One of the most heartbreaking phenomena among senior citizens is investment fraud. Unfortunately living in Israel is not an insurance policy against financial deception. Recently I met with several victims of financial deceit to see what damage control can be done and what they could do to protect themselves in the future.
In the majority of cases that I have seen, the perpetrators weren’t skilled con artists but family or friends. Offenses include outright theft using ATM cards, online fraud, emotional manipulation and threats, and false investment “advice.”
Why are seniors such easy targets, and how can they avoid falling for financial fraud?
Social isolation
Many seniors feel socially isolated. Fraudsters take advantage of this isolation to forge friendships and gain trust. Friendly conversations can quickly lead to confidences and eventually to trusting the other person enough to ask him to withdraw some cash or read a bank statement – gradually leading the victim right into the trap.
Furthermore, once a senior realizes what’s going on, he may be reluctant to report the fraud to the authorities. He may feel foolish, or not know where to report such offenses. And if the perpetrator is a relative, neighbor, or care giver, the victim may be too afraid to do anything at all. Many fraudsters are well aware of this and continue with their activities freely. A good place for seniors to ‘come clean’ is with their financial advisor, who can help assure that other assets remain secure.
How to avoid fraud
There are several ways to avoid financial fraud:
1. understand why a fraudster may target you – and be very wary. Not every friendly person can be trusted.
2. If a financial representative offers you a deal with low risk and high returns, be careful. If it sounds too good to be true, it probably is.
3. Watch out for free events and offers. While some may be legitimate, fraudsters employ high sales pressure and make exaggerated claims about possible profits.
4. Be suspicious if you don’t get a straight answer when you ask about risks.
If you, or someone you know, have been a victim of financial fraud, the most important thing you can do is to get help before the problem gets worse.
Douglas Goldstein, CFP®, is an investment advisor and author of Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published July 16, 2014.