Many types of retirement scams make consumers vulnerable. Retirement scams are often the most financially devastating frauds to retirees. The Federal Trade Commission (FTC) reports that roughly 10% of seniors in America have been victims of financial fraud or abuse. That’s a troubling statistic when you consider that most of these crimes go unreported because seniors don’t realize they have been taken advantage of until it’s too late.
The most common retirement scam is when a company markets itself as a retirement plan provider but fails to provide the promised services. For example, a company may take your money and promise to invest it in you, but instead uses it for its own purposes.
Some examples of retirement scams are the following:
Pension and retirement plan fraud. This type of scam occurs when an employer or financial advisor mismanages employee pension plans or 401(k)s. The Consumer Financial Protection Bureau (CFPB) reported that these schemes cost Americans more than $2 billion annually.
Annuity fraud. Annuities are complex financial products, and there are many types available. Some unscrupulous companies sell annuities with high and hidden fees, which may not be appropriate for your needs.
Investment fraud. Investment fraud involves a company using misleading information to convince investors that their investment will earn them money when, in fact, it won’t — or even worse, when it will lose their money.
A few ways to protect yourself from fraud:
- Never give out your credit card numbers, Social Security number, bank account numbers, date of birth, or card expiration dates to unknown callers.
- Resist any pressure to act quickly or make decisions right now. A legitimate salesperson will respect your decision to think it over.
- Don’t wire money based on a request made over the phone … especially overseas. You will likely never hear from the requester ever again, and you won’t get your money back.
- Be cautious with non-disclosure agreements that are added to the contracts. These are designed to prevent you from discussing the deal with other people.
- Learn more about any business that offers this arrangement to you. Visit the location, check with the Better Business Bureau, or research it online. If the business does not have a street address or the finder is never available when you call, be wary.
The best way to stay ahead of scams is to know how to identify them. The Securities and Exchange Commission, the FBI, and the Federal Trade Commission are doing their parts to keep us safe from scams and frauds. But they can only do so much. Our platform has many courses that go into depth about various types of scams and how to avoid them.
Stay educated to stay safe!