and fees are paid. 
According to data collected by the FTC's Consumer Sentinel, 
there were nearly 90,000 consumer complaints regarding prizes, 
sweepstakes and lottery scams in 2013.\47\ Individual victim 
losses reported to the Hotline have ranged from a couple 
hundred dollars to over $500,000.
---------------------------------------------------------------------------
    \ 47\FTC, Consumer Sentinel Network Data Book for January-December 
2013 (Feb. 2014) (online at http://www.ftc.gov/system/files/documents/
reports/consumer-sentinel-network-data-book-january-december-2013/
sentinel-cy2013.pdf)
---------------------------------------------------------------------------
    Investigators may refer victims of lottery scams to:
           The FTC;
           The Department of Homeland Security's ICE 
        tip line. ICE investigates cross-border crimes and 
        leads the Jamaican Operations Linked to Telemarketing 
        (JOLT) task force, a multi-agency, international task 
        force established with the goal of eradicating lottery 
        scams;\48\
---------------------------------------------------------------------------
    \ 48\U.S. Department of Homeland Security's Immigration and Customs 
Enforcement, U.S. and Jamaica Launch International Task Force to Combat 
Telemarketing Fraud (May 27, 2009) (online at http://www.ice.gov/news/
releases/0905/090527kingston.htm)
---------------------------------------------------------------------------
           The U.S. Postal Inspection Service, which 
        investigates fraudulent use of the nation's mail system 
        and has a history of actively pursuing lottery 
        scammers;\49\ and
---------------------------------------------------------------------------
    \ 49\See, e.g., Department of Justice, Jamaican DJ Arrested in 
Florida in Connection with North Dakota Telemarketing Lottery Scam; 26 
Individuals Currently Indicted (May 27, 2014) (online at: http://
www.justice.gov/usao/nd/news/2014/05-27-14-Willcocks%20Arrested.html)
---------------------------------------------------------------------------
           The AARP Fraud Fighter Call Center, which is 
        staffed with caseworkers who are well-versed in 
        speaking with victims and their families who are 
        dealing with the effects of lottery scams;\50\
---------------------------------------------------------------------------
    \ 50\AARP, AARP Fraud Fighter Call Center Dials in on Scams (Feb. 
2, 2014) (online at http://states.aarp.org/aarp-fraud-fighter-call-
center-dials-in-on-scams/)
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a. Jamaican Lottery Scams

    A sophisticated and common variation of the lottery scam is 
known as the Jamaican lottery scam. In 2012, it was estimated 
that scammers in Jamaica placed 30,000 calls daily to older 
Americans in an effort to swindle them out of their life 
savings.\51\ Frequently, the phone numbers displayed on Caller 
ID will begin with area code 876, which is Jamaica's country 
code, but is also often confused with an American toll-free 
phone number. More sophisticated scammers, however, are able to 
``spoof'' Caller ID so that a U.S. number appears, even if the 
scammer is calling from overseas.\52\ These scammers are often 
relentless in their pursuit of money. The daughter of a victim 
of the Jamaican lottery scam, who testified at the Committee's 
March 2013 hearing on the topic, explained that her father 
would sometimes receive 85 to 100 calls per day.\53\ At times, 
scammers have also been known to threaten harm to a victim or 
his or her family. They may use readily available technology, 
such as Google Earth, to view images of a victim's home and 
neighborhood. Using this information, they can reference the 
appearance of the victim's home or a nearby landmark, making 
the scammer's claims that he or she is nearby much more 
believable.
---------------------------------------------------------------------------
    \ 51\Caribbean Policy Research Institute, Background Brief: 
Jamaican Lottery, p. 5 (Nov. 2012), (online at http://
www.capricaribbean.org/sites/default/files/text/
FINAL_Background%20Brief_Jamaican%20Lottery%20Scam_November%202012.pdf)
    \ 52\Federal Communications Commission, Caller ID and Spoofing 
(online at http://www.fcc.gov/guides/caller-id-and-spoofing)
    \ 53\U.S. Senate Special Committee on Aging, 876-SCAM: Jamaican 
Phone Fraud Targeting Seniors, Testimony of Kim Nichols (March 13, 
2013) (online at http://www.aging.senate.gov/imo/media/doc/
01_Nichols_3_13_13.pdf)
---------------------------------------------------------------------------
    According to the FTC, in 2007, there were 1,867 complaints 
related to Jamaican lottery scams; by 2011, the figure had 
ballooned to more than 30,000 complaints.\54\ Experts believe 
that as many as 90 percent of the victims of this scam do not 
report their experience to authorities, often due to 
embarrassment and shame.\55\ As a result of the underreporting 
of this scam, it is difficult to measure how much money has 
been taken from victims. According to some estimates, victims 
lost $300 million in 2011, up from $30 million in 2008, to 
Jamaican lottery scams.\56\ An FTC official stated that prize 
and lottery scams worldwide could be bilking Americans out of 
as much as $1 billion a year.\57\
---------------------------------------------------------------------------
    \ 54\Caribbean Policy Research Institute, Background Brief: 
Jamaican Lottery, p. 5 (Nov. 2012)
    \ 55\Id. at p. 5-p. 6 (Nov. 2012)
    \ 56\David McFadden, Jamaican Lottery Scams Spread Despite US 
Crackdown, The Associated Press, (April 2012) (online at http://
www.businessweek.com/ap/2012-04/D9U6Q1O00.htm)
    \ 57\Id.
---------------------------------------------------------------------------
    In the Committee's hearing to examine the Jamaican Lottery 
Scam, the stories of two victims of the scam were shared by 
their families:
     Kim Nichols told the heartbreaking story of her 
father, a retired commercial airline pilot who flew for 36 
years after proudly serving in the U.S. Armed Forces. Over the 
course of approximately five months, the scammer defrauded Ms. 
Nichols' father out of $85,000.\58\
---------------------------------------------------------------------------
    \ 58\U.S. Senate Special Committee on Aging, 876-SCAM: Jamaican 
Phone Fraud Targeting Seniors, Testimony of Kim Nichols (March 13, 
2013) (online at http://www.aging.senate.gov/imo/media/doc/
01_Nichols_3_13_13.pdf)
---------------------------------------------------------------------------
     After learning that her mother was sending money 
to fraudsters located in Jamaica in hopes of claiming a $4.2 
million lottery, Sonia Ellis had to file for legal guardianship 
to protect her mother's remaining assets. From December 2008 to 
July 2012, Sonia's mother sent approximately $64,500 to 
scammers.\59\
---------------------------------------------------------------------------
    \ 59\U.S. Senate Special Committee on Aging, 876-SCAM: Jamaican 
Phone Fraud Targeting Seniors, Testimony of Sonia Ellis (March 13, 
2013) (online at http://www.aging.senate.gov/download/2013/03/13/sonia-
ellis-testimony-031313)
---------------------------------------------------------------------------
    A local sheriff, officials from ICE and the U.S. Postal 
Inspection Service, and a representative of a wire transfer 
service often used by victims to transmit money to scammers all 
shared their efforts to bring an end to the scam. The hearing 
also sought to press the Department of Justice (DOJ) to work 
toward extraditing perpetrators of the crime to the United 
States for trial. Chairman Nelson explained that such an action 
would have a chilling effect on those who now commit the crime 
with a sense of impunity.\60\ Following the hearing, on March 
15, 2013, Chairman Nelson and Ranking Member Collins wrote a 
letter to U.S. Attorney General Eric Holder in which they 
expressed their concern over the ``lack of attention'' being 
paid to the Jamaican lottery scams and urged the DOJ to work 
toward extraditing lottery scammers from Jamaica.\61\
---------------------------------------------------------------------------
    \ 60\Ledyard King, U.S. Authorities Tell Nelson Indicted Jamaican 
Scammers will be Extradited, Florida Today (April 25, 2013) (online at 
http://www.floridatoday.com/article/20130424/NEWS01/130424027/U-S-
authorities-tell-Nelson-indicted-Jamaican-scammers-will-extradited)
    \ 61\U.S. Senate Special Committee on Aging, Lawmakers Press 
Justice Department to Extradite Lottery Scammers (March 15, 2013) 
(online at http://www.aging.senate.gov/press-releases/lawmakers-press-
justice-department-to-extradite-lottery-scammers)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    According to the Jamaican government, as of February 2014, 
more than 100 arrests had been made under the anti-lottery 
scamming law, which was passed in 2013.\62\ To date, no lottery 
scammers living in Jamaica have been extradited to the U.S. for 
prosecution.
---------------------------------------------------------------------------
    \ 62\Jamaica Information Service, More Than 100 Scammers Arrested 
(Feb. 6, 2014) (online at http://jis.gov.jm/10009scammers-arrested/)
---------------------------------------------------------------------------
    The following are lottery scam victims who contacted the 
Hotline to report their experiences:
     William called the Hotline with concern over his 
father, who is continually bombarded via phone and mail by 
fraudsters who claim he has won $2.5 million. Since 2012, he 
has wired close to $200,000 to these scammers in an effort to 
claim his supposed winnings. Despite William's efforts to 
convince his father that it is all a scam, his father continues 
to believe he is the winner of $2.5 million. An investigator 
provided William with contact information for ICE, the U.S. 
Postal Inspection Service, and the AARP Fraud Fighter Call 
Center. The Committee also sent him a letter with information 
about the scam so that William could share something concrete 
with his father.
     Ethan's father, a retired attorney, fell victim to 
the Jamaican lottery scam. Although Ethan was granted temporary 
conservatorship over his father's finances, his father 
continues to send whatever money he can accumulate to the 
scammers, who call him multiple times a day from Jamaican phone 
numbers. According to Ethan's calculations, his father has lost 
over $500,000 to this scam. An investigator referred Ethan to 
the AARP Fraud Fighter Call Center and to the ICE tip line. 
Ethan was also provided the link to the Committee's hearing for 
more information on the Jamaican lottery scam.
     After discovering her parents lost $180,000 to the 
Jamaican lottery scam, Alice had to take over her parents' 
finances and confiscate their phones. After sending most of the 
money they had saved for retirement, Alice's parents eventually 
sold their home to send the proceeds to the scammers. Alice's 
father passed away soon after finding out it was a scam, and 
her mother is still in denial. An investigator spoke with Alice 
and provided her with the contact information for the ICE tip 
line, the AARP Fraud Fighter Call Center and to Western Union's 
Fraud Hotline since a majority of the money was sent using 
Western Union's wire transfer service. Furthermore, the 
investigator spoke with a sergeant at the county police 
department to follow up with Alice and ensure all steps have 
been taken to investigate the scam.
     Elizabeth from Florida is receiving numerous calls 
a day from Jamaican lottery scammers. She has not fallen victim 
to this scam, but she is worried her neighbors have. Although 
she knows this is a scam and has asked the scammers to stop 
calling, they continue to call her daily. She has contacted her 
local telephone company, and they have tried to stop the phone 
calls; however, as soon as she blocks one phone number, the 
scammers begin calling from a new number. Elizabeth was 
provided with contact information for the ICE tip line and the 
FTC. She was also sent the Committee's Jamaican lottery scam 
letter for information on this scam to share with her 
neighbors.

                       VII. SOCIAL SECURITY FRAUD

    As Social Security payments have moved from mailed checks 
to electronic payments via direct deposit or debit card, a new 
type of fraud has emerged. Fraudsters use banks and debit cards 
to set up accounts to which they can re-route Social Security 
benefits from the rightful recipients to these fraudulently 
created accounts. As of November 30, 2014, the SSA Office of 
Inspector General (SSA OIG) reported it had received more than 
42,000 allegations of questionable changes to a beneficiary's 
account. Many seniors rely on Social Security benefits for a 
large percentage of their income, resulting in drastic changes 
in everyday life for a senior who is the victim of Social 
Security fraud. Almost 90 percent of people age 65 and over 
receive some of their family income from Social Security, and 
without Social Security benefits, 44.4 percent of Americans 65 
and over would have incomes below the poverty line.\63\ Without 
their monthly benefits, these seniors would be unable to 
purchase basic day-to-day necessities.
---------------------------------------------------------------------------
    \63\Center on Budget and Policy Priorities, Social Security Keeps 
22 Million Americans Out of Poverty: A State-By-State Analysis (Oct. 
2013) (online at http://www.cbpp.org/cms/?fa=view&id=4037)
---------------------------------------------------------------------------
    The SSA OIG found that fraudsters most commonly make 
changes to the way in which Social Security benefits are to be 
paid through financial institutions, often directing the 
benefits to prepaid debit cards. Fraudsters also go online to 
establish a My Social Security account, which is an online tool 
that allows Social Security recipients to access information 
about their benefits and change payment information. As of 
January 2013, SSA reported that more than 22,000 potentially 
fraudulent My Social Security accounts had been opened.\64\
---------------------------------------------------------------------------
    \64\U.S. Senate Special Committee on Aging, Social Security 
Payments Go Paperless: Protecting Seniors from Fraud and Confusion 
(June 19, 2013) (online at http://www.aging.senate.gov/imo/media/doc/
05_SSA_IG_O'Carroll_6_19_13.pdf)
---------------------------------------------------------------------------
    On June 19, 2013, the Committee held a hearing titled 
``Social Security Payments Go Paperless: Protecting Seniors 
from Fraud and Confusion.'' The hearing examined what actions 
have been taken by SSA and the Treasury Department to prevent 
Social Security benefit fraud during the transition to 
electronic payments.\65\
---------------------------------------------------------------------------
    \65\Almost all Social Security beneficiaries have been required to 
receive their Social Security benefits electronically since March 1, 
2013 (see explanation at http://www.ssa.gov/deposit/)
---------------------------------------------------------------------------
    Callers reporting Social Security fraud may be handled in 
the following ways:
           In cases where their Social Security 
        benefits were fraudulently misappropriated, victims who 
        require their benefits to pay for basic necessities are 
        directed to their local SSA office to file for what is 
        known as a critical payment, which usually provides a 
        beneficiary with a paper check on the spot; and
           Callers who suspect fraudulent use, waste or 
        abuse in Social Security programs and operations are 
        encouraged to contact the SSA OIG to file a report.
    The Hotline reports of Social Security fraud include the 
following:
     A Florida senior named Julia discovered that her 
daughter had been taking her Social Security disability 
benefits for months, so she opened a new bank account and 
requested that her benefits be deposited to that account. When 
Julia's daughter learned that her mother had set up a separate 
account, she contacted SSA to again redirect the benefits back 
to the old account. Julia's relative contacted the Hotline in 
search of information about how she could stop Julia's daughter 
from continuing to steal her benefits. An investigator referred 
Julia's relative to Julia's local SSA office and advised her to 
request that a freeze be placed on Julia's Social Security 
account, which will prevent any future changes to the account 
information unless Julia physically visits her local SSA 
office. Further, she was provided with the contact information 
for the SSA OIG to report the fraudulent use of her Social 
Security benefits.
     Anna became worried that she was the victim of 
Social Security fraud when her monthly benefit did now show up 
in her bank account. Anna contacted SSA and found out that 
someone had changed the address and direct deposit information 
on her account. Anna is a senior living in Arizona who depends 
on her monthly Social Security benefits to pay for rent and 
groceries. Anna was referred by an investigator to her local 
SSA field office, where she could place a freeze on her account 
and file for a critical payment. She was also encouraged to 
contact the SSA OIG to report the fraudulent use of her Social 
Security benefits.
     After receiving a letter thanking him for opening 
an online account with Social Security, James, an Illinois 
resident, realized he was a victim of Social Security fraud. A 
scammer had created a My Social Security account in his name 
and then used it to request that his Social Security check be 
direct deposited into a bank account located in another state. 
Because James was proactive and contacted the SSA immediately, 
the fraud was discovered and his local Social Security office 
was able to correct the information. James contacted the 
Hotline to share his experience.

                         VIII. TIMESHARE SCAMS

    Given the significant drop in the value of numerous 
timeshares in recent years, many timeshare owners are desperate 
sell their units, especially older Americans, who may no longer 
be able to use a timeshare, but must continue to pay the 
compulsory annual maintenance fees. Scammers contact timeshare 
owners claiming to have found someone interested in buying the 
timeshare. The owner is told he must simply pay transfer fees 
and closing costs, which the scammer may claim will be refunded 
upon completion of the sale. Victims pay anywhere from a few 
hundred to many thousands of dollars in hopes of closing the 
sale. According to Lois Greisman, the Associate Director of the 
Division of Marketing Practices at the FTC, ``there are tens of 
millions of dollars being bilked from people who are trying to 
unload their properties because they need the money.''\66\
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    \66\Herb Weisbaum, Timeshare Resale Scams Take In Millions, Today 
Money (April 2012) (online at http://www.today.com/money/timeshare-
resale-scams-take-millions-667476)
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    In 2013, the FTC Consumer Sentinel logged 30,094 complaints 
related to travel, vacations and timeshare plans.\67\ In a two-
year period, U.S. and Florida officials filed nearly 200 civil 
and criminal cases in the state of Florida.\68\ One case, 
brought by the Southern District of Illinois U.S. Attorney's 
Office, involved a massive timeshare fraud that bilked more 
than 22,000 victims from 50 states out of over $30 million.\69\ 
The fraud ring grew from four employees to nearly 300, with 
nine locations across Florida. Losses to timeshare scams 
reported to the Hotline have ranged from $250 to over $19,000.
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    \67\FTC, Consumer Sentinel Network Data Book for January-December 
2013 (Feb. 2014) (online at http://www.ftc.gov/system/files/documents/
reports/consumer-sentinel-network-data-book-january-december-2013/
sentinel-cy2013.pdf)
    \68\Susannah Nesmith, Florida, U.S. Crack Down on Timeshare Fraud, 
Bloomberg (June 2013) (online at http://www.bloomberg.com/news/2013-06-
06/florida-prosecutors-say-191-timeshare-cases-filed-in-crackdown.html)
    \69\Andrea Day and Valerie Patriarca, Dream Vacation Turned 
Timeshare Nightmares, CNBC (March 20, 2014) (online at http://
www.cnbc.com/id/101488801)
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    Victims of a timeshare scam are typically encouraged to 
report the fraud to:
           The office of their state Attorney General 
        and any relevant state consumer protection agency;
           The FTC; an
           The IC3, if the victim responded to an 
        Internet ad for timeshare resale services.
    Complaints to the Hotline include:
      Susan in Virginia reported receiving a call from 
an individual claiming to be from the company ``Timeshares by 
Owner,'' who said he had a buyer ready to purchase her 
timeshare and needed a payment of $1,500 to cover closing 
costs. She was even placed on the phone with an individual who 
claimed he was the interested buyer, but, as soon as she sent a 
payment, the scammer stopped answering her calls. An 
investigator provided Susan with contact information for the 
FTC and the Virginia Attorney General's office.
     Marge in Florida was repeatedly victimized by 
scammers claiming to have buyers lined up for her timeshare. 
She explained to an investigator that her desperation to get 
rid of the timeshare led her to believe the fraudsters as they 
kept asking for additional payments to ensure the sale could be 
finalized. She eventually lost approximately $10,000, and her 
timeshare was never sold. Marge was advised to report this scam 
to her Attorney General's office, the Florida Department of 
Agriculture and Consumer Services and the FTC.

                    IX. FRAUD INVOLVING GUARDIANSHIP

    The purpose of a court-appointed guardianship is to protect 
and exercise the legal rights of an individual who has been 
deemed to lack the capacity to handle his or her own affairs. A 
guardian can be a family member or friend, a public guardian 
appointed by the state, or a private guardian if the individual 
is able to provide compensation. State courts are responsible 
for overseeing guardians, and laws pertaining to guardianships 
may vary greatly from one state to another.\70\ Individuals 
have contacted the Hotline to share heartbreaking stories of 
the abuses they have witnessed within the guardianship system, 
typically involving financial abuse of an elderly individual.
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    \70\See U.S. Social Security Administration, Digest of State 
Guardianship Laws (Aug. 2012) (online at https://secure.ssa.gov/
poms.nsf/lnx/0200502300)
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    Individuals who have contacted the Hotline for assistance 
with guardianship issues are often referred to state 
authorities. The Department of Justice's Elder Justice 
Initiative is also a valuable resource, providing state-by-
state information for victims of financial exploitation and 
their families, practitioners who serve them, and prosecutors 
and law enforcement agencies.\71\
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    \71\U.S. Department of Justice, Elder Justice Initiative (online at 
http://www.justice.gov/elderjustice/)
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    Individuals who have contacted the Hotline include:
     Alexandra, a resident of Missouri, explained that 
her father was placed under a temporary guardianship. While 
under the care of the guardian, Alexandra's father's assets 
were squandered and necessary medical care was not provided. 
Alexandra has contacted law enforcement and shared the evidence 
she has collected of the abuse inflicted by the guardian.
     Elaine, a resident of North Carolina, said that 
her sister's lies led to a court-appointed guardianship for her 
father. Elaine claims the guardian drugged and abused her 
father and sold his home for $1.5 million, taking all the money 
for himself. While one state organization says it is 
investigating what happened to Elaine's father, no action has 
been taken by state or federal authorities.
     Jim, an attorney in Florida, contacted the Hotline 
because he believed the Social Security benefits of a client 
were being misappropriated by a representative payee,\72\ the 
client's brother. The brother is a convicted felon but 
neglected to notify anyone of this fact when he sought to 
become his brother's representative payee. Although the 
beneficiary was deemed mentally impaired, a bank account was 
set up in such a way as to ensure that, even after the 
beneficiary passed away, the benefits would remain in his 
possession instead of passing to the estate. A Committee 
investigator put Jim in touch with one of Chairman Nelson's 
caseworkers in Florida and also advised Jim to contact the SSA 
OIG.
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    \72\A representative payee is appointed by a Federal agency to 
handle the benefits of an incapacitated individual
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                             X. CONCLUSION

    It is clear that more needs to be done to help seniors 
protect themselves from scams and the financial exploitation 
that accompanies them. With the aging of the American 
population, the problems highlighted in this report will only 
continue to grow.\73\ Information gathered through the Hotline 
and the resulting work of the Committee have already brought 
about some important successes. For example, after sustained 
Committee pressure, two of the three primary providers of 
prepaid debit reload products, Green Dot and InComm, announced 
their plans to distoninue the PIN method of reloading prepaid 
cards by the end of the first quarter of 2015, citing concerns 
over the extent to which scam artists were utilizing them in 
their fraud schemes.\74\ The third provider, Blackhawk, also 
recently unveiled enhanced security measures that it believes 
will mitigate the risks posed by fraud.\75\ However, as 
illustrated by the continued daily reports of fraud to the 
Hotline, much more work remains to be done. The Hotline 
provides a glimpse into the current state of scams against 
older Americans--information that the Committee hopes will not 
only raise awareness of the extent of this scourge, but also 
inform the conversation as possible solutions are considered.
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    \73\Allianz Life Insurance Company of North America, 2014 
Safeguarding Our Seniors, New Allianz Life Study Confirms Elder 
Financial Abuse Under-Reported and Misunderstood Problem Likely to Grow 
(Oct. 15, 2014) (online at https://www.allianzlife.com/about/news-and-
events/news-releases/Press-Release-October-15-2014)
    \74\U.S. Senate Special Committee on Aging, Private Industry's Role 
in Stemming the Tide of Phone Scams, Testimony of Steven W. Streit and 
Skeet Rolling (Nov. 19, 2014) (online at http://www.aging.senate.gov/
hearings/private-industrys-role-in-stemming-the-tide-of-phone-scams)
    \75\U.S. Senate Special Committee on Aging, Private Industry's Role 
in Stemming the Tide of Phone Scams, Testimony of William Y. Tauscher 
(Nov. 19, 2014) (online at http://www.aging.senate.gov/imo/media/doc/
Tauscher_11_19_14.pdf)


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