According to research from Stanford, the FINRA Foundation, and AARP, inducing older adults’ emotions increases the risk of them buying falsely advertised investments. Brokers who participate in misconduct often use the emotions of the victims to induce transactions. Seniors may be particularly susceptible to fraud.
The study examined the impact that excitement and anger has on one’s decision making when it comes to fraud. The research determined susceptibility in older adults between 65 and 85 years old and younger adults between 30 and 40 years old. After inducing excitement or anger in one group and not inducing any particular emotion in the other group, participants were shown various advertisements designated as misleading by the Federal Trade Commission. They were then asked to rate the believability of each ad and the likelihood to purchase it.
The research shows an increased intention to purchase in the older adults who had their emotions induced compared to the other group. In the younger adults, emotions did not play as much of a role in the decision to purchase. This means that heightened emotions don’t affect young adult investors as opposed to older adults.
Emotions induced were both positive and negative, but the direction of the emotion did not matter in the decision making.
At Meyer Wilson, we are dedicated to protecting elderly investors. You should be aware of the various methods fraudsters may use to induce securities transactions and investments. If you lost money due to investment misconduct, our securities fraud lawyers may be able to help you recover your losses. Call today to schedule your free consultation.