Watch out for these scams that target doctors

By John Murphy
Published September 1, 2020

Key Takeaways

Doctors are intelligent and perceptive people who know better than to easily fall for a scam or fraud, right? Sorry—wrong. Physicians are just as apt to get suckered as any average American, maybe even more so.

“[D]octors do get scammed frequently,” observed James M. Dahle, MD, who blogs as The White Coat Investor. Why is this so? There are a number of good reasons, he pointed out:

  • Doctors have no training in finance, business, or investing as part of their medical education.

  • Doctors are busy, with little time to properly research investments or businesses.

  • Doctors sometimes mistakenly assume that because they’re good at medicine, they’ll be good at other things—like making sophisticated investments or complex business decisions.

  • Last but not least, financial professionals “specifically target physicians due to their naivety, trust in professionals, lack of sophistication, and especially high incomes,” Dr. Dahle wrote.

To make matters worse, the COVID-19 crisis has only encouraged more scammers to crawl out of the woodwork. Don’t be duped. To avoid getting suckered, here are a few scams that doctors should be aware of.

The Stock Swindle

What if, in the early days of the pandemic, you had invested in a company that made facemasks? You would have earned a bundle by now, right? That’s exactly what scammers might hope you’d think. In fact, that’s exactly what a ring of scammers did.

According to the Securities and Exchange Commission (SEC), these fraudsters ran a “pump-and-dump” investment scheme to capitalize on the COVID-19 pandemic. In such a scam, the perpetrators hyped up (“pumped”) the buzz on their own companies to inflate the price of the stock. But when the stock reached its peak, the scammers abruptly sold (“dumped”) all their investments in the company. The stock tanked, but they walked away with more than $25 million—while other unwitting investors were left holding the (empty) bag. 

Fortunately, they didn’t walk far because the SEC caught onto their scheme, froze their assets, and charged them with fraud. One of the companies that the scammers had falsely promoted—through emails and other means—was a garment manufacturer that was touted to be capable of producing a mass of medical-quality facemasks. But, in reality, the SEC found that the garment manufacturer had very limited operations, sales, and available inventory to sell.

You might not be gullible enough to fall for such an investment scheme involving a no-name company, but scammers can “pump-and-dump” legitimate companies as well—without the company’s involvement or knowledge. For instance, the SEC recently caught a penny stock trader who orchestrated a pump-and-dump scheme of a biotechnology company’s stock. The trader made hundreds of deceptive statements in an online investment forum, topped by a lie that the biotech company had developed an “approved” COVID-19 blood test. The trader made $137,000 before the SEC caught him.

As noted above, fraudsters know that doctors are prime targets for their shady investment scams. The SEC recommends that you do your “due diligence” before investing.

The Contact Tracer Con

Physicians in private practice have been seeing many of their patients through telemedicine. But as physicians’ offices are opening up again, doctors and staff put themselves at risk for close contact with a patient infected with SARS-CoV-2. If that happens, you might get a call from a contact tracer asking questions about the patient.

Or, you might get called by a scammer pretending to be a contact tracer.

“You may receive a call, email, text or visit from a contact tracer, and you should not hesitate to talk with them,” said Andrew Smith, director of the Federal Trade Commission’s (FTC) Bureau of Consumer Protection. “But, beware if they ask you for money, bank account information, your Social Security number, or to click on a link, as those are sure signs of a scam.”

Xavier Becerra, California’s Attorney General, advised: “Legitimate contact tracers will never ask for personal information such as your Social Security number or financial information. It sickens the soul that there are people out there who make it their business to scam you as most of us seek to band together to respond to the coronavirus pandemic.”

What should you watch for to know if the contract tracer is legit?

  • Contact tracers should identify themselves by their first and last name, as well as the name of the government agency they’re calling from, usually the state or local health department.

  • Legitimate contact tracers will first inform you that you may have been in contact with an individual who has tested positive for COVID-19. They’ll also ask for information about where you’ve been and who you’ve been in contact with during the past few weeks.

  • An authorized contact tracer won’t disclose the identity of the person who tested positive and is the starting point for that tracing effort.

  • Don’t click on links or download anything sent from a contact tracer. Real tracers will only send you texts or emails to say they’ll be calling you.

  • To verify a contact tracer or to report a fake one, check with your state health department to make sure the person who contacted you is legitimate.

The Student Loan Hustle

According to an MDLinx survey, more than half (52.6%) of physicians under age 50 have student loan debt. Even 5.1% of physicians age 50 and older are still paying off their student loans. A silver lining to the COVID-19 crisis is that interest rates are currently at historic lows. So, if you’re thinking of refinancing your student loan debt, now’s a great time to do it.

But, beware of student loan debt scams. If someone tells you something like this, run in the other direction: “Tired of paying student loans? Student loan forgiveness programs are available now!”

Case in point: A Florida-based company called Student Debt Doctor offered to reduce or eliminate customers’ monthly payments and principal balances by enrolling them in repayment or debt-forgiveness programs. The company claimed that customers could have their loans paid off in 5 years or less. To enroll, customers had to pay Student Debt Doctor an upfront fee, usually $750.

What did customers get for their $750? Zilch. Many customers eventually learned that Student Debt Doctor had never enrolled them in a loan forgiveness program. In some cases, duped customers ended up owing more on their student loans than when they first signed up with the company.

When customers called to cancel or get a refund, the company ignored them or refused outright. Or, if the customer had filed a complaint with the Better Business Bureau or a law enforcement agency, Student Debt Doctor would issue a refund only if the customer agreed to withdraw the complaint.

As a result of an FTC investigation, a federal district court put a restraining order on the company to stop them from doing business and froze their assets. The FTC estimated that the Student Debt Doctor scammers had amassed at least $7 million from their scheme.

“People struggling to repay student debt should know that an offer of debt relief with an upfront fee is likely to be a scam, and they should alert the FTC,” said the agency’s Andrew Smith.

The US Department of Education’s Federal Student Aid website offers these other signs to help consumers identify a student loan scheme. Scammers may:

  • Promise immediate and total loan forgiveness or cancellation

  • Ask for your Federal Student Aid ID

  • Ask you to sign a third-party authorization form or a power of attorney

  • Pressure you to act immediately by claiming that their offer is limited

  • Have spelling and grammatical errors in their emails or advertising

The common thread among all these scams targeting doctors: If it sounds too good to be true, it probably is.

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