Retirees Are Prime Fraud Victims : U.S. Declares War on ‘Look- Alike’ Mail

WASHINGTON —  An elderly couple in Texas is invited to join a $50,000 “Social Security” sweepstakes.

An 81-year-old retiree in New Jersey receives an envelope from the “IRS” asking her to donate money to a group opposing a new Medicare law.

A California couple gets a “warrant of appearance” to claim a prize from the “Department of FBI.”

Official-looking letters from official-sounding organizations that have no connection with the government are coming under increasing scrutiny this year from members of Congress hoping to crack down on legal but potentially misleading mailings.

Direct-mail schemes involving “look-alike” letters and “sound-alike” groups range from real estate investment deals to sale of services that already are available for free from the government.

The “FBI” letter, for example, was from the Fountains Bureau of Invitations and invited families to visit a California resort.

The “IRS” designation signified only that the letter came from a nonprofit group with a particular Internal Revenue Service classification.

Many look-alike mailings fall into a “gray area”--they confuse the recipient about their origin but are still legal, said Thomas W. McClure of the Postal Inspection Service. “Something needs to be done to make sure the public gets a clearer interpretation of what they’re receiving.”

The Direct Marketing Assn., a trade group, tries to police itself and deter unethical solicitations, but look-alike mailings “have been a consistent problem over the past couple of years,” said spokeswoman Lorna Christie.

In July, the House approved legislation that would require private mailings bearing official-looking emblems, titles and insignia to include prominent disclaimers of any government affiliation. Similar legislation is pending in the Senate, with committee action likely this fall.

The legislation’s supporters include the American Assn. of Retired Persons, which says “look-alike” mailings often target the elderly and prey on their concerns about the well-being of Social Security and Medicare. Some come in envelopes similar to those containing Social Security checks and bear typical government messages like “Buy and Hold U.S. Savings Bonds.”

“There seems to be no end to people’s creativity in finding some way to make money at other people’s expense,” said the AARP’s Robin Talbert. “People get confused about exactly what it is they’re getting.”

Private mailings tied in to Social Security “are on the increase, unfortunately, because it’s a very lucrative business,” said Social Security Administration spokesman Phil Gambino.

Charge for Free Services

Groups charge fees ranging up to $40 to help married women change the name on their Social Security records, get Social Security numbers for children or obtain personal earnings records. In many cases, recipients are unaware the services are available at no cost through SSA.

Among the outfits that have come under criticism is the Social Security Protection Bureau, which staged the $50,000 Social Security sweepstakes. It charges $7 for a “membership kit” that includes a form people can mail in to check their retirement contributions--a form available free from SSA.

“A person has a right to either do it themselves or have someone else obtain the information for them,” said Michael Kushnick, an attorney for the company. He defended its right to sell a service and said the mailings already include a disclaimer of government affiliation.

Gwendolyn King, the new Social Security commissioner, said she is looking for ways to cut down on misleading mailings that invoke the name of her agency, and plans to work with Congress on the problem. She recalled a frantic phone call years ago from her 82-year-old grandmother, who said she had gotten notice that her retirement benefits were being cut off. The letter turned out to be from a group seeking donations to safeguard Social Security.

‘Worded Crassly’

“It was almost worded just that crassly--’If you don’t send something you may lose your benefits,’ ” King said. “We’ve got to figure out how we can shut these things down.”

The pending legislation is designed to take a first step in that direction without stepping on the rights of legitimate direct-mail companies.

The House bill sponsored by Rep. Frank McCloskey (D-Ind.) would require official-looking mailings to state: “This product or service has not been approved or endorsed by the federal government, and this offer is not being made by an agency of the federal government.”

Envelopes for such mailings would have to include the message: “This is not a government document.”

In addition, solicitations that look like bills or statements of overdue payments would have to state: “This is a solicitation of donations, and not a bill, invoice, or statement of accounts due. You are under no obligation to make any payment in response to this mailing.”

Sen. John Heinz (R-Pa.), the sponsor of a similar Senate bill, stressed that it would not limit what mailers can print, only require them to distinguish themselves from the government.

Deceit Admitted

“If it looks like you are trying to make the mailing come from the United States government, we want the mailer to say, ‘We are being deceitful, but it is not your friendly U.S. government that is being deceitful,’ ” he said.

The House last year passed a somewhat tougher McCloskey bill that also would have required mailers to serve notice if they were selling a service that is available for free or at a lesser charge from the federal government. That bill died in the Senate, and McCloskey agreed to drop the services provision this time to stem opposition.

But he cited a recent mailing from the Federal Benefits Assistance Corp., a private group charging $18 to help people file for Social Security benefits, as evidence of the need “to continue monitoring misleading mailings and perhaps legislate further regulations to protect the unwary recipients.”