Older Americans are the No.1 target of investment con artists.
Additionally, stockholders and financial planners who engage in abusive
practices often seek out the elderly. The files of state securities agencies
are filled with tragic examples of senior citizens who have been cheated out of
savings, windfall insurance payments and even the equity in their homes.
Fortunately, such victimization can be avoided by following 10 self-defense tips
developed for older Americans by the North American Securities
Administrators Association (NASAA), which, in the U.S., is the national voice
of the 50 states securities agencies responsible for investor protection
at the grassroots level.
1. Don't be a "courtesy victim" Older
Americans are of the generation that was taught to be courteous at all times to
phone callers, as well as people who visit them at home. Con artists will not
hesitate to exploit the "good manners" of a potential victim. Remember that a
stranger who calls and asks for your money is to be regarded with the utmost
caution. You are under absolutely no obligation to stay on the telephone with a
stranger who wants your money. In these circumstances, it is not
impolite to explain that you are not interested and hang up the phone. Save
your good manners for friends and family members, not swindlers!
2. Check out strangers touting "strange" deals.
Trusting strangers is a mistake that all too many older Americans make when it
comes to their personal finances. Say "no" to any investment professional or con
artist who presses you to make an immediate decision, giving you no opportunity
to check out the salesperson, firm and the investment opportunity itself.
Extensive background information on investment salespeople and firms is
available from the Central Registration Depository (CRD) files available from
your state securities agency (call NASAA at 202/737-0900 for the number) or the
National Association of Securities Dealers (1-800/289-9999). Almost all
investment opportunities must be registered for sale in the state in which you
live. Your state securities agency can tell you if the investment opportunity
is properly registered. Before you part with your hard-earned savings, get
written information about the investment opportunity, review it carefully and
make sure that you understand all the risks involved. A favorite tactic of
telemarketing con artists is to develop a false bond of friendship with older
Americans. Swindlers know that many senior citizens are eager to have someone
to talk to on the phone... even if that someone is a complete stranger. If you
are dealing in person with a stockbroker or financial planner, do not be swayed
by offers of unrelated advice and assistance that are merely efforts to develop
a sense of friendship and even dependency. If you are lonely and in need of
companionship, don't make the mistake of seeking it from someone whose only
real interest is to get his or her hands on your money.
3. Always stay in charge of your money.
A stockbroker, financial planner or telemarketing con artist who wants your
money will be more than happy to assure you that he or she can handle
everything, thereby relieving you of the need to watch over and protect your
nest egg. Beware of any financial professional who suggests putting your money
into something you don't understand or who urges that you leave everything in
his or her hands. Constant vigilance is a necessary part of being an investor.
If you understand little about the world of investments, take the time to
educate yourself or involve a family member or a professional, such as your
banker, before trusting a stranger who wants you to turn over your money and
then sit back and wait for results.
4. Never judge a person's integrity by how they sound."
All too many older Americans who get wiped out by con artists later explain
that the swindler "sounded like such a nice man (or woman)." Successful con
artists sound extremely professional and have the ability to make even the
flimsiest investment deal sound as safe and sound as putting money in the bank. Some
swindlers combine professional-sounding sales pitches with extremely polite
manners, knowing that many older Americans are likely to equate good manner
with personal integrity. Remember, the sound of a voice (particularly
on the phone) has no bearing on the soundness of an investment opportunity.
5. Watch out for salespeople who prey on your fears.
Con artists know that many older Americans worry that they will either outlive
their savings or see all of their financial resources vanish overnight as the
result of a catastrophic event, such as a costly hospitalization. As a result,
it is common for swindlers and abusive salespeople to pitch the schemes as a
way for older Americans to build up their life savings to the point where such
fears are no longer necessary. Remember that the fear and greed can cloud your
good judgment and leave you in a much worse financial posture. An
investment that is right for you will make sense because you understand it and
feel comfortable with the degree of risk involved.
6. Exercise particular caution if you are an older woman with no
experience handling money. Ask a con artist
to describe his ideal victim and you are likely to hear the following two
words. "elderly widow." Sadly, many women who are now in their retirement years
often received little or no education in their youth about how to handle money
Women of this generation often relied on their husbands to handle most all
major money decisions. As a result, older women (particularly those who have
received windfall insurance payments in the wake of the death of a spouse) are
prime targets for con artists. Elderly women who are on their own and have
little know-how about handling money should always seek the advice of family
members or a disinterested professional before deciding what to do with their
savings. One excellent resource available nationwide is the Women's
Financial Information Program at the American Association of Retired Persons
(AARP). For more information write: "Women's Financial Information Program,"
AARP, Consumer Affairs, 601 E Street, NW, Washington, DC 20049.
7. Monitor your investments and ask tough questions.
Too many older Americans not only trust unscrupulous investment professionals
and outright con artists to make initial financial decisions for them, but
compound their error by failing to keep an eye on the progress of the
investment. Insist on regular written and oral reports. Look for signs of
excessive or unauthorized trading of your funds. Do not be swayed by assurances
that such practices are routine or in your best interests. Do not permit a
false sense of friendship or trust keep you from demanding a routine checks on
your savings. When you suspect that something is amiss and get unsatisfactory
explanations, call your state securities agency and make a complaint.
8. Look for trouble retrieving your principal or cashing out
profits. Many older Americans have little
ongoing need for investment funds, while others need returns that are paid out
of them regularly in order to supplement limited incomes. If a stockbroker,
financial planner or other individual with whom you have invested stalls you
when you want to pull out your principal or even just profits, you have
uncovered someone who wants to cheat you. Since unscrupulous investment
promoters pocket the funds of their victims, they often go through great
lengths to explain why an investor's savings are not readily accessible. In
many cases, they will pressure the investor to "roll over" non-existent
"profits" into new and even more alluring investments, thus further delaying
the point at which the fraud will be uncovered. If you are not investing in a
vehicle with a fixed term, such as a bond, you should be able to receive your
funds or profits within a reasonable amount of time.
9. Don 't let embarrassment or fear keep you from reporting
investment fraud or abuse. Older Americans
who fail to report that they have been victimized in financial schemes often
hesitate out of embarrassment or the fear that they will be judged incapable of
handling their own affairs. Some senior citizens have indicated that they fear
that their victimization will be viewed as grounds for forced
institutionalization in a nursing home or other facility. Recognize that con
artists know about such sensitivities and, in fact, count on these fears
preventing or delaying the point at which authorities are notified of a scam. While
it is true that most money lost to investment fraud is rarely recovered beyond
pennies on the dollar, there are also many cases in which older Americans who
recognize early on that they have been misled about an investment are then able
to recover some or all of their funds by being a "squeaky wheel." A
good resource for older Americans who fear that they have been victimized is
the securities agency in the state in which they live. For the telephone number
and address of your state securities agency, contact NASAA at
202/737-0901.
10. Beware of "reload" scams. Younger
Americans who are ripped off by swindlers are fortunate to the extent that they
have the opportunity to pick themselves up and restore some or all of their
losses through new earnings. However, most older Americans are dealing with a
finite amount of money that is unlikely to be replenished in the event of fraud
and abuse. The result is a panic that is well known to con artists, who have
developed schemes to take a "second bite" out of senior citizens who already
have been victimized. Faced with a loss of funds, some senior citizens will go
along with another scheme (allowing themselves to, in effect, be reloaded) in
which the con artists promised to make good on the original funds that were
lost... and possibly even generate new returns beyond those originally
promised. Though the desire here to make up lost financial ground is
understandable, all too often the result is that unwary senior citizens lose
whatever savings they left in the wake of the initial scam, and possibly more
in the second scam