An old CONfidence fraud has found its way to the insurance business. Customers, consumers and adjusters should all be aware and alert of a new variant of the traditional “advance fee” fraud and identity theft confidence scheme that is affecting hundreds of thousands of people annually. The developing trend involves fraudsters, typically from outside of the U.S., having obtained a claimant’s telephone number and making contact to “con” them out of their money and personal information. Here is how it works: the caller, representing themselves as an agent for the insurance carrier or TPA, makes contact with the claimant to allegedly settle their general liability or workers’ compensation claim. The caller offers to settle the claim for an unusually large amount, which excites the claimant. The claimant is asked to provide personal information and send a settlement fee, usually $2,500 in cash to a Western Union account. The result, the fraudster receives the advance fee and the claimant gets nothing!
Happening in the insurance arena
In addition to the settlement scheme discussed above. The insurance industry has seen its checks stolen in the U.S. mail delivery process and then counterfeited by fraudsters. The counterfeit checks are sent to claimants and others usually for less than $10,000; some of the checks are for claims settlements others for Craig’s List or other purchases. The amount of the counterfeit check is always for an amount in excess of the actual amount due. The individuals realize the check was for an overpayment and they contact the fraudster who instructs the individual to deposit the check (which is counterfeit) into their bank account and send the difference to them via Western Union. The result, within a few days the counterfeit check is charged back to their account and the money that was sent to the fraudster – for a double loss.
Tips for avoiding advance fee schemes
Things that seem “too good to be true” probably are! Customers, consumers, insurance company and TPA colleagues and others should follow common sense and good business practices, such as:
- Know with whom you are dealing before making a deal
- If you do not know the person or company, learn more
- Be wary if someone asks you to pay money in advance of a transaction
- Make sure you understand every business agreement; if terms are complex, consult with a friend, your bank, an attorney or the Better Business Bureau
- Do not sign nondisclosure or circumvention agreements
Sedgwick consumers, customers and colleagues should report suspected fraud to firstname.lastname@example.org.
R. A. (Andy) Wilson, CFE, CPP, Vice President, Fraud & Compliance