States Take Action Against Financial Scams Targeting Seniors

image The Wall Street Journal reports that fed up with purported financial advisers preying on unwitting older people, some states are passing or amending securities and criminal laws to impose “enhanced penalties” on people who commit financial crimes against seniors.

In Laws Take On Financial Scams Against Seniors, Jennifer Levitz writes that investigators from the Arkansas Securities Department last year staged an undercover sweep of one of what they call “hucksters” favorite showcases — free lunch seminars.

The investigations uncovered enoughshady practices and lead to legislators passing a law, effective July 1, that doubles the civil penalties for financial securities violations when the victim is 65 or older.  Though the state securities department can’t bring criminal complaints, it can refer such cases to the attorney general’s office. 


Similar legislation is expected to be proposed in Congress next month by Democratic Sens. Bob Casey of Pennsylvania and Herb Kohl of Wisconsin, chairman of the Senate Special Committee on Aging.

"If you target an older person in Michigan, we’re going to target you," says Ken Ross, commissioner of the Office of Financial and Insurance Regulation for the state, which also has passed legislation protecting the elderly.

Such laws, however, have drawn criticism from some legal experts who oppose singling out seniors for protection. These critics say the laws amount to reverse discrimination by implying that older people aren’t sophisticated enough to keep from being taken in by sales pitches.

I love the quote from Jonathan Macey, deputy dean of Yale Law School, who adds that an enhanced penalty law regarding seniors isn’t illegal or unconstitutional, but "I think it’s just stupid.  There are all kinds of vulnerable groups in society, like poorly educated recent immigrants, et cetera. The bad guys will just target them."

This isn’t the first time “free lunches” for seniors has come under fire.  AARP is working with regulators and its members by establishing Free Lunch Seminar Monitors.   According to AARP’s website, volunteers are asked to attend seminars and fill out a checklist to help assure that free investment seminars adhere to the guidelines set by financial regulators. 

"Every rock that we turned over seemed to have a bug or a worm crawling out underneath," says former SEC Chairman Christopher Cox. "In each of the sweeps we conducted, we found significant fraud."

Laws Take On Financial Scams Against Seniors

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  • As a tax volunteer for AARP, training and testing were required; supervision was thorough and strong. The level of tax returns distributed to the volunteers at our location was well monitored and overall the program did a very decent job of trying to help taxpayers.

    The monitoring program described above on the other hand has no training. Anyone who fills in the checklist qualifies to be a monitor? This means potentially even competitors can become AARP monitors and fill in the checklist. What about those who are unreasonably disgruntled with one firm attempting to irrationally harm others? Who thought up this idea?

    Monitors who attend meetings are instructed not to identify themselves as AARP monitors or to bring anything that would identify them as such. Anyone who cannot attend is encouraged to send in their invitations to AARP for review. One of the items on the checklist is reverse mortgages.

    By the tone of the instructions and the checklist plus the statement of former SEC Chairman Cox, the whole program seems weighted towards finding some type of problem in the presentation whether anything significant is wrong or not. While it only seems right for government agencies to monitor those they have oversight and responsibility for, this program seems to be an attempt by AARP to gain an inappropriate foothold in the oversight of the investment community.

    Can AARP be unbiased? What will they do with the information they receive? Will you be paying for one or monitors to attend your next seminar? Get ready; AARP monitoring is here.

  • I am disappointed in the theme of this article as well as the lack of specifics. It is like watching someone drink something from a glass then promptly spew it out. Gives everyone the idea that the taste is something everyone should stay away from even if the glass contained Johnnie Walker Quest.

  • Free lunch monitors?

    My reverse mortgage company abandoned free lunch (and dinner) seminars long ago because we were being victimized by “plate lickers” — seminar attendees who are there only for the free meal and had absolutely no interest in the subject matter of the seminar.

    Perhaps we should have had these free lunch monitors attend our seminars and chase away the “plate lickers.” Oh, I get it! Those weren’t “plate lickers” at our seminars — they were free lunch monitors!!

  • What a load of horse manure! This is just another case of special interests ramping up the power grab! You could help a senior save their home, safely improve monthly income, protect their assets from a nursing home stay and you would get drug through the town square because you were paid for the work or dared to advise! Guilty until proven innocent becoming the norm! Ok, some steam has been released!

  • In NY when they hold Continuing Education (CE) seminars, the presenter can ask if any one is from the NY State Ins. Dept., and they then must identify themselves. I can envision an AARP monitor, not being a fly on the wall but instead attempting to entrap the presenter or otherwise asking questions or making statements that otherwise alter the tone or direction of the original presentation. We all have been at seminars where some know it all or a highly negative person might disrupt the intended educational flow. In other words: please, no unidentified “monitors”.

  • If you read the original Levitz article, you should spot two errors.
    “A number of products sold to seniors have triggered investigations in recent months, including reverse mortgages, which can help senior tap equity into the home and be beneficial, but which can also include hidden costs. Also popular are deferred annuities, which promise future payments to the investor but which can lock up money for a decade or more.”

    I emailed Ms. Levitz and said she should run technical articles past experts. She replied, and said she had. Point being, that you have to call these journalists out in a friendly way. You could even become a future source for them. Example, I pointed out that there was a “bad law” bill before Gov. Pawlenty of MN. Sometimes it works; but we need to keep them and the polititans honest. Bug em, the squeaky wheel gets the grease, especially effective are letters from seniors in dire straits.

  • To dduck: You mentioned “hidden” costs in a reverse mortgage. What are those hidden costs. I was unaware of any hidden costs. Please respond.

  • Mduck (are we related?).
    Sorry, I was quoting the WSJ article itself. Click on the article name link to read the whole article. My point was that we (people in the financial services industry) must try to correct errors perpetrated by journalists and politicians. If nothing else, than to keep them on their toes.

  • It sure gets tiresome being accused of ripping off or misleading seniors. There aren’t any “hidden costs”. It is what it is, things are fully disclosed, this program is SO regulated, and everyone must attend counseling to confirm the facts. I’ve been in the RM business for 7 1/2 years and got into it to help people, just like most of the others I know that are in this business. Sometimes I wonder if it’s worth all the misdirected criticism.

  • Lance Jackson
    It is frustrating, but journalists are trained to root out the most egregious and negative aspects of a subject TO SELL PAPERS or whatever. All we can do is try and help them produce as accurate a story as possible. And sometimes, if you get their ear, you can slip in some positive points; after all, they are also trained to produce balanced stories.
    Example: assuming the Zickefoose story has a happy ending, your industry PR people will probably blast it to as many journalists as they know (also include Ms. Levitz).

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