Seniors Face Growing Risk of Internet Investment Fraud, State Securities Regulator Tells Senate Panel
WASHINGTON—Squeezed by rising medical costs and lower returns on income-generating investments, seniors are increasingly turning to the Internet for alternative investment opportunities and are more vulnerable than ever to online investment scams, a representative of the North American Securities Administrators Association (NASAA) told a Senate committee today.
“With the Internet becoming a common part of daily life for increasing numbers of people, it should be no surprise that con artists have made cyberspace a prime hunting ground for victims. Seniors are rapidly discovering the Internet, opening up new vistas and exposing themselves to insidious new scams,” said Tanya Solov, Illinois Securities Director and chair of NASAA’s Broker-Dealer Section. Solov’s remarks were made in testimony during a Senate Special Committee on Aging hearing examining Internet fraud against seniors.
“Many of the scams, which reside on the Internet, have existed for years prior to the creation of this technology. What has given them new life, power and reach is the power of the medium,” Solov told the committee, noting that state securities regulators earlier this year identified senior investment fraud and Internet fraud among the top 10 scams facing investors.
Solov told the panel that state securities regulators work with criminal authorities to prosecute companies and individuals who commit crimes against seniors, and bring civil actions for injunctions, restitution and penalties against companies and individuals who commit securities fraud. She cited two recent examples of cases of Internet investment schemes broken up by securities regulators in Kansas and Illinois that, combined, defrauded mostly senior investors of more than $20 million.
“Older Americans who are duped via the Internet are highly intelligent and many are familiar with the Internet because they used the computer during the course of their employment,” Solov said. “They may have used the computer to research and verify legitimate information, but now they are accessing professional looking websites that contain misrepresentations and fraudulent information.”
To help protect seniors from investment fraud, Solov told the committee that state securities administrators, through NASAA, have launched an educational Senior Outreach Initiative. NASAA also has developed a Senior Investor Resource Center on its website (http://www.nasaa.org/1723/senior-investor-resource-center/) designed specifically for senior audiences.
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