Protecting Older Americans from Investment Fraud

Americans were hit hard by investment scams in 2021, with losses reaching nearly 1.5 billion dollars across more than 20,000 victims, finds a recent report from the FBI. This continues the stark increases in both victims and financial losses, with roughly 12,000 more victims and more than 1.1 billion more dollars lost compared to the previous year.

And, older Americans typically bear the brunt of this financial crime. One study finds that victims of investor fraud are more often older, male, white, married, and have higher socioeconomic status compared to the general US population. This means they have more money to lose from years of hard work, savings, and benefits, conversely having less time to recuperate these losses.

Investment Fraud: A growing problem.

Scammers have been taking advantage of the pandemic and volatile economic situation by offering new opportunities to “get rich quick.” From robocalls, email, TV, social media and more, it’s easier than ever to connect with people and try to convince them of a once-in-a-lifetime investment opportunity.  And with commodities having grown more nuanced, such as the rise of cryptocurrencies like Bitcoin, Ethereum, and Solana, these currencies, unlike government-backed securities and assets are subject to far less regulatory protection than traditional financial products like stocks, bonds, and mutual funds, making them increasingly susceptible to fraud and scams.

That’s why it is more important than ever that we arm older Americans and consumers with helpful tips to avoid, detect and protect themselves and their loved ones from financial crimes.

Outreach and Education: helping protect senior investors and their caregivers

I recently joined a (virtual) session hosted by the U.S. Securities and Exchange Commission’s (SEC) Retail Strategy Task Force and Office of the Investor Advocate to discuss the unique challenges facing older investors in an increasingly complicated market and ways they can keep safe. Below are highlights from my conversation with Teresa Verges, Regional Trial Counsel for the Securities and Exchange Commission at the Miami Regional Office.

Teresa Verges: Nancy… what do you think are some of the important things seniors can do to avoid being a victim of fraud?

Nancy LeaMond:  FIRST know that the criminals can make it sound SO TRUE and they are so convincing. So remember that every investment carries some degree of risk, and it’s important to look into who is offering the investment and into the investment itself – always. Avoid putting money into “can’t miss” investment opportunities or those promising “guaranteed returns.” Nothing is guaranteed when it comes to investments.

SECOND, don’t be pressured to invest.  No legitimate investment requires an immediate decision. Unscrupulous promoters may try to pressure you by claiming that this offer is limited in time or to a certain number of investors.  Recently, our Fraud Team featured how crooks are successfully using FOMO tactics also known as the Fear of Missing Out to pressure people. You can read more about tips for fighting FOMO by going to aarp.org and typing FOMO in the search bar.

THIRD, avoid any offers to invest that come out of the blue.  For example, you might get an unsolicited offer through a cold call, an email, text message, direct mail, or on social media.  Our Fraud Team has recently seen a huge spike in investment opportunities being pitched on dating sites. You should tread carefully when you didn’t seek out the investment or the salesperson. Do your due diligence if you’re tempted by the offer, or better yet, walk away. 

Teresa Verges: Nancy, what should seniors be aware about concerning financial investments being promoted by celebrities on social media or internet websites?

Nancy LeaMond:  You shouldn’t invest based solely on celebrity’s involvement or on other information you receive through social media, investment newsletters, online advertisements, email, investment research websites, internet chat rooms, direct mail, newspapers, magazines, television, or radio.

This information could be biased and unreliable, and at worst, it could be intentionally manipulative. Criminal scammers may use these venues to spread false information or otherwise bias investors.

Only trust what you can verify. Look to unbiased, third-parties who are in no way connected to the deal or the investment. And slow down your investment decisions—wait until you are out of that emotional moment so that you can think more clearly about how the opportunity.

Our Fraud Watch Network Helpline also has received many complaints about Celebrity Impostor Scams, so if you ever think a celebrity is talking to you via social media…slow down, do your research and do not give them money.

You should always consider the investment’s potential costs, risks, and benefits in light of your own investment goals, risk tolerance, investment horizon, net worth, and existing investments.

AARP’s Fraud Watch Network is a free resource for all that works to help consumers proactively spot and avoid scams, offers guidance from fraud specialists if you’ve been targeted, and advocates at the federal, state, and local levels to protect consumers.

Sign up for free Watchdog Alerts, review our scam-tracking map, or call our toll-free fraud helpline at 877-908-3360 if you or a loved one suspect you’ve been a victim.