Simply crooked
Last month, the Federal Trade Commission (FTC) announced that it had obtained a $195 million judgment against Simple Health Plans, LLC and its CEO, Steven J. Dorfman, over charges they duped consumers into signing up for sham healthcare plans that did not deliver the coverage or benefits they promised, leaving consumers effectively uninsured and exposed to limitless medical expenses. In a complaint filed in 2018, the FTC said that Florida-based Simple Health misled people into thinking they were buying comprehensive health insurance that would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing. In reality, the FTC announcement explained, most consumers who enrolled reported paying as much as $500 per month for what was actually a medical discount program or extremely limited benefit program that did not deliver the promised benefits and often left consumers with thousands of dollars in uncovered medical bills or unable to get necessary health care. In a related FTC blog post, the agency explained that Simple Health allegedly lured people through lead-generation sites, using logos of well-known health insurance providers to make itself look credible. Read advice on how to steer clear of false healthcare plan promises in the FTC blog post, and learn how to tell if a medical discount plan is legitimate here.
Sing-along scam
Chicago's CBS 2 reported earlier this month about a travel investment scam allegedly perpetrated by Elliot Lawson Henderson, a singer and performer in the Chicago area. According to the news story, many people alleged that they lost money to Henderson, and several of them spoke to the outlet. One of the victims, Jasmine Franklin, who connected with Henderson because she, too, is a singer, invested close to $3,600. She was told that she would see profits literally overnight (as in "the next day"). An invoice reviewed by CBS 2 promises a profit of $16,500 somehow related to the purchase of "flight points" for a "flight package" for a traveling choir. Because profits never materialized, Franklin asked for a refund, but never received it. And here's a mistake we can all learn from: It was only after Franklin lost money that she decided to "Google" Henderson. Franklin's belated research yielded a website, a Change-dog-org petition, and an Instagram page, all of which warned that Henderson was a scammer. Another victim featured in the story, a retired police officer, lost $17,000 he invested; other victims described unfulfilled promises of unlimited flights and hotel stays. When CBS communicated with Henderson, he told them that he was also scammed, and that he had only referred people to travel deals, and only years earlier. Henderson was eventually arrested (following continued investigation by the news outlet) and his criminal case is ongoing. "Do some research before sending money to anyone offering a big payout or a too-good-to-be-true deal," the news anchor concludes in this story. Wise advice, for sure. And we might add in this case: Don't be lulled by the perpetrator's smooth singing voice (which can be heard in the news piece); with scams, it’s always the same old song and dance.
Keeping everyone posted
With love from the Big Apple. Whether in a nightly newscast or a recent SCAM GRAM issue, you've surely heard about how scammers are tricking consumers into sending money via peer-to-peer payment and mobile banking apps, often as part of elaborate imposter schemes. It turns out they’ve also found ways to cut out the middle man—you!—and send the money to themselves by gaining access to your physical phone. According to a press release from the office of Manhattan District Attorney Alvin L. Bragg Jr., issued earlier this year, the DA sent letters to the executives of Venmo, Zelle and Cash App demanding better consumer protections in the wake of financial app thefts sweeping Manhattan and the country. The release explains that unauthorized users are gaining access to unlocked devices and draining bank accounts, making purchases with mobile financial applications, and using financial information from the applications to open new accounts. In some instances, the release continues, fraudsters ask to borrow someone's smartphone and then quickly send large amounts of money to themselves using financial apps on the phone. Scammers also ask for a donation for a particular cause and then offer to transfer the money directly from the victim’s smartphone, but instead transfer funds to themselves. The release also explains that offenders have violently assaulted or drugged victims and either compelled them to provide a password for a device or used biometric ID (a fingerprint or a face scan) to open the incapacitated victim’s phone and transfer money. Similar schemes, the DA's office explains, have occurred in Los Angeles, where several people were robbed of thousands of dollars through Venmo at knife point; Orlando, where a woman had thousands drained from her Venmo after a child asked to use her phone; and West Virginia, Louisiana, Illinois, Kansas, Tennessee and Virginia. The DA's office is asking the payment apps to implement several security measures (that we'd also love to see), including requiring a separate password for accessing the app on a smartphone, by default; imposing lower limits on the amount of daily transfers, by default; requiring longer wait times for large transactions; and implementing better monitoring of accounts for unusual activity.
Write back soon! Speaking of love letters to payment app providers, just last month (one day after Valentine's), Senators Sherrod Brown, Elizabeth Warren and Jack Reed sent Zelle's owner (Early Warning Services, LLC) a letter asking the company to publicly clarify their reimbursement policy for imposter scams, add categories of scams for which consumers can be reimbursed, and streamline the process for reporting unauthorized transactions, scams and fraud. The senators noted that, although it was reported in November 2023 that Zelle began to reimburse customers who had lost money to imposter scams, it is still unclear whether such a policy is standard practice. They cite contradictory wording on Zelle's website that in one place says "Because you authorized the payment [in a scam], you may not be able to get your money back,” and in another place says “[q]ualifying imposter scams may be eligible for reimbursement.” Because of the lack of clarity, the letter states, customers may not know that they can be reimbursed and, thinking they might not get any help, might not report these scams. The senators waste no space in the brief letter, clearly laying out all the questions they need answered—and pronto!—requesting a response by March 13. We'll be monitoring any developments and report back. And, as always, we remain faithfully yours.
Tips
Lights, camera...jammed Wi-Fi? Anyone relying on a Wi-Fi-enabled home security system may want to pay attention to a warning from Los Angeles-area police. The LAPD Wilshire Division warned that the area has seen several residential burglaries involving three or four suspects using Wi-Fi jammers to enter victims’ residences. Thieves use the jammers to interrupt the Wi-Fi capabilities of burglar alarms and security cameras, and then enter the home and steal expensive jewelry, high-end purses, cash and other valuables, tending to enter via second-story balconies and targeting primary bedrooms. They've also got a getaway driver and lookout waiting nearby. Tips for protecting yourself include hardwiring your burglar alarm system (talk to your internet service provider); placing Apple AirTags on valuable items, to be able to track them if stolen; padlocking electrical circuit boxes; and not publicizing that you'll be away from home. These and other tips were recapped by the Los Angeles Times here.
Tuesday is for tacos—and taxes. WRTV, an Indianapolis ABC affiliate, ran a Tax Tip Tuesday segment in early March focusing on spotting tax scams. The to-the-point video explained that the IRS is never going to text you, email you, or message you on social media. They may call you, but most often you'll receive a letter in the mail. (Now, if you really want to get into the weeds of it and find out on which very rare occasions the IRS might actually call you, or [gasp] visit you, then take a look at this IRS webpage. As you'll see, most of us have no reason to expect a call or visit from the IRS. And, let's say you owe the IRS money, the IRS will send a bill first and will never call to demand that you use a payment method such as a prepaid debit card or gift card.) Now, back to the WRTV story: You'll want to report scams to phishing@irs.gov. And, as the news piece explains, the No. 1 thing to remember is to not click on links in messages claiming to be from the IRS, since these could result in malware being installed on your phone or computer and your information being stolen. WRTV also mentions that the IRS is warning about tax preparers trying to scam you (for example, those that promise a refund amount before preparing your return), and includes tips related to tax identity theft. Check out WRTV's website for all the tips. And, if you missed Consumer Action's video on tax identity theft, check it out here.
Have you Met-a scammer? In early March, New York Attorney General Letitia James led a bipartisan coalition of 41 attorneys general in sending a letter to Meta Platforms, Inc. (Meta) addressing the recent rise of Facebook and Instagram account takeovers by scammers and frauds, according to a press release issued by James's office. The AGs are calling on Meta to thoroughly review data security practices for protecting its users’ accounts from being unfairly locked out or taken over by scammers. The letter outlines steps Meta should take, including increasing staffing to respond to account takeover complaints and making a greater investment in account takeover mitigation tactics. A news report last spring by WRTV offers a glimpse at how social media account takeovers can negatively impact users, including users with lots of followers, who rely on their accounts to generate income; how difficult recovering an account can be; and the several places it might be necessary to complain to—including to legislators—to get Meta to do more to address the problem. WRTV also pointed readers to this FTC fact sheet for tips on recovering a hacked social media account.
Clone wolf. NBC News 9 out of Denver picked up a story about yet another police warning from the land of fast cars and red carpets. In late February, the Newton Division of the LAPD said in a press release that auto detectives had noticed key cloning devices were being used in many newer model Camaro thefts. The devices are programming tools that are about the size of a cell phone, the communication said, that can pick up the signal of nearby key fobs and be used to create clones. The NBC News piece goes on to explain that thieves can use cloned key fobs to open car doors and reprogram the ignition system—the entire process can be completed in less than three minutes. The cloning devices are available online for as little as $500 and, NBC news explains, are intended to help people who've lost their keys. To avoid falling victim, the LAPD advises consumers never to keep key fobs inside their vehicles, and also explains that consumers can purchase security cases that prevent key fob signals from being transmitted. And, listen up if you're the DIY type: According to the LAPD, hacks such as wrapping fobs in aluminum foil or placing fobs inside tin cans have also proven effective. We really gotta give it up for LAPD—another scam foiled!
Imposter syndrome. In late February, the Social Security Administration Office of the Inspector General (SSA OIG) sent out an email blast announcing the March 7 Slam the Scam Day, which takes place during National Consumer Protection Week. The message offered tools and resources to help consumers recognize Social Security-related scams, and pointed readers to a recently updated alert and to the SSA's Protect Yourself from Scams landing page. The landing page links to a press alert issued in 2023 that includes useful information we can still use today. The alert explains that scammers are creating letters that appear to be from SSA or SSA OIG and are sending them to consumers as email and text message attachments, with the goal of stealing their money or identity. Tactics vary, the alert explains, but scams consistently contain red flags: an unexpected problem or situation along with a costly solution. The alert also includes a fake letter example that SCAM GRAM readers might want to use in their consumer education work. "Due to fraudulent activities," the fake letter reads, "your Social Security Number (SSN) will be suspended within 48 hours." Though one might think that this scam has been around long enough for people not to fall for it, that's hardly the case. Citing the Federal Trade Commission, the alert notes that in 2022, victims of government imposter scams reported losing nearly $509 million. The alert offers tips for avoiding scams, and recommends that victims stop talking to the scammer; notify financial institutions and safeguard accounts; contact local law enforcement and file a police report; file a complaint with the FBI Internet Crime Complaint Center; report Social Security-related scams to SSA OIG; and report other scams to the Federal Trade Commission. Find more tips and tools for slamming scammers all year long here. And, while we hate government imposters, we do love a good teaching tool—save a copy of the sample fake letter and use it to help save someone from a scam!
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