Preying on the elderly
States like Florida are playgrounds for retirees – and the fraudsters who prey on them. Here’s how staged accidents happen to unsuspecting seniors.
At the mid-year meeting of the Coalition Against Insurance Fraud in Orlando, Fla., one of the topics discussed involved establishing a partnership between AARP and the Coalition Against Insurance Fraud. Apparently, there are over 37 million members of AARP. That’s a lot of people!
What that also means is the organized fraudster has a huge opportunity to target those who may not be able to defend themselves. It’s unfortunate that in their “golden years,” senior citizens need to keep a lookout for predators who want nothing more than to find elderly victims. Furthermore, credit card companies, insurance carriers and governmental agencies can also find themselves victims of these types of crimes against the elderly.
For property and casualty insurance companies, staged accidents perpetrated by these organized fraudsters are a major area of concern. Here are a few common fraud schemes that seem to target the elderly.
Swoop and squat
This scheme involves a total of three vehicles — one victim and two fraudsters. Though there are different variations, the most common is when the victim is driving in the right lane, one fraudster pulls alongside the victim and then quickly merges in front of the victim. The second fraudster pulls beside the victim boxing them in, forcing the vehicle to crash into the first fraudster. The first fraudster will have a number of passengers with him in an older vehicle and they all claim injuries.
Panic stop
Similar to the swoop and squat, the fraudster will also have an older vehicle with multiple passengers in it. They will be directly in front of the victim’s vehicle. One of the people in the vehicle will look to see if the victim is distracted. When the victim is not paying attention, the fraudster will jam on the brakes for no reason and a rear-end accident occurs. Unaware this was a staged accident, the victim and the insurance company would be on the hook for both the physical damage to the fraudster’s vehicle and all of the injured parties.
Drive down
The drive down is when the victim is either merging or at a stop sign and the other vehicle has the right of way. The fraudster “waves” at the victim to go ahead and proceed. Once the victim starts to move forward, the fraudster runs into the vehicle. When the police arrive, the fraudster denies waving the other vehicle forward. In many instances, a mysterious witness tells the police that the victim pulled out for no reason. The witness, of course, is a party to the organized fraud ring.
Fraudster profile
The National Insurance Crime Bureau has more tips to help policyholders avoid becoming the next victim of a staged accident.
Generally, the way these organized fraudsters operate is by finding an urban area or wealthy neighborhood where it’s likely the victim will have higher insurance limits. In many cases, they will look for someone vulnerable, usually an elderly woman who is by herself. Further, they will target a high-end or expensive vehicle. Once the accident occurs, they usually are very aggressive and intimidating.
There are also several people in the fraudster’s vehicle, and there are often witnesses who come out of nowhere to reinforce the victim’s fault in the event. It’s easy for victims to be easily confused, and when the police show up, they may agree that the accident was their own fault.
Catch them if you can
The best bet for insurance carriers to help themselves and their customers is to make sure they have fraud technology in place to quickly identify these fraud schemes. The combined use of artificial intelligence/machine learning models, algorithms, anomaly detection, third-party data sources, text mining, expert business rules and link analysis is the best way to detect organized fraud early and stop it from occurring.
Special investigation units provided with information on staged accidents can quickly investigate and recommend denial of a fraudulent claim. The information can be provided to local law enforcement, the National Insurance Crime Bureau, a district attorney or prosecutor to pursue these fraudsters criminally.
In many instances, the prospect of significant jail time could serve as a deterrent for these organized fraudsters. Providing information to the public through media sources on the prosecution of staged accidents perpetrated against the elderly can help make the public more aware of these types of schemes. The AARP is one channel to get the word out and make the aging population more aware of those seeking to target seniors for their own gain.
It goes both ways
We’ve mainly focused on how fraudsters prey against the elderly, but the challenge goes both ways. Just because someone is a senior citizen does not automatically make them honest. During the 2018 FRAUDtalks conference, Christina Fiscella, an independent investigator, discussed how you are never too old for insurance fraud. She highlighted how some seniors commit insurance fraud out of a sense of entitlement after paying years of premiums or because they have outlived their savings and are short on money to pay bills and living expenses. No matter the reason, fraud is never an acceptable course of action.
After working in television news and non-profit healthcare, Andrew Vogeney (andrew.vogeney@friss.com) joined the FRISS team in Chicago to further their mission of making insurance more honest. Jim Murphy (jim.murphy@friss.com) is the vice president of products for FRISS and is a 30-year veteran of the insurance industry.
Related: