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3 Simple Ways to Cut Financial Fraud out of Senior Life

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Protect yourself from financial fraud.

Despite what television and the movies would have you believe, the favorite targets of investment fraudsters aren’t the frail and gullible. Yes, scam artists go after older adults, but they prefer victims who are educated and self-reliant, who have financial knowledge and are looking for new opportunities.

Senior living communities are hunting grounds for hucksters because that’s where the money is. Your years of hard work and saving for the future have made you a prime target for financial fraud.

But you can arm yourself.

1. Don’t let yourself be drawn into a phony deal.

You know the saying.  “If it sounds too good to be true, it probably is.” Problem is, there’s no neon arrow or line in the sand that can point us to the moment when “good” becomes “too good.” Investment fraudsters are experts at making deals look both good and true.

They’re master manipulators who know how to use friendly questions—about your family, home life, worldview, and the experiences that determine how you make decision in senior life— to ferret out exactly what buttons they need to push to get you onboard with their scheme.

The National Crime Prevention Council has documented five tried-and-true tactics of financial fraudsters:

  1. The “Phantom Riches” Tactic reels you in with a concrete example of how this investment opportunity provides guaranteed wealth that will secure your financial future.
  2. The “Source Credibility” Tactic lends a sheen of respectability to a scheme by claiming partnership with a reputable firm or giving themselves the appearance of experience by creating falsified titles or past history.
  3. The “Social Consensus” Tactic cons you into investing by making you believe that you’re part of a group of other savvy investors. They may name drop or even tell you how the scheme has brought financial success to their own friends and family.
  4.  The “Reciprocity” Tactic makes you believe that you’re making a good investment by personalizing the experience. The fraudster convinces you that they’re doing you a favor, getting you in on the ground floor offering a reduced commission fee, in return for the larger favor of having you buy in.
  5. The “Scarcity” Tactic presents a phony investment opportunity that encourages you to “act now while supplies last,” creating a false sense of urgency by fabricating a limited supply or opportunity.

Unfortunately, these tactics aren’t restricted to hucksters. Real sales people and telemarketers use them, too. Luckily, there are ways to verify the legitimacy of an investment opportunity.

2. Ask your own questions.

All investment professionals in the United States must be licensed, and firms must be registered with a regulatory body like the US Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the largest independent regulator for securities firms doing business in the United States, or a state securities regulator—depending on the type of business the firm conducts.

In addition, with very few exceptions, companies must register their securities with the SEC before they can sell shares to the public. So ask questions about credentials before you invest or give out information about yourself.

  • Find out if the firm is registered with the SEC, FINRA, or a state regulator.
  • Ask if the salesperson is licensed and if the particular investment is registered with any of these bodies.
  • Get specific. Ask how the salesperson became licensed. Find out exactly which national or state regulators is the firm registered with. The investment?
  • Check it out. You can verify licensure and registration by visiting or calling the toll free line at (888) 295-7422.

3. End the conversation.

If you’re feeling uncertainy about an offer, you can walk away at any time. A real deal will still be there tomorrow. So take a step back to evaluate the opportunity before making a decision.

Talk to a financial advisor, family member or trusted friend from your senior living community about any doubts you have about an investment.

Bryan Reynolds
June 11, 2013
Bryan Reynolds is the Vice President of Marketing and Public Relations for Episcopal Retirement Services (ERS). Bryan is responsible for developing and implementing ERS' digital marketing strategy, and overseeing the website, social media outlets, audio and video content and online advertising. After originally attending The Ohio State University, he graduated from the College-Conservatory of Music at the University of Cincinnati, where he earned a Bachelor of fine arts focused on electronic media. Bryan loves to share his passion for technology by assisting older adults with their computer and mobile devices. He has taught several classes within ERS communities as well as at the Osher Lifelong Learning Institute run by the University of Cincinnati. He also participates on the Technology Team at ERS to help provide direction. Bryan and his wife Krista currently reside in Lebanon, Ohio with their 5 children.

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