Connecticut BBB says Educated Baby Boomers with Some Knowledge of Investments at High Risk of Investment Scams

Baby boomers are prime targets for investment scams, and the typical victim is both educated and knowledgeable about investments.

Three Strategies for Ending Investment Scam Calls

Baby boomers are the prime targets of investment scams, and the typical victim is both educated and knowledgeable about investments.  However, financial sophistication does not provide protection against the variety of investment cons. 

“Investment brokers are known to have been victims of investment fraud amounting to tens of thousands of dollars or more,” according to Connecticut Better Business Bureau President, Paulette Scarpetti.

The seeds for investment fraud may be planted in locations where victims are caught off guard, such as houses of worship, where pitches for pyramid and phantom investments are aimed at entire congregations, with a great measure of success. 

According to Outsmarting Investment Fraud, a video produced by the Financial Industry Regulatory Authority (FINRA), convicted financial scam artists explain that the process takes time and involves the building of trust, and using tools such as limited availability of certain opportunities, the success of high-profile investors and similar tactics used in well-known investment scams.

Investment fraud is one of the most under-reported types of crimes.  According to the North American Securities Administration, the number of criminal complaints and cease-and-desist orders involving investors 50 years of age or older doubled in 2010 to 1,200.

FINRA recommends three strategies to put the brakes on anyone who exerts pressure on you to get in on an investment about which you are uncertain:

Turn the tables and ask questions: Information is power, and according to convicted investment fraud artists, scammers will try to build a relationship by asking questions about your family and hobbies.  However, they will give up and move on if you take control of the conversation and ask for proof of their registration with the Securities and Exchange Commission (SEC) or FINRA.

End the conversation: Take control of the conversation, and just say “no,” or “I’m not interested,” or “I’d like to do some research and get back to you.”  If the caller tells you that it is a limited-time offer or uses other high pressure tactics, it is a red flag that they are trying to perpetrate investment fraud.

Consult an expert:  If someone promoting an investment opportunity urges you not to discuss a “special investment deal” with anyone else, it is almost certainly a scam.  A legitimate investment professional will never ask you to keep secrets.

The reason why baby boomers are increasingly targeted for investment fraud is that many now manage their retirement accounts, and the ones at highest risk, are people who are trying to make up for losses suffered during the downturn in the stock market.

There is no separating the lure of a high return from the associated risks.

The more knowledgeable and cautious you are when making investments, the less likely you are to become a victim.  Take your time and do your research before making any investment decision.

You will find more helpful tips on wise investing at www.saveandinvest.org

-Submitted by Howard Schwartz, Executive Communications Director, Connecticut Better Business Bureau

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.


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