Financial scammers love retirees. A survey by the Investor Protection Trust found that at least 20 percent of people older than 65 -- some 7 million people -- say they have been victims of financial fraud. It's a retirement planning epidemic.
In fact, 20 percent is probably low, according to a related survey by the trust of nearly 800 financial, health and social service professionals who deal regularly with people living in retirement. In their experience, much financial fraud is never reported because older people are embarrassed to be victims. Also, scammers are good at identifying people who are vulnerable because they are in poor health. Under those circumstances, often the first time someone notices the scam is when the victim dies.
Avoid being a victim by following this advice from the Securities and Exchange Commission:
- Don't judge a person’s integrity by how he sounds. Successful con artists know how to sound professional. Good manners and a winning personality don't guarantee honesty.
- Try not to be a victim of your own fears. Run in the other direction if the sales representative says he has a deal that will solve all your problems.
- Take your time. If the sales representative says the deal won't last past tomorrow, chances are he just doesn't want to give you time to think too hard and figure out the scam.
- Be wary of unsolicited offers to buy stock. Fraudsters use email, fax and Internet postings to tout thinly traded stocks. They do it in the hopes of creating a buying frenzy that will push the share price up. When the share price jumps, the scammers sell their shares quickly. Once they dump their stock and quit promoting the company, the share price collapses.
- Keep your eyes on your money. Invest through organizations that offer you 24/7 access to your accounts. If something looks funny, ask for an explanation right away. Write down the answer. If you have real doubts, record. An easy way to do that is to put your phone on speaker and turn on the recorder.
- Don't be afraid (or too embarrassed) to complain. Here are some places to call:
- SEC: (800) 732-0330.
- FINRA BrokerCheck: (800) 289-9999.
- State Regulators: (202) 737-0900.
And the bottom line -- if it sounds too good to be true, it probably isn't.