Low interest rates, a worrisome economy and a rambunctious stock market have set the 1995 stage for a longtime American pastime: ripping off senior citizens in times of financial uncertainty.
Unscrupulous salespeople are targeting more and more older Americans, urging them to pay too much for investments, buy inappropriate financial vehicles or submit to outright scams.
They're aware that seniors have more money set aside than most people and are always seeking higher returns because they're on fixed incomes. Many trusting folks have neglected to keep up with money trends, rendering them vulnerable to con artists.
Since this financial mistreatment could next affect you, your parents or grandparents, friends or neighbors, it's everyone's problem.
"Some elderly people who have been ripped off again and again by scam artists never seem to learn," observed Robert Wilmouth, president of the Chicago-based National Futures Association, a futures industry body with authority to suspend disreputable salespeople.
Many older Americans naively "see a ray of hope and sunshine" in a hustler who makes them believe they can make a 20 percent return on their money overnight, he said.
One trick involves telephoning 10 seniors and telling them the price of a commodity such as gold is going to drop, then phoning 10 others to tell them the price will rise, said Mr. Wilmouth. Whichever way gold actually does move, the scam artist phones back those who had received the "correct" prediction and crows about his accuracy. After building a track record of fulfilled predictions, he announces, "Now is the time to strike," and urges them to invest with him.
"Senior citizens tend to have a more trusting nature than younger people," noted Barbara Roper, director of investor protection for Consumer Federation of America, a group of 240 state, local and national consumer organizations. "They also often receive large one-time lump sum payments."
Investments directly affect the quality of seniors' lives and they don't have much time to recover from mistakes. There are concerns even with the nation's "legitimate" investment firms, Ms. Roper said.
Some problems include the use of misleading titles that portray commissioned salespeople as impartial advisers; sale of uninsured investments such as mutual funds on the premises of banks without proper explanation; poor quality of oral and written disclosure of investments; hidden derivative securities within funds touted as safe; and account statements that don't clearly show performance, fees and commissions.
"The names of seniors wind up on all sorts of cold-calling lists, so they must be on guard," warned Mark Griffin, director of the Utah Division of Securities and a member of the North American Securities Administrators Association.
For example, some banks lend their lists of certificate-of-deposit expirations to firms selling mutual funds, he said. Older Americans will often receive calls from fund salespeople misrepresenting themselves as employees of the bank.
Don't feel you must stay on the telephone line with anyone calling you with an investment. Never invest on the telephone with someone you don't know or permit yourself to be pressured into buying quickly. Any reputable salesperson will provide his full name, address and telephone number and be willing to follow up with written materials. Check out companies with your local consumer protection agency, state attorney general, Better Business Bureau or the appropriate investment governing body.
Never put money in anything you don't fully understand. Beware of guaranteed spectacular returns or promises that you can't lose money. Don't be wooed by warm conversation.
"One telemarketer convicted of fraud later told us he would call senior citizens six or seven times without selling anything, just chatting about their families since he knew they were home all day," explained Holly Cherico, spokeswoman for the Council of Better Business Bureaus, Arlington, Va. After winning their confidence, the crook would suddenly offer "the deal of a lifetime," saying it was because they'd become good friends.