Council on Aging Answers 2015 - 86

COUNCIL ON AGING - ORANGE COUNTY

INVESTMENT FRAUD

FINANCE & LEGAL

Protect Yourself
From These Scams
We've all heard the timeless saying "If it sounds too
good to be true, it probably is." As an investor, these are
good words to live by. The trick is knowing when "good"
becomes "too good."
With over 50 million Americans aged 62 and older,
older adults are prime targets for financial exploitation
both by persons they know and trust and by strangers. Financial exploitation has been
called "the crime of the 21st century" with one study suggesting that
older Americans lost at least $2.9
billion to financial exploitation by a
broad spectrum of perpetrators in
2010.

including the ones listed below.
Common investment scams
Ponzi schemes: This is an old scam with a simple
formula: Scammers promise high returns to investors.
Money from new investors is used to pay previous investors. These schemes eventually collapse-leaving most
of the investors with a financial loss.
Promissory notes: - A promissory note is a form of debt-similar
to a loan or an IOU-which a company may issue to raise money.
Typically, an investor agrees to loan
money to the company for a set period of time. In exchange, the company promises to pay the investor
a fixed return on his or her investment. While promissory notes can
be legitimate investments, those that
are marketed broadly to individual
investors often turn out to be scams.
Unscrupulous financial advisers - Some advisers cut corners or
resort to outright fraud or bilking
older adults with unexplained fees,
unauthorized trades or other irregularities.
Affinity fraud - Involves targeting persons with
military, religious or spiritual affiliations, by ethnic identity, etc.
Internet fraud - the "Dot-Con:" Internet fraud has
become a booming business. With the growing number
of older adults using the Internet, it is increasingly easy
for con artists to reach millions of potential older victims at minimal cost.

A popular practice
among financial

services salespeople
is to identify themselves

Be wary of senior certifications
and designations
A popular practice among financial services salespeople is to identify
themselves by a "senior designation"
to signal that they have expertise in
retirement or the investment needs
of older people. The requirements to
earn and maintain a senior designation vary considerably. Programs of
study range from weekend seminars
to two-year graduate programs. The
initials on a business card don't provide information about the quality of the designation.
Some designations indicate extensive knowledge in senior financial needs, while others are merely marketing
tools.
While the vast majority of investment advisers financial planners and broker-dealers are honest and
reputable, it pays to check on a senior designation if you
are presented with one. Be wary of investment scams,

by a "senior designation"
to signal that they have

expertise in retirement or
the investment needs
of older people.

Answers Guide 2015

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Council on Aging Answers 2015

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