You're paying for all these life insurance fraud tricks: Internet Scambusters #1,092
Life insurance scams cost Americans billions of dollars every year.
Most of them are aimed at the insurers themselves - but you still end up paying for them.
In this week's issue, we explore the latest fraud tricks aimed at both companies and consumers, with advice on how to protect yourself.
Let's get started…
No, You Can't Cash Out A Stranger's Life Insurance - It's A Scam
A new life insurance scam is targeting people from several ethnic communities in the US by promising they can cash in on someone else's life policy.
Letters, supposedly coming from a Canadian lawyer, tell recipients they can make "easy money" by agreeing to a three-way deal involving the lawyer, the recipient, and a charity.
Of course, it's nothing of the sort. There is no lawyer, no life insurance policy, and no charity. But the scammers are hoping their victims will pay from their own pockets to get their hands on the money, as well as provide personal information that can be used for identity theft.
Reports of the scam have been received from members of Latino, Korean, and Vietnamese communities. But they could just as easily be sent to anyone.
The scam echoes the so-called Nigerian scam in which victims are either invited to supposedly help smuggle money out of a country or told they have a secret inheritance to collect.
In this new trick, the fake lawyer says they had a client, who has died, with the same last name as the victim and that there's a life insurance policy to which they can add their name as a beneficiary. Oh, and of course, they have to keep the whole affair secret!
Three (3) Tips
If you get one of these letters, says the US Federal Trade Commission (FTC):
- Don't respond. In fact, you should never share your information with someone who contacts you in this way.
- Share this information with a friend who could benefit from a friendly reminder to help them spot the scam.
- Report it to the FTC at ReportFraud.ftc.gov. "Your report makes a difference: by telling your story to the FTC and to others in your community, you help others avoid the scam," the Commission says.
And it's not the only way that consumers are paying out for life insurance fraud. A report earlier this year from the Coalition Against Insurance Fraud (CAIF) put life policy cheats at the top of the insurance fraud table. CAIF says scammers take almost $75 billion a year for this crime out of total fraud loss by the insurance industry of more than $300 billion.
And who ends up funding that $75 billion? We do, with higher life insurance premiums.
Furthermore, individuals can themselves fall victim directly - when policies are either taken out in their names (without them knowing) or taken over by the fraudsters. Then they forge death certificates and try to collect from the insurers, at the same time potentially landing you in trouble.
Often, the first a victim may hear about it is when they get a letter from an insurer about the policy.
But it's also possible they may be invited to take part in a fraudulent scheme in return for a cut of the payout. Fines and possible jail time lie at the end of that route to supposed easy money.
In addition, what CAIF calls "stranger-originated life insurance" (STOLI) scams - where older policyholders are recruited with incentives to take out policies naming the scammers as beneficiaries - increased 56% from 2019 to 2020.
So, here are a few more tips to help you steer clear of the life insurance scammers:
- If you have life insurance policies, monitor and review them regularly.
- Safeguard your original policy documents and don't supply copies to anyone unless you're 100% sure there's a legitimate reason and you've checked out the person to whom you provide them.
- Contact the insurer as soon as you know or suspect something fraudulent is happening using your name and/or your policy.
- You should also tell local law enforcement, the FTC (using the link above), and your state's insurance department.
- If you're asked to take out a policy naming someone you don't know as a beneficiary in return for payment, don't. It could be illegal, so report it.
Life insurance companies have many ways of spotting life insurance scams, such as requiring official death certificates and proof of relationship to whomever took out the policy. But crooks are always finding new ways to try to trick them.
This Week's Alerts
New malware: Hackers are using a legitimate Windows app to install malware on PCs. The app, MSIX, is one of those packages that simplifies the installation of new programs on your computer, but in the doctored version, it gives the crooks remote access to your PC. Use security software to check that anything you download is safe.
No vacuum: Nobody (as far as we know) is giving away free Dyson vacuum cleaners. So, if you get a robocall saying you've won one - currently doing the rounds - just hang up.
No hairdo: Another current scam involves being offered an opportunity to book a hairdresser appointment at a big discount by pre-paying. When you turn up for your appointment, nobody knows anything about it. Check out the message independently with the real hairdresser's online or directory phone listing before handing over any money. And especially beware if you're asked to pay by untraceable methods.
That's it for today -- we hope you enjoy your week!