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Financial Fraud: Do You Believe that It Could Happen to You?

FOR IMMEDIATE RELEASE
March 6, 2013

Financial Fraud: Do You Believe that It Could Happen to You?

Do you know of someone who has been a victim of financial fraud? Nationally the problem of consumer fraud is huge. The Financial Fraud Research Center in in their report "Scams, Schemes & Swindles: A Review of Consumer Financial Fraud Research" estimates the annual cost of consumer financial fraud in the U.S. as approximately $50 billion." What does this mean for the average consumer? It's hard to say as losses vary tremendously. However, the FTC estimates the median amount loss in 2012 was $537.

It's not only the financial amount loss that hurts victims; victims also lose time and may be affected psychologically. One study reported that 29% of investment fraud victims experienced major depression following the fraud.

Fraud is often under-reported. Unfortunately most people fail to report fraud when it happens to them. According to an AARP study, "Only 1 in 4 investment fraud victims, having lost between $1,000 and $25,000 in a scam, admitted to having been scammed or swindled in the preceding 3 years. "

You may think that you are safe from financial fraud because of your age, education level, gender, or race. However, the research does not support this. Contrary to popular belief, fraud doesn't just happen to lonely, uneducated, older women.

By reviewing 20 years of fraud research, the Financial Fraud Research Center has compiled a typical victim profile for both investment fraud and for lottery scam fraud. Investment fraud victims are more likely to be "male, relatively wealthy, risk-taking, interested in persuasive statements, open to sales situations, and better educated than the general public." Does this sound like you? If so, remember to be extra careful when investing as you may be targeted by investment cons.

Lottery scam victims are "more likely to be female, older, single, lower income, interested in persuasive statements, open to sales situations, and less educated than the general public." If you feel that you don't fit in either group, keep in mind that several national studies indicate that young adults are more likely to be victims than older adults. Why does this research matter? Because once you believe you could be a fraud victim, then I think you'll do a better job of protecting yourself.

Con artists are good at what they do. Take steps to protect yourself by following these tips.

Before investing in any product, ask questions. Take time to check that both the investment and the person selling the investment are legitimate. Check that the investment option you're interested in is registered with Illinois Securities Department. Call 1-800-628-7937 or visit their website at http://www.cyberdriveillinois.com/departments/securities/. If it is not registered, then this is likely a fake investment.

Also, people selling investments must be licensed. Visit FINRA BrokerCheck (http://brokercheck.finra.org) or call FINRA at (888) 295-7422 to be sure the person you're dealing with is licensed.

If you are feeling pressured to do something, end the conversation. Don't take any action or give any personal information about yourself. Be wary of anyone urging you to act fast, without time to think.

Talk to someone else first. Be especially careful about anything that you're asked to keep secret. This is a definite red-flag for fraud. Another red-flag is if someone asks you to send money in order to receive a prize or special offer.

And last but not least, if it sounds too good to be true, it probably is. If you would like more assistance evaluating whether or not an investment is likely to be a fraud, check out FINRA's Investment Scam Meter at http://apps.finra.org/meters/1/scammeter.aspx . This four question tool provides a good overview of investment "red flags" that can be likely to lead to fraud.

If you have been a victim of fraud, report it to your local police as well as file a complaint with the Illinois Attorney General's office; call 800-243-0618 or complete a form at http://illinoisattorneygeneral.gov/consumers/filecomplaint.html. Not only may these organizations be able to help recover the money you lost, their efforts also may stop the fraud from continuing.


Source: Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension, March 2013