The FINRA Investor Education Foundation issued a new research report, Financial Fraud and Fraud Susceptibility in the United States, based on a survey of nearly 2,400 U.S. adults age 40 and older. The report reveals that over 80 percent of respondents have been solicited to participate in potentially fraudulent schemes, and over 40 percent cannot identify some classic red flags of fraud. According to experts, this fraud activity may be costing Americans about $50 billion annually (view the infographic).
"When it comes to financial fraud, America is a nation at risk," said FINRA Foundation President Gerri Walsh. "Fraudsters are very effective at reaching and enticing vulnerable populations into turning over their money. And far too few Americans are able to detect likely fraudulent sales pitches."
Survey results revealed that financial fraud solicitations are commonplace, and Americans age 65 and older are particularly vulnerable. Specific findings indicate that:
- over 80 percent of respondents were solicited to participate in a potentially fraudulent offer, and 11 percent lost a significant amount of money after engaging with an offer;
- when shown a sample fraud pitch, more than 40 percent found an annual return of 110 percent for an investment appealing, and 43 percent found "fully guaranteed" investments to be appealing;
- Americans age 65 and older are more likely than Americans in their forties to be targeted by fraudsters and more likely to lose money once targeted;
- about 64 percent of those surveyed had been invited to an "educational" investment meeting that was likely a sales pitch, a favored tactic used by con artists; and
- some 67 percent of respondents said they had received an email from another country offering a large amount of money in exchange for an initial deposit or fee.
The study also found that under-reporting of fraud is a major concern. Although 11 percent of those surveyed lost money in a likely fraudulent activity, only 4 percent admitted to being a victim of fraud when asked directly. This is an estimated under-reporting rate of over 60 percent.
The full research report, methodology and questionnaire are available on the FINRA Investor Education Foundation's website SaveAndInvest.org.
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