Op-Ed: Smart seniors, smart investors: Don't get scammed
Op-Ed Published in the Journal News
By Eric T. Schneiderman
We’re all at risk of becoming victims of investment fraud. Losing money on a bogus investment can happen to anyone, especially if you let your guard down. Unfortunately, older adults, who are often targeted by con artists and fraudsters, are at special risk.
According to the American Association of Retired Persons, the mean age of investment fraud victims is 69 years old. While people over 60 years of age make up 15 percent of the U.S. population, they represent 30 percent of victims of investment scammers. A recent study found that 14 percent of seniors in New York have been victims of some type of elder abuse – financial fraud being the most common type.
Scammers go after seniors because they’ve been working their whole lives and may well have cash in the bank and possess assets like a house or apartment that they own.
Seniors are also vulnerable because unfortunately, as people grow older, they are more likely to experience cognitive decline and may have difficulty managing their finances.
That sets up older adults as particularly easy prey for con artists.
Play on emotions
While the details of various scams may differ, one thing they have in common is that they play on the victim’s emotions. The idea is to get to you to ignore that warning voice in your head.
Con artists may buy you lunch or invite you a free seminar and then launch a hard sell for a worthless investment. They may belong to your church or your favorite organization, or the same ethnic group as you – or they may pretend to – and use that association to get you to trust them. That’s what Bernie Madoff did.
They may promise returns on an investment that are too good to be true but sound too good to pass up. They may pressure you by telling you that if you don’t act right now, you’ll lose out on a terrific opportunity.
No one knows precisely how many older adults fall victim to scams like these because investment fraud is a grossly underreported crime. One study last year showed that for every complaint of financial or investment fraud involving a senior citizen that is filed with a law enforcement or social service agency, an estimated 24 more cases go unreported. But the MetLife Study of Elder Financial Abuse, updated in June 2011, estimated that the annual financial loss by victims of elder financial abuse is at least $2.9 billion.
Many victims don’t go to the authorities because they feel ashamed. It’s embarrassing to admit you were taken. But law enforcement can stop these criminals only if victims come forward.
My office’s Investor Protection Bureau has investigators and prosecutors who specialize in elder investment fraud cases. And to help seniors avoid becoming victims, my office – in partnership with AARP, The Brookdale Center for Healthy Aging at Hunter College, LifeSpan of Greater Rochester and the Weinberg Center for Elder Abuse Prevention at the Hebrew Home at Riverdale – will sponsor financial education programs all around the state over the next month – from Buffalo to Brookhaven and points in between – specifically to teach older adults how to detect financial fraud.
The first line of defense is to avoid becoming a victim in the first place. And the best way to do that is to follow this one basic rule: Before you invest, investigate.
Check out the brokerage firm and the investment product itself. Verify the broker’s registration and whether he or she has violated any laws. Make sure the particular investment is registered with the Securities and Exchange Commission or other appropriate regulatory body.
If you feel that someone may be trying to rip you off, or if someone comes to you with a scheme that sounds too good to be true, say you want to think about it. Don’t make a commitment. Ask someone you trust for an opinion – a lawyer, a stockbroker, an accountant, even a family member or a friend.
Financial scams tend to peak around the holiday season, so now is the time to learn how to defend yourself. Be smart seniors and smart investors – don’t get scammed.