When Ben and Ida received an invitation for a complimentary gourmet meal if they attended an investment seminar, they learned the hard way that there is no such thing as a free lunch. Promised a guaranteed income on an investment, the senior couple opened an account with the sponsoring firm, and got bilked out of thousands of dollars. They are not alone.

A survey by the North American Securities Administrators Association (NASAA) shows senior investment fraud accounts for nearly 50% of all complaints received by state securities regulators. That number is up from the 2005 survey, when 28% percent of fraud reports involved the elderly. The financial industry is littered with slick schemes that result in broken dreams for seniors who take the bait. Stories of seniors losing their life savings are far too abundant. Seniors are being targeted through the internet, mail, phone, in-home visits, and free "financial seminars" specifically tailored to large groups of seniors, says Bob Webster, Director of Communications for NASSA. There are many reasons seniors fall victim to fraud, including:

• Being too trusting, and too good mannered to be rude
• Wanting a better rate of return on their money
• Believing the salesperson is nice, friendly and caring
• Being impressed with fancy credential and titles

These titles can serve as an easy way for an unscrupulous sales agent or adviser to gain a senior's trust, which is the first step in a successful fraud," says Webster. "It is exceedingly difficult for prospective investors - particularly senior citizens - to determine whether a particular designation represents a meaningful credential by the agent or simply an empty marketing device." Financial predators use fear tactics to instill fear in seniors of running out of money and becoming a burden to their families. They inspire distrust in seniors of family members concerning their finances to keep seniors from disclosing the fraud. And they prey upon the loneliness and isolation, and availability of some retired or widowed seniors. How do you know if a potential investment is legit? Webster says to contact your state's securities regulator to see if the salesperson is licensed in your state to sell the security and if the security is licensed for sale in your state. "Usually investments that guarantee or promise high returns for little or no risk are signs of trouble ahead," he says. Investment scams can take many shapes. If it didn't sound good, seniors wouldn't give it a second

thought! Whatever the enticing investment, scammers use specific tactics to get seniors hooked. Be cautious of these phrases:

•"Your profit is guaranteed."
•"It's an amazingly high rate of return."
•"There's no risk."
•"You can get in on the ground floor."
•"You would be a fool to pass this by."
•"This offer is only available today."

Webster adds, "Remember, if it sounds too good to be true, it usually is.

Precautions to Take

Most investments are some form of securities that must be registered with the state securities regulator or with the Securities and Exchange Commission (SEC). Check to see if the investment opportunity is registered by contacting your state securities regulator. If the potential investment is not properly registered, do not invest.

Check the person. Is the person properly licensed with the state or with the SEC to sell this product? If not, beware. Is this person a broker, licensed to buy and sell stocks, bonds and other securities, or with an investment adviser, someone who is paid to provide advice about investing in securities but is not licensed to sell them?

Check the history. Does the person or their firms have had any complaints filed against them with regulators? Those who do business with an unlicensed securities broker or a firm that later goes out of business, may have no way to recover money. One way caregivers can help protect their elderly loved ones from investment fraud is to strive for an open, two-way communication when it comes to finances. Make sure the loved one is comfortable talking about money honestly and openly without fear of reprisal. If possible, have them turn to you, or a trusted financial advisor or lawyer before making any investment. If an investor is real, he will have no problem speaking to his client's family member before taking the senior's money.

For more articles on caring for aging and elderly parents, visit http://www.agingcare.com.
For more articles on caring for your agents parents, visit http://www.agingcare.com
Article Source: http://EzineArticles.com/?expert=Marlo_Sollitto