• SmartMoney

Investment Scammers’ Surprising Target (It’s Not Granny)


When we think of investment fraud victims, most of us envision a little old lady getting tricked by a sly con man.  But the reality is much different: the typical mark is a boomer guy.

The AARP’s new “Fraud Victim Study” finds that victims of investment fraud are more likely to be males 50 and up with at least some college education and an annual income of at least $50,000. Of course, some of this has to do with selection bias: Crooks tend to seek the group with the most money, and boomer men tend to land in that sweet spot. But that’s not the whole story.  These victims also tended to expose themselves to sales situations more often than the general population and to take risks with their money (because, on the whole, they are less upset about losing some cash) — both of which increase the likelihood of becoming an investment fraud victim, the study found.

Becoming a victim of fraud at any age can, of course, hurt your nest egg.  But for those nearing retirement, it can be especially detrimental as you have less time to recover from losses.  What’s more, you not only do you lose the stolen money, you also lose out on its growth potential. The victim of a $50,000 investment scam at age 50 would lose not only the $50,000 he’d saved but also the roughly $40,000 in interest he could have earned on the money up through age 65 (assuming a 4% interest rate).

To avoid becoming the victim of investment fraud, here are some tips from the National Consumer League’s Internet Fraud Watch site (Fraud.org):

  • Be especially wary of commodities investments. Many scams involve coins, precious metals, artwork, oil leases, gemstones and other commodities.  Though some of these investments are, of course, legitimate, these still should be warning signs.
  • For the most part, steer clear of “offshore investments.” “These are often promoted as a way to avoid taxes,” according to the site. “Actually, you are still liable for taxes, and the investments themselves are usually very risky.”
  • Call and investigate each potential investment. “A good place to start is with your state securities regulator,” according to the site.  They also recommend contacting the federal Securities and Exchange Commission, 800- 732-0330, www.sec.gov; the North American Securities Administrators Association, 202-737-0900, www.nasaa.org; and the National Futures Association (for investments in commodities), 800-621-3570 (in Illinois, call 312-781-1467), www.nfa.futures.org.

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