On October 26, 2007, the Wall Street Journal reported that insurance product marketers are tricking seniors into waiving their rights under the national Do Not Call List. The Do Not Call law allows companies to call people on the list if they have agreed in writing to receive calls. Because of this loophole in the law, companies that generate insurance product sales leads have mushroomed.
It works like this. Postcards offering information on subjects of interest to seniors are mass mailed by marketing companies to generate sales leads. These “lead cards” are often imprinted with American flags, have a Washington, D.C. return address, and appear to have been sent by the government or AARP. The cards often have warnings such as “changes in your Medicare benefits,” or “new legislation passed by Congress that will affect you and your heirs,” or an “AARP study found that probate taxes are hurting seniors. They offer purportedly helpful information to those who send back the card with their contact information. The cards do not mention that they were actually sent by a marketing company or that the recipient’s name and contact information will be sold and turned over to insurance salespeople.
Insurance salespeople use the information to sell variable annuities with high surrender charges and lengthy pay-out deferrals, and living trusts that provide no benefit to those who return the card. They typically present themselves with trumped-up credentials such as “Senior Estate Advisor,” and employ high-pressure and misleading sales practices. The Wall Street Journal article related a number of specific cases involving elderly people who were persuaded to invest most or all of their nest egg in complicated variable annuities that effectively locked up most of their money for years by imposing substantial charges on withdrawals. The victims were led to believe that they could withdraw their money at any time. The sales commission on such products is typically 9.5%, according to the article.
Such improper sales practices have prompted some state attorneys general to take legal actions against several of these lead generators, charging them with falsely suggesting endorsements by the government or AARP. Regulators in as many as 20 states have opened fraud investigations. AARP sued ChoicePoint, Inc., an Alpharetta, Georgia-based seller of personal data, and obtained a court order prohibiting Choicepoint from referring to AARP on its lead cards and from using a Washington, D.C. return address unless it had an office there, according to the article. AARP has filed similar lawsuits against other marketing companies.
If you believe that you may have been a victim of such a scam, or were sold a variable annuity or other investment that is unsuitable for you, Page Perry, LLC may be able to help. Our firm will review your situation and advise you on how best to proceed at no charge. Page Perry, LLC is a nine lawyer Atlanta-based law firm with over 125 years collective experience representing investors in securities related litigation and arbitration. Page Perry attorneys have successfully handled variable annuity and variable life insurance cases for over 20 years. The firm is currently involved in a number of variable product cases.
