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ASPIRA Association shares… How to avoid being a victim of financial fraud


  Do you know someone who has fallen victim in a fraudulent investment sales pitch? Chances are that you do. As last century’s legendary bank robber, Willie Sutton, said: the fraudsters usually go “where the money is.” That means that fraudsters target citizens who are retired or who are about to retire, as well as baby boomers who have been accumulating a big sum of money through their 401(k) retirement plans and their personal bank accounts.  

 The reality is that we are all at risk. Nevertheless, you can help protect your family and friends by recognizing how financial fraudsters work and by reporting fraudulent investment sales pitches or a real scam to the authorities. The key is to recognize an investment offer that sounds “too good to be true.” Fraudsters are masters of persuasion and adapt their pitches to the economic profiles of their victims. They may ask their victims casual questions about their health, family, political beliefs, hobbies, or previous employments. Once they identify a victim’s weak points, they will overwhelm them with an array of tactics that would leave even the most astute person confused. Some of the most common tactics are:

•The “phantom riches” tactic: This tactic tries to persuade you that with “this investment” you will obtain something you want but cannot have. For example, a fraudster might guarantee you that “the oil wells (in X, Y place) will produce an income of $6,800 monthly, guaranteed!”

•The “credibility source” tactic: This tactic tries to achieve credibility by means of claiming to belong to a prestigious firm or having a “certain” experience or special connection. For example, a fraudster might say, “Believe me, being the vice president of X,Y firm I would not sell an investment that would not yield earnings.”

•The “social consensus” tactic: This tactic tries to lead you to believe that other wise investors have invested already. For example, a fraudster might say, “This is how So-and-So started. I know it is a lot of money but I am investing also, as well as my mom, half of her church, and it is worth every penny.”

  Do you recognize some of this tactics? Here are a few strategies to counteract them:

•Finish the conversation: Practice saying “no.” Simply say to the “investor” that called you: “Sorry, but I am not interested. Thank you for calling, good-bye.” Or say, “Sorry, but I do not make decisions without consulting ____.” Fill in the blank with whomever you wish, your partner, son, lawyer, or financial consultant.
  For more information and examples on this topic, see “Resources for a better financial future” on the Web site at http://www.aspira.org/ (The Aspira Association).

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