Since May is Older Americans Month, I decided to write about a topic that’s become a real issue in America. It makes me sad to say this, but unfortunately, we live in a world where senior citizens are often the target of financial fraud — elder abuse is a serious problem to watch out for.

This is addressed to the children and relatives of senior citizens, but it isn’t meant to exclude senior citizens from the discussion. However, whether you take some of these steps on your own depends on the mental and physical state of your relative. You’ll have to make the call, but if at all possible, it’s important to have your relative participate in the policing of his or her finances. If that’s not possible, then it’s even more important that you take the initiative to protect your loved one.

According to the FBI, seniors are targeted because they often have nest eggs, they come from a generation that was more trusting, and they’re often too proud to report the fraud. Another reason the elderly sometime hesitate to report they’ve been ripped off? They’re concerned their relatives might see this as a sign of declining mental capacity and they don’t want to lose their independence. Smart and unscrupulous thieves know all this, and try to exploit it.

[Credit Score Tool: Get your free credit score and report card from Credit.com]

There’s so much advice on the Internet about what you need to do to protect your elderly relative against fraud. When you discover fraud, it can all be scary and quite confusing, so the FBI has come to the rescue with a comprehensive, yet easy-to-read, list detailing the different types of fraud and how to prevent them.

The scams range from funeral and cemetery fraud to fraudulent anti-aging products. I suggest checking out this site so you can be more aware of the scams your loved one could be exposed to. The FBI has another page describing all kinds of Internet fraud that you should check out. These scams range from investment fraud to the Nigerian Letter or “419″ fraud.

One of the most common types of fraud against the elderly is stealing credit card information. The thief then goes on a spending spree and hopes no one, including the senior citizen, is looking out for this activity.

Here are a few simple steps you can take to make sure your loved one isn’t the victim of credit card fraud:

Talk to your relative about email scams: You can’t be around your relative constantly, so take the time to explain why you should never give out your credit card number to buy a product that’s sold via email. These scams often promise a great product — anti-aging, perhaps? — but they need your credit card information. This type of scam also happens via phone.  Seniors get a call and they’re offered a new product that promises youthful energy. Once they have your loved one interested, they ask for a credit card number to seal the deal.

[Related Article: Act Fast: A Hotline for Elderly Financial Fraud Victims]

Keep an eye on caregivers: Maybe your mom is still at home and has home healthcare a few days a week. Or maybe she’s in a nursing facility and there are nurses and various medical assistants everywhere. Hopefully, your parent is exposed to professionals who are trustworthy. Just keep in mind that there are way too many reports of caregivers using the credit card of the people they’ve sworn to take care of. It’s horrible that someone would stoop so low. But it happens all the time.

If you can, it’s best to visit frequently and shred any mail that has personal information on it. If your mom has credit card accounts, you can view account activity online with her. You can even opt out of paper statements altogether. That way, you won’t have credit card account numbers within easy reach of whomever is in the room. Credit card fraud could still occur, of course, but by checking accounts online several times a week, you’ll notice if something fishy pops up on her statement.

Even if you can’t visit often, you can still check her credit card accounts online every week from your own home. But ask for her permission to make sure she doesn’t feel like you’re invading her privacy.

Keep an eye on other family members: I hate to say this, but often it’s family members who rob their own parents or grandparents. If you have a family member with issues, such as drug addiction or gambling debt, then that’s a red flag and warrants keeping an eye on things. When someone is desperate for money, they can justify taking it from anyone. They’re counting on the fact that no one will notice. You can prove them wrong by keeping on top of credit card account activity.

Look at the mail. You can learn a lot from the mail. Is your loved one getting letters from “charities” asking for a donation via her credit card? If she’s getting letters from organizations, she may have sent money to them previously. As suggested earlier, looking at credit card accounts online is a good way to make sure she isn’t authorizing payments to fraudulent entities.

Pay attention to new friends: The National Committee for the Prevention of Elder Abuse recommends keeping track of any new “best friends.” It may all be very innocent, but if it’s sudden and there’s an age difference, this may be a red flag that someone is planning to commit fraud.

[Free Resource: Check your credit score and report card for free with Credit.com]

Image: Alex E. Proimos, via Flickr

We’ve been warning consumers about fake overseas payday loan collection scams for a few years now. So it can be disheartening when we hear stories, like this one that was posted last week on our blog:

I received a recorded call at work that said I had written a bad check and would be served court papers…that day. The message then left a phone number to call to try to “settle” or arrange a payment plan. I got really scared and called the number. The lady said…they are middle man to recover past due pay day loans.

I don’t think I owe this debt, but I was so shaken that I did pay them a $50 payment, and set up a payment plan of $200 a month to pay a total of $960.00. She sent me an email receipt but it does not look legitimate to me. Their logo is weird, there is no address, and no website. She said it’s a loan with quick cash. I tried to google quick cash and nothing comes up.

I don’t want to keep paying them if this is a scam, and I guess the worst that could happen is to be served or have my check garnished? I just don’t like the fact that they are calling my work place. Should I call them back and ask them for their address, business license and for the original paperwork for the debt owed? I am not sure if this is a real collection agency. Please help!

[Credit Check Tool: Try Credit.com's Free Credit Report Card]

Bogus collectors scare consumers into paying debts they either don’t owe, or paid off long ago. Because they have so much information about the consumer—details such as Social Security numbers, work addresses, and/or bank account numbers—the victim often pays up thinking it must be legit. And because these operations are often based overseas, it can be difficult, if not impossible, for regulators to stop them.

Another One Bites the Dust

That’s why it’s especially sweet to hear news like this released last week by the FTC, which reported:

A U.S. district court has halted an operation that the agency alleges collected phantom payday loan debts that consumers either didn’t owe to the defendants or didn’t owe at all. The defendants’ scheme involved more than 2.7 million calls to at least 600,000 different phone numbers nationwide, according to the FTC. In less than two years, they fraudulently collected more than $5.2 million from consumers, many of whom were strapped for cash and thought the money they were paying would be applied to loans they owed, according to FTC documents filed with the court.

[Related Articles: Read more stories about payday loan scams]

According to the FTC, representatives of the company would pretend to be American law enforcement agents, using names like “Officer Mike Johnson.” Or they would claim to be calling from fake government agencies like the “Federal Crime Unit of the Department of Justice.” In reality, the callers would be placing calls from India. They would often wear their victims down with repeated calls and threats. One woman was told her children would be taken away if she didn’t pay.

The case, Federal Trade Commission, Plaintiff, v. Broadway Global Master Inc., also doing business as BGM, In-Arabia Solutions Inc., and Kirit Patel, Defendants, was filed in the United States District Court for the Eastern District of California.

In the public announcement, the FTC thanked the Better Business Bureau for its assistance in this case. And guess what that means? Complaints from consumers who were getting these calls helped to stop the operation. So if you are getting threatening calls like this, don’t be afraid to report them to the Federal Trade Commission and the Better Business Bureau. While the FTC may not be able to help you personally, they may be able to go after companies that generate multiple complaints from consumers.

[Featured Products: Research and compare Identity theft protection plans at Credit.com]

Don’t Be a Debt Collection Scam Victim

Keep in mind that legitimate debt collectors are required under federal law to:

1. Send written confirmation of a debt within three days of initial contact and, if the consumer disputes or questions the debt, to verify it.
2. Stop calling debtors at work if they tell them to stop.
3. Avoid threatening consumers with legal action they cannot take or don’t intend to take. Debt collectors generally can’t have debtors arrested for failing to pay debts.

[Related Article: Protect Your Identity: Watch Out for Online Loan Scams]

NOTE: The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.

At Credit.com, we’ve heard from consumers across the country who have been harassed by phony debt collectors who threaten to have them arrested for debts they may not even owe. While the threats are often blatantly illegal, there hasn’t been a lot that American regulators or law enforcement agencies could do to stop most of these scammers. That’s because they are based overseas.

But now at least one firm won’t be making any more collection calls, thanks to efforts by the Federal Trade Commission. Villa Park, California-based American Credit Crunchers, LLC, an affiliated company called Ebeeze, LLC, and the companies’ owner, Varang K. Thaker, are charged with violating the FTC Act and the Fair Debt Collection Practices Act.

A U.S. district court has closed down the operation based on FTC allegations that it made calls to collect payday loan debts that didn’t exist. According to the complaint, the firm made over 5 million collection calls from India. It was a lucrative operation, netting more than $5 million from consumers, says the FTC.

[Free Credit Calculator: Use Credit.com's Credit Report Card]

According to the FTC’s court papers, the callers pretended to be law enforcement agents, or “federal investigators” and threatened to arrest and/or imprison their victims if they didn’t pay.

One of the reasons these types of schemes work so well is that they target consumers who have received, or applied for, payday loans online. The firms usually have detailed personal information about the consumers they are calling, such as Social Security numbers or bank account numbers. That information makes callers think the debt is legitimate.

But for those who are getting those calls, the FTC’s complaint lists a couple of red flags:

• They threaten to lodge criminal charges against consumers who fail to pay these alleged debts. But the “collectors” have no intention of taking—or even the standing or authority to take—legal action against these consumers.
• Other times, they pretend to be attorneys or to work for law firms when they do not.
• They frequently use abusive or profane language during these telephone calls.  That’s prohibited under the Fair Debt Collection Practices Act.

[Related article: Beware of Fake Payday Loan Collection Scam]

While this is good news for consumers, the reality is there are many more firms operating the same way. This one happens to be based in California, which is why the FTC was able to act. But for the companies based entirely overseas, it’s likely business as usual. In fact, whose to say the employees who were working for this firm aren’t collecting for someone else now?

As long as this type of scam continues to make money, there will be companies operating the same way. The only way to stop it is to get consumers to stop paying bogus debts or debt collectors. Be extremely cautious if you get collection calls and the collector uses high-pressure tactics—especially for payday loans.

• Ask for written verification of the debt. You are entitled to it by federal law. Any legitimate collection agency will send it.
• Check out the specific company making the calls. A simple web search can often identify a company that is a fake. Firms often use meaningless names like “fraud investigation center” to sound official.
• Do not give your credit or debit card number over the phone to a collector that calls you out of the blue. If you determine the debt is legitimate, consider paying with a cashier’s check or prepaid card.

[Related article: The Dos and Don'ts of Paying a Debt Collector]

NOTE:  The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.   

Image: stallio, via Flickr.com

An alluring pitch, “We can reduce your credit card interest rates!” managed to get consumers from all over the country to pony up $149—$599 for debt relief help they didn’t get, according to the Federal Trade Commission. This week, the FTC announced a court froze the assets of a telemarketing agency that the FTC believes violated federal law.

The company in question, Premier Nationwide Corporation, allegedly cold-called consumers, promising to get them lower interest rates on their credit card debts. Those who took the bait and paid the fee were then sent a list of low-interest-rate credit cards and told to apply for them on their own. Or they were told they could enroll in a Debt Management Plan, requiring them to close all their credit card accounts—and pay a monthly fee for the administration of the DMP.

[Article: How to Get Help if You've Been Scammed]

I have a strong sense of deja vu while writing this. Early in my career (pre-Internet), consumers would send $4 to the non-profit organization for which I worked, and we would send them a list of low-rate credit cards. Every so often we would find out that some marketer had copied our list and was selling it for tens or hundreds of dollars. Eventually, the crooks would be shut down or disappear, and all would be quiet until another one surfaced.

The FTC listed numerous violations of the FTC Act in its complaint against the company. Most involve alleged violations of the Telemarketing Sales Rule, a federal law that prohibits marketers from charging and collecting an advance fee before renegotiating, settling, reducing or otherwise altering consumers’ debts. In fact, the firms may not charge a fee until at least one debt has been renegotiated or settled. The FTC also alleges that the company misrepresented its refund policy. Those who were told refunds were available if they weren’t satisfied (not everyone was offered the option) were unable to get their money back when they realized they weren’t going to get what they thought they were buying.

[Free Resource: Check your credit for free before applying for a credit card]

We’ll Help You For Free

Are your credit card rates too high? You don’t have to pay hundreds of dollars for help. You can:

• Consider transferring your balance to a credit card with a zero percent APR introductory rate. (Our credit card expert Beverly Harzog recent looked at the Best Balance Transfer Cards in America.) Or look for lower interest credit cards that are specifically designed for people with your credit standing.
• Learn how to negotiate directly with your credit card company to lower your rates. Read my article in which I interview a credit card negotiation expert here.
• Create a plan to get out of debt using an online tool like SavvyMoney.

Can’t do it on your own? Before you sign up with a debt relief firm, learn here how the Telemarketing Sales Rule protects you.

[Credit Cards: Research and compare low APR credit cards at Credit.com]

Image: mollybob, via Flickr.com

The company that used a fake courtroom to threaten a widow with jail and to steal her son’s car found itself in a real courtroom last week with little to say. Appearing in Erie County Court, an attorney for the collections company Unicredit America offered no defense for the strong-arm tactics it allegedly deployed.

As we reported in March, Unicredit had begun its collection efforts on Erie resident Marilyn Johnson after she was unable to pay the entire cost of her husband’s funeral, leaving her with a bill of $2,142.

[Related Article: "Fake Court" Collections Victim Wants Money Back]

Unicredit invited her to an office building converted into a fake courtroom, complete with law books on shelves and a company employee dressed in a judge’s robe and sitting on a raised bench.

“(I)t looked nicer than some of our real district courtrooms,” Andrea Amicangelo, Johnson’s lawyer, told Credit.com.

Unicredit threatened to throw Johnson in jail during the fake hearing. To keep his mom from going to jail, Johnson’s son, Howard D. Johnson, agreed to pay the company more than $2,000 and sign over the title to his 2002 Chevrolet Cavalier.

Last week in a real courtroom, Unicredit’s attorney, Lawrence D’Ambrosio, declined to explain or defend Unicredit’s actions to Erie County Judge Michael E. Dunlavey, according to the Erie Times-News. Instead, the company dropped its claim against Johnson.

Unicredit still faces a lawsuit by Pennsylvania Attorney General Tom Corbett over its alleged courtroom ruse.

[Resource: Get your free Credit Report Card]

Image: Jonathon Narvey, via Flickr.com