FTC joins in DOJ’s anti-elder-fraud efforts
The Department of Justice (DOJ) launched a wide-ranging campaign against elder fraud in February 2018. “Each year, an estimated $3 billion are stolen or defrauded from millions of American seniors,” said Attorney General Sessions at a press conference on February 22. He added that the elder fraud threat “is only growing,” noting that reports to the Senate Aging Committee’s Fraud Hotline doubled between 2015 and 2016.
“We will not let this crime continue to rise,” he promised.
In addition to ordering every U.S. attorney’s office to appoint an “elder justice coordinator” to execute the campaign in individual districts, Sessions announced a policy of increased cooperation and coordination with federal regulatory, enforcement and service agencies. Accordingly, Sessions praised the Federal Trade Commission (FTC) for assisting in the effort: The FTC has been focused on elder-fraud cases, and announced two new complaints against alleged fraudsters on the same day that the campaign rolled out.
Game of Stones
The first case, Federal Trade Commission and State of Missouri v. Next-Gen, Inc., involves the FTC taking on a pair of men who allegedly ran more than 30 companies that sent phony award mailers nationwide. One type of mailer produced by the pair claimed that the recipient had won some serious cash (sometimes amounting to millions of dollars) and only had to play a short and very easy “game of skill” and send in a comparatively small fee (up to about $140) to claim the winnings.
The mailer failed to disclose, however, that there were multiple rounds of the so-called game, each requiring additional fees to “advance,” and ending with a puzzle that was so difficult that few people would ever solve it.
The FTC claims that the pair’s scams defrauded consumers, many of whom were elderly, to the tune of $100-plus million over the past five years.
The other case, Federal Trade Commission v. Genius Technologies, involves the owner of two companies that allegedly teamed up with overseas telemarketing groups to rip off older Americans.
According to the FTC, the scam involved a scare tactic whereby the telemarketers, located in India, would call unsuspecting American consumers and convince them that a hacking attack against their computers was imminent. Because they posed as representatives of well-known and respected technology companies, they often persuaded their targets to buy old or useless security software at vastly inflated prices.
The defendant is accused of creating business accounts and running payment accounts to collect the ill-gotten funds.
The second case is particularly interesting because, according to the FTC, it began as a relatively straightforward scam, but opened the door to identity theft and other more serious legal violations: The telemarketers, once given access to install the security software, would make off with the victim’s personal information.
This sort of hybrid scam represents the novel threat posed by the marketing of computer support technologies to the elderly, many of whom are unfamiliar with these technologies and the policies that most tech support groups at legitimate companies adhere to. Without a doubt, law enforcement agencies like the DOJ and FTC will take action against individuals and companies that engage in these types of practices, particularly in light of the recently announced focus on protecting elderly consumers.