In recognition of World Elder Abuse Awareness Day, June 15, the Commodity Futures Trading Commission reminds the public that fraud criminals target older adults because they have typically acquired more assets through a lifetime of saving and investing. However, by being aware of common frauds and sharing information, you may be able to both avoid fraud and stop it from harming others.
Fraud can happen to anyone. It’s not about being gullible or incapable. Fraudsters use lies to exploit blind spots and trigger emotional reactions in their targets that nudge them into financial products they don’t truly understand or make other harmful missteps.
Dealing with major traumas and life events—such as severe changes in the health, the death of a loved one, divorce, retirement, financial setbacks, and isolation—have all been identified as increasing susceptibility to fraud. Conversely, getting a second opinion before making an investment decision, checking credentials and backgrounds, and staying current on fraud trends have been shown to reduce victimization. Interventions by family or friends also can help older adults avoid making costly mistakes.
Watch for Fraud on Social Media
Many frauds begin on social media. Fraudsters can hack profiles, create fake testimonials and profiles, and use targeted ads and discussion groups to direct their appeals to people sharing specific traits or interests. They can also use your posts and profile information to identify where you work, if you are retired, where you live, where you went to school, and your relationship status. Fraudsters then use this information to make their cons more convincing.
You should be especially cautious of anyone who approaches you on social media, dating apps, messaging apps, or through unsolicited email and wants to discuss trading or investing in digital assets, precious metals, over-the-counter foreign exchange (also called “forex” or “FX” trading), or other commodity derivative products.
Common Scams Targeting Older Adults
Precious metals scams. These scams commonly start with spam emails or videos forecasting economic collapse, government seizures, or claim to know hidden tax secrets. The messages say the only way to survive pending doom is by owning physical gold, silver, or other precious metals. Sellers push customers to use their retirement savings to buy overpriced coins. Many times, the sellers charge such high mark-ups buyers are never able to see a profit. Learn more.
Romance scams. Fraudsters commonly pose as successful people seeking friendships or romantic relationships. In a short amount of time, they are calling or texting daily, but are too shy or unable to video-chat or meet in person. Conversations eventually turn more to money and markets. The fraudsters tend to talk about their own trading successes, extravagant spending, and want to make financial plans together as couple. Once trust is built, the fraudsters offer to introduce victims to digital asset or forex trading. Learn more.
Fee scams. Fraudsters convince their victims they can earn unrealistically high profits in a short amount of time. Victims are told the more they invest, the more they can earn. Victims are shown account balances that exceed expectations, and are encouraged to invest more. But when they try to withdraw money, they must pay one fee after another such as alleged commissions, transfer fees, taxes, etc. As the supposed guaranteed profits were never real, the fraudsters steal the victim’s deposits and the additional payments. Remember, you should never have to pay more money to get your money back. Learn more.
Protect Yourself and Others
- Check to be sure the people or firms you trade with are registered with federal or state authorities. Relying on registration alone won’t protect you from fraud, but most scams involve unregistered entities, people, and products.
- Before trading forex, commodity futures, or other derivatives, check with BASIC, a free tool offered by the National Futures Association (NFA) to research the background of derivatives industry professionals.
- For virtual currency, see if the platform is registered as a money service business with the Financial Crimes Enforcement Network or with your state using the Nationwide Multistate Licensing System.
- Before paying for investment advice or trading securities, visit FINRA’s BrokerCheck.
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If Someone You Know is a Potential Victim of Fraud If you suspect that someone you know is a potential victim of fraud, don’t delay having a conversation. Be sure they understand you are coming from a place of concern. The sooner you act, the less money they are likely to lose.
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- Never make payments or give sensitive information to anyone you have only met online.
- Before making any investment, get a second opinion. Talk it over with a financial advisor, trusted friend, or family member.
- Don’t trade in markets or products you don’t fully understand.
- If you get cold calls from people pressuring you to trade or invest, just say ‘no’—then, hang up. Fraudsters are trained to keep you on the phone to gather information and wear you down. Don’t give them the chance.
- Build up your resistance. Learn more about fraud and stay current on the latest schemes through credible entities such as state and federal government or law enforcement agencies, including the CFTC, SEC, Department of Justice, Federal Trade Commission, the Consumer Financial Protection Bureau, NFA, FINRA, your state securities regulator or attorney general’s office.
- Share what you’ve learned with others, especially if they are socially isolated or have been victimized by fraud before.
This article was prepared by the Commodity Futures Trading Commission’s Office of Customer Education and Outreach. It is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. Please consult with your own legal advisor before taking any action based on this information. This advisory references non-CFTC websites and organizations. The CFTC cannot attest to the accuracy of information in those non-CFTC references. References in this article to any organizations or the use of any organization, trade, firm, or corporation name is for informational purposes only and does not constitute endorsement, recommendation, or favoring by the CFTC.