More than 6 million Americans age 55 and older have attended a free lunch investment seminar. But most of these so-called seminars are actually sales presentations, where the attendees are often pressured into making unsuitable -- or even fraudulent -- investments. If a friend, neighbor, or relative accepts an invitation to one, make sure they know the score before they go.
You will need
- Healthy skepticism
- &amp;quot;How to Spot a Free Lunch Scam&amp;quot;
Step 1 Educate them Explain that many free-lunch seminar presenters claim that “nothing will be sold” at the actual presentation. But odds are anyone who goes will get a sales pitch at a later date — sometimes using high-pressure tactics.
Download “How to Spot a Free Lunch Scam,” which lists the 5 most common persuasion tactics, at “createthegood.org”:http://createthegood.org/.
Step 2 Ask the right questions If the presenter tries to sell anything, tell your friend to ask these 3 questions: Are you licensed to sell this product? Who are you registered with? And, is this investment registered with the U.S. Securities and Exchange Commission?
Most investments must be registered with the SEC. All investment professionals must be registered with the Financial Industry Regulatory Authority known as FINRA, the SEC, or their state securities regulator.
Step 3 Check the answers Stress the importance of checking the seller’s answers, and offer to help do it. Look for proof of registration of the seller and the product. “SaveAndInvest.org”:http://www.saveandinvest.org/ can walk you both through the vetting process. Or call (888) 295-7422.
Step 4 Report suspicious information Urge them to report any irregularities to the proper authorities — FINRA, the SEC, or their state securities or insurance regulator. “SaveAndInvest.org”:http://www.saveandinvest.org/ can help you determine where to report your suspicions.
Step 5 It’s OK to walk away If the professional is not registered and the product is not registered, tell your friend to walk away.
Step 6 Become a monitor Become a Free Lunch Monitor — someone who audits free-lunch financial seminars and workshops and reports any suspicious activities. You or your friend can download the Free Lunch Monitor tool kit at “createthegood.org”:http://createthegood.org/, and use the checklist found in the how-to guide to rate investment presentations and submit your ratings to AARP.
In a national survey by FINRA, 3 times as many known victims of investment fraud went to a free investment seminar as the general population.