YOUR MONEY MATTERS
Avoid Fraud and Scams
Office of Investor Education and Advocacy
HOW TO AVOID FRAUD
•
Seniors are often the target of fraud.
However, with some basic understanding
of how scam artists work, you can avoid
fraud and protect your hard-earned money.
Learning how to invest safely can make a
huge difference in your retirement years.
Seniors are particularly vulnerable to scam
artists who are “nice” or attempt to develop
a false bond of friendship. Scam artists prey
on seniors who are polite and have difficulty
saying “no” or feel indebted to someone who
has provided unsolicited investment advice. •
WHAT CAN I DO TO AVOID BEING
SCAMMED?
• Ask questions and check out the
answers. Fraudsters rely on the fact
that many people simply don’t bother
to investigate before they invest. It’s
not enough to ask a promoter for more
information or for references—fraud-
sters have no incentive to set you
straight. Savvy investors take the time
to do their own independent research
and talk to friends and family first
before investing. Make sure you under-
stand the investment, the risk attached,
and the company’s history. And
remember, if the investment sounds too
good to be true, it is!
30 HimPower November/December 2018
•
Research the company before you invest.
You’ll want to fully understand the
company’s business and its products or
services before investing. Before buying
any stock, check out the company’s
financial statements by using the SEC’s
EDGAR database, or contact your state
securities regulator. Remember that
unsolicited email message board post-
ings, and company news releases should
never be used as the sole basis for your
investment decisions.
Know the investment professional.
Spend some time checking out the
person touting the investment before
you invest—even if you already know
the person socially. Always find out
whether the person who contacts you is
licensed to sell securities in your state
and whether he or she or their firms
have had any trouble with regulators or
other investors.
Never judge a person’s integrity by how
he or she sounds. Successful con artists
know how to sound professional. They
can make even the flimsiest deal sound
like a “sure thing.” Con artists know
that the appearance of professionalism
combined with polite manners or over-
tures of friendship may lead many older
investors to accept their advice.