[Senate Hearing 109-316] [From the U.S. Government Publishing Office] S. Hrg. 109-316 OLD SCAMS-NEW VICTIMS: BREAKING THE CYCLE OF VICTIMIZATION ======================================================================= HEARING before the SPECIAL COMMITTEE ON AGING UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS FIRST SESSION __________ WASHINGTON, DC __________ JULY 27, 2005 __________ Serial No. 109-13 Printed for the use of the Special Committee on Aging U.S. GOVERNMENT PRINTING OFFICE 25-878 WASHINGTON : 2006 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 SPECIAL COMMITTEE ON AGING GORDON SMITH, Oregon, Chairman RICHARD SHELBY, Alabama HERB KOHL, Wisconsin SUSAN COLLINS, Maine JAMES M. JEFFORDS, Vermont JAMES M. TALENT, Missouri RUSSELL D. FEINGOLD, Wisconsin ELIZABETH DOLE, North Carolina RON WYDEN, Oregon MEL MARTINEZ, Florida BLANCHE L. LINCOLN, Arkansas LARRY E. CRAIG, Idaho EVAN BAYH, Indiana RICK SANTORUM, Pennsylvania THOMAS R. CARPER, Delaware CONRAD BURNS, Montana BILL NELSON, Florida LAMAR ALEXANDER, Tennessee HILLARY RODHAM CLINTON, New York JIM DEMINT, South Carolina Catherine Finley, Staff Director Julie Cohen, Ranking Member Staff Director (ii) ? C O N T E N T S ---------- Page Opening Statement of Senator Gordon Smith........................ 1 Opening Statement of Senator Herb Kohl........................... 2 Opening Statement of Senator James Talant........................ 3 Panel of witnesses Lois Greisman, esq. associate director, Division of Planning and Information, Federal Trade Commission, Washington, DC.......... 4 Zane M. Hill, esq., acting assistant chief inspector, United States Postal Inspection Service, Washington, DC............... 19 Anthony R. Pratkanis, Ph.D., professor of Psychology, University of California at Santa Cruz, Santa Cruz, CA.................... 40 Denise C. Park, Ph.D., co-director, National Institute on Aging Roybal Center for Healthy Minds, University of Illinois, Urbana-Champaign, IL........................................... 53 Helen Marks Dicks, esq., director, Elder Law Center Coalition of Wisconsin Aging Groups, Madison, WI............................ 71 Vicki Hersen, director of operations, Elders in Action, Portland, OR............................................................. 81 APPENDIX Written statement of Melodye Kleinman on behalf of WISE Senior Services....................................................... 93 Written testimony from Stetson University, College of Law, Gulfport, FL................................................... 97 (iii) OLD SCAMS-NEW VICTIMS: BREAKING THE CYCLE OF VICTIMIZATION ---------- -- WEDNESDAY, JULY 27, 2005 U.S. Senate, Special Committee on Aging, Washington, DC. The committee met, pursuant to notice, at 2:32 p.m., in room SD-106, Dirksen Senate Office Building, Hon. Gordon Smith (chairman of the committee) presiding. Present: Senators Smith, Talent, Kohl and Carper. OPENING STATEMENT OF SENATOR GORDON SMITH, CHAIRMAN The Chairman. Good afternoon, ladies and gentlemen, we welcome you all to this hearing of the Senate Special Committee on Aging. Today's hearing is the first in a series that will examine consumer fraud and identity theft issues relating to older Americans. According to the Administration on Aging, nearly 40 percent of America's seniors rank fear of fraud ahead of their concern for health care and the crisis attendant to it and even higher than terrorism. In all, the Nation loses $40 billion per year to telemarketing fraud and over $50 billion to identity theft. These crimes rob America's seniors of their dignity and retirement security. As we will hear from the Federal Trade Commission, Internet auctions, prize and sweepstakes fraud and lottery scams top the list of fraud complaints received from Americans age 50 and older. What is most disturbing is that these scams routinely top the FTC's annual list of top consumer frauds in the nation. It seems that even though we are aware of their use, scam artists remain successful in pitching old scams to new victims, perpetuating the cycle of victimization. Through today's hearing I hope we will make progress in finding effective means to break this cycle. Fortunately, a number of Federal, state and community programs, especially groups in Oregon such as Elders in Action, have made a positive difference in helping seniors prevent and recover from fraud and identity theft crimes. However, I believe we can and should do more. Working with my colleagues, I have introduced bipartisan identity theft legislation that would, among other things, place restrictions on the solicitation of Social Security numbers, allow consumers to place a security freeze on their consumer credit reports, and require all entities that handle sensitive personal information to provide notice to affected consumers in the event of a security breach. I am also mindful that legislation and consumer education must work in tandem. As reflected in the consumer education research that will be presented to us today, one size may not necessarily fit all when it comes to consumer messaging. Throughout this Congress I will be inviting state and Federal law enforcement agencies, as well as independent consumer protection groups, to embark upon a collaborative approach to responsible and effective consumer education messaging. To further this goal, I welcome today's distinguished panelists and again I thank you all for coming today. I will turn next to my colleague, Senator Kohl, for his comments and then to Senator Jim Talent of Missouri for his comments. OPENING STATEMENT OF SENATOR KOHL Senator Kohl. Thank you, Mr. Chairman, for holding this important hearing. We would like to welcome all of our witnesses here today as we examine ways to combat consumer fraud and identity theft as it impacts our nation's seniors. It seems that seniors are being targeted more and more by con artists looking for a quick buck. Studies show that up to 5 million seniors fall prey to financial fraud every year. Just last week my Milwaukee office helped a 65-year-old man, who was a businessman all of his life, when he responded to an e-mail he received encouraging him to invest in a Nigerian business venture. The return was supposed to be outstanding. One hundred sixty-five thousand dollars later, this man is left with nothing but an empty retirement account and his wounded pride. Although the FBI was contacted, he was told that these scams are so common and so difficult to trace that they could not do anything to help him recover the money that he has lost. Seniors like this man become targets every day. They are trusting and come from a generation when business was often conducted on a handshake. Unscrupulous criminals are exploiting this trust and using it to their advantage. Preying on the elderly is certainly nothing new but in a day and age when many seniors are not technologically savvy, con artists have an easier time collecting personal information and using it to swindle a person out of their savings more than ever before. One way to stem the tide of consumer fraud is consumer education. We need to explain what seniors need to watch for and how not to be victimized. In my home State of Wisconsin we have been working to educate seniors on the pitfalls of financial exploitation. My office has developed a brochure that not only gives seniors an idea of what to watch out for in terms of identity theft, credit card scams, telemarketing schemes and fraudulent lotteries, but also lists where seniors can turn for help. I have also been working with the Wisconsin Coalition of Aging Groups, the banking industry, and law enforcement in Wisconsin, and recently received confirmation from Federal agencies that Wisconsin banks can report suspicious activities involving a senior's account to law enforcement officials without violating Federal privacy statutes. This is good news for seniors and their families and we'll continue to work with all of our partners to get the message out to seniors on how to avoid being victimized. As we examine this issue today, it is critical that we keep in mind that senior scams are nothing new. Just as con-men and -women have new high-tech ways of conducting fraud, we, too, must develop new ways of stopping these criminals. So I thank you once again, Mr. Chairman, for holding this hearing. We look forward to hearing from our witnesses, learning more about how we can put an end to schemes and scams targeting our seniors. Thank you, Mr. Chairman. The Chairman. Thank you, Senator Kohl. Senator Talent. OPENING STATEMENT OF SENATOR TALENT Senator Talent. Thank you, Mr. Chairman. I think this is a very important hearing and I am not surprised that our senior citizens rank fear of fraud so highly. They are a target because these con artists know that in many cases they have worked very hard and tried to save a little money and I think a lot of people have a sense that well, the only people who are victims are people who perhaps are naive or maybe do not have a lot of experience with the world, but that just is not true. I was just leafing through the statements and I know a lot of the witnesses are going to say that and we know that in our office. This is a very important hearing. I hope there is more we can do here in the Federal Government to try and help our seniors. I also want to echo what you said about the number of good state and local programs that are out there. We have several in Missouri. I want to mention in particular the O'Fallon, Missouri Police Department Senior Citizens Police Academy, which has been very effective because the seniors can come in and learn about these scams, and also what Clay County is doing with an elderly protection initiative for homeowners. So I am glad you are holding this hearing. I am very interested in what the witnesses have to say and what we can do productively to try to help fight this. Thank you, Mr. Chairman. The Chairman. Thank you, Senator Talent. Our first panel will consist of Ms. Lois Greisman. She is the associate director of the Division of Planning and Information at the Federal Trade Commission. They will be releasing a first-of-its-kind report compiling fraud and identity theft statistics on Americans age 50 and older. Ms. Greisman, I am pleased that you are here and we welcome you and look forward to your testimony. She will be followed by Mr. Zane M. Hill, acting assistant chief inspector at the United States Postal Inspection Service. He will be discussing the agency's law enforcement efforts and premier a new consumer education video. Mr. Hill, we welcome you, as well, and we will hear first from Ms. Greisman and then you will be following her. STATEMENT OF LOIS GREISMAN, ESQ. ASSOCIATE DIRECTOR, DIVISION OF PLANNING AND INFORMATION, FEDERAL TRADE COMMISSION, WASHINGTON, DC Ms. Greisman. Thank you very much, Mr. Chairman, Senator Kohl. The written testimony submitted represents the views of the Commission. My comments and any responses I have to your questions reflect my own views and do not necessarily reflect the views of the Commission or any individual commissioner. I am delighted to have the opportunity this afternoon to discuss the Commission's efforts in fighting consumer fraud against older Americans. We have worked closely with your committee over the years to protect senior Americans and we welcome the opportunity to continue these critical initiatives. I am also very happy to appear on the same panel as assistant chief Inspector Zane Hill. The U.S. Postal Inspection Service has been an indispensable partner in the fight against identity theft and consumer fraud. Our close working relationship has proven both effective in prosecuting wrongdoers and efficient in protecting consumers. We all are sensitive to the fact that certain fraudsters may target older Americans and place them at higher risk than the population at large. In 2004 we received almost 650,000 fraud and identity theft complaints directly from consumers and from others. It is this rich source of information that we used to develop the extensive report we have provided to the committee, which analyzes the complaints received from consumers aged 50 and older. As you said, Mr. Chairman, this is a unique report that we have produced. The FTC uses the information in this report and all other complaint information in guiding its law enforcement and consumer and business outreach initiatives, and this vital complaint information is also made available through our consumer sentinel network to over 1,300 law enforcement agencies, which in turn use it to identify and prosecute crooks. The FTC's report provides a tremendous amount of information about what older Americans tell us about being victimized. I want to emphasize a few points in that report about the fraud data. First, older Americans are not immune from any particular type of fraud. The most frequent complaints involve fraud about Internet auctions, sweepstakes and lotteries, Internet services and computers. We see these same complaint categories when we look at the entire population, but some things do stand out. For example, complaints about sweepstakes rank second for older Americans but rank fifth for the entire population and the FTC's report shows that the number of sweepstakes complaints received increases significantly from consumers aged 70 and older, as does the total dollar loss reported by victims. The FTC has sued many companies for sweepstakes frauds, many of which have been based in Canada. Our goals always have been to close down illegal operators and if at all possible, get money back to the victims. Second, looking at the report it also was striking to see that 41 percent of the fraud complaints from older Americans are Internet-related. What that means to us as we define it, that means that the company initially contacted the consumer by the Internet, the consumer responded to a solicitation via the Internet, or the solicitation itself concerned an Internet product or service. The 41 percent figure itself should not be surprising but it is a significant increase from the 33 percent figure for consumers aged 50 and older that we saw looking at the 2002 data. At bottom, we analyzed all the complaint data in the report to help us maximize our law enforcement activities. Halting fraudulent conduct is a cornerstone of the FTC's consumer protection mission in protecting older Americans, whether the cases involve alleged sweepstake scams, misrepresentations about a purportedly new Medicare program, or health claims about the benefits of a dietary supplement called ``Senior Moment.'' Law enforcement, however, is just one tool. We aggressively work to reduce fraud and identity theft through consumer and business education. We have developed a wealth of educational materials that alert consumers to signs of fraud and advise them about how to protect their sensitive information. Other educational materials inform businesses about how to safeguard personal information and how to assist customers who have been victimized. The FTC also partners with other agencies and organizations to reach a wide audience. The AARP is a key partner. Whose many publications frequently include articles about how to avoid and report fraud and identity theft. The AARP also has cobranded FTC publications and distributed them to its members. Further, the FTC looks forward to working with this committee to ensure that these materials reach senior Americans and all other consumers. I have provided the committee with a sample of these materials. It is in this large packet of information and I would be remiss not to note at the back is a ``Do Not Call'' fan, which is one of my favorite programs. All of these materials are available on our website, in both English and Spanish. We hope to continue conducting outreach programs and campaigns with your offices and with others to make the Commission's consumer education materials and our on-line complaint forms available through your websites as we continue our efforts to protect older Americans. Thank you for the opportunity to describe the Commission's activities. I will be happy to address any questions you may have. [The prepared statement of Ms. Greisman follows:] [GRAPHIC] [TIFF OMITTED] T5878.001 [GRAPHIC] [TIFF OMITTED] T5878.002 [GRAPHIC] [TIFF OMITTED] T5878.003 [GRAPHIC] [TIFF OMITTED] T5878.004 [GRAPHIC] [TIFF OMITTED] T5878.005 [GRAPHIC] [TIFF OMITTED] T5878.006 [GRAPHIC] [TIFF OMITTED] T5878.007 [GRAPHIC] [TIFF OMITTED] T5878.008 [GRAPHIC] [TIFF OMITTED] T5878.009 [GRAPHIC] [TIFF OMITTED] T5878.010 [GRAPHIC] [TIFF OMITTED] T5878.011 [GRAPHIC] [TIFF OMITTED] T5878.012 [GRAPHIC] [TIFF OMITTED] T5878.013 The Chairman. Thank you very much. Mr. Hill. STATEMENT OF ZANE M. HILL, ESQ., ACTING ASSISTANT CHIEF INSPECTOR, UNITED STATES POSTAL INSPECTION SERVICE, WASHINGTON, DC Mr. Hill. Thank you very much, Mr. Chairman, members of the committee. I want to first of all thank you for the opportunity to testify today about crimes against the elderly. The mission of the U.S. Postal Inspection Service is to protect the U.S. Postal Service as an agency, its employees, and the mails from criminal attack and criminal misuse. I think I want to show a video at this point in terms of our work with crimes against the elderly so you can see what we are trying to accomplish here. [Video shown.] Before I begin, I would like to acknowledge our Federal partner, the Federal Trade Commission, and the wonderful work that they have done with us in terms of training initiatives, education, legislation, enforcement actions. We have an excellent working relationship with them and I think we are actually doing some good to protect our seniors from fraud. There are countless illegal schemes that violate the Federal mail fraud statute, which is the very first consumer protection law enacted in 1872. It is still the most effective fraud enforcement weapon and postal inspectors have used it for over 100 years. Last year, for example, we responded to over 82,000 mail fraud complaints. Out of that we investigated over 3,000 fraud cases and arrested over 1,400 individuals for mail fraud. As a result of these investigations there was over $1.2 billion in court-ordered involuntary restitution and this was only a portion of the total financial impact these crimes had upon American citizens. Over the years postal inspectors have used the mail fraud statute to investigate and prosecute all types of scams. The advent of the telephone brought telemarketing scams and then the advent of the Internet brought Internet scams. Each of these bring their own offerings but really it is in many cases the same scam, just a different twist. Eventually the mails will become involved in the scheme and that is when postal inspectors will become involved in the investigation. Because older citizens, the physically challenged and shut- ins rely on the mail and these other forms of communication for many of their purchases and their personal business, they become easy prey for these fraud operators. The problem is further compounded by fraud operators who sell the names and addresses of their victims to other operators, resulting in repeated victimization of many elderly citizens. The same holds true for telemarketers. Most offers are legitimate but unscrupulous telemarketers can be the smoothest of operators and they can quickly defraud people out of their life savings. Losses attributed to telemarketing fraud are estimated to exceed $40 billion per year. Unfortunately, senior citizens are shown to be particularly vulnerable to these fraudulent solicitations. Fraudsters recognize this and they recognize that many seniors are widowed, alone, isolated from family and friends, and they take advantage of this. A telephone call from anyone to some of our senior citizens is welcome and our experience has shown that con artists know how to make the most of this. Once they have them on the telephone line, then they can manipulate them. In searches of fraudulent telemarketers' places of business we have discovered the files of the operators that they have maintained on their victims. These files tell us a great deal about how these cons are worked. The information contains intimate details of the victim's health, the names of their children, vacation and travel memories, and even information on deceased spouses. Telemarketers in particular use this information when they call their victims to give their sales pitch a personal touch, a hook if you will. They will mention family names, inquire about their health, and very effectively portray themselves as being caring and knowledgeable. For these victims, these telephone calls may be one of the few regular contacts they have with other people and the victims actually sometimes value this interaction with someone willing to talk with them. Victims often even defend the fraud operators in the continued belief that they are, in fact, their friends who are trying to help them win a sweepstakes and gain some money. Sadly, in our investigation some victims will acknowledge that they believed that the fraud operator was taking advantage of them but explain that they had no one else that they could talk to, and this is a sad commentary. One particular technique called the ``You have won'' scheme, targets elderly victims who have previously participated in lotteries, sweepstakes, and other prize-winning opportunities. Fraudsters inform these seniors that they have own; however, they are required to pay either administrative fees, taxes or membership fees before the prize check can be mailed. We know how this ends. The victim receives nothing; the scam artist receives the fee. Another tactic utilized by con artists is to tell a senior that they have won a large cash prize and then ask them for some identification by providing a credit card number, a bank account, or other personal information so that they can verify the senior as the winner. Armed with this personal financial information, fraudsters can quickly clean out the accounts of these unknowing senior victims. One of the most notorious scams that we have seen against seniors is what is known as the reload. It is a very offensive tactic that bothers all of us in this business. When fraud operators are successful in obtaining money from a victim, they often make an attempt to gain even more money. This is the reload. In a typical reload, the fraud operator contacts the victim again and alters the original scam or represents a new scam sweepstakes. Winners may be told that their prize has been increased but that additional fees are necessary to claim the new prize, and then starts the cycle of the reload. Victims in fraudulent investment schemes may be convinced to invest more money or to convert their investment to another market product which invariably is worth even less than what they initially had been sold before. Also, fraudulent telemarketers often network with other operators and sell or exchange target lists. The con artists refer to these lists as ``mooch lists'' or ``sucker lists,'' and you can tell from the name of the list what they think about them. If a telemarketer knows a particular senior has fallen for several scams, they will call this senior, pose as either an attorney or law enforcement officer and advise them that they have arrested the con artist from the earlier schemes and seized the money. This is the start of the scam. The victim's money is described as being held either in a State fund or held by the courts. The scam artist will then request a fee to release those funds to the victim and in doing so steal from the victim again. As you can see from this, there are just multiple opportunities under a reload for the victims to be re- victimized again and again. Many seniors have been robbed of their hard-earned life savings through illegal telemarketing and mail fraud schemes, but also there is a tremendous emotional cost that associates with this. The senior victims lose not only their money but also their self-respect and their dignity because they have been duped. We have interviewed victims in some of our cases who have claimed they could not remember sending anything to the operators or out of embarrassment would never acknowledge how much money they actually lost. Let me give you one example. An example of a recent Inspection Service case highlights an 86-year-old widower and World War II veteran from Pennsylvania who was the victim of a sweepstakes fraud. Over the course of 2 years, this senior lost his entire life savings to con artists who repeatedly promised him $850,000 in prize money provided he would pay in advance a series of customs fees, taxes, and legal fees in addition to his savings account. In reading the account of this, it was multiple reloads and multiple interactions by different groups that just continued to victimize him. It gets even worse. After he lost his life savings, the victim then used his Social Security income and sold his stock shares to cover the purported processing fees for the monies he had won. He never received any of the prize or any of the sweepstakes. Criminal prosecution is an important element in our fraud program, but it is not the only tool that we use. We also use civil fraud and our administrative authority to shut down the use of mails for those fraud operators that are using that as a vehicle to commit these crimes. The most important thing that we have seen in our good work with the FTC has been in the area of consumer education. We think this is probably where we need to place a lot of our work and attention to educate them. I want to tell you about some of those efforts and the success that we have had with them. In September 2003, our postal inspectors, in conjunction with the Postal Service, the FTC, and other Government agencies and private companies, unveiled a national consumer awareness program on identity theft known as Operation: Identity Crisis. This campaign focused on the ease with which identity theft occurs unless consumers take steps to prevent it. The video that you watched is one of those types of videos that we do as a part of these campaigns. Even though this crime affects all age groups, including older Americans, according to complaints that the FTC just spoke about, the percentage of seniors as a victim group rose from 17 to 21 percent, so we are actually seeing an increase in the numbers of senior victims to these types of frauds. The Inspection Service has recognized for many years that awareness in terms of consumer fraud is where our emphasis needs to be. We will continue to try to increase those efforts and to partner once again strongly with the FTC and other organizations to get that message out. Prevention efforts must focus on the key factors that play the greatest role in identity compromise. Unfortunately, the traditional way to steal personal information has not changed in terms of identity theft. Obtaining lost or stolen wallets, checkbooks, credit cards is still the favorite method, according to Congressional Quarterly Research. While this is a challenge, it really pales in comparison to the 52 million identities that have been compromised through electronic means since the beginning of this year. This is why prevention of the crime is a priority for the Inspection Service. You have all heard the saying ``Crime doesn't pay,'' but in this case, it does in a very positive way for some of the victims. All of the campaigns that we have been involved with have been paid by a unique funding arrangement where we use monies received from criminal fines and forfeitures in cases where the victims could not be identified and the money could not be returned to them, just like the video that you saw. In addition, this money also pays for funding for public service announcements and other very proactive consumer campaigns that we are involved with. As you understand, the more that we can get the message out to that part of our population, the more we can tell them things to look for. They are very knowledgeable. They can identify some of these factors. We think that we will be very effective there if we can continue that very aggressive push in terms of the education. Another campaign that we actually did also in 2004 was to raise awareness about investment fraud and help consumers avoid becoming victims of those types of scams. This one, perhaps you remember, was called ``Dialing for Dollars,'' and it included a video portraying investment scheme that actually targets older Americans. This past February, in February 2005, we teamed up with the Postal Service consumer advocate and other Federal, State, and local consumer protection agencies, and launched a campaign to inform consumers how to avoid fraudulent work-at-home schemes. A multimedia approach conveyed the message with ads placed in newspapers and magazines reaching over 45 million readers. Last month, the Inspection Service and the Direct Marketing Association announced a nationwide consumer education initiative to educate Americans on how to avoid being scammed by the fraudulent sweepstakes like you just saw. In August, a foreign lottery campaign is planned to protect the public from those scams that take the money with the purchase of ``tickets'' and then charge a fee to collect the fictional winnings. Americans trust the Postal Service and the mail. Seniors have relied on this mail system their entire lives for their financial and their personal business. The Inspection Service is totally committed to continue its work of ensuring that the mails are secure and not used for criminal and fraudulent purposes. We will continue to be vigilant for those fraud schemes that target our senior citizens. In closing, Mr. Chairman, I would like to extend an invitation to you and the committee to join us in a National Fraud Prevention Campaign that we are planning to kick off during Consumer Protection Week in February 2006. This will focus specifically on educating senior citizens about the various fraud schemes that target their age group. That concludes my remarks. Thank you. [The prepared statement of Mr. Hill follows:] [GRAPHIC] [TIFF OMITTED] T5878.014 [GRAPHIC] [TIFF OMITTED] T5878.015 [GRAPHIC] [TIFF OMITTED] T5878.016 [GRAPHIC] [TIFF OMITTED] T5878.017 [GRAPHIC] [TIFF OMITTED] T5878.018 [GRAPHIC] [TIFF OMITTED] T5878.019 [GRAPHIC] [TIFF OMITTED] T5878.020 [GRAPHIC] [TIFF OMITTED] T5878.021 [GRAPHIC] [TIFF OMITTED] T5878.022 The Chairman. Thank you both so very much. Zane Hill, is this a public service video? Is it shown on the airwaves? Where is it shown if not on television? Mr. Hill. We have sent it to target groups, and we have used it with some video news releases, but we have not done a public service campaign with it, Senator. The Chairman. It is very good, and it seems to me that there are probably some television programs where a public service announcement like that would be very, very effective. Just a question and a comment as an observation. I have seen some of your educational materials. They seem to me excellent. Do you do any research testing their effectiveness? Do you have a sense are you reaching consumers? Is it getting through how they can protect themselves? Ms. Greisman. We do an enormous amount of internal testing before we disseminate any sort of consumer---- The Chairman. Do focus groups and---- Ms. Greisman. Probably not quite on that level, but we do have an Office of Consumer and Business Education, which is staffed with people who have enormous expertise on how to reach a broad range of consumers and also how to communicate information in a way that is most likely to be received. We certainly have done copy testing on occasion when we think it is warranted. The Chairman. Lois, I owe you an apology. I think I mispronounced your name. It is Greisman, right? Ms. Greisman. That is correct. No problem. The Chairman. I apologize for that. A question about restitution to victims. When you identify them and you get a conviction or apprehend someone, do you ever retrieve their money? Ms. Greisman. I will start. If at all possible, we do, and the best key to enable us to do that is to be able to seize assets at the outset when we are dealing with criminals, people engaged in fraud. We, of course, are a civil law enforcement agency. If we are able to obtain ex parte relief and freeze their assets before they hide it, send it abroad, or do whatever they will with it, we are most likely to be able to preserve assets and then provide it to consumers in the form of redress at the end of the day. The Chairman. You have enforcement powers, but you do not have police powers in the same sense as the Justice Department. Do you work with them, the FBI? Ms. Greisman. We work very closely with them, as we do with Postal Inspection Service, FBI---- The Chairman. Attorneys General in the States? Ms. Greisman. Attorneys General, U.S. Attorney's Offices. We have found that partnering our civil enforcement with criminal enforcement is indispensable, and that is where we get the main deterrent effect. The Chairman. Are there any Sentencing Guidelines for elder crimes? Ms. Greisman. I would have to defer to my colleague on the criminal side. Mr. Hill. Yes, Senator. I know there are some in terms of vulnerable victims, in terms of the fraud guidelines that talk about where the scheme targets individuals, I think, over the age of 55 or where you have multiple targets of a fraud scheme. The Chairman. These are Federal Sentencing Guidelines? Mr. Hill. Yes, sir. The Chairman. Lois, I think in your testimony you spoke of the schemes that come from across our borders--Canada, you did not mention Mexico. Are there some from that southern border as well? Ms. Greisman. Certainly we have seen cross-border fraud from many countries throughout the world. It is not limited to Mexico or to Canada. The Chairman. Say it is Mexico or Canada or anywhere else, what do other nations do in terms of coordinating with you and stopping it as it might emanate from their countries? Do they wait until their people are victimized, or do they work well with you, particularly our closest neighbors with whom we have the greatest commercial relationships? Ms. Greisman. We have an enormous history of collaborative efforts with our Canadian counterparts, and increasingly so with our Mexican counterparts. We have a lot of project initiatives in the pipeline with Canadian law enforcement, but it can be difficult, and part of what the FTC has sought in order to better enhance our ability to deal with cross-border fraud is the introduction and passage of the U.S. Safe Web Act. We think that would provide us with additional tools to effectively combat cross-border fraud. The Chairman. So as not to be blaming it on Canada, are there U.S. fraud schemes that victimize Canadians? Ms. Greisman. Absolutely. There is no question about it. In fact, we receive a lot of complaint data from what is called Canada's Phone Busters, and most certainly those involve some Canadian citizens complaining against U.S. companies. The Chairman. You feel like the relationship between nations on these issues is seamless and effective? Ms. Greisman. Very much so. The Chairman. That is very good to hear. What about recidivism rates? Someone you find, apprehend, in some cases, I am sure, imprisoned, when they come out do you get a lot of repeat offenders? What do you find, Zane? Mr. Hill. Yes, Senator, we do. There are more scams than we can possibly count and these people are very creative. The old saying ``There is a sucker born every minute,'' then they take advantage of that, and they will just, you know, when prosecuted, when sentenced, then they will come out and they will look for other creative ways to dupe American citizens out of their money. To your other question about cross-border type work, unfortunately--the good thing about the information age and all these new means of communicating is this is really good. The bad thing is this type of fraud becomes very global, and these operators can set up in any number of countries, some of which we have not yet had the opportunity to create that good partnership relationship like we have in other countries where we have actually worked with them to combat this. So you have to go to where the schemes are originating and where the operators are residing. That is where you have to go to seize the assets to do all those things to shut them down. The Chairman. Is there any place particularly in the world that seems to have a concentration of it? Or is it just pervasive? Mr. Hill. Well, I think if you were to ask us that, I think probably parts of Eastern Europe. You know, we have seen an increase in the number of operators out of there, but, you know, the way telecommunications can be routed and switched and so on and so forth, sometimes even the place where you think they are might not be where they are actually working from. Ms. Greisman. If I may? The Chairman. Yes. Ms. Greisman. When a consumer complains to us, the consumer knows only what the company may have told him about where the compared is located. So, for example, a company can certainly say, yes, I am in the U.S. and there is a U.S. drop box, but it, in fact, maybe in Eastern Europe or in Canada or elsewhere. The Chairman. It is appalling, but I appreciate your forthcoming answers. Senator Kohl. Senator Kohl. Ms. Greisman, your report indicates a general upward trend in consumer fraud and identity theft complaints from consumers of 50 and over. Aside from an obvious increase in scams, is this also due to an increase in awareness and, therefore, reporting? Are seniors becoming more familiar about whom to turn to? Ms. Greisman. Yes, we think that is absolutely right. Each year that we have better enabled consumers to contact us, we have seen a substantial increase in the number of complaints, both on the fraud and identity theft side. Senator Kohl. So that the upside in numbers clearly does indicate a problem, but it is not apples and apples. It is that more people are familiar with what is happening and, therefore, are reporting what is happening. Ms. Greisman. That is correct. It does not tell you anything about the actual incidence of fraud or identity theft across the country, which is why we use surveys to get at that. Senator Kohl. All right. As I understand it, the complaints from consumers that you receive are all reported by victims themselves. We have seen that there is much stigma associated with being victimized and, therefore, many crimes go unreported. Is there a way to extrapolate from these numbers the actual number of seniors who are being defrauded? Ms. Greisman. I am afraid I do not think we can do that at this point. We would have to look at our fraud survey and techniques used in conducting that survey to see if you could determine the actual incidence impacting the elderly. Senator Kohl. Mr. Hill, in your testimony, you describe how raids of fraudulent telemarketers' places of business turned up files containing very personal information about their victims, such as spouse and children's names, their health conditions, and their travel histories. How is such information being distilled? Mr. Hill. Senator, you have people in the business of gathering personal information about American citizens, and this is what their job is, any number of open source public records they go to. They have very aggressive research groups that gather this information for them, and then they compile it in lists, basically customer lists that they use. It is not a unique situation for the fraud operators. It is done in a lot of marketing strategies for consumer marketing campaigns. Unfortunately, the unscrupulous operators use those same types of lists to then victimize the seniors as a target audience that they know that they can go after and that they would be very susceptible to those types of scams. Senator Kohl. All right. I understand that the Postal Inspection Service has developed a series of consumer DVDs, education DVDs. How are these being disseminated to seniors? Do you have any feedback on how they are being received and what kind of impact these DVDs are having? Mr. Hill. To another question about a focus group, we have done focus groups with seniors on some of our DVDs, and they have been very positively received. They think it tells the right message in the right way so that seniors will understand what things to be aware of. We are going to do more of this with the other public awareness campaigns that we do to make sure that the message that we put together is, in fact, reaching the target audience with the things they need to do to protect themselves. Senator Kohl. Thank you. Mr. Chairman, thank you. The Chairman. Thank you, Senator Kohl. Senator Talent? Senator Talent. Thank you, Mr. Chairman. Mr. Hill, I notice in your testimony on page 8, you present five questions people ought to ask themselves if they are contacted or they see something on the Internet. I was actually going to ask about that. I can remember on a number of occasions seeing public service announcements actually from the post office explaining what to do if people want you to send money up front or something. Are you making an effort to get out this information about key questions to ask regarding potential transactions or deals like this? Mr. Hill. Yes, Senator, we are. We are going to continue to really focus with these types of questions. As the scams change, then these questions will also change. But basically the one that you pointed out, when you have to give money up front to get something that you have won, that is just a red flag automatically. So these are the things that we will continue to do. As these scams continue to evolve, we will continue to pull out these key questions and build those into each of these public awareness campaigns that we are doing. Senator Talent. This is very frightening to me, Mr. Chairman, because I can easily see a lot of people, not just seniors asked to confirm something and providing some financial information and then, bang, their whole savings are just gone. I hope we can come up with some way for really getting this word out in a way that people can understand. Thank you, Mr. Hill. Thank you, Mr. Chairman. The Chairman. I have a few questions on the second round, so if any of my colleagues have additional questions, we will go to them. Back to the question of public service announcements, to either FTC or Postal Inspection, do you have the authority to get these on the air or do you have the funding necessary to get these on the air? Because it does seem to me that that could be perhaps quite effective if we could get them more broadly distributed, these messages that may be produced in the form of 30-second television ads. Do you have funding or need authority that Congress can provide? Ms. Greisman. We do conduct an enormous number and different types of consumer educational campaigns. To the best of my knowledge, we have not done video news releases, which is not to say it is not something we would not think about. But we have reached, we think, an enormous audience through our print and online materials as well as through some radio I know we have done. In fact, in the near future we will be doing an enormous outreach campaign focusing on identity theft as part of the FACT Act amendments. The Chairman. I would sure encourage you to think about what you need from Congress to better broadcast the materials that I think are excellent that you have produced, because I think there is an education curve out there that could really put a dent in this that maybe we can more effectively disseminate. I want to ask you about methamphetamines, not that you have anything to do with it, but my State of Oregon--and I suspect it is true of other States increasingly, tragically--just has a plague of methamphetamines. In fact, in Washington County, OR, over 90 percent of identity theft cases last year were connected to meth trafficking. The U.S. Attorney's Office in Eugene, OR, says the statistics are similar for what they regard as routine ID theft cases such as shoulder surfing, dumpster diving, and mailbox theft. Can you both elaborate on what, if any, experience your respective agencies have with this component to elder abuse? Ms. Greisman. I am not aware of a specific component with respect to seniors. Certainly we are well aware and the law enforcement community is well aware of the link between identity theft and methamphetamines, and what we have seen is that either people who are addicted or people who are trafficking it are using identity theft as a quick way to get quick cash to fund the labs. Part of what we are doing in response to that is ensuring that as many complaints as possible get into the Consumer Sentinel Network because that is accessible to 1,300 law enforcement agencies throughout the U.S., Canada, and Australia, and we think that will enable them to connect dots to locate thieves in a way that they do not otherwise have available. Mr. Hill. Senator, from our perspective, in the last probably 8 years or so, whenever you have seen that increase in meth usage and a meth problem in a community, you see these types of very low-level white-collar type crimes that are going on, the identity theft, trying to--purse snatching, vehicle break-ins to get purses or any type of personal information. You referenced other theft of mail. All of those things go hand in hand with that type of crime that the methamphetamine users seem to gravitate to. For them, it is not a very high-risk crime. It is something that they can do fairly anonymously if they can get the information. They do not have to confront someone. They do not have to brandish a weapon at them. They can do a great deal of damage to a community with those types of what we call probably low-tech white-collar crimes in terms of stealing that information. The Chairman. I am sure you are very much aware that Health and Human Services is in the process of implementing a Medicare Part D program, a prescription drug benefit for Medicare patients. Obviously, we are talking about people who are elderly. I suspect that as we speak there are many scams being developed trying to springboard off of Medicare Part D. Are my suspicions well founded? Are you starting to see prescription drug fraud schemes being developed? Ms. Greisman. Well, sir, over the years we have, unfortunately, seen no shortage of frauds involving various drugs, various dietary supplements, both in terms of the claims promised about what they can do for you, but also in terms of their availability. In fact, one of the settlements referred to in the Commission's testimony involves a scheme in which people allegedly were selling a Medicare program. What we have done, because we are anticipating a possible surge in such types of fraud, is talk to our colleagues over at HHS to try to find the best way to ensure consumers who are defrauded or who think they are defrauded know where to file a complaint and can access information that will ensure that they can differentiate between, distinguish between what is fraudulent and what is real. The Chairman. I am glad to hear you are already working with HHS because I suspect that scenario, as we implement this prescription drug benefit, that there is going to be a world of new opportunities for people who would commit these frauds. Senator Kohl, do you have any additional questions? Senator Kohl. No. The Chairman. Senator Talent. Senator Talent. No. The Chairman. We have just been joined by the Senator from Delaware. Do you have an opening statement or a question of these witnesses? Senator Carper. Not an official statement, but just something I would like to say, and then a question, if I may. As I walked through the room, I heard part of my question being asked, so maybe the rest of it has been asked as well. In our State, Delaware, we had about 40, 45 different drug discount cards that people could apply for. It was very confusing. I was thinking about trying to explain things so that my mother, who just passed away, could have understood them and trying to couch them in those terms. It is hard enough for folks the age of my mother or my aunt and uncle to understand the benefit that is being offered to them, and it is all the more difficult when there are folks out there that are trying to defraud them. We saw a fair amount of that fraud not so much in Delaware during the last year or so with the drug discount card, but what lessons have we learned from the fraud that grew up around the drug discount card that might enable us to reduce the incidence of fraud with respect to the next step, the implementation of the Part D benefit? Mr. Hill. I will just speak from the U.S. Postal Inspection Service standpoint. I am not aware of us seeing a real increase in the numbers of investigations that we have done of that nature. I could be wrong, but I do not know if we have really looked at that to the level of concern that the committee has expressed, and we will do so to see what kind of numbers. But obviously you are right, Senator, anytime that someone is misrepresenting what service they can provide to those card users, then there is a strong possibility that they could be deprived of services needed. So that will be something that we will most certainly take a look at. Ms. Greisman. I will add just briefly, that the importance of education can never be underestimated, and I think the point you are making is critical, which is that it is important to communicate in a way that people understand what you are saying and can use that information. That is something we spent a lot of time and energy ensuring that we get right, and we are constantly re-evaluating it. The prescription drug world is certainly a challenge, but it is one that we think we can deal with, working with HHS. Senator Carper. On the one hand, it is hard enough for folks the age of our parents and grandparents to figure out do I want to use this benefit, the Part D benefit. Do I want to use it? Do I know enough to understand it to make a right decision? Is the person that I am talking to on the phone someone who is there to help me or someone who is there to take my money and to defraud me? My mom used to live down in Florida just outside of Clearwater for a number of years, until my sister and I moved her up to Kentucky in the last years of her life. I remember the last few years my mom was there--my dad had passed away--my mom put a roof on their house that did not really need one. My mom built an extension to the house that I am sure was not really needed. She was living there by herself. I remember the time when my mom bought a vacuum cleaner, and she paid more for that vacuum cleaner than I paid for my first car or two that I bought. It is a good vacuum cleaner, but--and it should have been for what she paid for it, for as long as she paid for it. But, on the one hand, somebody tried to sell her once a long-term nursing home plan, and she bought it. My sister and I had no idea that someone had tried to sell her that kind of nursing home plan, but she bought it. When the time came for us to move her and all of her earthly goods from Florida up to Kentucky, my sister came across this long-term nursing home plan that my mom had bought for a relatively small amount of money and found out that it was worth 2 years of paying for her to stay in a private nursing home, and in that case--so we were not all that happy about the vacuum cleaner and the roof on the house and some other things, but we were glad that my mom had the good sense, the presence of mind to take out that long-term care plan, which did a lot of good for her and for us. Thanks very much. The Chairman. Thank you, Senator Carper. Lois and Zane, thank you both very much for your presence and testimony today and your public service. We are grateful to you and your agencies for what you are doing for America's senior citizens. The Chairman. We will now call up our second panel that will consist of four individuals: Dr. Anthony Pratkanis, a professor of psychology at the University of California at Santa Cruz, serves as a member of the AARP multidisciplinary research team. He will be followed by Dr. Denise Park, who is the co- director of the National Institute on Aging Roybal Center for Healthy Minds at the University of Illinois, and she will be presenting the results of NIA-funded research illustrating the role of cognitive science in developing effective consumer education materials for older Americans. Then we will hear from Ms. Helen Marks Dicks, the director of the Elder Law Center, the Coalition of Wisconsin Aging Groups, and she will testify about the center's work in educating and empowering seniors to recognize, report, and combat scams and other fraudulent practices. Also, we are very pleased to welcome from my home State of Oregon Ms. Vicki Hersen. She is the director of Operations at Elders in Action. Ms. Hersen will testify about Elders in Action community education program which provides seminars and ombudsman counseling on many topics, including senior scams, fraud, and identity theft. Dr. Pratkanis, go right ahead. STATEMENT OF ANTHONY R. PRATKANIS, PH.D., PROFESSOR OF PSYCHOLOGY, UNIVERSITY OF CALIFORNIA AT SANTA CRUZ, SANTA CRUZ, CA Mr. Pratkanis. Chairman Smith, Ranking Member Kohl, and Senator Talent, every year Americans lose almost $100 billion in telemarketing, investment, and charity fraud. While this dollar figure is staggering, it does not capture the true costs of this crime. Fraud not only impoverishes victims financially, but it can also impoverish them emotionally and drive a wedge between victims and family members. Economic fraud crimes have societal consequences as well, resulting in a loss of trust that impacts the business community and erodes the very fabric of life in American society. But I want to report some good news in the right against economic fraud crimes. For the last 8 years, I have been a member of a team of researchers and fraud fighters consisting of myself, Doug Shadel, the state director of AARP in Washington State; Bridget Small, the director of Consumer Protection for AARP here in Washington, DC; and Melodye Kleinman, of WISE Senior Services, whose written testimony you received today. Our team has conducted surveys of victims, carried out experiments investigating the effectiveness of intervention strategies, developed educational materials, trained volunteers to fight this crime, and have warned over a quarter of a million potential victims personally about fraud crimes. As a result of our work, we have developed an understanding of the nature of the crime and some strategies for preventing it. I want to tell you four things that we have learned, and I want to discuss with you three opportunities or challenges that I think we will face in fighting this crime. First, we have learned that the weapon that is used in fraud crimes is social influence. No one knowingly gives their hard-earned cash to a con criminal. They think they are making an investment, winning a prize, providing for a charity, or some similar positive goal. The con criminal is a master at using one high-powered influence tactic after another to sell a deception. Given that the weapon in a fraud crime is an invisible one--social influence as opposed to a gun or a knife--there is a tendency by both victims and observers not to recognize economic fraud crime for what it really is--a crime. Recently, Doug Shadel and I analyzed over 250 undercover tapes used in fraud investigations. In these taps, law enforcement took over a victim's telephone line and then tape- recorded the con criminal's pitch. In listening to these tapes, we found that con criminals would play different roles-- authorities, friends, even dependents--to create a platform of trust. They would then use many well-established social influence tactics to sell the crime. For the most part, these sales pitches are sweet and charming, although nonetheless deceptive and effective. However, at times it can also be abusive, frightening, and intimidating. Mr. Chairman, with your permission, I would like to play a portion of some of these tapes to illustrate the abusiveness that can occur in these crimes. The Chairman. Without objection. Mr. Pratkanis. The first selection is a montage of fraud pitches taken from two different undercover tapes. First you will hear two cons, Victoria and Sean, who are working together for a company that they call WMT. The company claims to be offering credit card protection. In reality, they are attempting to get the victim--in this case, Helen, who is played by a seasoned investigator--to make what is known as a verification, to give her name and other personal information over the phone, which they will then record and then use subsequently to withdraw money from Helen's account. In another scam, which you will also hear interspersed between these two, you will hear from Robert, who has told Ardelle, a real victim in this case that is being tape-recorded as part of a law enforcement investigation, that Ardelle has won a prize and needs to send money to claim her prize. Ardelle has been a repeat victim and now is out of money, and thus Robert is making one last attempt to steal whatever he can from her. [Taped played.] Mr. Chairman, with your permission, I would like to play a second portion of the section of our tapes that will give you an additional feel for the abuse. This time we will look at a little more detail about that WMT company. This was a call recorded in March 2003, and again, WMT is trying to get a verification from the victim. They have told them they are credit card protection, but what they are really trying to do is get a verification where the victim reads their personal identification number over the phone, which they tape-record and then use to withdraw from their account. Senator Talent. This is a law enforcement officer on the other end? Mr. Pratkanis. Yes, Senator. The first one was a victim. [Pause.] The Chairman. Maybe they got away. Mr. Pratkanis. It is in the written testimony as well, so we can move on if you would like. The Chairman. Why don't we do that? We will put it in the written record. Mr. Pratkanis. Thank you, Mr. Chairman. The Chairman. I understand Senator Talent had a question for you before he had to leave, and if you want to ask that, Senator? Senator Talent. Actually, I just want to clarify about the tape, and I got the answer. The Chairman. OK. Thank you, Senator Talent. Go right ahead, Doctor. Mr. Pratkanis. Mr. Chairman, a second thing that we have learned is just about anyone can fall prey to this crime. It impacts a large cross-section of our society, as Senator Talent said in his opening remarks. Con criminals go where the money is, and thus, older Americans with their nest eggs are a prime target for this crime. The stereotype of a frail or lonely victim does not stand up in our surveys of victims. While some victims are indeed lonely, others are quite active in their communities and can be leaders in their communities. Indeed, what we find is that con criminals profile their victims, as Mr. Hill said earlier, and they profile their psychological and other characteristics to find their Achilles' heel. We all probably have one. They find that Achilles' heel to construct the exact pitch that is likely to be most effective with each victim. For example, in one of our surveys, we found that victims of lottery fraud, a crime which emphasizes luck, believe that the world controls them, a psychological trait known as external locus of control; whereas, investment fraud victims-- and this crime emphasizes a mastery of one's fate--they believe that they control the world, or a trait known as internal locus of control. In other words, the con criminal was pitching the exact scam to take advantage of the person's psychological characteristics. The third thing that we have learned is we have identified effective strategies for preventing this crime. In her written testimony, Melodye Kleinman described the reverse boiler room approach of WISE Senior Center. At WISE, senior volunteers contact potential victims with a warning message. The volunteers call potential victims whose names appear on criminal call or mooch lists that have been recently seized by the FBI. These can be quite active lists. It is not uncommon for us to call people and find out that they just sent in some money to a con criminal. Our volunteers then call and talk with these potential victims. They explain the nature of the crime, and then they help them develop their own strategies for preventing the crime. In a series of experiments, we tested the effectiveness of this intervention. We first had our volunteers call the victim with a prevention message, and then a few days later professional telemarketers attempted to take the victim in a simulated scam. We found that our interventions were effective in reducing victimization rates by about 50 percent. In other words, peer counseling is an effective tool in our fight against economic fraud crimes. Finally, as a result of our research and work with victims, we have identified components of a prevention message that are most effective. Successful prevention messages are ones that provide the potential victim with specific warnings about the crime and, most importantly, coping strategies for dealing with the crime that build a sense of self-efficacy, a feeling that ``I can take charge of the situation and hang up'' on the criminal. We encourage everyone to develop their plan for getting off the phone and have it ready to go when the need arises. On the other hand, our research has found that some messages that increase fear and create a defensiveness not only do not work but oftentimes boomerang, and in one study actually increased victimization rates slightly. Our research suggests three opportunities and challenges for those interested in preventing this crime. First, it is important to remember that economic fraud is a crime. There is a tendency to blame the victim in this crime and to believe that ``there must be something about them'' that led to victimization. Instead, our research shows the power of the fraud criminal's weapon of influence. Victim blaming is harmful to victims and hinders law enforcement's ability to obtain accurate and timely information about this crime. The victim of economic fraud should be included in any Victim's Bill of Rights. Sentencing for economic fraud crime should match the magnitude of the crime and not the charm of the con. We need continuing Federal efforts in investigating and enforcing these laws. Second, we now have the tools, knowledge, and strategies which have been proven effective in preventing economic fraud. This information needs to be disseminated to fraud fighters everywhere. Doug Shadel, in collaboration with Washington State Attorney General McKenna, has trained over 2,500 volunteer fraud fighters since October 2003 who have in turn educate close to 100,000 people in their communities about fraud. This fall they will begin a series of peer counseling events to reach those whose names have been stolen by identity thieves. We need more of this sort of intervention. I would like to see the tools for effectively dealing with this crime in the hands of every victim's advocate in local and State prosecutor's offices, the efforts of Washington State duplicated in other areas, and the creation of regional centers to fight economic fraud patterned after the remarkably successful program at WISE Senior Center. Finally, we need research that focuses on the chronic victim, the 50 percent or so of victims that we did not successfully reach in our call center research. Our research shows that the chronic, repeat victims find themselves in a rationalization trap of being confronted with two discrepant thoughts: ``I am a good and capable person,'' on the one hand, but yet, ``I just sent my hard-earned money to a scammer.'' In such a situation, it is difficult to admit that one has been taken in a fraud without damaging self-esteem, and thus defensiveness is common. We are currently investigating strategies for resolving this rationalization trap in the hopes of finding effective interventions for use with the chronic victim. Chairman Smith and Ranking Member Kohl, this concludes my testimony. I thank you for the opportunity to inform you about our research, and I thank you and each of the members of your committee for the leadership you are taking in fighting this crime. Thank you, sir. [The prepared statement of Mr. Pratkanis follows:] [GRAPHIC] [TIFF OMITTED] T5878.023 [GRAPHIC] [TIFF OMITTED] T5878.024 [GRAPHIC] [TIFF OMITTED] T5878.025 [GRAPHIC] [TIFF OMITTED] T5878.026 [GRAPHIC] [TIFF OMITTED] T5878.027 [GRAPHIC] [TIFF OMITTED] T5878.028 [GRAPHIC] [TIFF OMITTED] T5878.029 [GRAPHIC] [TIFF OMITTED] T5878.030 [GRAPHIC] [TIFF OMITTED] T5878.031 The Chairman. Thank you, Doctor. That was wonderful testimony, very helpful to learn from. Our next announced witness is Dr. Denise Park. Dr. Park? STATEMENT OF DENISE C. PARK, PH.D., CO-DIRECTOR, NATIONAL INSTITUTE ON AGING ROYBAL CENTER FOR HEALTHY MINDS, UNIVERSITY OF ILLINOIS, URBANA-CHAMPAIGN, IL Ms. Park. Thank you. Good afternoon, Chairman Smith, Senator Kohl, and other members. My name is Denise Park. I am a cognitive neuroscientist and professor at the Beckman Institute, which is part of the University of Illinois in Urbana-Champaign. I direct the Roybal Center for Healthy Minds at the University of Illinois, a center funded by the National Institute on Aging that is designed to take the results of basic laboratory research on aging and determine how these results can be used to improve function in older adults in their everyday lives. I have been involved with the NIH by just completing a stint Chairing an NIH Review Panel recently, and I also just completed a term on the Board of Directors of the American Psychological Society. Thank you for inviting me today. My research for the past two decades has focused on the aging mind. Today, I would like to alert you to how changes in cognitive function with age make older adults particularly susceptible to being victimized by charlatans who exploit certain aspects of the aging cognitive system. How are we doing on the visual aids here? OK, great. Here is a figure based on data collected from my laboratory that has been published in scientific journals as well as USA Today and Newsweek. I call this figure the ``Aging Mind'' slide. It represents data collected on many different cognitive tests from adults aged 20 to 90 who were selected from a group of exceptionally able and healthy older adults. What you will see in this figure is the focus of my first important take-away point. Basic lab research demonstrates very clearly that as we age, beginning in our 20's, like many other systems in the body, our cognitive system shows signs of gradual deterioration. With age, we become slower at processing information; our memory becomes somewhat less effective; and our ability to take in a large quantity of information at one time and reason about it decreases. At the same time, these declines are not as important for function in everyday life as they might appear, because with age, as this figure shows, knowledge also increases, conferring a buffer against the impact of cognitive aging. Nevertheless, we do become increasingly ``cognitively frail'' with age, and this frailty has the greatest impact when we cannot rely on our knowledge or experience to help us out. So when older adults are unexpectedly faced with offers to buy things or have repairs done, they have less ability than younger adults to process all aspects of the message that they are receiving. This can result in them attending to the most attractive parts of the message or the simplest part of the message and agreeing to purchase things that they neither want nor need, or worse yet, signing contracts for which they never receive any services or contracts that they do not understand. A second take-away point that will give you further insight into why older adults are more easily exploited by consumer scams is the following: There is conclusive evidence that older adults have a bias toward the processing of positive information. Studies conducted by Laura Carstensen and her colleagues at Stanford University suggest that with age, we learn to ignore negative information and direct more of our attention and limited cognitive resources toward positive information. This is generally good news, suggesting the resilience that characterizes so many of our elderly citizens. But at the same time, this tendency to process positive information at the expense of negative can make older adults particularly vulnerable to unscrupulous characters. Research in my lab conducted with Oscar Ybarra has demonstrated the following: We presented young and older adults with both positive and negative information about an individual and then tested their memory for the traits we used to describe the individuals. Older adults tended to recall more positive traits and less negative traits, whereas young adults were more balanced between positive and negative information. These results suggest that when older adults meet a charming charlatan, they are going to be biased toward processing the positive information about the individual--his niceness, attractiveness, and warm toward them--and be less likely to note the inconsistency of his story or tendency to gloss over specifics, which would make him seem untrustworthy to a younger adult. This problem is exacerbated by the somewhat more limited cognitive abilities that occur with age that, again, result in increased vulnerability to exploitation. The types of effects I am describing will be particularly pronounced for our oldest citizens and for those with less experience, that is, less knowledge, with making financial decisions. So, for example, a new widow over age 75 might be particularly vulnerable to exploitation. The third point that I want to make is that with age, we tend to remember less explicit detail about events and more of the gist of what we hear. With age, individuals are particularly poor at remembering the details or context in which they learned something. So the point about gist memory will become particularly important when you consider my fourth point, and that is this: Information that feels familiar to an individual seems like it must be true. This is called the ``illusion of truth effect.'' Knowing that older adults remembered gist over detail, and that familiar information feels true, my colleagues Ian Skurnik, Norbert Schwarz, Carolyn Yoon, and I set up an experiment that was designed to demonstrate that information that individuals believe to be false at the time they learn it will later seem true. Here is what we did. We had older adults--aged 60 and over--and young adults-- aged 18 to 25--come into our lab, and we presented them with a series of statements about health and told them whether the statements were true or false. For example, they would see statements like ``Most cold medicines cause the eye's pupils to dilate,'' or ``DHEA supplements can lead to liver damage, even when taken briefly.'' Some of the statements they saw only once and some they saw three times. Thus, all participants studied some statements that they were told three times were false. Now, remember that older adults tend to remember gist but not the details of what they see or hear. Remember that familiar information seems true. So what did we predict? We predicted that people would be more familiar with the statements that they heard three times were false than the statements that they heard one time were false. We also expected that older adults, because they forget details, would not remember whether the statements were true or false. So 3 days later, when we brought our participants back to our lab, what did we find? We showed people the statements they studied earlier as well as some new ones, and we asked people to judge whether the statements were true, false, or new. What we found was very surprising on the surface, but also exactly what we predicted. We found that old, but not young, adults were more likely to call a statement true that they had been told was false three times, compared to a statement they heard was false only once. So the more often participants had been told a medical statement was false, the more likely 3 days later they were to believe that this statement was true. Why is this? It is because the statements they heard were false multiple times felt familiar, and information that feels familiar seems true. So young adults did not show these effects because they could remember the explicit details about what they had studied. So these findings explain how pernicious the effects of false claims can be for older adults. An older adult might not believe that ``shark cartilage cures arthritis'' if they read it as a headline in a tabloid at the grocery store checkout. But later, when they encounter the shark cartilage in the store, they might remember that they heard somewhere that it was a cure for arthritis and decide to purchase it, not remembering that they disbelieved the information when they initially read it. These findings provide insight again into not only how older adults might be exploited, but also provide guidelines for providing warnings to older adults. When presenting information to older adults as a warning, it is very important to present information clearly and in a positive way--for example, ``Do this,'' rather than ``Never do this''-- if we want older adults to accurately remember it. Here is an example of a way not to present information to older adults taken from an actual pamphlet about living trusts. Here is the claim: A living trust--this was taken from an actual pamphlet. A living trust will preserve your legacy to loved ones by helping you avoid probate costs and estate taxes. Then it goes on to say: But here is the truth. Most people do not need to worry about probate or estate taxes. Most living trusts are not designed to avoid estate taxes. There are many easier, cheaper ways to avoid probate than a living trust. Older adults, however, a few days later, if they read this, might only remember that they learned something about how living trusts are important for avoiding probate, and they think that they need one, even if they initially understood that living trusts are rarely needed to avoid probate. A better way to phrase this might be as follows: Living trusts are usually unnecessary and rarely save money for people. If you think a living trust is for you, get advice from an estate planning attorney. Presenting false claims about health or taxes to older adults and then explaining why they are wrong is a dangerous business for helping older adults avoid fraud. What I would like to do now is to critique several public service ads intended to educate older Americans about consumer fraud from the point of view of a cognitive psychologist. I will be pointing out some features that make the materials more easily comprehended and remembered by older adults and also presenting some examples that have some significant problems that will limit their effectiveness. As we look at these ads, keep in mind that designing materials for older adults can be particularly difficult due to the range of cognitive ability present in this population. There are, of course, a majority of older adults who are functioning at an extraordinarily high level and will be quite insulted by materials that are so simple that they appear to talk down to them. At the same time, there is a significant proportion of very old adults who are cognitively compromised and who may also have a limited social network, and these may be most susceptible to fraud. It can be quite a challenge to design materials that speak to both groups. Nevertheless, I will try to show you some materials that succeed for both groups and others that are problematic in their design. First I will show you some examples of problems. The first example here is material about Alzheimer's disease designed by a nonprofit Alzheimer's support organization. This particular brochure illustrates the point I just made. Remember that I mentioned that older adults tend to remember the gist of what they read rather than details and that information that is believed to be false at the time they read it may feel true later on. So when this information is presented as a set of itemized myths, there is a good chance that the information will later be remembered as truth. For example, an older adult reads the statement, ``MYTH: There Is No Hope for an Alzheimer's Person.'' At the time he or she reads it, they understand the statement is false. Days later, however, all the individual remembers is that he or she once read somewhere that there was no hope for people with Alzheimer's, completely forgetting the context in which it was read. Had the information been presented in a straightforward and positive way--``FACT: There are things that can be done to help people with Alzheimer's''--such a misunderstanding could have been avoided. The next example is a consumer fraud fact sheet published by the Federal Trade Commission that warns against ``phishing'' scams, a type of e-mail scam to which older adults, due to more limited experience with the Internet, may be especially vulnerable. The problem with this ad is that those individuals most likely to be taken in by a phishing scam are probably going to think it has something to do with the sale of seafood that does not exist. So the people who most need to read this article would be likely to pass it by when they encountered this brochure because they would not know what a phishing scam is and that it would have any importance to their everyday life. Perhaps a better headline would be, ``Have you been getting e-mail requests to update financial records or to help secure funds for someone in another country? It is a scam.'' Then the next line might read, ``How Not to Get Hooked by a Phishing Scam.'' The next excerpt is from a pamphlet on Medicare/Medicaid fraud put out by the Department of HHS and the Administration on Aging, and it is another example of helpful information being presented in a difficult and inaccessible format. Here we see once again that the main title, ``Be Informed, Be Aware, Be Involved,'' does not convey any useful information about what this pamphlet is actually about. The section headings also give no sense of what the topic of the pamphlet is. It is only upon careful scrutiny that one is able to notice that it is about health care and Medicare fraud. Finally, in small print, it indicates that if one suspects that fraudulent charges have been made to Medicare on their bill, one should call the number on the back of the pamphlet. But actually there is no number provided. The title of this pamphlet might read instead, ``Check Your Medical Bills. Be Alert to Medicare Overcharges and Medicare Fraud.'' Ms. Park. The next advertisement developed by the Department of HHS, the American Hospital Association, and the AMA is a good example of a well-crafted message that is easily accessible to older adults at all levels of cognitive function. The text is simple and succinct. The title and headings are eye-catching and easy to understand. It is possible to gather the gist of the message simply by glancing at the bold text alone. However, anyone who is interested in more detail can chose to read the small print as well. The pictures, while adding to the overall attractiveness of the ad, also serve to reinforce the main points and make them more memorable and easier to process. The Chairman. As you have evaluated these, Dr. Park, how much of the Government's information is good and how much is bad? Ms. Park. That is an interesting question. Your Committee sent me 10 or 15 pamphlets of this sort, and I selected 6 without any difficulty to critique, and, you know, I would guess at least--this is a guess. Of the materials I was sent, I would guess 25 percent had serious problems. I didn't have to look hard to find these examples, and there were many more in the materials that were sent to me. The Chairman. You mind if we give them your number? Ms. Park. I might mind. No, I think that actually that's my closing comment, and maybe I should get to that. Very quickly, this is another example of a good add. It is really clear what this ad is about. Stop calling me. How to remove your name from marketing lists. Then you can see that there is clear headers, and you can look at what your particular problem is and get more information on the second page of the web site. This is a web page. Here is another one that is really very good. Nice integration of visual and verbal information. If you just bought something online about a medical device, you would be sure to look at this and sure to know that this is about how to be warned. I like that they showed the FDA as a clear and credible source that was very visible on this ad, and it is also easy to figure out how to get more information from this ad. So to conclude, I hope you all remember the following: normal aging is accompanied by declines in cognitive function that result in older adults remembering gist rather than details. Never present older adults with false statements as examples, because, later on, they will feel true to the older adult. Older adults have a bias to process positive information. This can lead to exploitation due to their tendency not to process negative information about shady characters. Finally, I would like to note that cognitive aging scientists can play an important role in designing effective and memorable materials for older adults that will help them be less vulnerable to fraud. The work I have presented today is only a small example of the help cognitive scientists can offer in designing effective materials for older adults to protect them against fraud, as well as to aid in designing materials that clarify information about taxes, forms, medical conditions, and Social Security. The research I presented today was supported by the National Institute on Aging, and is a good example of how basic laboratory research can result in important outcomes for understanding everyday behaviors. It has been an honor and a pleasure, Senator Smith and Senator Cole, to share with you the work conducted under the auspices of the NIA Roy Ball Center for Healthy Minds, and I would also like to thank your Committee staff for their support and the National Institute on Aging for the support of the research that contributed to this presentation. Thank you. [The prepared statement of Ms. Park follows:] [GRAPHIC] [TIFF OMITTED] T5878.032 [GRAPHIC] [TIFF OMITTED] T5878.033 [GRAPHIC] [TIFF OMITTED] T5878.034 [GRAPHIC] [TIFF OMITTED] T5878.035 [GRAPHIC] [TIFF OMITTED] T5878.036 [GRAPHIC] [TIFF OMITTED] T5878.037 [GRAPHIC] [TIFF OMITTED] T5878.038 [GRAPHIC] [TIFF OMITTED] T5878.039 [GRAPHIC] [TIFF OMITTED] T5878.040 [GRAPHIC] [TIFF OMITTED] T5878.041 [GRAPHIC] [TIFF OMITTED] T5878.042 [GRAPHIC] [TIFF OMITTED] T5878.043 The Chairman. Dr. Park, it has been enormously helpful and insightful the academic approach you have taken. A question if I may. How sophisticated do you think the scam artists are? Do they know what you know in terms of positive messages and how to tell negative things in ways that will ultimately seem truthful to them? Ms. Park. I think that is a really good question. I think there are people who intuitively know how to defraud people and recognize that they need to present themselves as warm, charming--how to deal with lonely elders--and also are very good at, based on a few cues in a conversation as to what this person needs and wants to hear. So there is, you know, I would guess a really sophisticated con artist is a natural psychologist. He is informal. They also learn over time with what works and what doesn't work, and they will unconsciously learn things about what works that they can't even verbalize, but they may implicitly recognize what will be effective. The Chairman. Well, certainly this hearing and this Committee will be pursuing your suggestions on improving the materials and their effectiveness so that they are not wasting time, but actually making a difference. So. Ms. Park. OK. Thank you, Senator Smith. The Chairman. Thank you so very much. Helen Dicks is from Senator Kohl's State of Wisconsin and, we are very thankful for your presence and invite your testimony now. STATEMENT OF HELEN MARKS DICKS, ESQ., DIRECTOR , ELDER LAW CENTER OF THE COALITION OF WISCONSIN AGING GROUPS, MADISON, WI Ms. Dicks. Thank you. Good afternoon, Chairman Smith, Ranking Member Kohl, and members of the Special Committee on Aging. I appreciate this opportunity to testify. The Elder Law Center observes three types of financial exploitation of older Americans. Most easily recognized are the traditional fraudulent practices where a third party defrauds the senior and obtains their assets and their identities. The abusers are strangers to the seniors. This is the type that we have talked about the most today, and the type that we identify mostly as a consumer protection issue. The second issue that we deal with is the occurrence of waste, abuse, and other fraud within Medicare and other public benefit programs. With the introduction of a new and complex Medicare Prescription Drug Program this fall, marketing to seniors will reach a new, intense level. The CWAG Elder Law Center anticipates that scam artists will use this development to exploit seniors and people with disabilities who receive Medicare. Previously, you had asked what happened around the drug cards introduced last year as a transition before this benefit started. We had a lot of experience in Wisconsin with people charging applicants who apply for a public benefit. We had people pretending to be a Medicare approved card company, getting people's personal information, and then charging their credit cards to the tune of $299 for a card that was not a Medicare approved card. There were several organized scams around the discount cards. We presume that the same level of sophistication and greed will come out in the Part D marketing this fall. The third type of exploitation is the most common, the most under reported, and actually the most appalling type of elder abuse. It is the financial abuse of seniors by family members and other trusted people. These people use legal documents, such as Powers of Attorney, to drain seniors of their lifetime savings and assets. Trusted family members and professional advisors use estate planning as a means of gaining access to savings accounts, real estate, and other personal possessions. Seniors are reluctant to report these crimes simply because they involve family members. Law enforcement is often reluctant to get involved because they see this as a family issue. To address these concerns, the Elder Law Center has been using a fourfold approach. We provide consumer education on identifying and preventing financial elder abuse, benefit fraud, and other forms of exploitation. This education includes our publications, which I have provided to each Senate office. Additional consumer materials were given in my testimony packet. Since we anticipate major fraud activity around the new Medicare Drug Benefit, we have a section on our Part D web site www.wismedrx.org specifically dealing with fraud and a separate e-mail address to report fraud to us as people become aware of this type of activity. Two, we provide legal assistance and emergency representation for victims of elder financial exploitation. Most work in this area comes in to us through our financial exploitation helpline. Our oldest caller was 102. She asked for assistance in revoking a Power of Attorney that a family member had been misusing. The third way we work to eliminate abuse is to encourage the reporting, investigation, and prosecution of financial elder abuse, benefit fraud, and other exploitation through training for seniors, professionals, government employees, and community advocates. Our professional training includes working with bankers and lawyers. We have specific publications on both the civil litigation and criminal prosecution of elder abuse cases. We are currently working with our Attorney General's office, training law enforcement personnel. In addition, our office hosts one of the Senior Medicare Patrol projects, working to train seniors to spot and report Medicare fraud. Fourth, we advocate for improvements in the law and additional public funding to support prevention and prosecution of elder financial exploitation. We have successfully lobbied for increased funding by the state to our counties for elder abuse investigations. The Wisconsin legislature is currently reviewing both our guardianship laws and our protective placement laws. Financial abuse of elders is now where domestic violence was 20 years ago. No one wants to admit how extensive the problem is. Unfortunately, elder financial abuse is a low priority among the general public, among law enforcement, and within our government. We need to change this. We need greater coordination between social service agencies and the law enforcement community. We need to create a dialog between those who have direct contact with vulnerable seniors and those who can take actions to protect them. We need to realize that this is not just a family matter. We need a major change in the public attitude toward the victimization of seniors. This will require the reintroduction and passage of the Elder Justice Act and funding to support increased coordination between the aging network, financial institutions, and law enforcement. In closing, I am proud of the work that the Coalition of Wisconsin Aging Group, its Elder Law Center, and the other elder justice advocates have done, but limited resources means limited results. We need to empower our local communities with financial and legal means to prevent and prosecute elder the financial exploitation. If we do not do so, there will only be more victims and more abusers. [The prepared statement of Ms. Dicks follows:] [GRAPHIC] [TIFF OMITTED] T5878.044 [GRAPHIC] [TIFF OMITTED] T5878.045 [GRAPHIC] [TIFF OMITTED] T5878.046 [GRAPHIC] [TIFF OMITTED] T5878.047 [GRAPHIC] [TIFF OMITTED] T5878.048 [GRAPHIC] [TIFF OMITTED] T5878.049 [GRAPHIC] [TIFF OMITTED] T5878.050 The Chairman. Thank you very, very much. Vicki Hersen is from my State of Oregon. Thank you, Vicki, for coming all this way, and we invite your testimony. STATEMENT OF VICKI HERSEN, DIRECTOR OF OPERATIONS, ELDERS IN ACTION, PORTLAND OR Ms. Hersen. OK. Thank you. Good afternoon, Chairman Smith and Senator Kohl. I am Vicki Hersen, director of Operations for Elders in Action, and I am honored to be here today, and thank you for convening this hearing to address the critical issue of ``Old Scams, New Victims: Breaking the Cycle of Victimization.'' Elders in Action is a powerful voice for local seniors in the Greater Portland area. We have a 37-year history of tackling important issues of concern for seniors, and we believe quality of life should never depend on age. Our small staff relies on the time and talent that 200 volunteers provide in delivering key services, including our ombudsmen and community education program. The ombudsman philosophy embodies the neighbor-helping- neighbor approach. Our volunteers provide personal support, information, guidance, and advocacy to fill gaps in meeting the needs and solving problems for our growing senior population. For seniors who are alone, confused, or afraid, or have nowhere else to turn, our volunteers provide a lifeline. More than 2,400 elderly victims of crime in the Portland area have been helped by Elders in Action ombudsmen since this innovative program began in 1998. Victims of Crime Act funds, through the Oregon Department of Justice, help support this vital service. This is for seniors who live independently in their own home and it is not to be confused with the--long-term care ombudsmen program, which is funded through Older Americans Act money. But this is for folks who live in their own home or apartment. We helped individuals such as Georgia, who was terrified when a friend of her sons moved in and began stealing from her and threatening her. With our help, Georgia filed a restraining order and was able to take the steps necessary to live in an abuse-free environment. Then there was May, who had hired a contractor for some maintenance on her home, and ended up being a victim of his fraud. Last year, we helped victims of scams and fraud recover over $90,000 in benefits owed and funds lost to crime. Our volunteers have the time and the heart to keep working with the seniors for a positive solution. When an urban renewal area became a hotbed for opportunists to buy houses from seniors, we were there to assist. One 82- year-old victim was targeted by a man with a high pressure sales pitch, convincing her to sell her house for $88,000. Later, she was confused about what had transpired, and she called our ombudsmen services, and after reviewing the paperwork and making phone calls on her behalf, we were able to reverse the below market agreement and we saved her from a $48,000 loss when she sold the house for $136,000 a few months later. Our community education volunteers work to prevent local seniors from becoming victims in the first place by providing practical information and resources about senior scams, fraud, ID theft protection, home security and safety and predatory lending schemes. Last year, we provided 7,100 seniors with important consumer information at 94 community events. Such senior-to- senior prevention education is critical in helping seniors become more attentive to their surroundings. These include the many fraudulent schemes that are becoming rampant via mail, phone, door-to-door, and e-mail. One of our volunteers says, you can be robbed by a gun or you can be robbed by the phone, and the phone is a lot easier. She provides practical tips to her peers on cutting down the paper, credit cards, and sensitive ID information that people carry with them. Elders in Action volunteers advise seniors to keep their antenna up for things that just don't seem right. The old adage holds that if it sounds too good to be true, it probably is. Communication and prevention of isolation of seniors is crucial to breaking the cycle of victimization. We encourage seniors to call Elders in Action to see if mail that they may have received or an e-mail or a door-to-door offer or a phone offer is real. Our volunteers help file reports to our State Attorney General's Financial Fraud and Consumer Protection Division, the Construction Contractors' Board, the Oregon Division of Finance and Corporate Securities, and other consumer protection groups. Creating opportunities for seniors to get involved in their neighborhood or at their local senior centers is also a way to break barriers to isolation. We encourage seniors to talk with each other if they're suspicious, or if they have been a victim of a crime so that their peers may be informed. In fact, one of our victims of identity theft, luckily knew not to give the person information, but someone had actually taken out a credit card in her name. She came to us and one of our volunteers assisted her in getting it cleared up. She is now one of our ombudsmen volunteers, so she shares in the community her experience to be alert and informed. A local senior service agency case manager has said that 25 percent of their elderly clients have been a victim of ID theft or scams. One key solution to ID theft is to install mail slots or locked mailboxes, to pick up new checks at your bank, and to only put your mailing address on checks with your first initial. Unfortunately, Medicare Part D prescription drug benefit that people have been mentioning about that takes effect in January creates new fodder for scammers and other opportunists. Already we've received calls from three types of schemes who are taking advantage of seniors' uncertainty about the upcoming changes. One involved an insurance company using heavy handed sales by phone and not fully disclosing all information, not allowing the consumer to make an informed choice. A second came by mail and stated that the President has announced the guidelines for Medicare reform and went on making it sound like an official notice, then asking for phone, name, address, and birth dates of the Medicare beneficiary and spouse. No company name or contact information was listed on the return postcard, and the return address was a post office box, which is also a red flag. The third involved a company calling a woman in an assisted living facility. They made it sound like they were an official Medicare company and offered her $20 to answer a questionnaire, which lasted an hour. In reality, they were fishing for confidential information. There's a significant link to financial loss from robbery, ID theft, and health deterioration. Most of the victims we assist live on low, very fixed incomes, and a loss of a few hundred dollars can tear their world apart. The trauma of a stolen purse exacerbated an already existing health condition in one of the seniors we assisted, and she ended up in a nursing home as a consequence. The criminal was a repeat offender who stole the client's ID, wrote checks, and cashed her tax refund. Please consider the following solutions: Provide help and assistance within the police and court system for aging awareness training, tracking of scams, and more investigations, and I really appreciate the elder friendly materials that you were sharing with us, because we use a lot of focus groups with our local media and with just different groups, because we have seniors who are willing to share their information, and the importance of large enough fonts, colors, certain colors that people find hard to see on web sites and things like that are in print. So that's really great. Present senior-sensitive messages--TV spots, newspaper stories, and ads--about where to get help. Provide more significant funding for programs that educate seniors so they know how to avoid being victims of fraud, and provide funds for programs to train peer advocates for senior victims of crime. Thank you for the opportunity to share how Elders in Action works to prevent problems and solve difficult situations for seniors. Our elders deserve much more, given the contributions they have made to our society. Let us translate this into funds for those who really need it and create ways to gather the talent and wisdom that our elders can give to our community. Thank you. [The prepared statement of Ms. Hersen follows:] [GRAPHIC] [TIFF OMITTED] T5878.051 [GRAPHIC] [TIFF OMITTED] T5878.052 [GRAPHIC] [TIFF OMITTED] T5878.053 [GRAPHIC] [TIFF OMITTED] T5878.054 The Chairman. Thank you very much, all of you, and Vicki, if you could tell us what are the two or three biggest sorts of scams going on in Oregon right now? Is it Medicare Part D? Ms. Hersen. Well that's new, but like the identity theft and, as you know, meth is just so rampant in the West Coast. It's really bad, and we found a lot of victims have sons or grandsons living with them and financially exploiting them, and so we've been working with them to get restraining orders, and work with adult protective services. So that's really--identity theft---- The Chairman. Relatives with a pernicious motive living close by? Ms. Hersen. Yeah. It was interesting, when Senator Carper mentioned three of the issues with regard to his mother are issues that we have all helped with--aggressive vacuum cleaner sales people. This is really hard, because sometimes the person may be selling a legitimate item, but it is their tactics, and we do have one volunteer who I love--she's this particular vacuum maker's kind of advocate or anti-advocate--because the people came at six o'clock in the evening and came to the woman's house and were there for over an hour and she ended up buying a $1,300 vacuum, and she has wood floors. But really to get them out of her house. So we were able to reverse that, and everything. Then they made some really sly comments. She says, ``Well, I can't lift this upstairs where my carpets are,'' and they said, ``Oh, we will come over and help you every time you need to.'' Just give us a call. So it is things like that. Also construction fraud and scams. That is why we really educate people not to respond to flyers or people coming buy and saying ``Oh, I see your gutters need to be repaired or a roof.'' wee advise people to call first and how to do that in a positive way. The Chairman. I think it is clear from the testimony we have heard from all of you that, you know, Oregon, Washington was mentioned; California certainly. There are some very excellent programs to help the elderly avoid these things that have a national focus on this. Are there other states that we should mention who have good programs or states where they really need to shore it up? Ms. Park. I guess I think this is in some ways more of a national, from my point of view, the structuring of information and warnings to elders. It might be very useful--I have been thinking about how to solve this for the government, to set up a best practices standard and perhaps if some short-term requirement were made to have materials for seniors put out by Federal agencies reviewed. If that happened for a period of 6 months or a year after developed in conjunction with scientists, it might be the case that that would become part of the culture of developing materials for elders. The Chairman. If I asked you, Dr. Park, what is the best thing the Federal Government can do to help stem this, would that be your answer? Put up--you know, put together kind of a clearinghouse of best practices? Ms. Park. From the point of view of the kind of thing that I do, yes. I think the other thing is to be really clear about how do you effectively warn seniors. So I can--we can design the very best messages and the clearest, but the problem is they have to reach people. With the Internet, 200 television channels, radio, it is less clear how to get people to process messages. I was telling your staffer I was very impressed. Someone in town where I live felt that our president of the university was very unpopular to him, not to others. It was a lawyer, and he put a billboard in town criticizing this individual and ultimately resulted in this individual resigning and taking another job. I think everyone in town saw that billboard and those are cheap and effective, and when you think of when you were a little kid, Smokey the Bear, Only You Can Prevent Forest Fires. We all know that. I think getting some billboards. This is just. This is what I think. It's not what I know, if you see the difference. I haven't done research on this. But I think presenting a short message so that--Afraid You're Being Scammed or something like that a phone number or an Internet web site that people can check and having some kind of branding of this so that people know this is a national priority and there is a place to go if you just think there is any chance you might be defrauded so that they can get the information that they need. So one is to be effective. The other is to make sure you communicate. The Chairman. But it is truly an excellent suggestion. As we look to reauthorize the Older Americans Act, we ought to-- Senator Kohl and I ought to work together on an amendment that will create this kind of best practices center and create this branding, and create these simple messages that can be of assistance to the States. Dr. Pratkanis, you spoke of the Wise Senior Center's, telemarketing victim call centers. Is this the kind of thing we are talking about? Mr. Pratkanis. Yes, there is a number of approaches to take depending on the level of victimization, and the call center is excellent for getting people who are at risk or who may be in the process of being victimized. For those, I don't think the mass-marketed communications necessarily is the most impactful. They need somebody, such as Oregon, where there is an advocate in their camp. So the Wise Senior Center could serve as a model for that through its reverse boiler room where they're contacting people who are vulnerable, on the mooch list right now, and they are also have services there to help folks when they have similar situations that Ms. Hersen described in her statement. But personally, I would like to see that duplicated as much as possible. The Chairman. Are other States doing it? I mean you mentioned Washington. Mr. Pratkanis. I'm not aware of that, Senator. The Chairman. But Washington State is doing it? Mr. Pratkanis. Washington State has a different set of programs. They don't have the call center at Washington State. What they have is AARP does education for community leaders-- people at nursing homes and so forth--that teach them about the crime and then they go out and teach other people in their State. But it would be nice to have in different regions, different areas, these kinds of centers that could serve as a focus to disseminate information, to set up best practices, to continue to do the kinds of research that it needs to fight the next round of crime. The Chairman. Helen Dicks, do you have a comment? Ms. Dicks. I was going to say one of the things that we have done to try to reach the isolated elderly is we have recently produced a piece about financial exploitation that listed services for seniors and put them in home delivered meals. That was one way we thought of reaching people who were not coming into senior centers and didn't have regular contact with other people. We included--I put this in our packet that we gave a card, one side is about financial exploitation; the other side is a more general piece about other services available to seniors. The Chairman. Senator Kohl. Senator Kohl. Thank you. Helen, you are so experienced in our State with respect to these issues--I mean there are so many things that we could list. What are one or two of the most important things that we need more of? Law enforcement? Do we need more resources? Do we need more publications? If you could manage to get accomplished two or three things that would reduce the level of victimization, what would they be? Ms. Dicks. I think the two biggest things that I would do is one education of professionals, that is, the law enforcement community, with the real emphasis that this is truly a crime. It is not a consumer protection, regulatory issue. This is not a question of a family matter. Elder abuse is being minimized. We really need to convince law enforcement and the general community that this is a serious crime and it has to be treated like a criminal matter. Then the other part, in order to change of the attitude of professionals, is we have to change the general public attitude. If we had good publicity coming out of criminal prosecutions, I think it would help scare off the abusers. I think we talk a lot, and I do a lot in terms of educating seniors so that they don't become victims, but we also have to do something strong to limit the influence and the activity of the abusers. I don't think we have enough emphasis in that particular area, and I don't think the law enforcement community has enough resources to pursue this such a comment was made earlier. We need to provide seniors who are going to go through the criminal justice system as witnesses with some kind of support and background so that they aren't traumatized again by the court system after being victimized by the crime. Senator Kohl. Those are good comments. Mr. Pratkanis, would you like to comment? Mr. Pratkanis. No, I agree wholeheartedly with that. You know, victim advocates right in the court system. In addition, the other thing that I worry about is some of the FBI agents are switching some of their focus into the War on Terrorism, and that leaves some gaps at the Federal level in terms of investigation. I understand their priority. I have made a similar kind of switch in my research, but that doesn't mean the gap doesn't go away, and real success on this crime in terms of prosecution started in the late 1980's, and with Operation Disconnect and a few other FBI operations. As agents get switched over to other areas, there leads to be that gap, and it has to be Federal and international. Senator Kohl. Helen, I know you have developed many publications around the issue of victimization of our seniors. In your experience, what is the best way to get these publications into the hands of seniors? Ms. Dicks. Well, we kind of have a several-fold approach. One is that we go to every conference, every gathering of seniors every time we can get together with either seniors or their advocates and get the information out that way. We also do as much as we can through publicity within the aging network. We give a certain amount of our materials out without charge. Unfortunately, we can't do a great deal of that because of financial restraints. The other thing that we do with our publications I don't know what the professor would think of this--but our publications that are for seniors are very clearly distributed as senior publications, and we keep them at a very low cost. For professional publications, we make it more obvious that they are more dense. They are written differently. They encourage the professional community to start taking actions in this area. I also find that we get a good response when we use talk radio and radio broadcasts that are specifically focused on senior issues. Of course, in Wisconsin, since we are dealing with a very rural population, ``Farm Hours'' and other programs of that nature are also useful in getting out information and the weekly shoppers. Senator Kohl. That's very good. Any other comments from members of the panel on issues? Yes. Dr. Park. Ms. Park. I would just like to make one other small comment, Senator Kohl, and that is the--I think the Committee on Aging should also be concerned about an inadvertent kind of fraud and I hesitate to use the word fraud, but the presentation of materials, such as this Medicare Section D Plan, that people can't understand, and they can't understand the benefits that are available to them and how to secure them because the options are too many. They don't--people can't process that many choices, and they don't have enough information to make good decisions. So I think when laws are passed for seniors that implicate things like their health care, again, there should be some sense that the options available to them can readily be processed and acted upon by the people these laws are intended to help. I think that is a major concern as things become more complex with these different plans. Senator Kohl. Thank you. Ms. Hersen. Yeah. No, those are good comments. I agree. We have seen that as far as confusion, and we want to make sure people are informed and are able to make wise choices, but with the confusion, it makes it more difficult, and I agree. It is really important to educate law enforcement and the prosecution--in providing aging awareness training to them, so they do take these crimes seriously. I mean we have had examples--luckily, we have one--an elder crimes unit in the Portland Police, which we helped start back in the 1990's, but some officers, it is just not up there, you know, and they don't realize. One perfect example was a woman called us and she had put her car for sale. This is a perfect scam. Someone can go through the newspaper. Look who's selling cars. Her name was kind of an old fashioned name. If you heard her on the phone, you could tell that she was very elderly. The guy ended up coming or giving her a deposit of $50 and said can I test drive it? Well, he test drove, and, of course, stole her car. So when she reported it to the police, well, the first police officer didn't take it seriously. Well, it is just too bad. Well, losing $750 meant a lot for someone on a fixed income. That was probably a couple months of prescription drugs, food, fuel to heat her apartment. So someone from the Elder Crimes Response Team did start looking into this, but it is that attitude not realizing the importance of having investigators and reporting. This is probably going on in all of Oregon for people who are abusing meth, as an easy way to get money. They make these phone calls, and they play the lottery. They will call like 20 or 30 people and then find out, oh, this person wants to sell their car, and then steal it. So it does need to be taken seriously by both law enforcement, and any way we can help. We do have senior volunteers who provide aging awareness training and so actually today and yesterday our Portland Police was having a training involving citizens on better communication techniques. The Chairman. Thank you, Senator Kohl. To each of our witnesses, please accept our heartfelt thanks for your willingness to travel here, and to share your skills and your experience. You have added measurably to the Senate's public record. You have given us many good ideas to work on at the Federal level. We are grateful to you. We also thank C-SPAN for covering this hearing, because, frankly, the more we get information out and heighten awareness, the more successful we will be in apprehending, prosecuting, fining, and jailing those who would prey on the elderly. We say to those who would do such a thing that if we don't catch you, we trust there is a hot place in Hell for you. So each of you beware and all of you who have helped us today, we thank you, and we are adjourned. [Whereupon, at 4:31 p.m., the committee was adjourned.] A P P E N D I X ---------- [GRAPHIC] [TIFF OMITTED] T5878.055 [GRAPHIC] [TIFF OMITTED] T5878.056 [GRAPHIC] [TIFF OMITTED] T5878.057 [GRAPHIC] [TIFF OMITTED] T5878.058 [GRAPHIC] [TIFF OMITTED] T5878.059 [GRAPHIC] [TIFF OMITTED] T5878.060 [GRAPHIC] [TIFF OMITTED] T5878.061 [GRAPHIC] [TIFF OMITTED] T5878.062 [GRAPHIC] [TIFF OMITTED] T5878.063 [GRAPHIC] [TIFF OMITTED] T5878.064 [GRAPHIC] [TIFF OMITTED] T5878.065