The American Association of Retired Persons (AARP) recently released an Investment Fraud Vulnerability Study in which it highlighted some of the key risks facing senior investors. The study’s conclusions are noteworthy not only because of what they tell us about variances in retirees’ investment and risk profiles, but also because they help shed light on the factors that can make senior investors particularly at risk for becoming victims of investment fraud.
Consider, for example, the following:
- According to the study, retirees who strongly agree with the statement, “I am interested in receiving investment offers because you never know when something great might come along,” are significantly more likely to become victims of investment fraud.
- Retirees who strongly agreed with the statement, “I don’t mind taking chances with my money, as long as I think there’s a chance it might pay off,” had an even greater chance of falling victim to investment scams.
- In contrast, those who strongly agreed that they were, “much more likely to invest in something if a friend or family member has recommended it to me,” were among those who were least likely to lose money in fraudulent investments.
How Investment Scammers Target Senior Investors
1. Direct Solicitations by Phone, Mail and Email
Direct solicitations continue to be a primary way for scam artists to target senior investors. According to the AARP’s data, nearly 60 percent of retired investment fraud victims receive one or more calls per month from people offering investment opportunities. This is almost twice the figure for retirees who do not report being victims of fraud. Senior investment fraud victims also typically receive more mail and email solicitations as well.
2. Focus on Active Investment Traders
The AARP’s data also indicate that those seniors who are actively involved in managing their investments are more likely to fall victim to fraud. Among retired investors who make between zero and four investment decisions per year, those who have not been victimized outnumber those who have. However, the numbers swing dramatically when retirees make five or more investment decisions per year. Forty-two percent of all retired investment fraud victims fall into this category, compared to just 11 percent of general investors.
3. Remote Investment Purchases
Investment scammers also rely heavily on convincing retirees to make investment decisions remotely, committing their funds without direct in-person contact with a broker or advisor. This frequently involves the use of hard-sell tactics and claims that investors need to “act fast” in order to avoid “missing out” on can’t-miss opportunities. Once again according to the AARP’s data, retirees who lose money in investment scams are more likely to invest remotely in response to television advertisements, email solicitations, free-lunch seminars and telephone solicitations.
Are You Concerned About Investment Fraud?
If you are concerned that you or a senior loved one may be the target of an investment scam, an attorney can help. To speak with a stock fraud lawyer, inquire online today.
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