by Anna Rushton, Outreach Coordinator for the South Carolina Securities Division
Sadly, fraud victimization seems to go hand in hand with social isolation—whether involuntary or voluntary. Research has found that people are more likely to be victimized if they are isolated and do not have anyone to discuss an investment proposal with. As a result, those who engaged scammers and lost money are less likely to be married and more likely to be widowed or divorced. Common scams can range from Ponzi schemes to identity theft.
While financial abuse can happen at any time, perpetrators often strike during times in a senior’s life when they may be more vulnerable, such as during a health crisis or after the death of a loved one. Scammers often gather personal details from obituaries and social media posts and use this information to target their victims. Some also may attempt to exploit trust within seniors’ social and support groups to become more involved in their lives.
When seniors and others are socially isolated, they increasingly turn to the internet for social interaction and more frequently depend on the internet as a social outlet and are increasingly relying on online services for shopping, banking, and the initiation of electronic payments that may have otherwise been paid in person. Research has found that people who are contacted by scammers through social media or through a pop-up message on a website are more likely to engage with the scammer and lose more money than those who were targeted by phone or email. Loneliness also leads some to look for companionship online. As a result, online romance scams have become increasingly pervasive because the scammers can easily use the anonymity of the internet to mask their deceptive intentions.
How to Protect Yourself from Investment Fraud
- Ask for input from others. Scammers try to isolate their victims. Do not be afraid to contact a friend, or a company or organization you trust for advice.
- Do additional research before sending any money.One easy action: do an internet search to see if the website or pitch has been flagged as fraudulent or potentially fraudulent by news organizations or members of the public. Make sure you understand the investment, the risk attached, and the company’s history. And remember, if the investment sounds too good to be true, it probably is!
- Focus on your financial health and literacy.Individuals under financial strain and those with lower levels of financial literacy may be more susceptible to scammers.
- Knowledge is power. Knowing about scams and scammer tactics can be your best defense in successfully reducing the impact of scams. Keep up with the latest frauds by subscribing to consumer newsletters and seeking out information on current scams. Fraudsters rely on the fact that many people simply do not bother to investigate before they invest. Savvy investors take the time to do their own independent research and talk to friends and family first before investing.
- Never be afraid to complain.If you suspect fraud or a questionable practice and the explanations that you receive are not satisfactory, do not let embarrassment or concern that you will be judged incapable of handling your own affairs prevent you from filing a complaint with the SEC, FINRA, or the Securities Division of the South Carolina Office of the Attorney General.
- Check registration status. Before investing any money, contact the Securities Division to check registration status. A large number of securities schemes are perpetrated by unregistered and unlicensed individuals. Investors can contact the South Carolina Securities Division at (803) 734-9916 to research a person or firm offering securities or investment advice in South Carolina.
The South Carolina Securities Division has provided this information as a service to investors. It is neither a legal interpretation nor a statement of policy of the Office of the South Carolina Attorney General, the State of South Carolina, or any division thereof. For questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.
For more information, please contact the South Carolina Securities Division at 803-734-9916.
