Welcome to Consumer Reports Advocacy

For 85 years CR has worked for laws and policies that put consumers first. Learn more about CR’s work with policymakers, companies, and consumers to help build a fair and just marketplace at TrustCR.org

CU is Concerned of Possible New Wave of Fraudulent Scams on Medicare Beneficiaries

June 22, 2005
The Honorable Alberto R. Gonzales
Attorney General
Department of Justice
Washington, DC 20530
Dear Mr. Attorney General:
As the marketing of the new Medicare prescription drug benefit begins, Consumers Union, the publisher of Consumer Reports, is concerned that a new wave of fraudulent scams will soon be focused on Medicare beneficiaries. We urge you to begin warning the nation’s senior community about such frauds and consider the formation of a task force to prevent and aggressively prosecute any such scams.
As you know, in the spring of 2004, there were a number of con artists who tried to use the news of the new Medicare prescription drug discount card and the $600 available to lower income beneficiaries to defraud Medicare seniors and people with disabilities. Claiming they represented Medicare and/or discount card companies, they solicited cash payments in exchange for fictitious or fraudulent cards or attempted to obtain personal financial information from beneficiaries. The New York Times article of February 17, 2004 is particularly useful in pointing out that the discount card frauds started way before the program was even scheduled to begin.
We fear that even more of this type of fraud will return this summer and fall as the much larger permanent Medicare prescription drug program begins. Polling by the Kaiser Family Foundation shows that many beneficiaries are very confused by the new law and do not know or fully understand its provisions. In addition—against the advice of many consumer groups—Medicare drug plans will be able to telemarket (whereas telemarketing was not permitted in the discount card program). It is likely that some scam artists will join in those calls, and history has shown that many Americans (regardless of age) are susceptible to high pressure sales talk, and that some can be talked out of giving personal financial information, Social Security numbers, etc., over the phone. There is no end to the frauds that may be attempted on beneficiaries: it may range from door-to-door collection of money or the prying out of financial information and credit card data that can be used to loot seniors’ accounts.
Therefore, we urge you to take the lead in warning the American public now to be on the look-out for such scams and that they should not give out personal financial information to people soliciting door-to-door or calling in the name of Medicare. Further, if the Department of Justice and/or the FBI and HHS Inspector General announced the formation of a task force to detect and prosecute such crimes to the full extent of the law, it would serve as a deterrent to criminals and help ensure a more successful start of the
Medicare prescription drug law.
Thank you for your consideration of these requests.
William Vaughan
Senior Policy Analyst
cc: Director Robert Mueller,
Federal Bureau of Investigation
Washington, DC 20535-0001
cc: Daniel R. Levinson
Inspector General
Department of Health and Human Services
330 Independence Avenue SW
Washington, DC 20201