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Don’t be a Victim of Investment Fraud

Posted on October 12, 2017

There’s a few simple rules you can follow to avoid being a victim of investment fraud, the AARP reports.

First, let’s look at who is more likely to become a victim.

A new survey by the AARP Fraud Watch Network finds that the most susceptible typically exhibit an unusually high degree of confidence in unregulated investments and tend to trade more actively than the general investor population. 

More of the investment scam victims also reported that they value wealth accumulation as a significant measure of success in life and acknowledged being open to unsolicited telephone and email sales pitches.

The AARP survey found stark differences between the past investment fraud victims and regular investors in three areas:

Psychological Mindset – More victims reported preferring unregulated investments, valuing wealth accumulation as a measure of success in life, being open to sales pitches, being willing to take risks, and describing themselves as ideologically conservative.

Behavioral Characteristics – Victims reported that they more frequently receive targeted phone calls and emails from brokers, they make five or more investment decisions each year, and more of them respond to remote sales pitches – those delivered via telephone, email or television commercials.

Demographics – Somewhat replicating the previous industry studies, higher percentages of victims were found to be of older age, male, married and military veterans.

Avoid becoming a victim by following these AARP investor protection tips:

  1. Do:  Invest only with registered advisors and investments.
  2. Don't:  Make an investment decision based solely on a TV ad, a telemarketing call or an email.
  3. Do:  Put yourself on the Do Not Call list.
  4. Do:  Get a telephone call blocking system to screen out potential scammers.
  5. Do:  Limit the amount of personal information you give to salespersons until you verify their credentials.
  6. Don't:  Make an investment decision when you are under stress.  For example, when you've recently experienced a stressful life event such as the loss of a job, an illness or death of a loved one.

We’ll add one more: look to your credit union for guidance, as a financial partner you can trust.

Credit unions are not-for-profit, and therefore the professionals at your CU are not looking to make money off of you. They will not push you into investments that aren’t in your best interests.

Your CU can also help guide your decision-making on investment options you discover online, from friends or elsewhere in the world. Sometimes, running your options by an unbiased, knowledgeable partner can really help you to make the right choices.