Aging Brains: More Vulnerable to Deception and Financial Fraud?
An estimated 7.3 Million people over the age of 65 have been the victims of financial fraud. That’s about 20% of all adults over 65. And, that number keeps growing. Just two years ago, in 2010, state regulators saw a 50% increase over the course of approximately12 months in investment fraud complaints and actions where victims were over 50 years of age.
Elder abuse and financial fraud isn’t on the rise only because baby boomers, retirees, and the elderly are the prime targets of con artists. Older adults are more likely be taken in by con artists and investment schemes than younger adults biologically.
The occurrence of many forms of dementia tends to increase with age, increasing the likelihood someone might take advantage of our loved ones. Alzheimer’s, for example, affects at least one in eight Americans over the age of 65. New research, however, sheds light on an additional reason why older adults fall victim to fraud.
Around 60 years of age may be the pivot point when we may become more susceptible to investment fraud because an area of the brain that is involved in doubt and skepticism becomes damaged as we age, according to a recent scientific study. Thus, we are more likely to believe false claims and less able to detect deceit, including misleading statements made in advertising and interactions.
This cognitive deficit could explain why older Americans are more likely to fall victim to investment fraud schemes like the scam in Seattle that cheated the elderly, church goers and inexperienced investors out of more than $3 million. The con artist, Stephen J. Klos, lured elderly investors from the church into the investment scheme with promises to invest their cash for them and bring in good returns. Instead, Klos used the cash for his personal benefit and lifestyle.
According to King County Prosecutor Dan Satterberg, “The defendant used his charm and influence to persuade elderly victims to invest with him." If you consider the recent study mentioned above, the older investors snagged by the scheme were likely unable to detect Klos' misleading statements. Couple a smooth talker with what seems like quality advertising and marketing pieces and
When you look at the data, it appears that the main methods for preventing investment fraud (taking your time, doing your own research, and receiving advice from an unbiased third party) become even more critical as we age.
Don’t let a polished pitch or advertising materials lure you into financial fraud. Protect yourself by learning four key ways to detect possible investment schemes in "How Brokers, Advisers and Other Financial Professionals Mislead Investors."
Adult children also can help protect their parents from fraud. For tips and information on helping your parents by preventing investment fraud before it happens, click here.