Alan Marx pens the latest installment of AARP Tennessee’s blog series “Outsmart the Scammers:”AARP Tennessee Volunteer Alan Marx

The Bureau of Consumer Protection of the Federal Trade Commission (FTC) is the federal agency with the broadest authority to protect the public from consumer fraud.  It conducts investigations and brings civil lawsuits against companies and individuals who engage in unfair, deceptive or fraudulent practices.  The FTC also educates consumers and businesses about their rights and responsibilities.  It maintains a Consumer Sentinel Network which tracks the complaints it receives.  In 2012 the Network received 1,692,363 complaints (excluding identity theft and do-not-call complaints).

Last month, Acting Director Charles Harwood of the Bureau of Consumer Protection testified before a subcommittee of the House of Representatives about the types of fraud that particularly affect older Americans, especially prize promotion scams, timeshare sales and re-sales, medical alert devices, investments, discount medical and prescription services, work-at-home schemes, bogus advance fees for loans, and charitable donations.  He gave examples of successful actions brought by the FTC to stop abuses in some of these areas.

Work-at-home Schemes

AARP works closely with the FTC, as shown by one of the cases Acting Director Harwood cited.  AARP’s Legal Counsel for the Elderly, a legal services office based in Washington, DC, alerted the FTC about Real Wealth, Inc., a company that ran mass mail campaigns promoting work-at-home jobs.   The FTC alleged that Real Wealth claimed consumers could make money by stuffing envelopes, addressing postcards, or performing other work at home.  Some Real World promotions appeared to target seniors.  For example, one that was cited contained a picture of an elderly man along with a claim that earnings of $350 per week were available for mailing 30 postcards every day.  Because there were no jobs from Real World that actually paid this amount of steady income and because consumers had lost more than $10.4 million in this scam, the FTC won a judgment for $10.4 million against Real Wealth and its owner.

Although the FTC does not represent individual consumers in fraud claims, when it brings a civil enforcement action it can obtain monetary relief to redress the damage done by the defendants.  Within the past two months, the FTC has sent checks to 50,000 consumers who were injured by Real Wealth.  Along with the checks the FTC included information about AARP’s Fraud Fighter Call Center, where trained volunteers work one-on-one to help seniors recognize and avoid fraud.

Identity Theft

For the past 12 years, identity theft has been the single largest category of complaints in the Consumer Sentinel Network.  Acting Director Harwood reported that 19 percent of the complainants who reported their age said they were over the age of 60.  The FTC recently held a workshop to collect information about which seniors are vulnerable to identity theft, how often they were targeted, and the types of schemes that were used, such as tax, Medicare, and nursing home related identity theft.  The FTC invited public comments to share with the Elder Justice Coordinating Council, which includes the heads of federal departments and other government agencies that have responsibilities relating to seniors.

Fraud Relating to Health Care

Recent and pending changes in the healthcare field have attracted con artists who are preying on consumers’ confusion and their fear of losing benefits.  Acting Director Harwood referred to recent cases filed by the FTC against companies for allegedly pushing phony prescription drug discount products, scaring consumers with threats that failing to sign up would cause the loss of their Medicare benefits, misrepresenting that they were from the Social Security Administration, Medicare or the consumer’s bank, and charging hundreds of dollars for worthless discount cards or for nothing.

Last year, the FTC filed a case against CVS Caremark Corporation, alleging that the company misrepresented the prices of certain Medicare Part D prescription drugs.  According to the FTC, from 2007 through at least November 2008, a CVS Caremark subsidiary, RxAmerica, posted on its website, supplied for posting on a website of the Centers for Medicare & Medicaid Services, and on third-party websites incorrect prices for Medicare Part D prescription drugs at two pharmacy chains, CVS and Walgreens. In some instances, the actual prices for the drugs were as much as 10 times more than the posted prices. The FTC claimed that as a result of CVS Caremark’s actions, many seniors and disabled people were charged significantly more than they expected, which pushed them into the “donut hole” under Medicare Part D where none of the drug costs are reimbursed by Medicare.

As a result of the FTC’s action, CVS Caremark was barred from making deceptive claims relating to Medicare Part D drug prices.  It also agreed to pay $5 million in consumer refunds, which the FTC administered.

The Bottom Line

While many federal and state agencies look out for consumers, the arsenal of the FTC’s Bureau of Consumer Protection has the most powerful and effective tools to stop schemes that hurt seniors and to obtain redress.

Here is a secure form to use to file a complaint.

If you’d prefer to call:

  • For complaints about a Company, an Organization, or a Business Practice - Call the toll-free helpline: 1-877-FTC-HELP (1-877-382-4357);
    TTY: 1-866-653-4261
  • For complaints about Identity Theft - Call the toll-free Identity Theft helpline: 1-877-ID-THEFT (1-877-438-4338); TTY: 1-866-653-4261

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Alan is an attorney with King & Ballow in Nashville, a native of Memphis and a veteran AARP volunteer whose passion is consumer protection.

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