FINRA Foundation Survey Reveals Over 80 Percent of Respondents Are Exposed to Financial Scams
Over 40 Percent Unable to Identify Classic "Red Flags" of Fraud
WASHINGTON—The FINRA Investor Education Foundation today issued a new research report—Financial Fraud and Fraud Susceptibility in the United States—which reveals that over 80 percent of respondents have been solicited to participate in potentially fraudulent schemes, and over 40 percent of those surveyed cannot identify some classic red flags of fraud.
"When it comes to financial fraud, America is a nation at risk. 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," said FINRA Foundation President Gerri Walsh.
The FINRA Foundation's new survey of nearly 2,400 U.S. adults age 40 and older revealed that financial fraud solicitations are commonplace, many Americans are unable to spot fraudulent sales pitches, and older Americans (age 65 and older) are particularly vulnerable. Specific findings include:
- More than 8 in 10 respondents were solicited to participate in a potentially fraudulent offer. And 11 percent of all respondents lost a significant amount of money after engaging with an offer.
- More than 4 in 10 respondents found an annual return of 110 percent for an investment appealing, and 43 percent found "fully guaranteed" investments to be appealing.
- Americans age 65 and older are more likely to be targeted by fraudsters and more likely to lose money once targeted.
Con artists are adept at using a variety of tactics to get their hands on consumers' money. The FINRA Foundation's survey found that 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 email from another country offering a large amount of money in exchange for an initial deposit or fee.
Financial Fraud and Fraud Susceptibility in the United States also found that under-reporting of fraud is a major concern. Although 11 percent of those surveyed lost money in a likely fraudulent activity, only 4 percent admitted to being a victim of fraud when asked directly—an estimated under-reporting rate of over 60 percent.
The FINRA Foundation's report is based on an online survey of 2,364 Americans age 40 and over that was conducted between September 28, 2012, and October 4, 2012. For analysis purposes, the total sample was weighted to match 2010 Census distributions for ethnicity and gender. The full research report, methodology and questionnaire are available at http://www.saveandinvest.org/FraudCenter/Research.
The FINRA Investor Education Foundation supports innovative research and educational projects that give underserved Americans the knowledge, skills and tools necessary for financial success throughout life. For details about grant programs and other FINRA Foundation initiatives, visit www.finrafoundation.org.