The Center for Retirement Research is warning about an ever-increasing problem of investment scams directed at Baby Boomers.
In a new research brief, the center based at Boston College said the scams have increased over the last decade because of the Internet and that “this trend will likely continue as scammers target aging baby boomers, who have substantial assets and face cognitive decline.”
The center added: “According to the Federal Trade Commission (FTC), Americans in 2010 submitted more than 1 million complaints about financial and other fraud – up 35 percent in just three years. But these data do not fully represent fraud’s pervasiveness, because researchers say that it often goes unreported to the authorities.”
The center’s worries center on two fronts: That the Boomer generation is relatively wealthy and that, as we age, are decision making may be compromised by people who don’t have the best intentions.
“When money is combined with cognitive decline among aging baby boomers, it can be a recipe for fraud,” said the center brief.
According to the center, Baby boomers are accumulating inheritances from their parents, adding to substantial home equity and a lifetime of saving for retirement as the first generation to experience the transition from traditional pensions to 401(k) accounts.
The center offered a list of “red flags” that might indicate investment fraud:
- Look too good to be true.
- Offer a very high or “guaranteed” return at “no risk” to the investor.
- Require an urgent response or cash payment.
- Charge a steep upfront fee in return for making more money on an unspecified date.
- Suggest recipients do not tell family members or friends about the offer.
- Lure prospective investors with a “free lunch.”
- Come unsolicited over the Internet, are of unknown origin, or come from overseas.
- Instill fear that a failure to act would be very costly.
- Cannot be questioned, inspected, or checked out further.
- Are so complex that they are difficult or impossible to understand.
Story credit: The Examiner
Category: Money & Work