Our parents and grandparents worked hard their entire lives and saved for retirement. Today, as they begin to enjoy what should be their “golden years,” they are increasingly being targeted by criminals who are robbing our nation’s seniors of millions of dollars from their hard-earned savings, investments, and retirement funds.
I am a member of the Senate Special Committee on Aging, which recently held a hearing to help expose the most common types of investment fraud targeted to seniors.
Older Americans have become the number one target of unscrupulous investment con artists and others who engage in abusive practices. The files of the Securities and Exchange Commission (SEC) and the Maine Office of Securities are filled with tragic examples of senior citizens who have been cheated out of their life savings, their retirement funds, and even the equity in their homes.
Ironically, the very virtues that personify our “Greatest Generation” make them the likeliest targets of shameless con artists. Years of thrifty living have enabled them to build a nest egg, own their own home, and have excellent credit, all of which the con artist will attempt to tap into, often by offering friendship and compassion. Moreover, our parents and grandparents were generally raised to be courteous and trusting, making it difficult to “just say no” or hang up the phone on a con man.
The truth is that con artists not only rob their victims of money but also their pride. According to the FBI, older persons are less likely to report a fraud, making them even better targets. Some fail to report because they are too embarrassed to admit that they have been scammed. Others may not even realize that they have been the victim of a crime. In some cases, an elderly person may not report the crime because they are concerned that it will cast doubt on their mental capacity to handle their own affairs.
Common sense tells you that if something sounds too good to be true it almost always is. Fortunately, we don’t have to rely on common sense alone. The North American Securities Administrators Association, Inc. (NASAA) has created the following list of self-defense tips for older investors to help protect against investment fraud.
- Don’t be a “courtesy victim.”
Con artists will not hesitate to exploit your good manners. Remember that you are not obligated to talk to a stranger who calls asking for your money. Save your good manners for friends and family members, not strangers looking for a quick buck!
- Check out strangers offering strange deals.
Trusting strangers is a mistake when it comes to your personal finances. Be sure you have written information about the investment opportunity, review it carefully with family and/or friends, and make sure you understand all the risks involved.
- Always stay in charge of your money.
Beware of anyone who suggests putting your money into something you don’t understand or who urges that you leave everything in his or her hands.
- Never judge a book by its cover.
Successful con artists sound and look extremely professional and have the ability to make even the worst investment deal sound as safe as putting money in the bank. The sound of a voice, particularly on the phone, has no bearing on the soundness of an investment opportunity.
- Watch out for salespeople who prey on your fears.
Con artists know that you worry about outliving your savings. Your fear can cloud your good judgment. An investment that is right for you will make sense because you understand it and feel comfortable with the risk involved.
- Exercise particular caution following tragedy.
The death or hospitalization of a spouse has many sad consequences – financial fraud shouldn’t be one of them. If you find yourself suddenly in charge of your own finances, get the facts before you make any decisions. Arm yourself with information and your confidence will send con men running.
- Monitor your investments and ask tough questions.
Don’t compound the mistake of trusting an unscrupulous investment professional or outright con artist by failing to keep an eye on the progress of your investment. Insist on regular written and oral reports. Look for signs of excessive or unauthorized trading of your funds. And if you are stalled when you want to pull out your principal or profits from an investment, you have uncovered someone who wants to cheat you.
- Don’t let embarrassment or fear keep your from reporting investment fraud or abuse.
Con artists know that you might hesitate to report that you have been victimized in financial schemes out of embarrassment or fear. Con artists prey on your sensitivities and, in fact, count on these fears preventing or delaying the point at which authorities are notified of a scam. Every day that you delay reporting fraud is one more day that the con artist is spending your money and finding new victims.
Seniors can contact the Maine Office of Securities at (207) 624-8551 for assistance. They can also learn more about the dangers of investment fraud by visiting the online Senior Investor Resource Center (www.nasaa.org), which has been developed specifically for senior audiences and offers a variety of important information and resources including a checklist of questions seniors can ask before making an investment decision; common sense solutions to protect your nest egg from investment fraud; and information about the top frauds targeting seniors. This information will both protect seniors and help them to better protect themselves against con artists who are out to steal their money.