If you’ve spent years building your nest egg, the last thing you want is for a slick pitch to take it away in minutes. Scammers know retirees often have savings, want predictability, and may be more trusting of “professionals.” That’s why investment fraud keeps climbing. In 2024, investment-fraud losses (especially crypto-related) were the largest single category of losses reported to the FBI’s Internet Crime Complaint Center, topping $6.5 billion. People over 60 reported nearly $5 billion in losses and also filed the most complaints.
Even more troubling, the average loss per victim over 60 exceeded $83,000 in 2024, and more than 7,500 older adults lost over $100,000 each.That’s not a scare tactic—it’s a reminder that the best defense is learning the early warning signs, building a clear process for due diligence, and knowing exactly where to report trouble fast.
This guide will walk you through the major red flags, how these scams work, what to do before you invest, and the exact steps to take if you suspect fraud. I’ll keep it simple, practical, and focused on protecting your retirement savings.
What “Investment Fraud” Really Means
Investment fraud is any scheme—big or small—designed to trick you into handing over money for an “opportunity” that’s misleading, illegal, or totally fake. The hook can be a phone call, an email, a seminar at a local hotel, a “friend of a friend,” or a targeted ad on social media. Retirees and near-retirees are appealing targets because you typically:
- Have accessible savings or rollover funds (401(k)/IRA).
- Want stable returns and lower risk.
- May be more polite and willing to hear a “professional” out.
- Don’t always have an independent advisor reviewing every offer.
Fraudsters exploit those preferences. They use urgency, social proof, and complex jargon to block you from asking simple, smart questions.
What It Costs to Fall for Fraud
The financial hit hurts, but the emotional toll can be worse: stress, lost sleep, conflict with family, even delayed or derailed retirement plans. Reporting can feel embarrassing, but please remember: Fraud is a crime, not a mistake you “should have caught.” Criminals design pitches to bypass logic and push your emotional buttons. If you’ve been targeted, you’re not alone—and you can take steps right away to fight back and recover what’s possible.
For context, the FBI’s 2023 report showed investment-fraud losses jumped 38% year-over-year (from $3.31B in 2022 to $4.57B in 2023), with crypto schemes leading the surge.
The Biggest Red Flags (and What They Look Like in Real Life)
Think of these as your “stop signs.” If you spot any one of them, slow down and verify independently before you do anything with your money.
A) “Guaranteed” High Returns With Little or No Risk
Any promise of guaranteed double-digit returns—especially “risk-free”—is a classic tell. Real investments go up and down. Scammers use the word “guarantee” because it relaxes you. The SEC’s investor education pages flag this clearly: guaranteed returns and “too good to be true” offers are common fraud markers.
B) Intense Pressure to “Act Now”
“If you don’t lock this in today, you’ll miss out.” Real investments don’t vanish in hours. Pressure is used to short-circuit your research.
C) Unregistered Products or Unlicensed Sellers
Most fraud comes from unlicensed, unregistered people selling unregistered investments. Before you invest, check licenses and registrations (details below). The SEC emphasizes that investing with unregistered individuals is really risky—and often where fraud starts.
D) Overly Complex, Secretive, or “Proprietary” Strategies
If someone can’t explain the investment simply or refuses to share documents (“we can’t show our secret algorithm”), that’s a red flag.
E) No Clear, Official Paper Trail
Legitimate investments come with prospectuses, Form ADV brochures (for advisers), offering documents, and statements you can verify. If they dodge documentation—or everything is just a PDF they emailed—walk away.
F) Affinity & Trust-Based Pitches
Scammers target tight-knit groups—religious communities, clubs, veterans’ groups, even family circles—because social trust lowers skepticism. When you hear “everyone in our group is in,” that’s a signal to verify independently, not a green light.
G) Weird Payment Requests
Gift cards, crypto sent to a personal wallet, or wires to offshore/private accounts are big warnings. Legitimate firms use standard, traceable channels and custodians.
H) “Early Access” to Retirement Funds
Be cautious with anyone promising special tricks to tap retirement accounts without penalties or taxes. Sometimes there are legal strategies, but they should come from a credentialed, fiduciary advisor and a tax professional, not a salesperson with a script.
I) “Everybody Is Buying It” or Celebrity Impersonation
“FOMO” lines like “thousands of retirees already in” are designed to create urgency. Also watch out for fake endorsements, AI-generated videos, and cloned websites.
Quick Memory Trick: G-P-U-O-D-A-W-E-C (Guaranteed, Pressure, Unregistered, Opaque, Documents missing, Affinity push, Weird payments, Early access, Celebrity/FOMO)
How Scammers Target Retirees
- Fear: “You’re behind on retirement; this is how you catch up.”
- Greed/Relief: “Safe 12% yield so you can relax.”
- Authority: Fake titles, “former Wall Street pro,” or spoofed government emails.
- Reciprocity: Free lunch seminar or “exclusive club” intro to prime you to say yes.
- Commitment: Start with a tiny amount; once you’re “in,” they push bigger checks.
- Isolation: “Don’t tell your kids or advisor—they won’t understand this strategy.”
Just naming these tactics helps you recognize when someone’s working you.
Your 8-Step Defense Plan (What to Do Before You Invest)
Use this like a checklist. Print it, stick it near your desk, and treat it like a seatbelt.
1) Verify the Person
Use the SEC’s Check Out Your Investment Professional tool to look up licenses and disciplinary records (it links to IAPD for advisers and FINRA BrokerCheck for brokers). If the person isn’t licensed, that’s usually the end of the conversation.
Bonus: Call FINRA’s BrokerCheck hotline (800-289-9999) if you prefer to verify by phone.
2) Verify the Product
If it’s a public company, search the SEC’s EDGAR database for filings (10-K, 10-Q, 8-K, S-1). If it’s a private offering, ask for and check the Form D (for Reg D offerings) and read the offering memo carefully. EDGAR is free and easy to use.
3) Ask for the Form ADV (if there’s an adviser involved)
Every SEC- or state-registered adviser must provide Form ADV Part 2A (plain-English brochure with fees, conflicts, and strategy). If they won’t provide it, that’s a no.
4) Demand a Simple Explanation
You should be able to explain the investment to a friend in under two minutes—what it is, how it makes money, the risks, the fees, and how you can get out. If you can’t explain it, don’t buy it.
5) Use an Independent, Fiduciary Second Opinion
Run offers by a fee-only fiduciary (CFP®, CPA/PFS, or a fiduciary RIA) who doesn’t earn a commission on your decision. Pay for an hour of time if needed—it’s cheap insurance.
6) Control the Money Flow
Never move retirement funds to a personal wallet, a stranger’s custodian, or a new “escrow” account because someone said so on the phone. For IRAs/401(k)s, keep assets at a known custodian (Schwab, Fidelity, Vanguard, etc.) and initiate transfers yourself through official channels.
7) Check Your Emotions (and Calendar)
Sleep on it. Scams hate time. Create a personal rule: no investment decisions within 72 hours of first hearing the pitch.
8) Document Everything
Save emails, PDFs, texts, business cards, call notes, and the names of everyone you speak with. If anything feels off later, this file will be gold.
If You Suspect Fraud: Do This Right Now
- Stop sending money and cut off contact.
- Collect evidence: emails, contracts, wire receipts, wallet addresses, phone numbers, website links, screenshots, and your notes.
- Report immediately to the right places (each has a job):
- SEC – If it involves a security, an adviser/broker, a private offering, or a potential Ponzi/pump-and-dump, submit a Tip or Complaint online.
- FINRA Securities Helpline for Seniors® – A live hotline designed for older investors: 844-57-HELPS (844-574-3577) (Mon–Fri, 9 a.m.–5 p.m. ET). They’ve helped recover millions for investors.
- FTC – ReportFraud.ftc.gov – Report any scam or fraud, even if you didn’t lose money. These reports fuel investigations and warnings. You can also call 1-877-FTC-HELP (382-4357).
- State Securities Regulator (NASAA Directory) – Your state regulator can investigate and may take action faster locally. Use NASAA’s “Contact Your Regulator” map to find the right office.
- AARP Fraud Watch Network Helpline – Free, confidential support at 877-908-3360. They offer emotional support and step-by-step guidance.
- Call your bank/custodian to try to freeze or recall transfers.
- Secure your accounts (change passwords, enable 2FA, place fraud alerts).
- Consider an attorney if the amounts are large or if you need help preserving claims.
Important: Don’t worry about “bothering” the authorities. Reports help them spot patterns and shut down scams before more people get hurt.
True-to-Life Mini Case Studies
Case 1: The “Safe Income” Private Note
Linda (68) was pitched a “secured private note” yielding 14%, backed by real estate she never saw. The seller said the filings were “pending” and rushed her to wire funds that day. Red flags: guaranteed high return, pressure, no documents, “trust me” claims.
What would’ve helped: Checking the seller’s license on Investor.gov (likely unlicensed), asking for Form D/EDGAR filings, and taking 72 hours to get a second opinion.
Case 2: The “Crypto Arbitrage Bot”
Al (62) saw social posts showing “proof” of profits. The promoter asked Al to move IRA money to a new custodian and then into a personal wallet controlled by the “bot manager.” Red flags: unregistered promoter, opaque strategy, weird payment flow, social proof screenshots.
What would’ve helped: Keeping retirement assets at a known custodian, insisting on third-party statements, and verifying registrations.
Case 3: The “Affinity” Church Investment
Maria (71) heard about a “can’t-lose” fund from a church acquaintance. Many congregants had “already doubled their money.” Red flags: affinity pressure, guaranteed claims, no independent documents.
What would’ve helped: Quietly verifying the fund and the seller with state regulators and SEC databases, asking for audited financials, and getting a fiduciary to review.
Pattern you’ll notice: Every scam leans on urgency, secrecy, social proof, or guarantees—or all of the above.
Build a Fraud-Resistant Retirement Plan
A smart plan makes you harder to trick because you’ll have clear rules:
- Use a reputable custodian for all retirement assets.
- Keep a written Investment Policy Statement (IPS) with risk limits, asset mix, decision rules, and a default “cooling-off” period for new ideas.
- Diversify by asset class and provider. If one position (or one person) goes bad, it won’t sink you.
- Automate good behavior (rebalancing, contributions) so you’re not chasing hot tips.
- Involve a trusted person: Add a family member or “trusted contact” to your accounts (many brokers allow this) so someone can be reached if something looks off.
- Annual “Fraud Drill”: Once a year, practice how you would verify a new pitch, who you’d call, and how you’d document things.
- Education as habit: Subscribe to investor alerts from the SEC/FINRA and read AARP Fraud Watch updates. Staying current keeps your radar sharp.
Simple Scripts You Can Use (So Saying “No” Is Easy)
When pressured to invest today:
“I don’t make same-day financial decisions. Send all documents. I’ll review with my advisor.”
When returns are “guaranteed”:
“No legitimate investment is risk-free. If you’re guaranteeing principal and a yield, show me the insurer and policy.”
When someone says they’re exempt from registration:
“Great—then send me the specific exemption, the Form D filing if applicable, and your Form ADV or CRD number so I can verify.”
When asked to wire or send crypto:
“I only move retirement money through my existing custodian, not to personal wallets or new accounts.”
If they push back on any of those? That’s your sign to walk.
FAQs
Q1) How do I know if an adviser or broker is legitimate?
Look them up on Investor.gov’s Check Out Your Investment Professional. It links you to IAPD/BrokerCheck to see licenses, disclosures, and background. If they’re not listed, that’s a problem.
Q2) I already sent money. What should I do now?
Act fast: contact your bank/custodian for a recall or hold, secure your accounts, and file reports with the SEC, FTC, your state regulator (NASAA map), and—if you’re over 60 or helping someone who is—call FINRA’s Seniors Helpline and AARP’s Fraud Watch Helpline for guidance.
Q3) Are IRAs or 401(k)s protected if a scammer tricks me?
Retirement accounts have rules and custodians, but they’re not “insured” against bad decisions. Fraud losses can be permanent. Your best protection is prevention and quick reporting.
Q4) What documents should I always ask for?
- For advisers: Form ADV Part 2A (and Part 3/Form CRS).
- For brokers: BrokerCheck record and written disclosures.
- For public companies: 10-K, 10-Q, 8-K, prospectus on EDGAR.
- For private offerings: PPM/offering memo and any Form D filed with the SEC.
Q5) I’m embarrassed—do I really have to report it?
Yes. Your report could help recover funds or stop the same criminal from hitting other retirees. Reporting also documents your timeline for banks, insurers, or law enforcement.
Quick “Red Flag” Checklist (Print This)
- ☐ Someone says “guaranteed” or “risk-free.”
- ☐ You’re told to act today or miss out.
- ☐ The seller or product is not registered (or they dodge your request to verify).
- ☐ The strategy is secret, proprietary, or too complex to explain simply.
- ☐ There’s no official paperwork you can verify.
- ☐ Payment must be wire, gift cards, crypto to a personal wallet, or offshore.
- ☐ You’re urged to keep it quiet or not involve family/advisors.
- ☐ The pitch leans on celebrity, community trust, or “everyone’s doing it.”
If you check even one box, slow down and verify. If you check two or more, walk away.
Trusted Resources & Hotlines
- SEC — Submit a Tip or Complaint (securities fraud).
- EDGAR — Company Filings (research public companies and offerings).
- FINRA Securities Helpline for Seniors®: 844-57-HELPS (844-574-3577).
- FTC — ReportFraud.ftc.gov (report scams of all kinds).
- NASAA — Contact Your Regulator (find your state securities office).
- AARP Fraud Watch Network Helpline: 877-908-3360 (free support and guidance).
Final Word: Your Calm, Simple Process Wins
Here’s the truth: you don’t need to become a forensic accountant to stay safe. You just need a repeatable process:
- Verify the person (license + history).
- Verify the product (real filings + clear documents).
- Get a fiduciary second opinion.
- Never rush or move money in unusual ways.
- Keep a paper trail.
- If something feels off, report it—you’re helping yourself and others.
You’ve worked too hard to build your retirement savings. A little skepticism, a few simple checks, and a clear plan will keep that money working for you—not for a scammer.