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By Christine Benz | 03-14-2012 01:00 PM

Who's Most Vulnerable to Financial Fraud?

Investment frauds tend to be perpetrated on men who are in their mid-50s and who may actually be experienced investors, says UCLA professor Dr. Shelley Taylor.

Christine Benz: Hi, I'm Christine Benz for Morningstar.

The Madoff case was perhaps the best known instance of financial fraud, but incidences of financial fraud go on every day.

Here to discuss how seniors are often the targets of financial fraud, as well as what they can do to protect themselves, is Dr. Shelley Taylor. She's is a professor at UCLA.

Dr. Taylor, thank you so much for being here.

Shelley Taylor: You're very welcome.

Benz: I'd like to start with the general way of the land in terms of financial fraud. Can you share any statistics about whether it has increased, decreased in recent years?

Taylor: Yes. Financial fraud is going up tremendously quickly. There are over 30 million complaints a year, and those are just the reported ones. We know there are a lot that go unreported. And of interest, more than half of these complaints are filed by adults, who are age 55 and up, so it's true that older adults are disproportionately the victims of financial fraud.

Benz: So, can you make any generalities about the types of financial fraud that are growing in number over the past few years?

Taylor: Well, the most common ones are foreign lotteries, unauthorized billings to credit cards, weight loss scams, but the most expensive typically are the investment frauds.

Benz: You are a professor of psychology, and you've been looking at the intersection between psychological aspects that tend to make people more vulnerable to financial fraud. Can you share any of those commonalties?

Taylor: Yes. There are some interesting simple pictures you can draw of who is most vulnerable to different kinds of fraud. So, for example, lottery or charitable giving scams are more likely to be perpetrated on older women who live alone--typically women in their 70s.

On the other hand, investment frauds, which are the most expensive, tend to be perpetrated on men who are in their mid-50s, who are actually experienced investors, who have taken risks before, and who are pretty knowledgeable about investments.

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