Although people aged 60 and older account for 15 percent of the population in the United States, according to consumer advocacy groups, they make up about 30 percent of all fraud cases. This is a problem that regulators are increasingly worried about as baby boomers (people born between 1946 and 1964) continue to retire. They fear that scams and fraudulent investment schemes targeting seniors will only rise in future.
Remember, the golden rule of investments: If it sounds too good to be true, it is too good to be true.
There is no such thing as a “guaranteed return.” Low-risk investments typically yield less money. Higher yields, usually means higher-risk.
- Research the company before investing: Do not rely solely on the information given by the company that is seeking an investment, especially if the investment opportunity was unsolicited. Before giving the company a single penny, research the company’s financial statements using this SEC database, or contact the state agency that regulates securities and investments.
- Research the investment professional: Do not just study the company itself. It is also critical to research the person who is trying to sell the investment. Make sure this person is a licensed securities salesperson, and try to find out if he or she has ever been in trouble with regulators or other people who have invested. This can easily be verified by visiting the FINRA Broker Check website. Be especially wary of investment professionals who try to use concerns about retirement savings or medical costs to increase pressure to invest, and remain even more leery if he or she is pressuring the potential investor either to invest money immediately or to rollover their 401k or pensions.
- Monitor all investment statements and accounts: Do not trust anyone who says they will handle everything and you have nothing to worry about. That is patently untrue. After all, it is your money. Check your statements regularly, and do not be afraid to speak up about any questions or irregularities found in the investment records.
- Always ask questions if there is push back when requesting a return of principal or to cash out the investment: If the investor asks for his or her profits, and the investment professional hesitates, this is a serious red flag. It could mean that the investment professional has already taken your hard-earned money and spent it. Investment funds should never be inaccessible, and there is no reason why you should be forced or convinced to take profits and shift them to other investments.
What types of fraud can target senior citizens?
The SEC identifies several types of fraud to which seniors are most vulnerable. These include:
- Ponzi or “pyramid” schemes – The SEC describes these as “robbing one person to pay another.”
- Oil and gas scams – Some oil and gas investments are valid, but often, get rich quick oil and gas investments are nothing but scams.
- Promissory notes – This is when an investor loans money to the investment company with an agreement to be paid back a fixed return. Promissory notes, like other investments, can be legitimate, but investors should still be careful.
- Prime bank fraud – In a prime bank scheme, fraudulent investment professionals convince investors that their money will be used to buy and trade “prime bank” financial instruments or other “high yield investment programs” (“HYIPs”) on offshore markets to generate huge returns. But both of those instruments are nonexistent, as are the markets.
With the Elder Financial Fraud on the rise, many–even the most financial literate–can fall prey to the tactics of unscrupulous brokers and advisors. What is important is that you take action immediately to protect your nest egg.
Don’t let yourself or your loved ones fall victim to Elder Financial Fraud. If you have concerns, contact the offices of Fishman Investment Fraud Lawyers for help today.