Bloomberg: One of Five Americans Older than 65 Have Been Victims of Fraud

NewImage.jpgThe latest issue of Bloomberg Businessweek reports that financial abuse of older people is increasing as more seniors are being lured into investments that are unsuitable or outright swindles.

According to the Washington-based Investor Protection Trust, a nonprofit that promotes shareholder education, one out of five Americans older than 65 has been the victim of a financial scam.  Which means more than 7.3 million seniors have been taken advantage of financially through inappropriate investments, high fees, or fraud, and comes at a cost of more than $2.6 billion a year says a study from MetLife Mature Market Institute.

Bloomberg reports that veterans looking for extra cash to supplement savings may be a specific target.

Several groups offer to help former soldiers sign up for a $2,000-a-month needs-based benefit from the Department of Veterans Affairs in Washington. While the program is real, some groups are telling seniors in order to qualify they have to first liquidate their assets and purchase a private annuity, which usually comes with a hefty sales commission.

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Kent Smetters, a professor of insurance and risk management at the University of Pennsylvania’s Wharton School in Philadelphia tells Bloomberg another unsuitable practice affecting senior citizens involves taking out a reverse mortgage and then locking up the proceeds in a multi-year annuity, even though a ban has been in place since 2008 on cross-selling the mortgages with other financial products.

Senior Swindles Increase, Often Perpetrated by Elderly Scammers

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  • While cross-selling and a senior purchasing an inappropriate investment could be related, that probably is rare. Even though I do not hold to the position that all cross-selling results in appropriate investing, it sure is susceptible to it. However, eliminating it does not take care of collusion which results in the same basic issues.

    My objection to cross-selling is the appearance of impropriety. By eliminating it, all participating industries are better off. Yes, in a very few cases it will eliminate some inappropriate sales of investments which greatly hurt the reverse mortgage industry more it seems than the industry through which the investment was sold (odd how that works).

    But cross-selling will not eliminate inappropriate investing by seniors. Sorry, that just is not the case. However, seniors who are flush with cash are prone to making poor investment decisions unless they have done so most of their adult lives. Even then, I have met some who have never seen a poor investment that they would not buy.

    Unlike California legislation which wants to tie everything together for twelve months (or more depending on definitions), once cross-selling is eliminated, we should fight to have each transaction stand on its own and not be linked together unless there is proven collusion.

  • There is plenty of senior financial fraud, but I don't believe the one in five figure for a minute. Pure exaggeration and phony parameters, probably.

  • While cross-selling and a senior purchasing an inappropriate investment could be related, that probably is rare. Even though I do not hold to the position that all cross-selling results in appropriate investing, it sure is susceptible to it. However, eliminating it does not take care of collusion which results in the same basic issues.rnrnMy objection to cross-selling is the appearance of impropriety. By eliminating it, all participating industries are better off. Yes, in a very few cases it will eliminate some inappropriate sales of investments which greatly hurt the reverse mortgage industry more it seems than the industry through which the investment was sold (odd how that works).rnrnBut cross-selling will not eliminate inappropriate investing by seniors. Sorry, that just is not the case. However, seniors who are flush with cash are prone to making poor investment decisions unless they have done so most of their adult lives. Even then, I have met some who have never seen a poor investment that they would not buy.rnrnUnlike California legislation which wants to tie everything together for twelve months (or more depending on definitions), once cross-selling is eliminated, we should fight to have each transaction stand on its own and not be linked together unless there is proven collusion.rn

  • There is plenty of senior financial fraud, but I don’t believe the one in five figure for a minute. Pure exaggeration and phony parameters, probably.

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