David Lerner Associates News

Financial Fraud and Seniors

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Monday, August 20, 2018

Financial fraud is part of our online lives. There’s no getting around it. The Identity Theft Resource Center recently announced its 2017 Data Breach report, and it’s no surprise that breaches are up. Last year there were 1,579 data breaches, exposing nearly 179 million records.

That represents a 44% increase in the number of breaches and a 389% increase in records exposed. 

The Federal Trade Commission estimates that 25 million Americans are victims of consumer fraud each year. When it comes to scams, children and seniors are at the biggest risk. Experian is alerted to 25,000-30,000 fraud cases reported each year.  Older investors are a favorite target of con artists who focus on investment fraud. The pursuit of seniors’ “nest eggs” is one of the fastest growing consumer fraud issues today.

It's estimated that one out of every five persons over age 65 has been victimized by a financial swindle, with older Americans defrauded out of nearly $3 billion each year. The threat of senior financial fraud is expected to grow as the senior population itself grows with the aging of the Baby Boomer generation. 

As a result, new laws are being proposed to safeguard and protect those who are vulnerable.

But the best defense against investment fraud is an educated and skeptical consumer.

Here are some things that you can do to help protect yourself from fraud:

Hang up

One of the favorite methods to extract money from a would-be target is to get them on the phone and exploit their good manners. If you’re not interested, you have absolutely no obligation to a stranger who cold calls you and asks for your money. Your best defense in this situation is to not be afraid to offend. Just say you’re not interested - and hang up the phone.

Verify the opportunity

Verify that the investment offering is registered with your state securities regulator and/or the Securities and Exchange Commission. Say no to any salesperson that pressures you to make an immediate decision. If he or she doesn’t have the time to explain the investment to your regular investment professional or another trusted party, or if they ask, “Can’t you make your own investment decisions?” Say NO! You have the right and responsibility to check out the salesperson, firm, and the investment opportunity itself.

Appearances can be deceiving

Beware if the only written material you receive is a glossy brochure. Demand a prospectus and/or other legal disclosure documents as required by law. And never judge a salesperson’s trustworthiness based on how they look or sound. The only thing that should instill trust in you is that they are professionals and can provide verifiable data on the investment. No amount of salesmanship can make a bad investment into a good one. 

Ask tough questions

Don’t be afraid to be confrontational. And don’t let yourself get overwhelmed by a seemingly superior knowledge of finances. Determine how the funds solicited for investment will be used. Will the funds be segregated from other accounts available to the business? What is the basis for the purchase price of the investment? Does it represent fair value? What does it cost to own this investment? Are there any annual fees, holding charges, custodial fees, or hidden charges? Let the promoter know you want a complete disclosure of every last penny required to own this investment. What is the liquidity of the investment? Can you sell it whenever you want to? Is there a ready market of buyers? What are the expected transaction costs when selling? What are the restrictions to selling?

Keep a record

Maintain a file with all correspondence and notes from conversations. Print a hard copy of all on-line solicitations, noting the internet address (URL), time, and date. Get all claims, guarantees, and terms of the deal in writing. If it’s not in writing, then it can be thrown out as hearsay.

Get another opinion

If you’re not confident or lack experience in a particular investment, then consult with a third party such as your attorney or registered investment advisor for a second opinion before investing.



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.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC..

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Author: Sally Falkow

Categories: David Lerner Associates News


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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