The phone rings, and a friendly, energetic-sounding stranger is on the line asking if you have a minute to learn how to triple your money in just six months by investing in gold and silver mines. Or maybe you get an email urging you to buy shares of a company whose stock price is sure to go through the roof. It sounds too good to be true — because it is too good to be true.
Each year, fraud siphons billions from investors, according to the North American Securities Administrators Association. This isn’t new. In the early 1920s, to name one famous example, a con artist named Charles Ponzi fleeced scores of Americans by promising lavish returns from a strange scheme to speculate in international coupons used by people in different countries to send each other return postage. In reality, Ponzi was using new investors’ money to pay off existing investors.
It’s a tactic that criminals still employ. But in today’s world, they have more — and more powerful — ways to reach ordinary people (robocalls, email, TV, social media) and convince them to hand over their money. A 2019 study by fraud experts at the University of Minnesota and AARP found that, compared to investors in general, victims of investment scams tend to be older; male; more frequent stock traders; and more likely to respond to investment pitches in unsolicited phone calls and emails, TV ads or free financial "seminars."
Investment fraudsters often target older people, whom they view as more trusting than younger generations, less likely to say "no," and more apt to have tappable assets after a lifetime of working, according to law enforcement, regulators and advocacy groups. In June 2022, for example, federal prosecutors secured their eighth conviction in connection with a multimillion-dollar fraud scheme that preyed largely on older victims, selling stock in a sham company supposedly developing cutting-edge electric and natural-gas cars.