(Newswire.net -- November 19, 2014) Syosset, NEW YORK -- According to the FINRA report, 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. Even though fraud solicitations are widespread, 40% or more of respondents say they cannot identify classic red flags of financial fraud. These include promises of annual returns of 110 percent and promises of investments that are “fully guaranteed,” even though annual returns above 100 percent are highly improbably and virtually no investment is risk free.
“This research is a good reminder that individuals need to constantly be on their guard against financial fraud,” says David Lerner Associates Inc. Branch Manager Tony Meere. “There really is no such thing as a free lunch — and if something looks too good to be true, it usually is.”
Fraud and Older Americans
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.
The FINRA research has disputed many of the common stereotypes surrounding older Americans who are investment fraud victims as being isolated, frail and gullible. For example, the typical profile of a financial fraudster’s victim is often an individual who is:
• Self-reliant when it comes to making financial decisions.
• Above-average in his or her financial knowledge and income.
• A college-educated male.
The influence tactics used by financial fraudsters were shown to be very sophisticated and highly effective, according to FINRA, which recommends that financial advocates rethink how to best meet the challenge of helping older Americans thwart fraudsters touting illegitimate financial and investment scams.
Types of Financial Fraud Scams
Overall, 11 percent of all respondents said they lost a significant amount of money as a result of falling victim to a financial scam. Among the different types of financial fraud identified in the study were “419” frauds (like the Nigerian email scam), lottery scams, penny stock sales, boiler room calls, pyramid schemes, and free lunch seminars that turn out to be sales pitches.
Fraud susceptibility is not limited to specific demographic or psychographic segments, the study concluded, and it is a more pervasive phenomenon than previous research suggested. The internet has significantly lowered the cost of entry for fraud perpetrators and scammers while enabling them to reach millions of potential victims quickly and easily. Effective fraud prevention must be broad the study concluded and fight fraud at its sources, while also helping provide individuals with the capability to recognize red flags that usually indicate financial fraud.
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
About David Lerner Associates
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 http://www.davidlerner.com (800) 367-3000