Scam artists and other dishonest businesses try to take advantage of consumers of all ages, but seniors can be special targets because they’ve built up a lifetime of savings and may be more trusting. One of the worst kinds of scams pressures seniors into spending their savings on living trusts and annuities that many of them don’t even need.
    My office recently won court orders against two companies that ran a living trust and annuity scheme in North Carolina. American Family Prepaid Legal and Heritage Marketing and Insurance of California are now banned from selling to North Carolina consumers.
    These companies targeted seniors and used tricky sales practices to sell them living trusts and annuities. The two companies worked together, visiting seniors at home and pressuring them to pay $1,995 for a living trust by preying on fears about the costs of handling their estates.
    {mosimage}Once the paperwork for a living trust was finished, a sales agent delivered it and tried to convince the consumer to buy insurance products such as annuities. Some seniors were talked into putting their entire life savings into annuities, a poor investment choice for most seniors.
    For example, a sales agent convinced one Charlotte couple to cash in their investments and put all of their savings into an annuity he told them would earn 7 percent interest. But the agent never told them the interest rate was guaranteed for only one year and that they would pay steep penalties of nearly 20 percent if they needed to withdraw their money.
    A senior from Cary got talked into cashing in an IRA worth tens of thousands of dollars to purchase an annuity. She told the sales agent that she depended on monthly payments from the IRA to cover her living expenses. The sales agent failed to tell her that switching to the annuity would cut her monthly income from $1,700 to less than $300.
    We’ve stopped these two companies from preying on any more North Carolina seniors but there are other scammers out there using some of the same tricks. Here’s how you can keep yourself and your loved ones from being hurt by any similar schemes.
    Never buy anything you don’t understand.
    Don’t make a quick decision about investment offers or changing insurance policies. Ask an independent professional and read all forms completely before you agree to sign.
    When a loved one dies, don’t be pressured into making major financial decisions or purchases right away.
Be wary if a sales person says “it’s a special opportunity but you have to keep it secret,” or urges you to “act now” while using phrases like “limited offer,” “risk free” or “tax-free offshore investments.”
    When considering a living trust, check with an attorney first to see if a living trust meets your needs.         Living trusts are not one-size-fits-all documents, so before committing to any financial opportunity or agreeing to cash out your investments, consult with a trusted professional adviser, such as a lawyer or an accountant.

If you or a loved one has been a victim of a scheme to take seniors’ savings, let us know about it. Call my Consumer Protection Division toll-free in North Carolina at 1-877-5-NO-SCAM.

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