The North American Securities Administrators Association (NASAA), FINRA, and the staff of the SEC’s Office of Investor Education and Advocacy have joined to raise awareness that increased social isolation during the COVID-19 pandemic can have a devastating impact on senior investors.


Social isolation, whether voluntary or involuntary, has long been a leading factor contributing to the financial exploitation of older investors. The unprecedented quarantines to protect against the spread of the novel coronavirus have made many seniors more vulnerable to financial exploitation.

While financial abuse can happen at any time, perpetrators often strike during times in a senior’s life when they may be more vulnerable, such as during a health crisis or after the death of a loved one. Scammers often gather personal details from obituaries and social media posts and use this information to target their victims. Some also may attempt to exploit trust within seniors’ social and support groups to become more involved in their lives. 


Social Isolation and Fraud

Social isolation and diminishing cognitive capacity can combine to affect the judgment and decision-making capacity of senior investors, rendering them more vulnerable to financial abuse. With many seniors in isolation for their own safety, friends and family are unable to physically check in and are not able to notice the sometimes small but important changes in behavior that could indicate a person is susceptible to fraud or worse, is being victimized.

Research has found that people are more likely to be victimized if they are isolated and do not have anyone to discuss an investment proposal with. As a result, those who engaged scammers and lost money are less likely to be married and more likely to be widowed or divorced. Sadly, fraud victimization seems to go hand in hand with social isolation—whether involuntary or voluntary. Common scams can range from Ponzi schemes to identity theft.

When seniors and others are socially isolated, they increasingly turn to the internet for social interaction and more frequently depend on the internet as a social outlet and are increasingly relying on online services for shopping, banking, and the initiation of electronic payments that may have otherwise been paid in person. Research has found that people who are contacted by scammers through social media or through a pop-up message on a website are more likely to engage with the scammer and lose more money than those who were targeted by phone or email. Loneliness also leads some to look for companionship online. As a result, online romance scams have become increasingly pervasive because the scammers can easily use the anonymity of the internet to mask their deceptive intentions.


How to Protect Yourself from Investment Fraud

  • Ask for input from others. Scammers try to isolate their victims. Do not be afraid to contact a friend, or a company or organization you trust for advice.
  • Do additional research before sending any money. One easy action: do an internet search to see if the website or pitch has been flagged as fraudulent or potentially fraudulent by news organizations or members of the public. Make sure you understand the investment, the risk attached, and the company’s history. And remember, if the investment sounds too good to be true, it probably is!
  • Focus on your financial health and literacy. Individuals under financial strain and those with lower levels of financial literacy may be more susceptible to scammers.
  • Knowledge is power. Knowing about scams and scammer tactics can be your best defense in successfully reducing the impact of scams. Keep up with the latest frauds by subscribing to consumer newsletters and seeking out information on current scams. Fraudsters rely on the fact that many people simply do not bother to investigate before they invest. Savvy investors take the time to do their own independent research and talk to friends and family first before investing.
  • Never be afraid to complain. If you suspect fraud or a questionable practice and the explanations that you receive are not satisfactory, do not let embarrassment or concern that you will be judged incapable of handling your own affairs prevent you from filing a complaint with the SEC, FINRA, or your state securities regulator.

Common Warning Signs of Senior Exploitation

Senior financial exploitation can be difficult to identify or recognize. Below are warning signs to watch for among the seniors in your lives:

  • Family members or those who insinuate themselves into a senior’s life to act like “family” to extract money for loans or expenses.
  • A new and overly protective friend or caregiver.
  • Surrendering passwords to financial accounts or control of finances to a new friend or partner.
  • Fear or sudden change in feelings about somebody.
  • A lack of knowledge about financial status or new reluctance to discuss financial matters.
  • Sudden or unexplained changes in spending habits, a will, trust, or beneficiary designations.
  • Unexplained checks made out to cash, unexplained loans, or unexplained disappearance of assets (cash, valuables, securities, etc.). Also watch for suspicious signatures on the senior’s checks or other documents.

Red Flags of Fraud

  • Unregistered and Unlicensed Sellers. Always check whether the person offering to sell you an investment is registered and licensed, even if you know him or her personally. Unregistered and unlicensed persons commit many of the frauds that target older investors.  Researching the background of the individuals and firms selling you investments, including their registration/license status and disciplinary history, is easy and free. You can verify the status of investment professionals and find out whether they have a history of customer harm by contacting your state securities regulator or use tools available for free from the SEC and FINRA.

    You can also call the SEC’s Office of Investor Education and Advocacy directly to help research the person and firm selling you the investment: (800) 732-0330 (open 9:00 a.m. to 5:30 p.m. EST Monday through Friday).  FINRA’s Securities Helpline for Seniors® can also be leveraged to get assistance from FINRA or raise concerns about issues with brokerage accounts and investments. Call 844-57-HELPS (844-574-3577) toll free, Monday through Friday, 9 a.m. – 5 p.m. Eastern Time.

  • Promises of High Returns with Little or No Risk. The promise of a high rate of return, with little or no risk, is a classic warning sign of investment fraud.  Every investment carries some degree of risk, and the potential for greater returns usually comes with greater risk.  Avoid putting money into “can’t miss” investment opportunities or those promising “guaranteed returns.”  Remember – if it sounds too good to be true, it probably is.
  • Pressure to Buy Quickly. No reputable investment professional should push you to make an immediate decision about an investment or tell you that you must “act now.”  If someone pressures you to decide on an investment without giving you time to do your research, walk away.
  • Red Flags in the Financial Professional’s Background. Even if an investment professional is in good standing with his or her regulators, you should be aware of potential red flags in the professional’s background.  SEC, FINRA, and state securities regulator records can be used to identify red flags for potential problems, including: (1) employment at firms that have been expelled from the securities industry; (2) personal bankruptcy; (3) termination; (4) being subject to internal review by an employer; (5) a high number of customer complaints; (6) failed industry qualification examinations; (7) federal tax liens; and (8) repeatedly moving firms.

How to Help the Seniors in Your Life

Social distancing does not mean social isolation. Social isolation increases vulnerability to financial exploitation and fraud. That is why it is important to keep seniors socially and mentally engaged while physically keeping them protected from the virus.

  • While in-person visits may not be possible yet, be sure to keep in touch with older family members, friends, and neighbors. Call or leave a note on their front door. If they have the technology, send them a text or email, or connect through video conferencing. Contact is key to letting your loved ones know you are thinking of them and that they are not alone.
  • Let your older family members know that fraudsters and scammers have found ways to exploit the pandemic. Make them aware of the red flags of fraud and common scams, which remain consistent over time. Send them updates on current scams targeting older people.
  • Individuals with suspicions of possible senior investment fraud or financial exploitation should contact their state securities regulators, local Adult Protective Services agencies, FINRA or the SEC. Financial and investment professionals also are encouraged to contact their state securities regulator to request a Senior$afe presentation on how to spot and report suspected senior financial exploitation.

Additional Resources

Use these additional resources to learn more about social isolation and senior investor protection:

This bulletin represents the views of the staff of the Office of Investor Education and Advocacy.  It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”).  The Commission has neither approved nor disapproved its content.  This bulletin, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.