The New Rules of Retirement

Chapter 13Avoiding Financial Scams and Abuse

The world is rife with financial scams and abuse, and you're a target. Those are facts we all need to acknowledge. Unfortunately, many people don't know enough about the world of financial scams, to their detriment. Even people who think they know the facts of financial fraud and abuse don't, especially those most likely to be targets. You need to understand financial fraud and abuse and take precautions before it is a problem for you or those you care about.

Most people don't even realize when they've been targeted for or subjected to fraud and abuse, according to a 2015 survey done for FINRA, the Financial Industry Regulatory Authority. The survey asked people if they'd ever been defrauded or targeted for fraud, and most answered in the negative. But the survey also asked people if they'd ever been approached about or participated in certain types of financial transactions, and 84 percent said they had. The financial transactions described in the questions were classic and widespread scams and frauds. That means most people, 84 percent, were targeted for fraud or abuse and didn't realize it.

Several key factors make a person more likely to be a target of fraud and abuse.

Age, of course, makes one a target. That's partly because as people age they tend to become more trusting and optimistic. They're more likely to believe the best results will occur from actions, and that makes them vulnerable to sales pitches.

In addition, cognitive ...