Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions. September 2006

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1 Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions September 2006

2 Consumer Fraud: A 2006 Survey of AARP Idaho Members Experiences and Opinions Report Prepared by Jennifer H. Sauer Copyright 2006 AARP Knowledge Management 601 E Street NW Washington, DC Reprinting with Permission

3 AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, AARP Foundation is our affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Acknowledgements AARP staff from the Idaho State Office, State Affairs, and Knowledge Management contributed to the design and implementation of this study. Special thanks go to AARP staff including Cathy McDougall and Cheryl Tussey of the Idaho State Office; Mary Wallace, State Affairs; and Rachelle Cummins, Jennifer Leslie, and Darlene Matthews of Knowledge Management; Michael Schuster of General Counsel; Laura O Conner and Barry Robinson, Research Information Center. FGI Research entered and tabulated the data for AARP. Jennifer H. Sauer, AARP Knowledge Management, managed all aspects of the project and wrote the report. For more information, please contact her at (202) or by at jsauer@aarp.org.

4 Highlights Among those Idaho members who have accessed the Internet and have accounts, eight in ten (81) are extremely or very concerned about providing personal information over the Internet and at least half of them have set up filters or firewalls, avoided posting addresses on websites, installed anti-virus and anti-spyware protection software. About three in ten Idaho members say they (5) or someone they know (26) has been a victim of identity theft, and most are extremely (52) or very (27) concerned about being the victim of identity theft. Nearly all (93) members strongly support stiffening penalties for repeat offenders of identity theft. While very few (7) report being exposed to investor fraud, six in ten (60) are extremely or very concerned about becoming a victim of a financial crime. Among those Idaho members who have hired a person or company to make repairs or improvements to their home (67), onethird of them (32) have had a bad experience as a result. Among members who have been contacted by a company or someone interested in selling them health insurance (60), just under two-thirds (62) say that all or some of those offerings were valid only 6 percent felt such solicitations were not valid offers. The majority of Idaho members (90) say that it should be a top or high priority for the state to strengthen laws and regulations that protect consumers from identity theft. Just slightly fewer, eight in ten (78) view home repairs and financing a top or high priority for stronger laws and protection. Informational and educational programs on identity theft rank top among the other types of programs members in the state view as extremely or very important for AARP Idaho to provide (82). Following identity theft in order of importance is health insurance, home repair and financing, and charitable donations. Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

5 Background While consumer fraud is not a new crime, it continues in the United States to be one of the most prevalent white collar crimes. Close to 25 million adults in the United States were victims of fraud in 2005, and the most frequently reported types of fraud include advance-fee loan scams, buyers clubs, credit card insurance and credit repair. 1 Still, between one and two million people were victims of prize promotion scams, Internet service fraud, and pyramid schemes. The Consumer Sentinel contains nearly 3 million fraud and identity theft complaints from every state attorney general in the U.S. and from 19 consumer protection agencies worldwide, and the Federal Trade Commission (FTC) received over 685,000 of those complaints during 2005, with a third of those being identity theft complaints. 2 While the costs of consumer fraud are costly - consumers reported fraud losses resulted in over $680 million and Internet monetary losses were over $335 million the costs due to identity theft alone are more so. The FTC reported in 2003 that identity theft victims reported $5 billion in out-of-pocket expenses and businesses and financial institutions estimate losses at nearly $48 billion from identity theft. 3 Idaho is among the states with the fewest recorded fraud complaints, the occurrence and expense of consumer fraud is no less serious or detrimental to this state and the resident consumers who experience it as with other states. And like the rest of the nation, this state and the victims often have to bear the financial and emotional costs to prosecute the offender and clear a name and personal financial credit history. The Consumer Sentinel reports that among the total number of fraud and identity theft complaints, most were from consumers residing in Boise, and over 2.5$ million was paid out by Idaho consumers to a business or individual offering a product or service. About one-quarter of those complaints were made by Idahoans age 50 or older. 4 This report describes the findings from a state wide survey of AARP members residing in Idaho. The survey gauged member experience and opinion regarding various forms of consumer fraud including Internet scams, Securities and Investment fraud, home repair and financing, charities fraud, and healthcare fraud. The survey also explores their support or opposition for legislative protection from certain forms of consumer fraud as well as their perception of adequate criminal punishment for such a crime. 1 Federal Trade Commission, FTC Releases consumer Fraud Survey: More Than One in 10 Americans Fell Victim to Fraud, August 5, Federal Trade Commission, Consumer Sentinel, Consumer Fraud and Identity Theft Complaint Data, Executive Summary, Jan Dec Released Jan Federal Trade Commission For the Consumer: FTC Releases Survey of Identity Theft in U.S Million Victims in Past 5 Years, Billions in Losses for Businesses and Consumers. (2003). 4 Federal Trade Commission, Consumer Sentinel Complaint Figures, Idaho, Jan Dec 2005, Released Jan Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

6 Methodology AARP conducted the AARP 2006 Idaho Member Survey of Members from March through April A random sample of 2,000 AARP members in Idaho, proportionally stratified by three age segments, 50 to 59, 60 to 74, and 75+, was selected from AARP s membership database. Each sampled member was contacted about the survey in four ways: a pre-notification postcard, the survey itself, a reminder postcard, and a second survey. Fifty-two percent of the sampled Idaho members returned surveys by the cut-off date, providing 1,035 useable surveys for analysis. Thus, the survey has a sampling error of plus or minus 3.05 percent. Survey responses were weighted to reflect the distribution of the age segments in the member population of Idaho. A full annotated survey is attached to this document. Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

7 FINDINGS Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

8 Major Concerns AARP members in Idaho are clearly concerned about consumers being mislead or taken advantage of by certain types of businesses. In fact, the data show that members rank companies selling products over the phone top among a list of 19 different types of businesses that could possibly defraud consumers over eight in ten say they are extremely or very concerned about being deceived by telemarketing. About six in ten Idaho members say they are extremely or very concerned about pharmaceutical companies and check cashing outlets taking advantage of consumers. Slightly fewer say they are extremely or very concerned about being intentionally mislead by finance companies, home repair contractors, companies selling products over the Internet, and used car dealers. Fewer members are highly concerned about securities and investment companies, telephone companies, utility companies, companies that sell products on home shopping television, or lotteries (see Annotated Survey, Question 1). One third or less are extremely or very concerned about banks, drug stores, or credit unions. Interestingly, except for one, at least an additional one in five are somewhat concerned about each of the nineteen types of businesses tested in this survey. Level of Concern for Consumer Fraud by Business Type (n=1,035) Extremely concerned Very concerned Somewhat concerned Not very concerned Not at all concerned No answer Companies selling products over the phone Pharmaceutical companies Check cashing outlets Finance companies Home repair contractors Companies selling products over the internet Used car dealers Companies/ people selling health insurance Health care organizations/ companies Insurance companies * * * Blank indicates 5 or less of respondents Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

9 Internet use and Fraud Concerns The majority of Idaho members own a laptop or personal computer and have accessed the Internet in the past 12 months, and among them, most say they access the Internet at least once a week or more and most have at least two accounts (89 of 706 respondents) (see questions 3-7 in annotated questionnaire). Computer Ownership, Internet Use, Account: Idaho Members 50+ Responding AARP Idaho Members 50+ N=1,035 Idaho Members who own a computer or a laptop n=719 (69 of all ID members) AARP Idaho members who accessed Internet in past 12 months n=706 (68 of all ID members) AARP Idaho members with Internet access and at least 1 account n=585 (57 of all ID members) Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

10 The majority of Idaho members who have accessed the Internet in the past 12 months and have at least one account are extremely or very concerned about providing personal information over the Internet (81). To avoid receiving spam or junk , eight in ten members with accounts installed anti-virus protection software, more than six in ten installed anti spyware software, and slightly more than half set up filters or firewalls or avoided posting their address on websites. Additionally, some Idaho members report preventing spam or junk by not giving out their address to anyone or resetting their address so it is hard to guess. Very few did not take these measures or did something other than measures tested in this survey. Level of Concern About Personal Information Over The Internet (n=585) Measures Taken To Avoid SPAM Or Junk (n=585) Extremely concerned 51 Very concerned 30 Installed anti-virus protection software 79 Installed anit-spyware software 62 Avoided posting address on websites 55 Set up filters or firewalls 51 Not at all concerned 1 Not too concerned 2 Somewhat concerned 15 Avoided giving out address 30 Reset address so difficult to guess 6 Did none of these 5 Other 4 Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

11 Identity Theft Nearly one-third of AARP Idaho members report being a victim (5), or know someone (26) who has been a victim, of identity theft in the last five years. Among these members, over half say the incident involved stolen credit card information, one-third report that bank account information was stolen or used, and one in five indicate that a Social Security number was stolen or used. Other members who were victims or know a victim of identity theft report new accounts were created in the victims name, other personal information was stolen or used, or an ATM bank card was stolen or used. Incidence of Identity Theft Among AARP Idaho Members (N=1,035) Type of Identity Theft or Personal Information Stolen or Used (n=387) Yes, self and/ or someone I know 32 Credit card information 52 Checking, savings, other bank account 33 Social Security number 20 No 59 New accounts created in victims name Other types of personal information Not sure 6 ATM card No answer Not sure 12 Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

12 Interestingly, while six in ten members indicate they or anyone they know have not been victims of identity theft in recent years, the majority of Idaho members are extremely or very concerned about becoming a victim of this crime. Another one in six are somewhat concerned, leaving very few members to say they are not concerned about being a target for identity theft. Moreover, it is hugely important to most members that Idaho strengthen laws and regulations that protect consumers from identity theft, and nearly all strongly support stiffening penalties for repeat offenders of this crime. Level of Concern: Being a Victim of Identity Theft (N=1,035) Level of Importance: Stronger Consumer Protections (N=1,035) Level of Support: Stronger Penalties for Repeat Offenders (N=1,035) Extremely concerned 52 Very concerned 27 Extremely important 67 Very important 24 Strongly support 93 Not at all concerned 1 Not too concerned 2 Somewhat concerned 16 Not at all important <1 Not too important 1 Somewhat important 6 Strongly oppose <1 Somewhat oppose 0 Neither support / oppose 1 Somewhat support 5 Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

13 AARP Idaho members do take precautions to prevent identity theft most say they shred personal or financial information after they ve reviewed it, and one in five currently have a lock on their home mailbox. Most would take action if they had concerns about someone tricking them into giving personal identification information nearly three-quarters identify the State Attorney General s office and the Federal Bureau of Investigation (FBI) as a place they would turn to for help. Other members indicate they would contact the police, a credit card company, or the federal banking agency. Shred Personal/Financial Information Or Have Lock On Mailbox (N=1,035) Where Or Who Idaho Members Turn To For Help With Identity Theft (N=1,035) No 75 Yes 65 Police 64 Credit card company 54 State Attorney General Yes 21 Lock on mailbox Yes.. sometimes 21. No 11 Shred personal/financial information Federal Banking agency Personal Lawyer Federal Bureau of Investigation Not sure Other Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

14 Securities and Investments and Fraud Most AARP Idaho members have read, seen, or heard about misconduct by people in the financial investment, mutual fund, or stock buying business, and while very few say they or someone they know has been exposed to investor fraud in the past 12 months (Yes: 7; No: 75), nearly two-thirds are extremely or very concerned about becoming the victim of financial crime. Another quarter say they are somewhat concerned. Amount Read, Seen, Heard about Misconduct in Financial Business (N=1,035) Level of Concern about Being Victim of Financial Crime (N=1,035) A great deal 19 A fair amount 45 Not too much nor too little 14 Very little 15 None at all 2 Not sure Extremely concerned 32 Not sure 0 Not concerned at all 1 Not too concerned 11 Very concerned 30 Somewhat concerned 26 Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

15 Common Securities Sales Phrases That Concern AARP Idaho Members About Potential Investment (N=1,035) Risk Free 77 You must invest now 75 Your investment is guaranteed against loss High rate of return None of the above Not sure When asked whether or not they had been contacted in the past 12 months by anyone selling securities such as stocks or bonds and using terms or sayings such as high rate of return, risk free, your investment is guaranteed against loss, or you must invest now, one-quarter of Idaho members said they had (Yes: 25; No: 72). Moreover, when asked which phrase raises their concern about an investment opportunity, most indicate the phrases risk free and you must invest now. Nearly seven in ten felt the phrase your investment is guaranteed against loss warranted concern about a potential investment, and just under two-thirds felt likewise if the phrase high rate of return was used. Very few say none of the phrases tested raise their concern about a potential investment. Many Idaho members have concerns or worries about investing in the stock market today. Among a list of 16 possible reasons people could cite for being concerned, fear of losing money is the top worry for two-thirds of the members. Four in ten say lack of ethics in the marketplace or the state of the economy are a main investing concern or worry for them, and thirty-seven percent of Idaho members say market volatility raises their concern. A similar proportion indicate that a lack of accountability, lack of confidence in the stock market generally, and lack of significant consumer protections and means of recourse for harmed investors are main concerns or worries when thinking of investing in the stock market today. About onethird of Idaho members are worried about investing due to significant stock market declines, incompetent brokers or financial investors, or fear of becoming a victim of fraud. Main Concerns Or Worries About Investing In Stock Market Today (N=1,035) Fear of losing money 66 Fear of being victim of fraud 30 Lack of ethics in marketplace 42 Insider trading 29 State of the economy 40 Accuracy of published 25 financial statements Market volatility 37 Fear of future attacks on U.S. affecting stock market decline 23 Lack of accountability 36 Insufficient disclosure of risks 23 Lack of confidence in the stock market generally 36 Lack of consumer protections/ means of recourse for harmed investors 36 Significant stock market declines Incompetent stock brokers/ financial advisors 32 Lack of internal 21 controls/checks Transition fees too high None no plans to invest in stock market 14 Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

16 Not surprisingly then, the data also show that AARP Idaho members do not have a favorable opinion of the securities industry as a whole, and they are concerned that investigations into accusations of misconduct by people in the financial investment industry could affect the value of investments. Nearly seven in ten members say their opinion of the securities industry is somewhat or not too favorable, and six in ten are extremely or very concerned that financial misconduct could affect the value of investments. Moreover, just under half of all members feel they are more likely to be a victim of investor fraud today compared to five years ago, and a over one-quarter feel they have same likelihood of becoming a victim as five years ago. Level Of Favorability Toward Securities Industry (N=1,035) Level Of Concern About Financial Industry Misconduct Affecting Investments (N=1,035) Likelihood Victim Of Investor Fraud Compared To Five Years Ago (1,035) Extremely favorable 1 Not sure 13 Not at all favorable 8 Not too favorable 27 Very favorable 8 Somewhat favorable 41 Extremely concerned 23 Not at all concerned 2 Not too concerned 10 Somewhat concerned 26 Very concerned 36 More likely 45 Not sure 7 Same likelihood 29 Less likely 16 Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

17 Home Repair Financing and Improvement The sub-prime mortgage lending industry has grown dramatically. Over the past two years, close to two-thirds (60) of all AARP Idaho members say they have read, seen, or heard of offers guaranteeing easy, affordable financing for home repairs, while one in ten (10) are not sure if they have, and over one-quarter (28) say they have not. When asked about their support for possible consumer protections in Idaho on sub-prime mortgage lending companies that grant high cost home loans, loans with high fees or interest rates, many members show strong support for each of the three proposed measures tested in this survey. Support For Consumer Protections In Mortgage Lending (N=1,035) Strongly support Somewhat support Neither support/oppose Somewhat oppose Strongly oppose Not sure Considering borrowers ability to repay loan Prohibiting excessive prepayment penalities Requiring minimum notice for foreclosures * Blank indicates 5 or less of respondents Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

18 Additionally, Idaho members show strong support for three of the possible or proposed lending practice laws that would protect consumers from misleading, deceptive or fraudulent business practices the right to a three day cooling off period where a homeowner may cancel the contract; requiring disclosures that inform the homeowner that he or she is signing a loan where the home is the collateral; requiring that lenders consider the homeowner s ability to repay the loan as well as the property s value before giving a loan. While just under a third of all Idaho members say they strongly support requiring home improvement loans to be signed only at financial institutions or other relevant business establishments, there was little support for requiring a legal representative to be present at the signing of a home improvement loan. Level of Support for Possible Home Improvement Lending Practice Laws N=1,035 Strongly support Somewhat support Neither support or oppose Somewhat oppose Strongly oppose Not sure Provide 3 day cooling off period Require loan disclosure informing homeowner home is collateral Require lenders consider homeowner's ability to repay loan or property value Require home improvement loan sign only at financial institutions Require legal representative at loan signing * Blank indicates 5 or less of respondents Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

19 As indicated earlier, over half of all members in Idaho are extremely (26) or very (30) concerned about contractors who do home repairs possibly misleading or taking advantage of consumers (see Question 1, Annotated Questionnaire). While the majority of AARP Idaho members have hired a person or company to make repairs or improvements to their home (67), close to one-third say they have not (30). Among those who have, one in three say they had a bad experience as a result of hiring a person or company to make repairs or improvements to their home (Yes: 32; No: 63) (see questions 33 and 34 in annotated questionnaire). Idaho could provide a number of mechanisms to protect consumers when they sign a home improvement contract, and members overwhelming view such protections as highly important. Among three possible protection measures, nearly all members view contractor insurance for property damages to the home, its contents, or the property of others as extremely or very important. Eight in members say it extremely or very important that a home improvement contractor be bonded so there is a source of recovery for the homeowner if the contractor does not complete the work, and slightly fewer say insurance for personal injury to the homeowner or others is an extremely or very important consumer protection. Very few members viewed any of these tested protections as less than very important. Importance of Consumer Protections with Home Improvement Contractors (N=1,035) Very important Property damage insurance Be bonded Personal injury insurance Extremely important Where Idaho Members Would Go To Resolve Problem With Home Improvement Contractor (N=1,035) Attorney General Office Consumer Affairs 64 Police 27 County Commissioner 17 City council member 10 Better Business Bureau 10 State Banking Commission 7 Governor s office staff 5 An Attorney 4 Other 5 Not sure 22 Where would AARP Idaho members turn for help if they had a complaint about a home improvement contractor? Among a list of six possible offices or people, nearly two-thirds say they would contact the Attorney General Office of Consumer Affairs and over one quarter would turn to the police. One in five would contact the county commissioner, and one in ten say they would contact a city council members. Interestingly, another one in ten would contact the Better Business Bureau. Another one in five are not sure where to turn if they had a complaint about a home improvement contractor. Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

20 Charitable Contributions and Fundraising While many legitimate and reputable charities use mail and phone to solicit donations, the Federal Trade Commission warns that of the more than two billion dollars raised for charities in 2001, a portion of it may have been misused or donated to fraudulent solicitors. 5 A 1998 AARP survey found that in one year, one-quarter (24) of the population age 25 and older estimate they gave between $100 and $500 to a charity or charitable cause, and another one in five (17)gave $500 or more. 6 Additionally, most of these respondents (67) were not confident that a call from someone asking for a contribution to a charity was significant. A more recent survey conducted by AARP found that over half (57) of respondents age 45 or older viewed organizations calling for donations to a charity as trying to take advantage of people most of the time. 7 While the data from this survey show that about half of all AARP Idaho members say they receive one to two charity solicitations by mail or phone per week, between one in five and one-quarter say they receive three to five charity solicitations per week. A small number of members report receiving six to eight solicitations per week for charitable donations. Solicitations for Charitable Contributions (n=1,035) 1-2/week 3-5/week Pieces of Mail Phone Calls /week More than 8/week None Federal Trade Commission, For the Consumer, Charitable Donations: Give or Take? 6 The 1998 AARP Survey on Charitable Donations: A Summary of Key Findings, AARP Research Group (November 1998). 7 Off the Hook: Reducing Participation in Telemarketing Fraud, AARP Foundation, (2003). Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

21 In the twelve months previous to completing this survey, nearly one-third of Idaho members say they gave no money in response to a telephone or mail solicitations. However, a similar proportion reports giving up to $100, and one in six gave between $100 and $500. Moreover, when asked how often they contact an organization before agreeing to make a donation and learn how their money would be spent, four in ten Idaho members say they never do, and one quarter say they rarely do. Donation In Response to Charity Solicitation (n=1,035) Contact Organization Before Donating (n=1,035) <$50 21 Every time 11 $50 to <$100 $100 to < $ Most times 8 $500 or more 10 Sometimes 10 None 32 Rarely 24 Not sure 2 Never Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

22 Health Insurance Among a list of 19 types of businesses tested in this survey, over half of all AARP Idaho members are extremely (26) or very (28) concerned about being mislead or taken advantage of by companies or people who sell health insurance plans, and another three in ten (29) say they are somewhat concerned. Among the sixty percent of members who have been contacted in the twelve months previous to this survey by a company or someone selling health insurance, most felt that all (14) or some (48) were offering a valid and legitimate plan. However, nearly one-third (30) were not sure. Where Idaho Members Would Go With Concerns About Health Insurance Plan (N=1,035) Attorney General Office Consumer Affairs 50 Current Insurer 33 National Insurance Company 15 Federal Trade Commission Police County Commissioner Other Not sure When asked where they would turn for help if they had a concern or complaint about a health insurance plan, half of all Idaho members would contact the Attorney General s Office of Consumer Affairs, and one in three say they would contact one of their current insurers. Some members say they would contact a national insurance company and one in ten would turn to the Federal Trade Commission. One in five members are not sure where to turn for help if they had a complaint or concern about a health insurance plan. Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

23 Strengthening Laws and Protect Nearly all AARP Idaho members indicate that it should be a top or high priority for the state to strengthen laws and regulations to protect consumers from identity theft, and most say it is extremely or very important to them that AARP Idaho provide community educational and informational programs around this issue. Another majority of members view home repair and financing and health insurance as top or high priorities for stronger state protections as well as highly important areas where AARP Idaho should provide community education and information programs on avoiding fraudulent practices. Level of Priority for Idaho: Strengthen Consumer Fraud Laws & Regulations (n=1,035) Importance of Educational & Informational Programs: Avoiding Consumer Fraud (n=1,035) Top priority High priority Medium priority Low priority Not a priority No answer Extremely important Very important Somewhat important Not very important Not at all important No answer Identity Theft Identity Theft Home Repair/Financing Home Repair/Financing Health Insurance Health Insurance Charitable Organizations Charitable Organizations * Blank indicates 5 or less of respondents * Blank indicates 5 or less of respondents Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

24 Finally, Idaho AARP members were asked two questions similar to those asked nationally in the National Public Survey on White Collar Crime. 8 The questions asked in this survey were who was more likely to be caught by the authorities and who should be punished more severely a person commits a burglary and steals $5,000 or someone who commits a fraud and steals $5,000. Interestingly, most members think that someone who commits a burglary is more likely than a swindler to be caught by the authorities but they believe both types of criminals should be equally punished for their crime. Most Likely To Be Caught By Authorities (n=1,035) Who Should Be Punished More Severely (n=1,035) Person commits burglary 61 Not sure 13 Person commits fraud 6 Both equally likely 16 Person commits fraud 12 Person commits burglary 5 Not sure 2 Both equally likely 74 8 The National Public Survey on White Collar Crime, Rebovich, D.J, Layne, J., Jiandani, J., and Hage, S. (2000) Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

25 Summary of Survey Findings Clearly, AARP Idaho members are concerned about the possibility of being defrauded and having their personal information stolen or used by someone they don t know in fact, more than eighty percent of all members are highly concerned about being mislead or taken advantage of by companies selling products over the phone and half or more are highly concerned about being mislead by a number of company or business types: pharmaceutical companies, check cashing outlets, finance companies, home repair contractors, companies selling products over the Internet, used car dealers, companies selling health insurance, health care organizations, and insurance companies. More specifically, most AARP Idaho members report being extremely or very concerned about sharing personal information over the Internet as well as being a victim of identity theft, and well over half of all members are extremely or very concerned about becoming a victim of financial crimes including investment or pension fraud. In fact, two thirds report their main concern or worry about investing in the stock market today is around losing money, while over four ten cite a lack of ethics in the market place as their main concern. About one-third of all Idaho members say the lack of accountability, lack of consumer protections, and fear of being a victim of fraud generate worry and concern when considering investing in the stock market today. While one-third of AARP members in Idaho indicate having been a victim or knowing someone who has been a victim of identity theft, twice that number of members report having had a bad experience with hiring a home contractor. Just under half say they receive between three and five mail or phone solicitations per week for a charitable contribution, and just seven percent report having been a victim or knowing someone who has been exposed to investor fraud. Among those members who utilize the Internet and , most have installed protective software or filters and protected their addresses. Additionally, most report shredding personal and financial information when they are finished reviewing it, but less say they have a lock on their mailbox. However, when asked where to go for help, many members clearly don t know or are unsure. In fact, nearly two-thirds of all members say they would turn to the police with concerns about identity theft, while half would contact a credit card company or the State Attorney General. Likewise, if members in Idaho had a complaint about a home contractor, a majority of Idaho members say they would contact the Attorney General s Office of Consumer Affairs, but over one-quarter would contact the police, and about one in five would contact the County Commissioner. Similar results are apparent when asked where they would go with concerns about a health insurance plan half would contact the Attorney General s Office of Consumer Affairs, a third would contact an insurer, and others would contact a national insurance company, the FTC, the police, or other. Interestingly, one in five members simply report they don t know where to turn for help with a concern or complaint about a home contractor or a health insurance plan, and one in ten say they don t know where to go for help with identity theft. Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

26 Given their levels of concern about being defrauded or scammed by certain businesses or individuals, and their reported victimization or indications of potential victimization, it is not surprising that most AARP members in Idaho view stronger state consumer protection from identity theft as extremely or very important, and nearly all strongly support tougher penalties for repeat offenders. There is high support among members in Idaho for all but one of the proposed mortgage lending and home improvement regulations fewer indicate high support for requiring a legal representative to be present at the loan signing. Additionally, most members place a high priority on the state strengthening consumer fraud laws and regulations around identity theft, home repair and financing, health insurance and charitable organizations. Recommendations Based on the findings from this survey, AARP Idaho should work toward helping the state implement legislation that will provide residents ages 50 or older greater protection from identity theft and consumer fraud. The data also suggest a tremendous opportunity for the state office to educate and inform the 50 and older population in Idaho about the types of fraud they may be most vulnerable to and where to turn to for help with concerns or complaints of potential scams or dubious business transactions or investment information. Members report that it is extremely or very important to them that AARP Idaho provide community educational and informational programs on avoiding unfair and deceptive business practices leading to identity theft, home repair and financing fraud, charity scams, and health insurance fraud. Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

27 Demographics of AARP Idaho Member Respondents Age Gender Male <$20K 50K Retired Education Some college Marital status Widowed Race Black Other <.05 < Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

28 ANNOTATED QUESTIONNAIRE Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

29 AARP 2006 Idaho Member Survey Weighted n=1,035; Response Rate = Thinking about your own experience and what you know about the experiences of other people, how concerned are you about each of the following businesses possibly misleading or taking advantage of consumers? Extremely Concerned Very Concerned Somewhat Concerned Not Very Concerned Not at all Concerned a. Drug stores b. Banks, savings & loan institutions c. Contractors who do home repairs d. Telephone companies e. Finance companies f. Companies that sell their products over the Internet g. Companies that sell products by calling people on the phone h. Securities and Investment companies i. Insurance companies j. Lotteries k. Used car dealers l. Check cashing outlets m. Stock brokers or brokerage firms n. Companies that sell their products on home-shopping TV shows o. Health care organizations and companies p. Utility companies q. Pharmaceutical companies r. Credit unions s. Companies or people who sell health insurance plans No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

30 2. How easy would you say it is for most people to spot when a company is trying to take advantage of them? 2 Extremely easy 8 Very easy 28 Somewhat easy 50 Not too easy 9 Not at all easy 4 No Answer 3. Do you own a personal computer or laptop? 70 Yes 28 No 2 No Answer 4. In the last 12 months, have you accessed the Internet from your home or work, or from some other source or place like a friend s or the local library? (Check all that apply) 62 Yes, from home 23 Yes, from work 13 Yes, from some other source 28 No [GO TO QUESTION 10] 4 No Answer 5. How often would you say you typically access the Internet? (n=706 Have accessed Internet in the last 12 months) 1 Never 63 At least once a day 25 At least once a week but not every day 5 At least once a month but not every week 6 Less than once a month 1 Not sure 1 No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

31 6. Do you have an account through your employer or an Internet provider like AOL or both? (n=706 Have accessed Internet in the last 12 months) 16 Neither, I do not have an account at all [GO TO QUESTION 10] 4 Yes, through my employer only 58 Yes, from an Internet provider only 20 Yes, from both my employer and an Internet provider 2 No Answer 7. How many accounts do you currently have? # of accounts (n=585 Have an account) 60 1 account 29 2 accounts 6 3 accounts 5 4 or more 8. How concerned are you about providing personal information over the Internet? (n=585 Have an account) (n=585 Have an account) 51 Extremely concerned 30 Very concerned 15 Somewhat concerned 2 Not too concerned 1 Not at all concerned 2 No Answer 9. In the last 12 months, which of the following actions have you taken to avoid receiving spam or junk ? (n=585 Have an account) (Check all that apply) 51 Set up filters or firewalls 55 Avoided posting my address on websites 30 Avoided giving out my address to anyone 6 Reset my address so it is hard to guess 79 Installed anti-virus protection software 62 Installed anti-spyware software 5 I have done NONE of these 4 Other: (specify) 2 No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

32 Identity Theft 10. Identity theft can occur when someone gets access to your bank accounts, checking accounts, or credit cards and then uses them fraudulently to run up bills. Identity theft can also occur when someone gets personal information about you such as your name, Social Security number, date of birth, or mothers maiden name and uses it to open new bank accounts, open new loans, or make large purchases in your name. How concerned are you about being the victim of identity theft? 52 Extremely concerned 27 Very concerned 16 Somewhat concerned 2 Not too concerned 1 Not at all concerned 2 No Answer 11. In the last five years, have you or someone you know experienced identity theft? 5 Yes, I was a victim of identity theft 26 Yes, a person I know was a victim of identity theft 1 Yes, both myself and someone I know have been victims of identity theft 59 No [GO TO QUESTION 13] 6 Not sure 4 No Answer 12. What kind of identity theft have you or someone you know experienced? (n=387 Experienced identity theft) (Check all that apply) 52 Credit card information stolen or used 33 Checking, savings, or other bank account information was stolen or used 20 A Social Security number was stolen or used 10 New accounts bank or credit card were created in victim s name 7 New loans were created in victim s name 9 ATM bank card was stolen or used 13 Other types of personal information was stolen or used 3 Other types of identity theft; please specify: 12 Not sure 17 No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

33 13. Do you shred personal or financial information after you ve reviewed it? 65 Yes, all the time 21 Sometimes 11 No, never 2 No Answer 14. Do you currently have a lock on your home mailbox? 21 Yes 75 No 4 No Answer 15. How important is it to you that Idaho strengthen laws and regulations that protect consumers from identity theft? 67 Extremely important 24 Very important 6 Somewhat important 1 Not too important <.5 Not at all important 16. How strongly do you support or oppose stiffening penalties for repeat offenders of identity theft? 93 Strongly support 5 Somewhat support 1 Neither support or oppose 0 Somewhat oppose <.5 Strongly oppose 2 No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

34 17. If you had concerns about someone tricking you into giving them any of your personal identification information, where would you turn for help? (Check all that apply) 64 Police 23 Federal banking agency 49 State Attorney General s office 17 Federal Bureau of Investigation (FBI) 54 Credit card company 18 Personal lawyer 6 Other: (specify) 10 Not sure 14 No Answer Securities and Investments Crimes of fraud are targeted against individuals and employ deception for the purpose of obtaining illegal financial gain. They involve the misrepresentation of facts and the deliberate intent to deceive with the promise of goods, services, or other financial benefits that in fact do not exist or that were never intended to be provided. This includes various forms of telemarketing, frauds involving consumer goods or services, or frauds dealing with financial advice, insurance coverage, pension, investment or business schemes. 18. How much have you read, seen, or heard about misconduct by people in the financial investment, mutual fund, or stock buying business? 19 A great deal 45 A fair amount 14 Not too much nor too little 15 Very little 2 None at all 0 Not sure 3 No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

35 19. Financial crimes include offenses commonly called "white collar crime" such as tele-marketing scams, investment or pension fraud, elder financial abuse, and identity theft. How concerned are you about being the victim of financial crimes? 31 Extremely concerned 29 Very concerned 25 Somewhat concerned 11 Not too concerned 1 Not at all concerned In the past 12 months, have you or anyone you know been exposed to investor fraud? 7 Yes 75 No 15 Not sure 3 No Answer 21. Compared to five years ago, do you think you are more likely, have about the same likelihood, or are less likely to be the victim of investor fraud? 45 More likely 28 Have the same likelihood 16 Less likely 7 Not sure 3 No Answer 22. In the past 12 months, has anyone contacted you about investments using the following terms or sayings: high rate of return, risk free, your investment is guaranteed against loss, or you must invest now? 25 Yes 72 No 3 No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

36 23. As you may know, securities are transferable paper or electronic certificates that prove ownership of equity such as stocks or bonds. If someone is selling you securities, which of the following phrases would raise your concern about the investment? (Check all that apply) 64 High rate of return 77 Risk-free 67 Your investment is guaranteed against loss 75 You must invest now 3 None of the above 7 Not sure 4 No Answer 24. Has a friend asked you to invest in something in the past year? 7 Yes 90 No [GO TO QUESTION 28] 3 No Answer 25. Did you ask your friend for more information about the investment so that you could understand the risks before you made a decision? (n=75 Friend has asked to invest) 86 Yes 11 No 2 No Answer 26. Did you invest only a small amount to see how things go before making a larger investment? (n=75 Friend has asked to invest) 25 Yes 72 No [GO TO QUESTION 28] 2 No Answer 27. Did you call your securities regulator [someone who regulates financial investments such as stocks and bonds] to see if the investment has been registered or is properly exempted for sale? (n=19 Invested as small amount to see how tings go) 22 Yes 78 No Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

37 28. Whether or not you have invested, how concerned are you that investigations into accusations of misconduct by people in the financial investment industry, including mutual funds and stock brokers, could affect the value of investments? 23 Extremely concerned 36 Very concerned 26 Somewhat concerned 10 Not too concerned 2 Not at all concerned 4 No Answer 29. What are your MAIN concerns or worries about investing in the stock market today? (Check all that apply) 66 Fear of losing money 42 Lack of ethics in the marketplace 40 The state of the economy 32 Significant stock market declines 37 Market volatility 36 Lack of accountability 25 Accuracy of published financial statements 36 Lack of confidence in the stock market generally 23 Fear that future terrorist attacks may cause a significant stock market decline 30 Fear of being the victim of fraud 21 Lack of internal controls and checks 32 Incompetent stock brokers and financial advisers 29 Insider trading 36 Lack of significant consumer protections and means of recourse for harmed investors 23 Insufficient disclosure or risks to investors 17 Transition fees too high 14 NONE, I do not plan to invest in the stock market 1 Other: (specify) 1 No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September

38 30. In general, how favorable is your opinion of the securities industry as a whole? 1 Extremely favorable 8 Very favorable 41 Somewhat favorable 27 Not very favorable 8 Not at all favorable 13 Not sure 2 No Answer Mortgage Lending and Home Repair Fraud Sub-prime mortgage loans are normally higher cost home equity loans that are given to people who are higher credit risks before the loan is granted. Sub-prime mortgage lending companies often operate as thrifts, banks, affiliates of banks, or other finance companies. 31. There has been dramatic growth in the sub-prime mortgage lending industry. How strongly do you support or oppose the following consumer protections on sub-prime mortgage lending companies that grant high cost home loans, loans with either high fees or a high interest rate? a. Prohibiting excessive pre-payment penalties... b. Requiring a minimum notice for foreclosures... c. Considering borrower s ability to repay the loan... Strongly Support Somewhat Neither Support Somewhat Strongly Not Support or Oppose Oppose Oppose Sure No Answer Consumer Fraud: A 2006 Survey of AARP Idaho Members' Experiences and Opinions; September