State Regulators Warn of Continued Investment Fraud Threat to Seniors
In 2003, state securities regulators forecast that investors would be challenged with increasingly complex and confusing investment frauds. Unfortunately, as we all know, that forecast turned out to be true, but one group in particular has suffered more than others in recent years: seniors.
Seniors are reported to lose more than $2.9 billion each year to financial crimes. As of today, at least one out of every five U.S. seniors has been victimized by a financial scam. Worse, that number is only growing.
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Seniors are one of the most targeted investor groups in the country, because they have larger nest eggs and more assets than other groups.
Many of them also exhibit signs of cognitive decline, which make them more susceptible to deception and fraud. They’re less likely than younger investors to hang up on cold callers or ignore unsolicited pitches, and they find it harder to say no to high-pressure sales tactics. Con artists have targeted seniors for these reasons for years, and the threat against them keeps growing as fraudsters come up with new schemes and new ways to defraud – like the Internet.
As seniors increasingly embrace new technologies that make modern life easier and more enjoyable, such as online social networking sites, they also open themselves up to newer kinds of investment fraud schemes. Illinois Securities Director Tanya Solov highlighted the continued threat against seniors in recent testimony before a Senate Special Committee on Aging.
“With the Internet becoming a common part of daily life for increasing numbers of people, it should be no surprise thatcon artists have made cyberspace a prime hunting ground for [investment fraud] victims,” she said. “Many of the scams, which reside on the Internet, have existed for years prior to the creation of this technology. What has given them new life, power and reach is the power of the medium.”
Even if seniors avoid the Internet, they continue to be targeted in a wide variety of classic investment schemes. Barry Glennon, Director of New Hampshire’s Bureau of Securities Regulation,told the Associated Press that the most frequent threats to seniors include scams involving gold and precious metals; oil and gas drilling programs; promissory notes; real estate; and private offerings.
Thankfully, investor education efforts can go a long way toward helping seniors avoid scams. A survey conducted by the Investor Protection Institute and the Investor Protection Trust showed that 70% of industry experts surveyed believe that collaborative, community-based education programs are effective at combating and preventing financial abuse.
“There are some good signs in these [the survey’s] findings that we are on the right track in tackling financial swindles that go after older Americans,” said Irving Faught, Oklahoma Department of Securities Administrator.
To help arm seniors in the fight against investment fraud, state securities regulators have launched an educational Senior Outreach initiative through the North American Securities Administrators Association. NASAA also has developed an online Senior Investor Resource Center. The online center offers tools and resources specially designed to help seniors avoid investment fraud. For more information about the Senior Investor Resource Center, click here. To learn how you can help seniors avoid fraud, click here.
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