America is a nation at risk of financial fraud, with 80 percent of surveyed consumers having been solicited with what was probably an investment scam, according to the Finra Investor Education Foundation.
The foundation, which serves as an education and research source for the underserved population for financial services, released the Financial Fraud and Fraud Susceptibility in the United States study today. It revealed that 80 percent of those surveyed had been solicited for what was probably a fraudulent investor scheme.
At the same time, 40 percent could not identify red flags of financial fraud such as promises of huge returns or guaranteed returns. The survey included 2,364 Americans age 40 and older.
Forty percent of those surveyed found promised returns of 110 percent to be attractive and 43 percent said “fully guaranteed” returns were attractive.
Financial fraud is vastly underreported, according to the Foundation. Eleven percent of those surveyed said they had lost substantial amounts of money in a financial scheme that was probably fraudulent, but only 4 percent admitted to being victims of fraud, the study says.
Americans age 65 and older are more likely to be targeted by fraudsters and more likely to lose money once targeted, the Foundation said.
Fraudulent solicitations are commonplace, the Foundation says. The study showed 64 percent of those surveyed had been invited to an "educational" investment meeting that was likely a sales pitch. Additionally, 67 percent of respondents said they had received an e-mail from another country offering a large amount of money in exchange for an initial deposit or fee.
“Fraudsters are very effective at reaching and enticing vulnerable populations into turning over their money, and far too few Americans are able to detect likely fraudulent sales pitches," says Gerry Walsh, FINRA Foundation president.