David Lerner Associates: 3 Steps to Help Prevent Financial Fraud
According to findings published in a new research report issued by the FINRA Investor Education Foundation, Financial Fraud and Fraud Susceptibility in the United States 84 percent of respondents have been solicited to participate in potentially fraudulent schemes, and at least 16 percent said they invested money in response to a fraudulent offer.
The research determined that older Americans are especially vulnerable to financial fraud. Americans age 65 and older are more likely to be targeted by fraudsters and more likely to lose money once they’re targeted. Upon being solicited for fraud, these older respondents were 34 percent more likely to lose money than respondents in their 40s.
“Not me,” you might be thinking. “I’m too smart to be duped by investment fraud.”
"The FINRA Foundation points out that everyone is at risk," says Martin Walcoe, EVP of David Lerner Associates. "Anyone with assets is bound to be approached by a financial fraudster at some point."
Such fraudsters are “masters of persuasion, tailoring their pitches to match the psychological profiles of their targets,” notes the FINRA Foundation. “They look for your Achilles’ heel by asking seemingly benign questions — about your health, family, political views, hobbies or prior employers. Once they know which buttons to push, they’ll bombard you with a flurry of influence tactics, which can leave even the savviest person in a haze.”
The FINRA Foundation has launched an Investor Protection Campaign at SaveAndInvest.org to help reduce incidents of investment fraud by teaching investors the tactics most commonly used by fraudsters, and the steps they can take to protect themselves. It offers the following three strategies to help investors distinguish between legitimate and fraudulent investment opportunities:
1. Be suspicious and end the conversation. This is the best way to put an end to any potentially fraudulent activity. If you are at all suspicious about anyone who calls you with a supposed investment opportunity, simply say, “I’m sorry, I am not interested. Thank you.” And then hang up. By knowing (and practicing) your exit strategy in advance, it will be easier to end these conversations, even if the pressure starts rising.
2. Turn the tables and ask some questions yourself. A legitimate investment professional must be properly licensed and registered with FINRA, as well as the Securities and Exchange Commission (SEC) or a state securities regulator. And securities must be registered with the SEC before shares can be sold to the public. So ask callers if they are FINRA and SEC or state registered and verify their answers by visiting SaveAndInvest.org or by calling (888) 295-7422.
You can also call your state securities regulator to find out what they know about the caller, and consult the SEC’s EDGAR database of company filings at www.sec.gov/edgar.shtml.
3. Talk to an objective investment professional before making any investment decisions. If the caller tells you not to tell anyone else about this “special deal,” this should raise major red flags. Legitimate investment professionals usually will not make a request like this. You should always talk to an objective, independent investment advisor who is looking out for your best interest before making any investment decisions.
Another way to protect yourself is to remove your name from telemarketing and junk mail lists. Here are some resources to help you do this:
• Telemarketing Calls: www.donotcall.gov or (888) 382-1222
• Direct Mail and Email Offers: www.dmachoice.org
• Credit Card Offers: www.optoutprescreen.com or (888) 567-8688
• Online Cookie Collecting: www.networkadvertising.org
Most legitimate securities firms will honor your request. So if you still receive a solicitation after removing your name from these lists, there’s a good chance it is from an investment or financial fraudster.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC