Seniors are targets for investment fraud for a few reasons. Fraudsters expect that many seniors will have put away a hefty nest egg to live off of during retirement. They also exploit the fact that seniors (up to 20 per cent of all individuals) experience some level of diminished capacity as they age, and that seniors can often experience feelings of loneliness. Fraudsters will prey upon this vulnerable population and manipulate them to earn trust and loyalty.
What does investment fraud look like? There are a few common tactics that are used when approaching senior citizens:
- Affinity fraud: investment opportunities that become available via people you know and trust through organizations, clubs, communities that seniors are a part of.
- Cold calls: aggressive and persistent sales people who pitch “exciting” and “lucrative”-sounding investment opportunities.
- Investment seminars involving a free lunch: these are usually sales pitches for an investment opportunity which often feature a free lunch as a means to lure people in. The senior is often made to feel obliged to invest because (s)he received the free lunch.
Each of these types of fraud aims to target a need, circumstance or trait specific to seniors and, unfortunately, it works a lot of the time.
Children of seniors, or even those who know and are close to a senior who could be at risk of being targeted are encouraged to start a conversation (even though talking about money can be awkward) to ensure that their parents/loved ones know what the red flags are and can identify them if they’re approached by someone/something suspicious. Simple and casual conversation starters can often lead to information that might tip you off to some odd behaviour that can be dealt with before it’s too late. Here are some suggestions to get your loved ones talking:
- Who are you banking with these days?
- I’ve recently seen an interesting article in the paper, let me show you!
- Are all of your accounts with the same bank?
- Do you invest?
- Do you like your advisor? Are they friendly?
If in fact a fraud has occurred and your loved one has lost money to a scammer, it can be difficult for them to speak up and say something. They may be embarrassed that they fell for the sale or in the case of affinity fraud, they may not want to get their friends, family or community members in trouble. It is common for there to be a level of denial when a large sum of money has been lost. Seniors should be encouraged to come forward and speak about these situations so that the fraudster can’t prey on any more victims.
If you, or someone you know has been affected by or approached with a potential scam, there are resources available to help. Checking registration of a suspicious person or organization via the Canadian Securities Advisors website as well as reading materials via the Alberta Securities Commission website can be good ways to educate yourselves and the ones you love.
Red Flags of investing fraud
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