Social isolation is a leading factor contributing to financial exploitation, especially as it affects older individuals. 

Financial scams can happen to anyone at any time. But perpetrators often strike during times in a senior’s life when they might be more vulnerable, like following the death of a loved one or after a major health-related episode, according to the North American Securities Administrators Association (NASAA).

Scammers often gather personal details from obituaries and social media posts, then use this information to target their victims. Some scammers may even attempt to exploit trust within support groups to become more involved in an individual’s life.

Social Isolation and Fraud

Social isolation and diminishing cognitive ability can affect judgment and decision-making, which can make older individuals more vulnerable to financial abuse. Sadly, fraud victimization often goes hand in hand with social isolation, whether involuntary or voluntary. Common scams can range from pump-and-dump and Ponzi schemes to identity theft.

For those who are socially isolated, the internet often becomes the primary means of social interaction, as well as shopping and financial transactions. 

Research has found that those who are contacted by scammers through social media or through a pop-up message on a website are more likely to engage with the scammer and lose more money than those who are targeted by phone or email.

When scammers build trust through online interactions, they eventually shift the conversation to investment opportunities or other financial matters.

Guarding Against Investment Fraud

• Ask for input from others. Scammers try to isolate their victims. Don’t be afraid to contact a friend or an organization you trust – like the Nebraska Department of Banking and Finance – for guidance.
   
• Do additional research before sending any money. Conduct an online search to see if the website or pitch has been flagged as fraudulent or potentially fraudulent. Understand the investment, the risk attached, and the company or product’s history.
   
• Focus on your financial health and literacy. Individuals under financial strain and those with lower levels of financial awareness are generally more susceptible to scammers.
   
• Knowledge is power. Knowing about scams and scammer tactics can be your best defense. Keep up with the latest frauds by subscribing to consumer newsletters and seeking out information on current scams. Fraudsters thrive on ignorance. Conduct your own independent research before investing.
   
• Don’t be afraid to complain. If you suspect fraud or experience a questionable practice – and the explanations you receive are not sufficient – don’t hesitate to file a complaint with the Nebraska Department of Banking and Finance.

Red Flags of Fraud

• Unregistered and Unlicensed Sellers. Always check whether the person offering to sell you an investment is registered and/or licensed, even if you know them personally. Also watch for signs of impersonation schemes in which scammers pose as an actual investment professional at a registered firm. Researching the background of the individuals and firms selling you investments, including their registration/license status and disciplinary history, is easy and free. 
   
• Promises of High Returns with Little or No Risk. Avoid putting money into “can’t miss” investment opportunities or those promising “guaranteed returns.”
   
• Pressure to Buy Quickly. No reputable investment professional should push you to make an immediate decision about an investment or tell you that you must “act now.” If someone pressures you to decide on an investment without giving you time to do your research, walk away.
   
• Questionable Professional Backgrounds. Even if an investment professional is in good standing with regulators, you should be aware of potential red flags in the professional’s background. SEC, FINRA, NFA and state securities regulator records can be used to identify potential problems.

Signs of Senior Exploitation

Senior financial exploitation can be difficult to identify or recognize. Watch for warning signs, including:

• Family members or others who maneuver themselves into a senior’s life to extract money for loans or expenses;
   
• A new and overly protective friend or caregiver;
   
• Surrendering of passwords to financial accounts or control of finances to a new friend or partner;
   
• Fear or sudden change in feelings about somebody;
   
• A lack of knowledge about financial status or new reluctance to discuss financial matters;
   
• Sudden or unexplained changes in spending habits, a will, trust, or beneficiary designations;
   
• Unexplained checks, loans, or disappearance of assets (cash, valuables, securities, etc.);
   
• Suspicious signatures on checks or other documents.

How to Protect the Seniors in Your Life

Social isolation increases vulnerability to financial exploitation and fraud. It’s important to keep seniors socially and mentally engaged, especially if they’re physically limited.

• Contact. Be sure to keep in touch with older family members, friends and neighbors. Call or visit regularly. If they have the technology, send them a text or email, or connect through video conferencing. Contact lets your loved ones know they are not alone.
   
• Inform. Let your older family members know fraudsters and scammers use different methods to exploit seniors. Make them aware of the red flags of fraud and common scams. Send them updates on current scams targeting older people.
   
• Act. Individuals who suspect possible investment fraud or financial exploitation should contact their state securities regulators, as well as local Adult Protective Services agencies. 

If you are a victim of financial fraud, or know of someone who is, call the Nebraska Department of Banking and Finance at (402) 471-2171 or use the department’s online resources.