Preventing Senior Fraud
In honor of the recent World Elder Abuse Awareness Day and the fact that senior fraud is practically an epidemic, here’s a sobering fact: It's estimated that fraud costs Americans over $50 billion a year and those 65 and older are often the targets. The reason is as true today as it was for legendary bank robber Willie Sutton: criminals go "where the money is"—and that means targeting older Americans who are nearing or already in retirement. Additionally, the bad folks have also latched to something that many have long suspected: as we age, we tend to make more emotional decisions. Researchers at the Stanford Center on Longevity, in collaboration with the Financial Industry Regulatory Authority (FINRA) and AARP, recently released a study that found older investors are more susceptible to fraud than younger ones, due to the emotional states — both positive (excited) or negative (angry)—they were experiencing.
According Doug Shadel, one of the authors of this new research, "Whether the con artist tries to get you caught up in the excitement of potential riches or angry at the thought of past and future losses, the research shows their central tactic is the same and just as effective…Cons are skilled at getting their victims in to a heightened emotional state where you suspend rational thinking and willingly hand over your hard earned money to a crook.”
To protect yourself or an older friend or family member, try not to act when you feel yourself in a heightened emotional state. If you are on the other side of a high-pressure sales tactic like, “Act Now”, “Time is running out!” or “This is a onetime offer”, run the other way. The same goes for any pitch where you are being asked to pay upfront fees, told that won a contest that you didn’t enter or receive unsolicited mail, emails, or phone calls for services that you were not seeking. Practice saying “No” or “I'm not interested. Thank you.”
The preceding approaches may seem obvious, but even some seemingly legitimate investment ideas may be unnecessary and expensive or at worst, fraudulent. According to the Boston University Center for Retirement Research, here are some red flags for shady investment pitches:
- Look too good to be true.
- Offer a very high or “guaranteed” return at “no risk” to the investor.
- Suggest recipients do not tell family members or friends about the offer.
- Lure prospective investors with a “free lunch.”
- Cannot be questioned, inspected or checked out further.
- Are so complex that they are difficult or impossible to understand.
In order to protect yourself or your relatives, the Consumer Financial Protection Bureau, FINRA and the SEC offer these tips:
- Sign up for the Do Not Call Registry at https://www.donotcall.gov.
- Shred junk mail, old bills, bank statements and any other documents that have personal identifying information.
- Don’t give out personal information over the phone unless you originated the call and you know with whom you are talking. Particularly safeguard your social security number.
- Be rude. At the slightest hint of pressure, feel free to hang up the phone or close the door.
- Never sign something that you don’t understand. Have a trusted and unbiased professional assist you when enter contracts or signing legal documents.
- If you hire someone for personal assistance services, in home care services, etc. ensure that they have been properly screened with criminal background checks completed.
Family members should encourage their older relatives to discuss any unsolicited offers before writing a check. If you suspect fraud or a questionable practice, call FINRA's toll-free Securities Helpline for Seniors (844-57-HELPS) or go to http://www.finra.org/investors/finra-securities-helpline-seniors.