Monthly Archives: April 2017

Fraud Victims Vulnerable to Severe Stress, Anxiety and Depression

Posted on April 29, 2017 by Melissa Hart

The FINRA Investor Education Foundation issued a new research report, Non-Traditional Costs of Financial Fraud, which found that nearly two thirds of self-reported financial fraud victims experienced at least one non-financial cost of fraud to a serious degree—including severe stress, anxiety, difficulty sleeping and depression. While the Stanford Financial Fraud Research Center estimates that $50 billion is lost to financial fraud every year, the FINRA Foundation’s innovative research examines the broader psychological and emotional impact of financial fraud.

“Fraud’s effects linger and cause distress well after the scam is over. For the first time, we have data on the deep toll that fraud exerts on its victims, and the results are sobering. This new research underscores the importance of the FINRA Foundation’s work with an array of national, state and local partners to help Americans avoid fraud, and assist consumers who have been defrauded,” said FINRA Foundation President Gerri Walsh.

The research report found that:

nearly two thirds (65 percent) reported experiencing at least one type of non-financial cost to a serious degree; and
most commonly cited non-financial costs of fraud are severe stress (50 percent), anxiety (44 percent), difficulty sleeping (38 percent) and depression (35 percent).
Beyond the psychological and emotional costs, nearly half of fraud victims reported incurring indirect financial costs associated with the fraud, such as late fees, legal fees and bounced checks. Twenty-nine percent of respondents reported incurring more than $1,000 in indirect costs, and 9 percent declared bankruptcy as a result of the fraud.

Additionally, nearly half of victims blame themselves for the fraud—an indication of the far-reaching effects of financial fraud on the lives of its victims.

For more information, click here.

Teaching Suggestions

Ask students to list a few suggestions to protect themselves from financial fraud.
Explain how FINRA can assist consumers who have been the victims of financial fraud.

Discussion Questions

What are a few indirect financial costs associated with funds?
Why nearly half of victims blame themselves for being victims of financial fraud?
How and where should you report financial fraud?

Categories: Chapter 5, Frauds and Scams | Tags: financial literacy, fraud, scams | Leave a comment

Does It Sounds Too Good To Be True?

Posted on April 22, 2017 by Melissa Hart

A current email scam invites people to take advantage of “a little known Social Security contract” which enables you to receive “little known benefits.” Think that sounds too good to be true? It should—there is no “little known Social Security contract.”

What are some clues that scams might not be legitimate? Scammers insist that the situation is urgent and issue warnings. They try to convince you to act now to avoid dire consequences. They promise a deal or secret that the public doesn’t know about. They come from organizations unknown to you. They offer things the government doesn’t want you to know, but they don’t come from a .gov website.

The Federal Trade Commission’s website maintains a list of scams in the news. You can sign up to be notified by an e-mail when new scams appear. You can also get free consumer education materials and read the latest from consumer protection experts. Stay well informed by visiting the FTC scam alert page. It’s in your best interest to find out about the scams and how they work so you won’t fall a victim to one yourself. Protect yourself by learning how to avoid scams and fraud. You can search for “identity Theft” or “phishing scam” on Social Security website, www.socialsecurity.gov to learn more about how to protect yourself. Then you’ll be the one who knew it sounded too good to be true.

For more information, click here.

Teaching Suggestions

Ask students what they would do if they received such enticing offers.
Ask students to make a list of agencies where they can file a complaint against these scammers.

Discussion Questions

How can you determine if the offer is legitimate?
What can you do to protect yourself from such bogus offers?

Categories: Chapter_14, Frauds and Scams | Tags: medicare, scams, social security | Leave a comment

FINRA’s National Financial Capability Study (NFCS)

Posted on April 15, 2017 by Melissa Hart

According to a recent FINRA study, the financial circumstances of Americans have improved over the last several years—driven in large part by an improving economy and job market. For example, the percentage of survey respondents reporting no difficulty in covering their monthly expenses increased from 36 percent to 48 percent. This is very significant and 12 percentage point improvement.

However, some groups are still struggling, particularly blacks and Hispanics, those without a high school education, and women. Here are some sobering statistic: About half of respondents with only a high school diploma or no diploma could not come up with $2,000 in an emergency compared to 18 percent for those with a college degree.

Debt continues to be a problem for many Americans. More than one-in-five Americans have unpaid medical debt. Similarly, more than one-in-five Americans with credit cards have been contacted by a debt collection agency in the last year.

In terms of financial literacy, absolute levels are low; only 37 percent of respondents are considered highly financial literate—meaning they could answer four or five basic questions correctly on a five-question financial literacy quiz. And, financial literacy is down slightly since 2009.

For more information,click here.

Teaching Suggestions

You may want to use the information in this article to

Help students understand that many minority groups are still struggling even though economy and job markets have improved.
Explain how people can improve their financial lives by saving even a tiny portion of their income for emergencies.

Discussion Questions

What can be done to improve the financial circumstances of minorities?
What might be some reasons that debt continues to be a problem for many Americans?
Since financial literacy levels are so low, what can individuals, local, state and Federal governments can to improve financial literacy of all Americans?