On Wednesday, December 16, 2015, law enforcement officials in Chattanooga, Tennessee posted a “Scam Alert” on their official Facebook page, which was reposted on the website of a local news station. The post informed the public of what appeared to be a one-off life insurance scam that targeted a local elderly woman in Hamilton County.
“Someone she knew had a loved one that passed away a few weeks prior,” explained Matt Lea, the Public Information Officer for the Hamilton County Sheriff’s Office. “They told her there was an unclaimed life insurance policy.”
It’s not known if the scammers targeted other people, too. Officials are only aware of this one instance of the scam. According to the “Scam Alert,” representatives from a fraudulent life insurance company called the elderly woman at her home. They then told her that her recently deceased loved one left a life insurance policy behind that needed to be paid out.
Red flags all over the place
Depending on how you look at it, this is not a particularly clever scam. Red flags are flapping all over the place. Case in point, the elderly woman was asked to pay several thousand dollars in order to collect the life insurance money.
Beneficiaries NEVER need to pay an insurance company in order to collect a payout! The only money a legitimate life insurance company should be collecting from you is your monthly premium — and nothing more!
But in this scam, the woman was specifically asked to buy a money card, such as those sold at Walmart stores or CVS pharmacies. She was then told to pay the fraudulent company using the money card in order to receive the nonexistent life insurance funds.
The fake representative reportedly told the woman that they could not provide any account information or contact information to her until the money — in this case, thousands of dollars — was received. Of course, in cases like these, there is no account, nor any contact information. There is also no eventual payout of funds because the funds don’t exist.
Family to the rescue
Luckily for the elderly Chattanooga resident, her proactive relatives stepped in and curbed what could have been a financially devastating situation. By the time the scammers contacted the woman a second time, her family was there to get stern with the scammers. “They got angry and hung up,” said Lea. Unfortunately, the culprits didn’t leave behind any breadcrumbs and law enforcement officials have had no way of nabbing them.
No shame in the game
If you know how insurance payouts work (and how they don’t work), then you are less likely to fall for a scam. Trust us, there are far more complicated and crafty ripoffs out there that might fool even us here at Asurea. And we’ve been on the life insurance scene for more than two decades!
But this case was rather easy to crack. Paying money to collect money makes no sense.
“A lot of people are embarrassed by the fact that they may have fallen for a scam,” said Lea. His advice? “Don’t hide in shame and don’t feel like people will laugh at you. Scams like these have been going on for years. For every scam we hear about, there are 10 more we haven’t.”
Put up your dukes
If you talk to someone claiming to be from an insurance company, Lea says you should “always ask for a legit contact person and phone number.”
He added that many elderly people don’t have Internet access. This means they don’t have the same “quick-draw” ability to Google for the truth that younger people might have. That’s another reason not to hide in shame if you’ve been hit by a scammer. Someone else might be able to fight the scam on your behalf — and prevent a disaster altogether.
Our Asurea Scam Report wants you to know the warning signs that you are being scammed. If you think you have been targeted by a fake life insurance company, Lea recommends contacting the Better Business Bureau to see if a company has been up to no good in the past. And to ultimately report the incident to your local law enforcement agency.
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This information is provided for general consumer educational purposes only and is not intended to provide legal, tax or investment advice.