by Vee Daniel, President and CEO, Better Business Bureau of the Upstate 

Typically, seniors are on a fixed income, but may have a large lump sum of money in the bank from savings. Scammers can take advantage of this. Be sure to beware of these scams and follow these tips to protect yourself.

Types of Scams

Pyramid Schemes

Fraudsters claim they can turn a small investment into large profits within a short period of time—but in reality, participants make money solely by recruiting new participants into the program.

Ponzi Schemes

A central fraudster or “hub” collects money from new investors and uses it to pay purported returns to earlier-stage investors—rather than investing or managing the money as promised.

Pump-and-Dump

A fraudster deliberately buys shares of a low-priced stock of a thinly traded company and then spreads false information to drum up interest in the stock and increase its stock price. The fraudster then dumps his shares at the high price and vanishes, leaving many people caught with worthless shares of stock.

Advance Fee Fraud

The scam begins with an offer to pay you an enticingly high price for worthless stock in your portfolio. To take the deal, you must send a fee in advance to pay for the service. But if you do so, you never see that money—or any of the money from the deal—again.

Affinity Fraud

Fraudsters use groups of friends, colleagues, religious groups, ethnic groups or other people who inherently trust one another to build support for the next “great investment.” This investment turns out to be a fraud and leaves a trail of broken relationships and bank accounts behind.

Tips

• Watch for red flags like: guarantees, unregistered products, overly consistent returns, complex strategies, missing documentation, account discrepancies or a pushy salesperson
• Ensure you’re dealing with a licensed and registered professional and firm. Double check with the U.S. Securities and Exchange Commission at1-800- SEC-0330
• Ask questions and get the answers you need
• Take notes during conversations with sales people
• Take your time to make decisions
• Seek independent advice or see a lawyer if there’s something you don’t understand
• Never accept a verbal agreement
• Never sign a document before reading it carefully
• Contact the BBB if you would like the reliability rating of a company or have a problem resolving fraudulent charges. Call the Elder Fraud Hotline at (864)-240-2080.