Social Security scams: Treasure Coast residents unwitting victims of Social Security scam
Melissa E. Holsman, Scripps Treasure Coast Newspapers
6:56 AM, Feb 25, 2013
10:52 AM, Feb 25, 2013
PORT ST. LUCIE, Fla. — If you receive Social Security payments and you get a letter saying your monthly check is being deposited into a new account, don't ignore it.
It could signal that your check has been stolen — by thieves who pilfer your personal information first, then use it when they contact Social Security and pretend to be you.
Since 2011, authorities have been tracking a nationwide scam that diverts Social Security Administration checks from seniors by rerouting monthly payments using direct deposit systems at financial institutions.
Social Security's Office of Inspector General has logged 144 complaints from residents in Martin, St. Lucie and Indian River counties that their direct deposits have been stolen, according to Jonathan L. Lasher, assistant inspector general for external relations.
In January, the agency had recorded 29,000 reports of questionable direct deposit changes to a beneficiary's record, Lasher said. But that doesn't mean every complaint represents a fraud victim, he said. Some changes or attempted changes resulted from duplications or errors.
Thieves perpetrating these schemes are often organized, elusive and extremely tough to catch.
Social Security's Inspector General Patrick P. O'Carroll, who in September testified before a U.S. House subcommittee, called direct deposit scams a "serious challenge for the agency and its beneficiaries."
Scammers typically gain the name, bank account number and sometimes Social Security numbers of victims through phony lottery and sweepstakes schemes using the telephone and sometimes email. Some phone scams involve criminals impersonating an official with the IRS, Medicare or Federal Emergency Management Agency who try to extract personal information from unsuspecting seniors.
O'Carroll said last year federal agents tracked one criminal group with roots in Jamaica that "reached across the United States."
"Suspects have predominantly targeted older citizens' personally identifiable information through various methods of social engineering, such as telemarketing and lottery schemes," O'Carroll testified.
Federal officials say once thieves gain a victim's personal information, they use it to pose as the beneficiary to contact Social Security by phone, mail and the Internet to reroute checks to a financial account the thief controls. Funds often are diverted to prepaid debit cards that come with a bank account and routing number.
To their detriment, some seniors are ignoring a letter sent by Social Security that announces a change to their direct deposit payments has been received and was being implemented "as requested."
However, the "request" to redirect a deposit was all part of the fraud, many seniors discover, generated by whoever obtained enough personal information to impersonate a legitimate beneficiary.
Prepaid debit cards
O'Carroll in September told Congress beneficiaries can redirect their benefits to a prepaid debit card by using any of Social Security's direct deposit change methods, including the phone and Internet.
Because debit cards can be purchased at retail stores or online, O'Carroll has urged the U.S. Treasury to develop unique routing numbers for prepaid debit cards.
"These cards are particularly tempting tools for benefit thieves," O'Carroll testified in September.
According to Brian Ruby, with the public relations firm ICR in Norwalk, Conn., Green Dot Corp. is the program manager for Wal-Mart's MoneyCard prepaid debit card issued by GE Capital Retail Bank. Green Dot also issues its own prepaid debit cards under the names "Green Dot Prepaid Visa" cards and "Green Dot Prepaid MasterCard" cards, which are issued by Green Dot Bank and are sold at 60,000 retail stores nationwide such as CVS and Walgreens.
In a statement from Green Dot Corp., which Ruby emailed to Scripps Treasure Coast Newspapers, the company said it uses "stringent and highly robust" identity verification systems and technologies.
"We have partnered with the (U.S.) Treasury and the Social Security Administration to help minimize the risks to the financial system posed by identity thieves," Green Dot stated. "Despite these efforts, we are aware that identity thieves are constantly becoming more sophisticated in the tactics they deploy to obtain the information used to defraud individuals, the government and the banking system."
Stopping the Scam
Miami-based U.S. Attorney Wifredo A. Ferrer said South Florida and the Treasure Coast have seen a sharp increase in stolen identity crimes, including the Social Security direct deposit scam, mortgage and tax refund fraud. He said in 2011 Florida recorded the highest identity theft rate in the country, logging 178 complaints per 100,000 residents.
Ferrer noted the 2012 federal case of Jakisha Fergus and Natalie Underwood, who were convicted in West Palm Beach of acquiring stolen Social Security numbers to reroute benefit checks to Direct Express debit cards issued by Social Security.
"When law enforcement searched the defendants' apartment," he said, "we found more than 100 Direct Express debit cards, and documents with more than 200 Social Security numbers and corresponding names."
Both women pleaded guilty to two offenses and each received prison terms of around four years.
To combat the region's rise in identity theft and related crimes, Ferrer created a strike force in August that he said has resulted in 100 arrests involving $51 million in stolen tax refund checks. They're also cracking down on crooks diverting Social Security checks.
Social Security is tightening its own identity verification methods when beneficiaries contact the agency by phone and online. Improvements include revising its policy for verifying the identity of individuals who request direct deposit changes over the phone, and not allowing multiple beneficiaries to enroll using the same debit card, without "explicit approval" from Social Security.
Seniors too can protect themselves by placing a block on their Social Security account, which prohibits any changes from being made without visiting a Social Security office.
Social Security fraud by the numbers
45: Number of new allegations being received per day by May concerning direct deposit changes to a beneficiary's record. The reports involved either an unauthorized change or a suspected attempt to make an unauthorized change.
13,000: Number of allegations of direct deposit fraud received by June, with some allegations dating back more than 18 months. (That doesn't mean there are 13,000 victims; some reports involve innocent errors or duplicates.)
19,000: Number of allegations of direct deposit fraud received by Aug. 31
29,000: Number of allegations of direct deposit fraud received by January
144: Number of allegations of direct deposit fraud from victims in Martin, St. Lucie and Indian River counties.
Source: Office of the Inspector General for Social Security Administration
Protecting your personal information
Federal officials urges all individuals, especially seniors, to be proactive to protect their personal information from improper use:
Be aware of phishing and lottery schemes — no reputable financial institution or company will ask for upfront money in exchange for additional winnings; or for personal data like a Social Security number or bank account number via phone, mail or Internet.
Never provide your personal information when receiving unsolicited calls or contacts.
Never agree to accept prepaid debit cards or credit cards in another person's name.
Never agree to send or wire money to an unknown person.
Shred your documents, if possible, and don't give information over the phone or through email if you're not certain of who you're giving it to and why.
Check your credit reports regularly; if it's discovered that a benefit check is missing, contact Social Security immediately.
Source: Office of Inspector General, Social Security Administration
How the scam works
Scam artists have been stealing Social Security income from seniors by rerouting their checks before they reach the bank.
Here's what scammers try to get from you:
Your name, address and date of birth
Your bank account number
Your Social Security number
How do they get it? They ask you to give it to them.
They call you, impersonating an IRS official.
They call you, impersonating a Medicare or Social Security Administration official.
They call you saying you won a lottery, a sweepstakes or a free cruise, then feigning a need for verification, try to extract personal information including date of birth, bank account numbers and/or Social Security number.
Then the scammers use the phone, mail and Internet to contact Social Security posing as you, the legitimate beneficiary, and reroute funds to their bank account, prepaid debit cards or to Social Security's own Direct Express debit card.
If you get a letter from Social Security
Read it! Even a letter that looks routine could contain information that your check has been rerouted to another account. Keep in mind, Social Security doesn't who authorized the transfer. You need to contact them.