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Confusion over Obamacare helps scammers

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There's that old saying about turning a crisis into opportunity. Here's a twist on that:  Turning confusion into opportunity. The confusion is over just how Obamacare’s health exchanges -- the marketplaces on which people can buy insurance this fall -- will work. And the opportunity is scams.  Lots of scams

Let’s start with the confusion. I heard plenty of it when I went out on to the street this morning to ask folks in downtown Los Angeles what they knew about the health care exchanges. 

“I must admit that I’m not as well versed as I should be,” said Stephanie Talavere, a development administrator for a non-profit who was on her way to work. 

“I know there’s exchanges -- but I don't know how one would go to sign up for an exchange,” a consultant named Eric Morton told me.

A banker named Syed Hague was more blunt. When I asked him what he knew about how the health care exchanges will work, he laughed and said, “I don’t know anything about it.”

And those folks speak for a lot of Americans, said Sally Greenberg, the executive director of the National Consumers League. Right now, as the new program rolls out, “consumers may have a little bit of knowledge, but not a lot,” she told me. And that makes it a “heyday for the scammers and the fraudsters of the world.”

To get a sense of how these things go down, I asked if Greenberg would pretend to be a scammer calling me up on the phone. She was game.

“I’m from the government -- the Health and Human Services Department, and I’m calling about Obamacare,” she said, in her friendliest voice. “Did you know you have to have insurance and you could be in some serious trouble with the law if you don't sign up -- including going to jail?”

That part about jail is not true by the way, but it’s a common threat in these sorts of Obamacare scams.

Lucky for me, my fake scam-artist told me, “we're offering a special deal right now where you can get insurance for $29.99 a month. All you have to do is give us some information about your bank accounts.”

And by this time in a phone call like this, you should already be hanging up.  (Greenberg said whenever you get a cold call from someone who asks for any sort of personal information like bank account, credit card or Social Security numbers, it’s almost always a scam.) 

Another common Obamacare scam involves offers to sign up for government “Obamacare Cards” -- cards that do not actually exist.

After you hang up, if you do get a call or email you think might be an Obamacare scam, you should report it to Federal Trade Commission, said Lois Greisman, associate director for the FTC’s division of marketing practices. 

“We want complaints,” she says. “They are an enormous source of rich information for us.  They're our investigative leads.”

Greisman said the FTC hasn’t sued anyone over Obamacare scams -- yet. But she said her agency has received more than 1,000 complaints about the issue. “We are looking very closely at the complaints we receive. It’s a top law enforcement priority for us,” she said. Greisman expects even more complaints in the next few months, as we get closer to October, when the exchanges actually open.

“As is the case with any new large program, we’re going to see fraudsters take advantage of the opportunity where there’s confusion in the marketplace,” Greisman said.

Meanwhile, the federal government just awarded $67 million in grants to nonprofits and others to hire so-called Obamacare “navigators,” who will help people figure out how to sign up for exchanges.  It’s unclear how that outreach will be conducted, meaning there might be more room for fraud, by people pretending to be navigators. Greisman said the FTC is in discussions with various navigator programs, to attempt to minimize that risk.

About the author

Krissy Clark is the senior reporter for Marketplace’s Wealth & Poverty Desk.

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