From unscrupulous home improvement contractors to those who try to take financial advantage, seniors are the most targeted group for scams according to a trio of state officials during a virtual seminar.
A “Senior Scam Stopper” Seminar was held on Nov. 12. It was presented by Assemblyman Brian Maienschein in conjunction with the Ed Brown Center for Active Adults in Rancho Bernardo.
According to the presentation, 1 in 5 seniors has been the victim of fraud and new scams are developed constantly. Many relate to home improvement, auto repair, insurance, telemarketing, real estate and COVID-19.
“Don’t engage … stop being nice and report fraud,” was the advice from Tonya Martin with the state’s Department of Insurance.
Kevin Durawa from the state’s Contractors State Licensing Board said unlicensed contractors target seniors because they are “very trusting and more vulnerable.”
Durawa said one way they try to manipulate seniors is by establishing a connection with them. If the senior agrees to home repairs or renovations, one scam tactic is to demand a large down payment. He said California law restricts a down payment to no more than 10 percent of the project’s cost or $1,000, whichever is less.
Door-to-door sales, pressure and scare tactics, free home inspections, verbal agreements and changing the price of materials once work commences are other ways unlicensed contractors try to commit scams, he said. One reason home inspections are a bad idea is because the scammer will “discover little repairs that they insist must be done” or tell seniors a little problem is actually part of a bigger problem to scare them.
Another tactic is to say they just completed work down the street, have leftover materials and will offer to, for example, redo one’s lawn with the supplies. They demand too much money upfront, do a lousy job, leave the work unfinished or take the money and not do any work at all, Durawa said.
He said everything, including details of the work to be completed, total price, materials and payment schedule must be in writing. If changes are necessary, those must be written too. When contracted work is completed, “Don’t pay in cash,” Durawa said. “Pay with a check and save a copy of the check in a project file.”
He also advised obtaining at least three bids in writing so they get a better idea of how much a project costs. Also do not be pressured into making a decision.
According to Durawa, a licensed contractor is required by California law when home improvement jobs are $500 or more. Hiring one is important because the contractor has passed trade and law exams and undergone a thorough background check. CSLB licensed contractors are required to hold $15,000 contractor bonds and have Workers Compensation Insurance for all employees. The insurance covers worker injuries while on the job, which protects homeowners.
If there is an issue, consumers have greater protection and more options when a licensed contractor was used. The CSLB can also help with negotiation, mediation and arbitration if there is an issue. He said these services are free to consumers.
His advice to those who have been scammed includes calling the Contractors State Licensing Board at 800-321-2752 and filing a complaint at cslb.ca.gov. (This is also where one goes to verify a contractor’s license.) Durawa said seniors have four years from the date of construction to file a complaint and five days to cancel a contract. The latter is to protect seniors from solicitors.
“It is becoming harder to know who to work with and trust,” said Jackie Wiley from the state’s Department of Financial Protection and Innovation. “The bad ones make it harder to work with the good ones.”
Wiley said the more one becomes educated about fraud and scams, the less likely a person is to become a victim.
When financing large expenses — whether they be for home repairs or solar systems, for example — Wiley said people must “be careful when choosing a lender and contractor and be educated about the (financing) program.” This includes offers that claim “no money down,” she said. “It gives the impression the service is free, but you must pay back the funding.”
Sometimes the money is paid back through a property tax bill, which potentially causes the bill to suddenly double or triple and seniors then risk losing their homes due to an inability to pay their taxes, Wiley said.
She also said people should not let contractors coax them into doing more expensive repairs than they planned — such as installing granite counters if that is not want they wanted.
Wiley said there are many common and pandemic-inspired financial frauds and scams. The prevalent ones right now are based on charities and disasters, debt collectors, home improvement financing, financial relief opportunities and romance/sweetheart swindles. Immediate red flags should be raised when someone calls asking for help from a grandparent or relative or is a government impostor. The latter pertain to callers claiming they are from Medicare/Medi-Cal, Social Security, the IRS, a relief fund or utility companies.
The “bottom line” according to Wiley is to trust one’s instincts, especially when something sounds too good to be true; to never give out personal information unless you initiated the contact and to always go to the source yourself.
Victims of identity theft can file a complaint with the Federal Trade Commission at reportfraud.ftc.gov. Those who need help from the Department of Financial Protection and Innovation can call 866-275-2677, visit dfpi.ca.gov or email [email protected].
Martin from the state’s Department of Insurance said seniors are the largest population targeted for scams because they have bank accounts, savings and money accumulated in their home and retirement accounts. She said they are also “much too nice … have the time and want to talk to people, even strangers.”
She warned that annuities “are great for some, lousy for others” due to tax implications and penalties if they have to take money out early. Martin said seniors should consult their tax adviser, since that person knows their goals, risk tolerance and can explain what makes the most sense when diversifying their financial portfolio.
Martin said seniors also need to be wary if they are in a vehicle accident to make sure they were not set up. One scam going around is a request financial help for a relative due to COVID. If such a call is received seniors should verify with family members that there is a medical emergency and not just give the caller money.
“Never feel pressured or intimidated and have a trusted person with you (when making financial decisions),” Martin advised.