The social isolation wrought by public health restrictions can leave senior investors more vulnerable to investment fraud, regulators are warning.
The North American Securities Administrators Association, the Financial Industry Regulatory Authority Inc. and the U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy have issued a joint alert about seniors’ increased risk of social isolation during Covid-19.
“Social isolation, whether voluntary or involuntary, has long been a leading factor contributing to the financial exploitation of older investors,” the alert said. “The unprecedented quarantines to protect against the spread of the novel coronavirus have made many seniors more vulnerable to financial exploitation.”
The combination of isolation and diminishing cognitive capacity can negatively affect the judgment and decision-making of senior investors, “rendering them more vulnerable to financial abuse,” the alert said.
Additionally, as isolated seniors go online for social interaction, banking and shopping, they may face greater exposure to online fraudsters.
“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,” the alert said.
Seniors affected directly by Covid-19 could be at greater risk, too.
“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,” the alert said. “Scammers often gather personal details from obituaries and social media posts and use this information to target their victims.”