Elder Americans & Financial Fraud
Financial fraud – including investment, Internet and credit card scams – is on the rise, and the targeted victims are increasingly elder Americans. According to USBoomers.com, older adults represent 12% of the U.S. population, but they are 35% of all fraud victims.
Individuals 65 and older are preyed upon for a number of reasons, says Sharon Gilchrist, an Indianapolis-based financial planner. They’ve had a lifetime to acquire substantial savings and assets, including annuities and retirement accounts, stocks and bonds, insurance policies, and property. In addition, senior citizens are often more trusting of financial schemers who present themselves as legitimate professional investment advisors.
“Today’s older generation is not accustomed to the vast amount of scam artists. Many elderly people are lonely, and eager to talk to someone who is kind to them or want to help them,” Gilchrist says. “In some cases, elderly victims of financial fraud are hoping for a miracle investment to make their life easier.”
Financial fraud of the elderly is indeed big business. In 2011, financial abuse robbed elder Americans of nearly $3 billion, up 12% from 2008, according to a MetLife Mature Market Institute study. More than 7.3 million older Americans, or one in every five U.S. citizens over the age of 65, has been the victim of a financial swindle, according to a survey by Investor Protection Trust.
Findings from the 2010 Investor Protection Trust revealed key insight into why elder Americans are vulnerable to financial fraud. Specifically, 44% of those aged 65 or over got at least two out of four questions wrong about basic investment knowledge:
- WRONG – 46 percent true/39 percent false: If an investment is registered with the Securities and Exchange Commission (SEC) or state securities regulators, it has been reviewed to make sure it’s safe.
- WRONG – 57 percent true/31 percent false: A very high rate of return is only okay as long as the investment is guaranteed or bonded.
- RIGHT – 32 percent true/49 false: Variable annuities are usually good investments, especially for retirees.
- RIGHT – 3 percent true/93 percent false: You can make a lot of money quickly without risk.
So what can someone do to prevent elder financial fraud from happening? The first step is to “ask a lot of questions,” says Gilchrist. “If someone presents an investment opportunity or financial deal, get as much information as you can. Phone numbers, the salesperson’s name, business identity, street address, mailing address, and business license number. Ask for references. Most of all, take your time before making any decision. If you’re being pressured into handing over money, that’s a sure sign something is wrong and you need to walk away.”