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Securities
Scams Often Target Elderly
The pitches
sounded so promising. In one case, sales agents in In another, the
officials of a Florida-based church sought "gifts" from
Christian communities in a number of states, promising that they would
double the money over the next year and a half. Then there were
would-be entrepreneurs seeking "seed money" to patent promising
new products, dig an oil well or raise rabbits for fur. All drew
investments from scores of Americans, mostly seniors, and all were bogus.
The investors lost thousands of dollars, according to federal and state
securities regulators. "The saddest
part of this is that almost all of our cases involve the elderly, people
60 and older," said Fred J. Joseph, Securities scams
are on the rise, in part because many Americans are desperate for higher
returns on their savings. Some were burned in the stock market downturn of
1999-2001 and remain afraid of stocks, while others want more than the
paltry 1 percent or 2 percent interest they're now getting on savings
accounts and money market funds. "It's in that
condition that con artists thrive," said Barbara Roper, director of
investment protection for the Consumer Federation of America, based in Roper also warned
that "con artists follow the headlines," often picking up on
issues in the news for their scams. Right now, they might go for things
like products designed to increase national security or a vaccine to
counter anthrax, she said. Joseph said that
one way consumers can protect themselves is to watch for "red
flags" in sales pitches: _ The promise of a
large profit _ Phrases such as
"low risk," "no risk" and "guaranteed
return" _ Pressure,
including statements such as "You have to do this now, because the
opportunity will be gone tomorrow when everyone else finds out about
this." He also urged
seniors to be especially wary of overly solicitous salesman intent on
gaining their confidence. "That's why
they call them 'con' men," he said. David Yeske,
president of the Financial Planning Association, said he believed many
consumers were vulnerable because they're "hypnotized by the whole
topic of investment." He said, however,
that investment should be just one part of an overall financial plan.
Those who have taken the time to plan - who have an understanding of their
goals, savings objectives and debt limits - can put investing in context. "Then they're
not so easily swept away," Yeske said. He also said that
a characteristic of almost every investment scam is that there is no
independent, third-party custodian involved, such as a bank or brokerage
firm or trust company. Unless such an
institution is going to be providing regular statements, "you
shouldn't turn over your money." Yeske said. Joseph, Roper and
Yeske spoke to reporters at a forum in Sometimes the
scammers are registered stock brokers or investment advisers, but most are
not, the securities expects said. Consumers can
check out the credentials of securities sales agents - and whether there
are any complaints on file - at www.nasdr.com, which is maintained by the
National Association of Securities Dealers, and at www.nasaa.org, the site
of the North American Securities Administrators Association, which
represents state regulators. They also can phone their state securities
regulator's office. The NASAA site has
a new "senior investor resource center" with a wealth of
educational and consumer protection material aimed at older Americans. Copyright
© 2002 Global Action on Aging |
