May 2023
Fraud Alert

Avoiding Retirement Fraud

In 2022, the Federal Trade Commission data showed that consumers had reported losing nearly $8.8 billion to fraud, an increase of more than 30 percent over the previous year. Younger people reported losing more frequently but older people lost more money on average.

Retirees are often the target of fraud for many reasons. They usually have large ‘nest eggs’, own their own homes, or have good credit, making them appealing targets for con artists. In addition, seniors may take longer to realize that they’ve been scammed and take longer to report it. Finally, individuals who grew up during the 1930’s, 40’s and 50’s tend to be more polite and trusting, characteristics fraudsters exploit.

With some basic understanding of how fraudsters work, you can avoid fraud and protect your hard-earned money. The last thing you want is a scam to ruin your retirement plans.

What can I do to avoid being scammed?

Ask questions and check out the answers.

Fraudsters rely on the fact that many people simply don’t bother to investigate before they invest. It’s not enough to ask a promoter for more information or for references—fraudsters have no incentive to set you straight. Savvy investors take the time to do their own independent research and talk to friends and family first before investing. Make sure you understand the investment, the risk attached, and the company’s history. And remember, if the product sounds too good to be true, it is!

Research the company before you invest.

You’ll want to fully understand the company’s business and its products or services before investing. Before buying any stock, check out the company’s financial statements and other disclosures by using the SEC’s EDGAR database. Remember that unsolicited emails, message board postings, and company news releases should never be used as the sole basis for your investment decisions.

Watch out for salespeople who prey on your fears.

Con artists know that many retirees worry about the adequacy of their retirement savings, especially if they are faced with costly medical expenses. As a result, fraudsters know to pitch their schemes as a way to increase the investor’s financial security to the point where such fears are no longer necessary.

Take your time—don’t be rushed into investment decisions.

Just because someone you know made money, or claims to have made money, doesn’t mean you will too. Be especially skeptical of investments that are pitched as “once-in-a-lifetime” opportunities, particularly when the promoter bases the recommendation on “inside” or confidential information. Remember that a fraudster does not want you to think too much about the investment because you might figure out the scam.

Be wary of unsolicited offers.

Be especially careful if you receive an unsolicited fax or email about a company—or see it praised on an Internet bulletin board—but can find no current financial information about the company from other independent sources. Many fraudsters use email and Internet postings to tout thinly traded stocks, in the hopes of creating a buying frenzy that will push the share price up so that they can sell their shares. Once they dump their stock and quit promoting the company, the share price quickly falls. And be extra wary if someone you don’t know, and trust recommends foreign or “offshore” investments. When you send your money abroad, and something goes wrong, it’s more difficult to find out what happened and to locate your money.

Information for this article was taken from the following website:    

Avoiding Retirement Fraud

Additional information

Guide for Seniors: Protect Yourself Against Investment Fraud
Early Retirement Seminars 101: Smart Tips for Spotting Retirement Scams 
Social Media and Investing - Tips for Seniors 

If you have questions, please contact us.

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