There are many reasons the elderly fall victim to fraud, including:
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Being too trusting, and too good mannered to be rude
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Wanting a better rate of return on their money
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Believing the salesperson is nice, friendly and caring
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Being impressed with fancy credential and titles
These titles can serve as an easy way for an unscrupulous sales agent or adviser to gain a senior's trust, which is the first step in a successful fraud," says Webster. "It is exceedingly difficult for prospective investors – particularly senior citizens – to determine whether a particular designation represents a meaningful credential by the agent or simply an empty marketing device."
Financial predators use tactics to instill fear in seniors of running out of money and becoming a burden to their families. They inspire distrust in seniors of family members concerning their finances to keep seniors from disclosing the fraud. And they prey upon the loneliness and isolation, and availability of some retired or widowed seniors. How do you know if a potential investment is legit? Webster says to contact your state's securities regulator to see if the salesperson is licensed in your state to sell the security and if the security is licensed for sale in your state. "Usually investments that guarantee or promise high returns for little or no risk are signs of trouble ahead," he says.
Investment scams can take many shapes. If it didn't sound good, seniors wouldn't give it a second thought! Whatever the enticing investment, scammers use specific tactics to hook seniors. Be cautious of these phrases:
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"Your profit is guaranteed."
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"It's an amazingly high rate of return."
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"There's no risk."
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"You can get in on the ground floor."
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"You would be a fool to pass this by."
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"This offer is only available today."
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"It's a secret investment tip just for you."
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"I'll get you the paperwork later."
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"Just make your check out to me."
Webster adds, "Remember, if it sounds too good to be true, it usually is.