The next time you think you’re too smart to be scammed out of money, consider the Ladue businessman who recently lost $3 million in a Jamaican lottery scam. The man, in his 80s, was convinced by thieves that he had won $22 million, and all he needed to do was send money for taxes, says Bill Smith, a trade practice investigator with the Better Business Bureau (BBB). It escalated from there.
“It’s an unbelievable situation,” Smith says. “We first heard about this about two years ago, from a businessman in the area who was a friend of his. We have since talked to the gentleman’s brother. The family has been through a really difficult time. As is the case in many of these situations, a lot of people end up becoming closer to the scammer than their own family; and after spending this amount of money, when their family or police tell them it’s a scam, there’s a part of them that’s embarrassed and they want to prove them wrong.”
Though it sounds extreme, it is not uncommon for people—seniors in particular—to lose large sums of money to scammers, Smith says. In addition to the Ladue man, a recent press release from the BBB also notes a man from Jefferson County who lost his $41,000 life savings in a lottery scam; an 88-year-old West County woman who lost up to $60,000; and a man from Lake St. Louis whose father has lost $457,000.
So how do people get involved in these scams and why does it continue to such great lengths? Sometimes, people just take a gamble that the sweepstakes is real, Smith notes. Many times, scams will come with legitimate-sounding associations, with fliers bearing the names of Reader’s Digest or the BBB itself. “The gentleman in Jefferson County was contacted several times about sweepstakes, and didn’t believe it,” Smith notes. “But then he said to himself, what if it’s true?” After all, the notice said he only needed to send a couple of hundred dollars to claim a huge prize. “Once he paid the couple hundred dollars, they needed just a little bit more for additional fees.”
If the victim starts to back out, thieves often get desperate and resort to threats, Smith adds, using high-pressure tactics and saying they can reach the victim or their grandchildren. “They’ll look up Google pictures of the house and describe the house, to make it look like they’re not out of the country—which is the case in most of these situations—but that they’re driving by the house all the time. It scares them to the point where they won’t cooperate with law enforcement or their family. They just do anything they think will keep them safe.”
Whether or not you think your family member might be involved in a money scam, Smith recommends broaching the subject and feeling out their reaction. “Say, I heard people are getting a lot of these crazy raffle things in the mail, and that every one of them is a scam—which it is if you’re getting it in the mail.” A casual suggestion might either warn your family member or help bring up a red flag of a scam that is already underway. Smith also recommends keeping an eye out for unusual telephone calls, or receipts for things like Green Dot MoneyPak or Western Union that might indicate your relative is sending money to a stranger.
Schemes to Watch Out For
Smith recently spoke about scams that seniors are particularly vulnerable to at a presentation at The Gatesworth. In addition to lottery/sweepstakes scams, other common scams include:
Contracting schemes: This might include anyone who comes on to your property to do work. Always check to make sure they have proper licenses, and read contracts thoroughly before signing them. Scammers often take advantage of natural disasters, collecting on insurance payments with a promise of work that they never complete. Smith recalls the case of a lady who was promised a $59 deal on duct cleaning; but after the work was complete, two men demanded $1,000 for their work. “What’s her option at that point? She paid them, and once her daughter found out, they stopped payment on the check.” No matter your age, it’s a good idea to have a second family member or friend at the house when someone’s coming in to do work, Smith suggests.
Charity Scams: If a charity sounds like a good idea--such as money for children with leukemia or for veterans--but you’re not familiar with the particular nonprofit, be wary of writing a check. “If you give them $10 or $15, you’re opening yourself up to more solicitations.” Fundraising groups commonly earn significant amounts of money by selling names of donors, Smith notes.
Door-to-door solicitations: Solicitors offer magazine sales, saying they’re raising money for a nonprofit. If this happens, make sure to see their solicitor’s license before buying anything. Scammers often promise subscriptions, and the victim pays but never receives anything.
Green Dot MoneyPak: Never transfer money to a stranger using a pre-paid card like Green Dot MoneyPak, or by Western Union or MoneyGram. These methods are extremely difficult for law enforcement to track if a scam occurs, making them a favorite for thieves.
For more information or to report a scam, contact:
Better Business Bureau: 645-3300 or bbb.org
Federal Trade Commission: 877-382-4357 or ftc.gov