Kai Stinchcombe is a serial startup entrepreneur. But when he discovered that his grandmother had been writing up to four checks a day to fraudulent charities (i.e. charities with unsavory business practices that have similar names to well-known organizations), he didn’t initially see a business opportunity. "Essentially, this seemed like 'You need to talk to her bank, get some sort of arrangement set up where she can’t order more checks, and reroute the mail,'" he says.
A simple tweak in framing the problem made all the difference. "If you think of it not as a scammer problem but a safe form of payment problem, then that’s the opportunity," explains Stinchcombe. This week, Stinchcombe and co-founder Claire McDonnell launched True Link Financial, a Y Combinator startup that sells a pre-paid Visa card ($20 for a yearly subscription) to protect the elderly from fraud. Throw away grandma’s checks, give her the card, and she can still maintain some independence--even if she’s hampered by Alzheimer’s or other forms of dementia.
Once they’ve signed up, family members (or the elderly card user) can prevent certain types of transactions from going through the FDIC-insured card without explicit consent. A family could block all magazines, charities, and casino-related purchases, for example. But if the card user actually goes on a legitimate gambling trip with her daughter and buys $500 worth of casino chips, the purchase can still be approved--a text message to a designated family member immediately alerts them to the purchase, which they can approve by replying.
The card offers daily and per-purchase spending limits. A daily spending limit might be $300--above that, no transactions will go through. The same goes for a per-purchase limit.
True Link also combs through all the latest senior scams and blocks them from the card. The startup actually has people on staff who spend their time getting scammed--clicking every banner ad, going through garbage bags of junk mail, and inputting credit card numbers in every sketchy location possible. True Link monitors all of it.
"It’s not just egregious fraud," says Stinchcombe. "Some of it is like, you order an electric burner on TV, they say you get four for the price of one, so for $20 you get four electric burners, but it costs $40 in shipping and handling for each one. Is that illegal? If it’s properly disclosed, it’s not illegal, it’s just confusing."
According to Stinchcombe, there are some overarching scam categories: the hearing aid scam, overcharging for products purchased on TV, fraudulent charities, magazine subscriptions, "gee whiz" medical devices, and prescription drugs. Some of the scams pop up frequently:
- One of the worst, says Stinchcombe, is a scam that asks people to renew their Medicare. "It feels natural if someone is calling to renew a card that you just read the ID number on the Medicare card," he says. The problem: that ID number is actually the owner’s social security number.
- Charity fundraising scams are also a big problem. "It’s the easiest one to set up. Any registered charity can buy a list of elderly people who donate to these types of things, send a piece of mail that costs 50 cents and get back $10," explains Stinchcombe. This list from The Center for Investigative Reporting and the Tampa Bay Times reveals some of the biggest offenders.
- In a popular hearing aid scam, seniors are offered a free hearing evaluation. It’s not a lie to say that most people have some measure of hearing loss, but these scammers take it a step further and tell their marks that they need a new and expensive hearing aid. "It’s a $6,000 hit. That’s one that we see as a wakeup call to people," says Stinchcombe.
As of this week, True Link cards are available to order here. The startup hasn’t pilot tested the cards with any seniors yet, but True Link has been working with a panel of seniors, going through their bank statements and getting them up to speed on how the product works.
In addition to marketing the card online, True Link is also planning to spread the word in ways that are more suited to those who don’t use the Internet: resource lists for seniors, hospital brochures for people who have been diagnosed with memory loss or Alzheimers, and so on.