According to “Non-Traditional Costs of Financial Fraud,” which is a new research report by the FINRA Investor Education Foundation, almost two-thirds of financial fraud victims who reported that they’d been bilked experienced at least one non-financial consequence to a serious degree. The findings show other ways in which this type of crime takes a toll on its targets.
Some 600 fraud victims took the survey online. Respondents were at least 25 years of age. Among the findings:
• The most commonly named non-financial fraud costs included serious stress, anxiety, sleeping problems, and depression.
• Other negative emotional reactions included anger, regret, betrayal, feeling like a victim, embarrassment, sadness, shame, helplessness, guilt, and confusion.
• There may have been fees, interest rates, legal fees, bounced checks and resulting fees from losing money because of the fraud.
• 9% of respondents reported bankruptcy.
• Almost half of respondents experienced self-blame. Many felt that they shouldn’t have been too trusting.
• The larger the amount of money stolen, the more non-financial costs were experienced.
• Victims who were confused about the fraud’s details were more likely to suffer from non-financial consequences.
• Just 15% of respondents had a significant amount of interaction with the fraudster.
• The smaller the financial loss, the less interaction there was with the alleged perpetrator.
• Respondents with higher incomes (at least $75K) were more likely to lose more money than those with lower incomes.
• The age of the respondent wasn’t a factor in terms of how much someone might lose from financial fraud.
• An introduction from a family friend or relative was the most common way cited for how the victim became acquainted with the fraudster.
• 68% of respondents told family or friends about the fraud.
• Just 35% of respondents told authorities.
• 48% of those that did not report the fraud said that doing so would not have changed the outcome.
Other reasons for not reporting fraud: embarrassment, not sure what to do, lack of time, and other reasons.
Some of the financial fraud incidents involved:
• Email solicitation from a stranger outside the US asking for a fee or deposit.
• A notification that the target had won a lottery or prize but needed to pay a fee to claim it.
• Learning about an investment through a free lunch seminar.
• Notification of grant eligibility but that a fee was required.
• A commission offered for referring people an investment.
• Phone solicitation.
• Notice of an unclaimed inheritance.
At Shepherd Smith Edwards and Kantas, LTD LLP, we understand that the toll of financial fraud is more than just monetary. We are here to help investors get their losses back. Your initial case consultation with our investment fraud lawyers is free. We can help you explore your legal options.
Non-Traditional Costs of Financial Fraud,
FINRA Foundation Research Reveals Fraud Victims Vulnerable to Severe Stress, Anxiety and Depression, FINRA March 9, 2015
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