5 Social Media Tips for Seniors

10/16/13 11:33AM EDT

By Moshe Silver

The SEC has two Twitter feeds that all investors should follow.  One is a news feed under @SEC_News, with over 196,000 followers.  The other, which the private investor should check daily, is its investor education feed @SEC_Investor_Ed.  This Twitter feed has only around 38,000 followers – far fewer than the number of individuals who make their own investment decisions on a regular basis.  While the Commission admittedly has had a dim record in recent years, they are pretty much all that stands between the retail investor and the deep blue sea.  If you don’t follow the news and investor education feeds, then you don’t know what the SEC thinks is important day by day.

5 Social Media Tips for Seniors - twff 

This week the Commission put out a bulletin aimed at older individuals and their families.   As with many of the Commission’s bulletins, their headline advice is, “The key to avoiding investment scams on the Internet is to be an educated investor.”  But the fact is that older Americans are becoming increasingly turned on to the social media favored by their children and grandchildren, most of whom also have no clue about how to handle their finances.  Your cute 16 year-old granddaughter may be able to teach you to be a whiz with Twitter and Facebook, but don’t look to her for which stocks to buy.

And, as with any new communication technology, the scamsters and fraudsters are out in their legions, looking for an easy mark.  Financial fraud is the fastest growing form of elder abuse – largely because, according to the AARP, people over 50 have quaint old-fashioned notions and generally expect honesty in the marketplace.  Once defrauded, older folks may be slower to realize – and are quite often hesitant to take action.  This makes it increasingly important for family members to pay close attention to their older relatives’ financial dealings.

Five Tips

The bulletin lists five areas of concern, which really apply to everyone.

1 – Look out for “Red Flags” – these include offers that look “too good to be true, which generally means almost anything that makes you jump for your checkbook because it looks so much better than anything else that’s out there.  Other causes for caution include anything using the word “guarantee” (illegal in most investment contexts), offers of high returns on investments outside the US (“learn why the world’s most sophisticated investors have invested in the Albanian bauxite industry…”) and anyone who tells you that you have to invest “right now!”

2 – Be wary of unsolicited offers – generally, investors look for professional advice, while fraudsters look for victims.  The Commission recommends particular caution any time you see a post on your social media wall, a tweet either mentioning you by name or direct messaged to you, or any other unsolicited communication about money or investments.

3 – Look out for “affinity fraud” –  Any investment pitch that you receive because you are part of a group, club or association may be affinity fraud.  If you don’t know the person or entity that is sending the message, you probably shouldn’t even open it – and should definitely not respond until you have checked it out thoroughly.  Even if you know the person making the offer, cautions the Commission, make sure you check out the investment completely.  The biggest losers in the Bernie Madoff fraud were institutions who invested with him based on advice from some of the world’s leading financial professionals.  The bad news is that even your best friends can unwittingly draw you into a fraud.  The really bad news is that even smart people can be duped.

4 – Be thoughtful about privacy and security settings – Ask your granddaughter to give you a thorough tutorial on privacy features, and don’t post any information that you want to keep confidential.  It is a literal fact that, once you post something on the Internet – regardless of security features you may employ – it is no longer confidential.  All kinds of people have nearly instant access to your emails, tweets, and Facebook postings – and most of them are not the NSA.

5 – Ask questions and check out the answers – “Be skeptical,” says the Bulletin.  “Investigate the investment thoroughly and check the truth of every statement.”

Caveat Emptor (We get to say that a lot…)


The SEC lists a few of the most common types of investment fraud.  In the good old days, these were routinely perpetrated by telephone and the mail.  In the brave new world of social media, you can lose your money much faster – and with online banking, you can do it all from the comfort of home.

We list a few headline categories here and urge you to read the full release for yourself.

“Pump-and-dump” scams, fraudulent “research opinions,” “hot stock” spam blasts, and online stock offerings.  Congress has not made matters any more transparent by permitting general solicitation of private placements – you may be hard pressed to tell the difference between a legitimate advertisement under the JOBS Act and a fraud.

The Commission urges investors to be aware of various legitimate financial services professional designations.  While most investment professionals require some form of licensing, there are titles floating around that look quite legitimate, but that have no regulatory oversight associate with them.  One pointer we can add: if you are contacted by an individual wishing to discuss investments, you can look them up on the FINRA website (www.finra.org) by entering their name in the BrokerCheck® database.

Remember: It takes a fair amount of preparation to properly Caveat.  But it takes only the click of a mouse to Emptor. 

Moshe Silver is a Hedgeye Managing Director and author of the Hedgeye e-book Fixing A Broken Wall Street

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