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Investor Protection Campaign for Older Investors

Investor Protection Campaign for Older Investors. Ask and Check: Using Social Influence to Combat Investment Fraud SFEPD Financial Literacy Leadership Conference – October 3, 2011. Scams are creative and consistently changing Disaster Relief Green Energy Oil & Gas “China” Stocks

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Investor Protection Campaign for Older Investors

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  1. Investor Protection Campaign for Older Investors Ask and Check: Using Social Influence to Combat Investment FraudSFEPD Financial Literacy Leadership Conference – October 3, 2011

  2. Scams are creative and consistently changing Disaster Relief Green Energy Oil & Gas “China” Stocks Bird Flu Terrorism New distribution channels are constantly being created Seminars Email & Internet Direct Mail Word of Mouth Telephone Text Messages Answering Machines Common Features of Scams

  3. Generic Proactive Long-term Skills-based Moving Beyond Warning Campaigns Investor alerts and warning campaigns have limited focus. Warning Campaigns Educating Campaigns Specific Reactive Short-term Information-based Source: OECD, Examining Consumer Policy: A Report On Consumer Information Campaigns Concerning Scams (2005)

  4. Major Research • Off the Hook (2003) USDOJ/AARP. A survey of 502 general population and 132 investment fraud victims. • Investor Fraud Study (2006) FINRA/WISE Senior Services. A survey of 499 general population and 71 investment fraud victims. • Stolen Futures (2007) AARP Washington. A survey of 258 general population and 125 investment fraud victims. • National Investor Risk Behavior Study (2007) FINRA and AARP. A survey of 371 general population and 101 investment fraud victims.

  5. Who is Most Victimized? Victim demographic trends: • Male • 55-65 years old • More financially literate • College-educated • Self reliant • Recent change in financial or health status • Risk-takers

  6. Key Risk Factors Own high-risk investments Relying on friends, family, co-workers for advice Open to new investment information Failing to check background and registration of financial professional and product Inability to spot persuasion used by fraudsters

  7. Fraud Weapon – Social Influence • Scam pitches are tailored to the “hot buttons” of targets • An investment fraud pitch is full of influence Analysis of hundreds of undercover fraud tapes for Off the Hook Again: Understanding Why the Elderly Are Victimized by Economic Fraud Crimes (2006)

  8. Investor Protection Strategy Teach Investors to: • Know that are vulnerable • Recognize persuasion techniques • Take simple, highly protective steps • Ask questions • Check answers

  9. Outsmarting Investment Fraud Curriculum • Outsmarting Investment Fraud • Understanding Fraud Risk • Recognizing Persuasion Tactics used in Fraud • Preventing Investment Fraud • Incorporates moderated presentation, videos, and learning activities & exercises • Full version runs 60 minutes; adapted to range from 20-60 minutes in different settings with varying audio-visual capacity • Call to Action: Deputizes participants to warn others

  10. Accepting Vulnerability – Risk Meter Are you a high-risk candidate for fraud? • 12 Simple Questions • Research-based • Identifies Areas of Concern for You • Provides Detailed Explanations and Resources www.SaveAndInvest.org/meters/risk

  11. 11 Resisting Influence – Spotting Persuasion Most Frequently Used Tactics Phantom Riches: Dangling the prospect of wealth; something you want but can’t have Source Credibility: It is better to deal with credible people or individuals in positions of authority Social Consensus: If everybody wants it, it must be good Reciprocity: Doing a small favor in return for a big favor Scarcity: If something is rare or scarce, it must be more valuable

  12. Smart Shopping Network

  13. Preventing Fraud – Ask and Check • Those who counter-argue and actively question a communication are less persuaded • Interviews of cons reveal that they do not like to be questioned • Ask and check the registration status of the professional and investment. • ASK if they are licensed to sell the investment and if the product is registered • CHECK that they are licensed and the product is registered – SaveAndInvest.org or (888) 295-7422

  14. Curriculum Changed Behavior Those who had been to the OIF seminar responded positively to the fraud appeal 50% less frequently than those who had not.

  15. Campaign Partners FINRA Investor Education Foundation AARP U.S. Securities & Exchange Commission State Securities Regulators – Alabama, Arizona, Colorado, Florida, Maine, North Carolina, Pennsylvania, Vermont, West Virginia and Washington Grassroots Organizations – BetterInvesting, SAIF, Seniors vs. Crime, Crime Prevention Associations, others

  16. Free Resources • Partner Toolkit • Curriculum CD • Flip Charts • Documentary DVD • Handouts • Fighting Fraud 101 • Investor Kits • Playing Cards

  17. Trick$ of the Trade

  18. Before You Invest, Ask and CheckSaveAndInvest.orgContact: Christine Kiefferchristine.kieffer@finra.org or (202) 728-6970

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