Commerce Department urges consumers to use caution to avoid insurance policy mill scams

SAINT PAUL, MN – Two recent investigations conducted by the Department of Commerce Fraud Bureau uncovered insurance “policy mill” schemes that resulted in felony insurance fraud and forgery charges against individuals who masqueraded as insurance agents bilking their customers out of cash and insurance coverage.

The growth of internet sales for insurance policies has provided opportunity for criminals to prey on consumers. These policy mill schemes typically involve an individual posing as a trusted insurance agent, who then uses the consumer’s information to apply for insurance policies online. Many companies issue temporary insurance cards once the application is completed, which these criminals give to their victims as proof that they have purchased “legitimate” insurance policies, when in fact, they have not. Since the policy premiums are paid with fictitious credit card or bank information, the criminal pockets the cash and the policies are cancelled by the insurance company for non-payment, leaving the victims without their cash or insurance.

“These criminals will go to great lengths and use sophisticated techniques to scam and defraud consumers,” said Commerce Commissioner Mike Rothman. “I urge consumers to educate themselves on who they are doing business with and check their license at the Department of Commerce website.”

In the case of Byron Joseph Davis of New Hope, Minnesota, who was charged with one count of felony theft and a felony count of forgery, he allegedly using the name, “Julian King” when posing as a Progressive Insurance agent, promising clients policies at a discount with an up-front cash payment. After collecting money for the policy premiums, Davis, who has an extensive criminal history, would keep the cash for himself, using fictitious credit card information to pay for the policies. In most of the incidents, the victims received cancellation notices in the mail indicating they did not have insurance coverage, but when asked, Davis allegedly assured them that they had insurance and everything would be okay.

Earlier this summer, Marlon Anton Moore, known as “Ace Boogie” to his victims, was charged with five counts of felony forgery for allegedly acting as an independent insurance agent scamming unsuspecting victims through a policy mill scheme. The complaint reports that similar to Davis, Moore would accept cash up front for insurance policies he either fraudulently obtained or manufactured, deceiving clients who believed they were purchasing legitimate auto insurance. In this case, Moore who reportedly passed himself off as an agent for both Geico and Progressive auto insurance had a lucrative scam leading investigators into an investigation of over 250 fraudulent applications for insurance policies purchased online.

To protect yourself against insurance policy mill scams, check the Department’s License Lookup Tool<http://mn.gov/commerce/insurance/consumers/tools/license-lookup.jsp> to make sure the company or individual you are or will be working with is licensed to do business in Minnesota. If they are not licensed, do not give them any personal information – credit card or bank information – or cash, and report the individual to the Commerce Department. If you receive notification that your policy has been canceled due to lack of payment, contact the insurance company directly and ask why your policy has been cancelled.

If you suspect insurance fraud, call the Commerce Fraud Bureau< http://mn.gov/commerce/topics/insurance-fraud/> tip line at 1-888-FRAUD MN (1-888-372-8366).

Seven Scams that Target Small Businesses

Being vigilant against fraud is not only important for a company’s bottom line, it also strengthens customer trust in the business. 

Every year the BBB receives thousands of complaints from small business owners who fell for an invoicing scam or were misled into paying for products and services they didn't want. Scammers aren't always trying to steal money from a business; sometimes they are after a company’s financial or customer data and will use many kinds of high and low-tech methods for getting it.

Here are seven scams that commonly target small businesses:

1. Directory Scams – A perennial problem that has plagued businesses for decades involves deceptive sales for directories. Commonly the scammer will call the business claiming they just want to update the company’s entry in an online directory or the scammer might lie about being with the Yellow Pages. The business is later billed hundreds of dollars for listing services they didn't agree to or for ads which they thought would be in the Yellow Pages.
2. Office Supply Scams – Some scammers prey on small business owners hoping that they won’t notice a bill for office supplies like toner or paper which the company never ordered.  Every year BBB receives thousands of complaints from small business owners who were deceived by office supply companies and billed for products they didn’t want.
3. Overpayment Scams – Be extremely cautious if a customer overpays using a check or credit card and then asks you to wire the extra money back to them or to a third party. Overpayment scams target any number of different companies including catering businesses, manufacturers, wholesalers and even sellers on sites like eBay, Craigslist and Etsy.
4. Data Breaches – No matter how vigilant your company is a data breach can still happen. Whether it’s the result of hackers, negligence or a disgruntled employee, a data breach can have a severe impact on the level of trust customers have in your business. You can learn how to defend your company from a data breach for free with BBB’s Data Security – Made Simpler at www.bbb.org/data-security.
5. Vanity Awards – While it’s flattering to be recognized for your hard work, some awards are just money-making schemes and have no actual merit. If you are approached about receiving a business or leadership award, research the opportunity carefully and be wary if you’re asked to pay money.
6. Stolen Identity – Scammers will often pretend to be a legitimate company for the purposes of ripping off consumers. When it comes to stolen identity, the company doesn’t necessarily lose money, but their reputation is potentially tarnished as angry customers who were ripped off by the scammers think the real company is responsible.
7. Phishing E-mails – Some phishing e-mails specifically target small business owners with the goal of hacking into their computer or network. Common examples include e-mails pretending to be from the IRS claiming the company is being audited or phony e-mails from the BBB saying the company has received a complaint.  If you receive a suspicious e-mail from a government agency or the BBB, don’t click on any links or open any attachments. Contact the agency or the BBB directly to confirm the legitimacy of the e-mail.

What other scams have you heard of?