Older Americans Growing Targets of Financial Fraud
America’s older generations grew up in a different world where it was customary to be courteous and trusting. Unfortunately, these exemplary standards of conduct could get some individuals into trouble. Con artists bank on the willingness of older Americans to trust in a variety of too-good-to-be-true investment “deals,” making them growing targets of financial fraud. Therefore, many people already experiencing financial difficulties have become more vulnerable to financial fraud in recent years.
Scammers have an unlimited number of opportunities to obtain an individual’s personal information, ranging from the phone to the Internet. Common scams include emailed chain letters promising a financial windfall once the victim buys in, or emails from foreign lawyers claiming to need assistance transferring their wealth to an American bank account. In turn, the victim is promised up to 30% of the transferred millions if an upfront fee is paid.
Other phony schemes involve chances to “win” the lottery or claim a sweepstakes prize, and fake charities where kind-hearted donors are swindled into contributing sums to a cause that benefits only the con artist. Topping off all of these scams are fraudulent investment opportunities whereby the victim is promised fantastic returns on capital from “lucrative” oil and gas leases, penny stocks, rare coins, or metals. In the end, these scams can cause financial loss and heartache to many unsuspecting victims. This type of crime often goes unreported due to the shame fraud victims can experience, which is exactly what scammers count on.
Several years ago, the FINRA Investor Education Foundation in partnership with WISE Senior Services and the AARP researched why older individuals are often victimized by financial fraud. The report revealed psychological tactics typically used by cons. For example, victims may be pressured to believe that their only option is the scam, or the scammer may request help, tapping into the victim’s sympathy. Another ploy is to claim famous investors are also buying into the property or product in such high demand, and how lucky the victim is to have this opportunity. Con artists may also prey on victims’ fears to coerce them into making decisions; offer no-risk, guaranteed results; or procure more payments by telling victims they must continue to invest to keep what they have already paid in.
The FINRA study indicated that financial education alone may not be enough to put an end to fraud because older adults tend to listen more to sales pitches than younger generations. One possible explanation for this could be that people with financial difficulties who have experienced negative life events, such as job loss, divorce, or the death of a spouse are more inclined to be open to a solution to their problems.
Fighting Back
The best way to fight fraud is to walk away from “must-act-now” deals and do your own research. Be skeptical, question why the offer is being made to you at this time, and contact the Better Business Bureau to learn more. Make sure to get second opinions from friends, trusted advisors, and family before taking action. Remember, if it sounds too good to be true, it probably is. For more information, visit www.consumerfraudreporting.org.