Beware: Insurance Fraudster Tricks

Insurance fraud is a widespread issue that affects all consumers, costing the average US family between $400 and $700 per year in increased premiums. Scam artists employ a variety of tricks to deceive victims and steal their money or personal information. To warn people about insurance fraud, it is important to educate them about the common tactics used by scammers. This includes raising awareness about fake policies, premium fraud, unlicensed agents, unnecessary services, and common scams such as staged accidents, fraudulent medical charges, and phishing schemes. People should be encouraged to verify the identity of agents, review documents carefully, and only make payments to licensed insurance companies directly. Additionally, they should be cautious of unsolicited requests for personal information and be wary of contractors who pressure them to sign contracts or pay upfront. By spreading knowledge about these deceptive practices, individuals can better protect themselves and their communities from falling victim to insurance fraud.

Be aware of common scammer tricks: stealing wallets, turning people into mules, impersonating officials, etc

Scammers are always looking for new ways to defraud people, but there are some common tricks that they often use to separate victims from their money or personal information. Here are some of the most common scammer tricks you should be aware of:

Stealing wallets

This trick involves getting access to a person's purse or locker to get their phone number and then stealing their wallet with credit cards. The scammer then waits for the victim to discover the loss and calls them, pretending to be the bank. They inform the victim of "unusual activity" and ask for their banking passwords and ATM PIN to cancel the cards. This puts the victim in a panic, and they are more likely to give out their information to the friendly scammer offering help.

Turning people into mules

Scammers steal banking passwords from a large company and find people looking for jobs in the same state as the bank. They hire these people for a small fee to do a "special research project". After the project is done, the scammers pay the mules a large amount and instruct them to transfer the money to an overseas account, minus their fee. Banks often don't flag small, in-state transactions, so this trick can be repeated multiple times in a short period.

Impersonating officials

Scammers often pretend to be from official organizations, such as the IRS, to demand money for bogus issues. They use threatening language to create a sense of urgency and panic. They may also impersonate inspectors and carry a walkie-talkie to appear more official. Scammers may also pretend to be from the government, law enforcement, or a charity organization seeking donations.

Other tricks

• Faking an emergency and then expressing that resistance or inaction will lead to negative consequences
• Rewarding cooperation with encouraging comments and acting as a trusted friend
• Not allowing victims to hang up the phone until they pay
• Using official-sounding titles and names for ordinary things, such as referring to a gift card as an "electronic federal tax payment system"
• Signalling that the call is being recorded and monitored by an official organization
• Threatening to alert the media if the victim doesn't comply with their demands
• Exploiting member engagement by transferring the call to another fake agent to further legitimize the scam
• Insisting that victims keep quiet about special offers, such as tax breaks

Understand how scammers target victims: exploiting lack of English, cultural traits, trust, etc

Scammers often target victims by exploiting their lack of English, cultural traits, and trust. Here are some ways in which scammers exploit these factors:

Lack of English Proficiency

Scammers may take advantage of individuals who have a limited understanding of the English language. They may use complex or technical language to confuse their targets or send communications with misleading or false information. This can make it difficult for individuals with limited English proficiency to understand the true nature of the scam.

Cultural Traits

Scammers may also target individuals from specific cultural backgrounds by leveraging cultural norms, values, or beliefs. For example, they may pretend to be from the same cultural background or appeal to cultural traditions to gain trust. They may also exploit cultural taboos or fears to manipulate their targets.

Trust

Trust is a critical factor that scammers exploit to gain their victims' confidence. They may pose as trustworthy individuals or organizations, such as government agencies or well-known companies, to establish a sense of legitimacy. They may also use tactics like creating a sense of urgency or offering too-good-to-be-true deals to pressure individuals into making impulsive decisions without thoroughly verifying the legitimacy of the offer.

Additionally, scammers may exploit psychological traits, such as risk-taking behaviour, high impulsivity, or a lack of critical thinking. They may also take advantage of individuals' desire for financial gain or their need to avoid wasting time. By understanding these factors, scammers can tailor their approaches to increase the likelihood of success.

To protect against scams, it is essential to be vigilant, sceptical of unsolicited offers, and cautious about sharing personal information. It is also crucial to verify the legitimacy of any communication or offer before proceeding.

Learn about different types of insurance fraud: fake policies, premium fraud, unlicensed agents, etc

Insurance fraud is a deliberate deception committed to obtain an illegitimate financial gain. It can be committed by insurance companies, agents, adjusters, or consumers. The most common types of insurance fraud include life insurance, Medicare, property and casualty insurance, health insurance, and workers' compensation. Here are some detailed examples of different types of insurance fraud:

Fake Policies

Insurance agents or illegitimate insurance companies can commit fraud by selling fake policies to consumers. They may collect premiums for these bogus policies with no intention or ability to pay out claims. These fraudulent companies or agents may offer policies at significantly lower prices than the market rate to attract consumers looking for cheaper options. They may even provide consumers with official-looking documents, making the scam seem legitimate. Legitimate companies that are not licensed to sell insurance in a particular state may also sell fake policies, evading state insurance regulations.

Premium Fraud

Premium fraud involves the embezzlement of insurance premiums. It is often committed by insurance agents or brokers who fail to send the collected premiums to the insurance company and instead keep the money for their personal use. Another form of premium fraud is selling insurance without a license and then collecting premiums without paying any claims. Fee churning is another type of premium fraud, where intermediaries take commissions through reinsurance agreements, reducing the initial premium until there is no money left to pay claims.

Unlicensed Agents

In many states, it is illegal to sell insurance without a proper license. Unlicensed insurance companies or agents often do not meet the state's financial requirements and may not have the financial capacity to pay out claims. They typically target consumers and small businesses who struggle to afford coverage. These unlicensed entities deceive customers by selling them fake policies or collecting premiums with no intention of paying claims.

Health Insurance Fraud

Health insurance fraud involves providing false or misleading information to a health insurance company to obtain unauthorized benefits. This can be committed by the insured individual or the healthcare service provider. Individuals may allow someone else to use their identity and insurance information to obtain healthcare services or use their benefits to pay for unauthorized prescriptions. Healthcare providers can commit fraud by billing for services, procedures, or supplies that were never provided, charging for more expensive services than those performed, or performing unnecessary procedures for financial gain.

Auto Insurance Fraud

Automobile insurance fraud occurs when someone attempts to deceive an insurance company about a claim involving their vehicle. It can involve misleading information, false documentation, staged accidents, or false reports of vehicle theft. Auto insurance fraud also includes padding claims, filing false injury claims, or submitting claims for pre-existing damage. Unrecognized drivers, underestimated mileage, and false garaging to save on premiums are also common forms of auto insurance fraud.

Workers' Compensation Fraud

Workers' compensation insurance fraud can be committed by both employers and employees. Employers may misrepresent their payroll or the type of work done by employees to reduce premium payments. Employees may fake or exaggerate injuries, claim injuries that occurred outside of work, or conceal income from another job while receiving benefits.

Know how to protect yourself: verifying identities, reviewing documents, checking licenses, etc

It is important to be vigilant when it comes to protecting yourself from scam artists and insurance fraud. Here are some key steps you can take:

Verifying Identities

Identity verification is crucial to ensuring that the person you are dealing with is who they claim to be. This can be done by:

• Checking for valid identification documents such as a national ID, passport, or driver's license.
• Using identity verification tools and services, such as IDMERIT, which can cross-reference identity data with other sources and perform biometric checks.
• Being cautious of unsolicited contacts and high-pressure sales tactics. Always take your time and do not be pressured into making quick decisions.

Reviewing Documents

When reviewing insurance documents, it is important to:

• Carefully read all the terms and conditions before signing anything. Do not sign anything you do not fully understand.
• Keep and protect your insurance documents, including advertisements, receipts, and claim information.
• Compare the company's exact name with the records to ensure unlicensed companies are not using similar names to licensed companies.
• Check the license status of the agent or company, especially if they are selling health coverage through your employer or if you work for a small business.

Checking Licenses

It is important to ensure that the agent or company is licensed or registered to sell insurance in your state or country. You can usually do this by checking the appropriate government or insurance department website or by calling a dedicated helpline.

Other Warning Signs

Be cautious if you notice any of the following:

• Low premiums that seem too good to be true.
• High-pressure sales tactics, such as urging you to buy a policy immediately.
• Difficulty in finding the company's contact information.
• Unnecessary medical procedures or treatments recommended by doctors or hospitals.
• Unsolicited emails, phone calls, letters, or visits from people trying to sell you insurance.

Remember, if something seems suspicious or too good to be true, trust your instincts and take the time to verify the legitimacy of the person or company you are dealing with. Report any suspected fraud to the relevant authorities or organizations, such as the TDI Fraud Unit or the National Insurance Crime Bureau (NICB).

Recognise scam scenarios: phony property inspections, disaster-related fraud, charity scams, etc

Recognise scam scenarios:

Phony property inspections

After a disaster, scammers may pose as property inspectors to gain access to your home. Official FEMA inspectors will never ask for your social security number or financial account information. They will also never charge a fee to inspect your property. Always ask to see an inspector's identification badge. All FEMA personnel and contractors will have official laminated photo identification.

Disaster-related fraud

Disasters present scammers with opportunities to take advantage of victims. Common post-disaster fraud practices include:

• Fake offers of state or federal aid: Federal and state workers do not solicit or accept money. FEMA and U.S. Small Business Administration (SBA) personnel never charge applicants for disaster assistance, inspections, or help with completing applications.
• Phony government workers: Scam artists may pose as disaster workers seeking money for services. Federal, state, and local disaster workers do not solicit or accept money, nor will they promise a disaster grant.
• Fraudulent charitable solicitations: Criminals exploit survivors by sending fraudulent communications through email or social media and by creating phony websites designed to solicit contributions. Always verify that a charity is reputable before donating.
• Rental listing scams: Scammers know that finding a rental property can be challenging, and a seemingly good deal can be tempting. Be cautious when searching for a rental property after a disaster.
• Unlicensed/uninsured contractors: Individuals may represent themselves as legitimate contractors after a disaster. Always ask for references, be cautious about advanced payments, and verify that a contractor is licensed and insured before hiring them.

Charity scams

Scammers may pose as charities to solicit donations for a fake cause or to steal your personal information. Be wary of unsolicited emails or pushy telemarketers asking for donations. Always verify that a charity is reputable before donating.

Frequently asked questions