The National Association of Securities Dealers Investor Education Foundation, in cooperation with WISE Senior Services and AARP Foundation, released a study today that looks at why certain elderly investors are more susceptible to investment fraud than others, exposes the various tactics used by criminals to exploit seniors and offers strategies to help seniors avoid becoming victims.

The report was unveiled at the US Securities and Exchange Commission’s Seniors Summit in Washington, D.C. It recommends expanding financial literacy and fraud prevention programs to include information about how persuasion tactics work. Other recommendations include encouraging seniors to report such crimes to securities regulators, conducting more research to test the efficacy of persuasion education and further studying resistance to persuasion in the context of “free seminar” settings where aggressive salespeople so often make their pitches.

Some of the key research findings include: investment fraud victims are more financially literate than non-victims; criminals use a wide array of different influence tactics — from friendship to fear and intimidation tactics — to defraud the victim; fraud pitches are tailored to match the psychological needs of the victim; victims are more likely to listen to sales pitches; victims are more likely to rely on their own experience and knowledge when making investment decisions; victims experience more difficulties from negative life events than non-victims; victims are more optimistic about the future; and, they dramatically under-report fraud.

“With the numerous financial scams that continue to evolve and the variety of fraud tactics being used, the NASD Investor Education Foundation is committed to expanding its investor education efforts to help seniors protect the assets they’ve worked a lifetime to acquire,” said Robert Glauber, chairman of the NASD Investor Education Foundation, who also serves as chairman & CEO of the NASD. “The research results dispel common myths about who’s actually being targeted and offers effective strategies on how seniors can avoid these costly financial traps.”