On Sunday, April 13, 2008, at 7:00 p.m., NBC will broadcast a "hidden camera investigation" by reporter Chris Hansen, entitled "Tricks of the Trade", which will reveal how some insurance agents are "selling annuities to seniors when they think they're alone."
A Press Release, dated April 8, 2008, describes the focus & the findings of the broadcast:
With an estimated 15 trillion dollars under their control American seniors have become more of a sales target than ever for insurance agents seeking to sell them annuities.Chris Hansen is well-known for other broadcast investigations that raised the consciousness of both the public and law enforcement: Katherine C. Pearson, a Professor of Law and the Director of the Elder Law and Consumer Protection Clinic, at the Penn State Dickinson School of Law, in Carlisle, PA, alerted me to this upcoming broadcast in an email message:
On Sunday, April 13 (7:00 PM/ET), "Dateline" goes undercover in "Tricks of the Trade" -- a hidden camera investigation revealing what some insurance agents say, and what they don't say, when they think they are alone with a senior. In his signature style, Chris Hansen then confronts agents about their questionable sales pitches.
NBC News footage shows the widespread practice of agents cloaking themselves in fancy titles and insurance agents attending a seminar to learn these sales tactics.
Minnesota Attorney General Lori Swanson, who reviewed "Dateline's" footage, and who has filed several suits alleging fraud in the sale of annuities to seniors, tells Hansen: ". . . what is tragic about it is when those agents go into the seniors' homes, it is literally the wolf among the lambs."
[I]t seems relevant to what we've sometimes seen happening in Pennsylvania.In Pennsylvania, Professor Lawrence A. Frolik, of the University of Pittsburgh School of Law, and his wife, Ellen M. Doyle, have highlighted abuses in the sales of annuities to seniors. (He coined the term "Elder Law" while teaching the first course in law school with that focus, and continues to teach courses on legal rights of the elderly. She limits her law practice to class action lawsuits.)
We've had at least two cases in our Elder Law and Consumer Protection Clinic involving highly manipulative sales of "deferred" annuities to 85+ year old persons, one of which is also the subject of investigation by the Pennsylvania AG.
Together, they wrote an article, published in the Pittsburgh Post-Gazette, on March 20, 2007, entitled "Private Sector: Seniors need law behind them to fight annuity sales abuse", which explains in detail the explosive problems relating to sales of annuities to seniors in Pennsylvania.
Allegations of improprieties in the sale of annuities to elders have generated a good deal of litigation in recent years.Their article urges legislators in Pennsylvania to change the statute to allow individuals to sue under consumer protection laws.
According to a Feb. 12  article in the National Law Journal, the attorneys general of a number of states, including Illinois and Minnesota, have begun to initiate action against companies that target seniors for the sale of unsuitable or improper annuities. The SEC is investigating the sale of equity-index annuities.
Many class actions also have been brought, with varying degrees of success, challenging various aspects of annuity sales, particularly those targeted at senior citizens.
According to the Web site of Pennsylvania's attorney general, Tom Corbett, the commonwealth has the third largest percentage of seniors in the United States, and protecting Pennsylvania's seniors from fraud and abuse is a "priority" for Mr. Corbett.
Yet, he lists only one annuities case against a rogue broker in his news releases. His office prosecuted a broker who sold annuities that, without the knowledge of the insurance company, contained provisions more favorable to the insured. * * *
For one online resource, based in California, concerned about the marketing of annuities, see Annuity Truth (offered as a community service by H.E.L.P., a nonprofit education & counseling center "providing impartial information to older adults and their families").
[W]e are unaware of any large-scale prosecutions by that office of abuses and over-reaching in the sale of annuities to seniors.
While there is a case pending in the Pennsylvania Supreme Court challenging the "reliance" requirement under the Consumer Law, the Pennsylvania Legislature can and should make private enforcement of the law readily available by amending the statute to explicitly permit consumer-filed actions to be pursued for classes of consumers under the same standards of proof as that required of the attorney general.
This simple change in the statute will ensure that aggrieved seniors in Pennsylvania do not have to depend on the attorney general, but can sue for themselves for the effective enforcement of the Consumer Protection Law and protection from abusive annuities sales schemes.
Perhaps this NBC broadcast will result in renewed attention to this problem, across the country, and in Pennsylvania.
Update: April 14, 2008:
After the broadcast, NBC's Dateline posted transcripts on the MS-NBC website of its "Tricks of the Trade" program about selling annuities to seniors:
Dateline also posted some useful resource links for those seeking more reliable information about the sale of annuities:
- National Association of Fixed Annuities
- NAIC: Senior citizens should be aware of deceptive sales practices
- Minnesota Attorney General Lori Swanson wants you to know your legal rights
- Alabama Securities Commission Director Joe Borg's Senate testimony on "Advising Seniors About Their Money: Who Is Qualified - and Who Is Not?"
- Joe Borg & his team give you tips on "Talking to Your Parents About Senior Investment Fraud"
- How susceptible are you to being duped? Take the "Investment fraud awareness quiz" (NASAA-CSA)
- 10 Tips to Protect Your Nestegg
On December 20, 2007, Creative Marketing had posted, "on Behalf of the NAFA Board of Directors", an entry entitled "Breaking News: Dateline NBC is Investigating Annuity Sales Practices".
This posting was noted at its end as "For agent or broker use only. Not for use with the public." Yet, it was easily found by a search engine, and was available in the public domain, at least through this morning, at this web address, without a sign-on; and so therefore is not proprietary.
It has been brought to our attention that Dateline NBC is investigating annuity sales practices to retirees by insurance agents through the use of undercover hidden video cameras.NAFA's post-broadcast response, dated April 13, 2008, addressed to the producer of the Dateline NBC's program, was posted by CNBC here.
The National Association for Fixed Annuities applauds any and all advocacy efforts by the media when its intention is to keep the public informed about potential misleading sales practices and salespersons.
NAFA continuously advises all producers to:
NAFA strongly opposes unscrupulous or misleading sales methods. NAFA reminds agents to continue engaging in the best practices listed above.
- Tell potential clients they are a licensed insurance professional and do not suggest any representation of expertise or authority when there is none
- Fully disclose all product features so that customers understand the insurance benefits and limitations of the product they are buying
- Determine a product's suitability based on the unique needs and financial goals of the individual
- Comply with all state and federal regulations
NAFA warns its members of the continued distortion and mischaracterization of fixed annuity features and sales by the media over the past two years. NAFA encourages its producer members to verify that client referrals are from known customers or business professionals with whom they’ve had ongoing relationships. Maintaining written, video or audio files of your meetings can ensure that discussions are documented in their entirety and cannot be taken out of context. * * *
If you have any questions or you are a target of the Dateline undercover operations, please feel free to call us at 888-884-NAFA.