There’s no doubt that investment fraud is on the rise and that older investors are a prime target. According to a 2010 Investor Protection Trust Survey, it’s estimated that one in five seniors over the age of 65 have suffered some form of financial fraud, which adds up to 7.3 million in the U.S. alone.
What is “Cold Calling” Fraud Scheme?
One way that perpetrators attempt to reach retirees and seniors is through “cold calling,” or reaching you through an unsolicited phone call. During these unsolicited phone calls, the investors are told about supposedly “low-risk, high-return” investment opportunities, and they often try to entice victims into rolling their existing retirement accounts into the opportunity. Often, the calls become increasingly harassing in hopes of wearing their target down and getting them to agree.
Here are a few things you can do to help your parents protect themselves from this type of financial fraud:
- Help them add their phone number to the National Do Not Call registry at donotcall.gov.
- Report any harassing investment calls to FINRA, the SEC, the FTC, or your state regulators.
- Remind your parents that they can ask to be put on an individual company’s do not call list.
- Ask your parents to get any potential investment offers in writing, and make a plan to review the documents together before any money changes hands.
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How Do Scammers Get Phone Numbers?
Scammers get lists of telephone numbers to try through a variety of avenues, and it can be very difficult to avoid them. Sometimes these scams will lift phone numbers from the local phone book. Sometimes they obtain phone numbers through other companies, like your credit card company. Sometimes they may have even obtained your number through a form you filled out — like a request for more information or a contest entry.
How to Identify a Cold Call, Social Media, or Email Scam
It is very unusual for any legitimate investment opportunity to come to you through an unsolicited investment phone call, unknown email or social media message. If you are in doubt, however, remember that these types of phone scams almost always have these three things in common:
- You must “act now” or miss the opportunity.
- The investment offers very high returns in a short amount of time.
- The caller claims that the investment is “low risk” – or even “no risk.”
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How to Prevent Elder Financial Abuse from Cold Calls & Messages
As the expression goes, “evil grows in the dark” and perpetrators thrive on isolation. Talking to your friends and family and trusted advisors and educating yourself through legitimate organizations can prevent you from becoming a victim to telephone and online scammers.
To help prevent cold calls, you can add your number to the National Do Not Call Registry. Despite this, you may still receive some telemarketing calls or calls touting investment opportunities.
If this happens, remember that you:
- Can ask to put on the individual company’s do not call list
- Can ask for the company’s name, address, and telephone number
- Can report harassing investment phone calls to FINRA, the SEC, state regulators, or the FTC
Key Warning Signs of Cold Calling Investment Fraud Scams
Cold calls about investment opportunities are one of the ways that people get involved in fraudulent investment schemes. The callers often are reading from impressive scripts that might sound a little too good to be true; however, your concerns are quickly quelled by a list of impressive facts, credentials, and perfectly placed reassurances. It all sounds very good.
Scam artists are well-rehearsed, leading unwitting investors into fraudulent schemes that can end up costing them a fortune. Here is a list provided by the NASAA Investor Education Site on how to avoid being a victim of cold calling investment fraud:
- Ask your state securities agency for help.
When you are contacted by a securities industry representative, particularly if you do not know this person or have not heard of the firm, you should call your state securities agency in order to learn more about the caller and the firm. The simplest inquiry is to ask if they are registered to do business in your state. But you should also ask about the record of the firm and its representative. Are there any past disciplinary events? Are they subject to past complaints? Are they under active investigation? Are there other customer complaints in your state against this firm or agent? Most of this information is available if you only ask.
- Ask questions.
Don’t rely on a company’s glossy brochure. You need to ask about the investments themselves. Where is the company traded? Is it listed in the stock tables printed in your local newspaper? Investigate its trading history. Make phone calls. Find out more about it. Ask the salesperson — who is making a market in the stock? Who else is buying in your area? Is the salesperson’s firm making a market in this company? The reason you want to ask is that they might be the only market maker. And they might be using cold calling techniques to create a buy demand for a stock that insiders will sell when the price is driven high enough.
- Contact an investment fraud attorney.
If these warning signs look familiar, and you believe you have been a victim of investment fraud, not all is necessarily lost. With the help of an experienced investment fraud attorney, you may be able to recover the money that you thought was gone.
Protecting yourself and your retirement funds from senior investment fraud is becoming increasingly difficult in a world where scammers are specifically targeting seniors. Remain vigilant, always ask for details in writing, do your research, and meet in person before putting your cash on the line. If you have already been the victim of investment fraud, speak with one of our skilled investment fraud attorneys today. Meyer Wilson is devoted to helping victims of senior financial fraud recover their losses through mediation, arbitration, and litigation.
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