Free Lunch Scams Cooking Up Problems for Senior Investors
"Free lunch" scams are a continuing problem, particularly for seniors. According to FINRA, approximately 80 percent of seniors receive at least one invitation to a "free lunch seminar" each year. Many seniors receive more than one invitation. Though they’re often marketed as "seminars" and "educational workshops," at which "nothing will be sold," these claims are patently false.
"There is no such thing as a free lunch," stated Connecticut Banking Commissioner Howard F. Pitkin. "Oftentimes at these investment seminars, the presenter is ultimately interested in selling a product or signing up new clients."
Since at least 2007, regulators have warned investors that most "free lunch" presentations are from firms that have been found to neglect their supervisory duties, and a large percentage feature falsified or misleading claims about unsuitable products.
"Seniors attending these seminars are often putting themselves in financial danger," Office of Financial and Insurance Regulation (OFIR) Commissioner Ken Ross told the AARP. "We've found that seniors are often exposed to misrepresentations, high-pressure sales tactics and outright fraud."
To help educate seniors on the dangers of "free lunch" scams, the AARP is offering a variety of seminars across the country that help seniors recognize and avoid investment scams. The organization also recently launched a Free Lunch Seminar Monitor program, which organizes volunteers to attend the"free lunch seminars" and then report back on the seminars’ activities. The program’s volunteers also have generated a checklist, which seniors can use to help them determine whether or not a "seminar" is actually a scam.
The checklist includes questions such as: "Did the speaker use a title that suggested he or she was particularly qualified to advise older investors?" and "Did you feel pressured to make an immediate decision?"
While investors should think twice before attending any workshop or seminar that offers a "free" meal, those who decide to attend should consider using the checklist to catalogue their impressions. (The checklist can be found here.) And, of course, before you part with any of your money or follow any presenter’s advice, verify the presenter’s information with your state securities regulator, FINRA, or the SEC.