Scammers are taking advantage of the phasing out of paper checks for Social Security benefits and other federal programs, gathering financial information about the elderly during the transition.
The scams will likely continue until all paper checks are replaced with electronic direct deposit alternatives on March 1, 2013.
The Social Security Administration’s Office of the Inspector General and the Better Business Bureau serving the Pacific Northwest are warning Alaska’s older residents to watch out for fraud specifically targeting Social Security benefits. Officials recommend people scrutinize unsolicited calls and update to direct deposit sooner rather than later.
As far as identity theft scams go, this scheme is relatively new, said Adam Harkness, the bureau’s Alaska Public Relations manager. There are no reports of scammers targeting Alaskans’ Social Security benefits, yet.
Scammers write, call or email to phish for personal information like names, addresses and social security numbers. Phishing is the act of attempting to acquire those details by masquerading as a trustworthy person or official.
Calls range from scammers claiming to be a local library updating records about its members to impersonating the Federal Bureau of Investigation, Harkness said.
A name, address and phone number are enough information to get scammers started with identity theft or the new Social Security scam, he said.
In 2011, the Internet Crime Complaint Center, IC3, received and processed an average of more than 26,000 complaints per month. The most common complaints received in 2011 included FBI-related scams — schemes in which a criminal poses as the FBI to defraud victims — identity theft, and advance-fee fraud, according to a FBI press release.
Davyn Williams, an Alaska Department of Law Consumer Protection Unit attorney, encourages victims of Internet crimes to report complaints to the IC3.
Among the findings in IC3’s 2011 annual report released earlier this year:
■ Alaskans lost $1.28 million to Internet crimes in 2011.
■ Alaska ranked first in rates based on population, with 196 complaints per 100,000 people.
■ Of the age groups that filed complaints, people 40 and older represented 57 percent of the complaints.
“Seniors are the number one targeted demographic for scams … Medicare, Social Security, veteran’s benefits; all federal programs are required to switch to direct deposit, so they’re at-risk right now,” Harkness said.
Awareness of unsolicited calls and emails is key to avoiding the scams.
“(The bureau) gets reports all the time from people who say they’ve received anonymous calls, asking them to verify certain information, and that’s a very common phishing technique,” Harkness said.
After scammers obtain basic information, they contact the Social Security Administration, claim a false identity and sign up for direct deposit benefits. They provide an account number set up for the scam.
A year ago, the Office of the Inspector General began receiving reports from identity theft victims that their monthly Social Security benefits had been sent to a different bank account or a pre-paid debit card, without their knowledge or permission, according to its website. Since then, the office has tracked these cases and investigated whenever possible.
The frequency of the scam has increased as the deadline for the phasing out of paper checks approaches. This trend is expected to continue, Harkness said.
“Unfortunately, it’s very easy at this point,” he said. “The safe guards that are in place are not sufficient. And it’s going to get worse before it gets better.”
The Social Security Administration admits as much.
In a Sept. 20 press release following testimony from the administration’s inspector general Patrick P. O’Carroll Jr., the organization wrote, “While we have made some headway in identifying the perpetrators of these schemes, direct deposit fraud remains a challenge that does not have a single cause or solution.”
Harkness recommends signing up for direct deposit as soon as possible. It will not ensure complete protection, but the likelihood of falling victim to the scam drops significantly, he said. If the contrary happens, victims should call the Social Security Administration.
Local police departments cannot address the majority of scams, as scammers target their victims from Outside and across oceans.
Alaska State Troopers also have a Computer and Financial Crimes Unit. Troopers only have jurisdiction if the scam violates state statute and if the person committing the illegal scam is operating inside of Alaska and inside Troopers’ jurisdiction, said Megan Peters, spokesperson, in an email.
Jerzy Shedlock can be reached at email@example.com.