FILE - This April 2017, file photo provided by NerdWallet shows Liz Weston, a columnist for personal finance website NerdWallet.com. (NerdWallet via AP, File)
Believing that fraud can’t happen to us — because we’re too smart, logical or informed — may make us more vulnerable. Successful scam artists skillfully overcome our defenses and get us into emotional states that override logical thinking, says Kathy Stokes, AARP’s director of fraud prevention programs.
Various studies have tried to identify characteristics that make people more susceptible to fraud. But that can create a “blame the victim” mentality and give the rest of us a false sense of security, she says.
“I’d say the majority of people are unwittingly deceived through no other reason than the criminals are good at what they do,” Stokes says.
GO WHERE THE MONEY IS
One thing is certain: Older people are more likely to have money. People 50 and older control 83 percent of the wealth in the U.S.
One way to protect that money is to cut down on our exposure to sales pitches, fraud experts say. AARP studies have found investment fraud victims were more likely than other investors to respond to sales pitches delivered by phone, email or television. They also were more likely to send away for free promotional materials, enter drawings, attend free lunch seminars and read all their mail.
To reduce your exposure to potential scams , consider the following steps:
• Put yourself on the federal Do Not Call list.
• Sign up for a telephone call blocking system, such as NoMoRobo, and let unknown callers go to voicemail.
• If you give out personal information, be sure you know who you are giving it to, and why they need it.
• Don’t make investment decisions based solely on a phone or email pitch or an ad.
OVERCONFIDENCE INCREASES RISK
Overconfidence can lead people to trade too aggressively (convinced that they can beat the market), put off saving for retirement (convinced they can catch up later) and ignore warning signs of fraud (convinced that they can’t be victimized).
The risk may increase with age. Studies have found that our financial decision-making abilities peak by our early 50s and decline, sometimes precipitously, after that. But our confidence in our abilities doesn’t drop — in fact, many become more self-assured.
“So as we age, this gap grows between actual and perceived ability to make good decisions,” says Chris Heye, co-founder of Whealthcare Planning, a site that helps older adults and financial advisers plan for age-related changes.
People of any age can combat overconfidence by getting a second opinion on financial decisions from a trusted adviser or money-smart friend. As we get older, it can also make sense to consolidate our accounts so there are fewer to monitor and switch to investments that require less hands-on management, such as target date mutual funds.
LONELINESS CAN BE EXPENSIVE
The Federal Trade Commission says romance scams cost people more money than any other type of consumer fraud in 2018. Reports of these scams more than doubled between 2015 and 2018, while reported losses more than quadrupled to $143 million.
The scams often start via dating apps, social media or email. The con artists build trust over many weeks or even months before asking their targets to reveal personal data or send money for an “emergency.”
A reverse-image search using TinEye or Google Images may show if an imposter is using someone else’s photo, while sites such as Romancescams.org keep track of known scammers’ email addresses.
But perhaps the best inoculation against being defrauded is to talk to someone you trust about the situation before you send any money.
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