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Tel: 212.226.1007 • Fax: 212.226.0240. Email: [email protected] FINANCIAL FRAUD AND FRAUD SUSCEPTIBILITY. IN THE UNITED STATES. RESEARCH REPORT. FROM A. 2012 NATIONAL SURVEY. Prepared for the. FINRA INVESTOR EDUCATION FOUNDATION. By. APPLIED RESEARCH & CONSULTING LLC.
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FINANCIAL FRAUD AND FRAUD SUSCEPTIBILITY IN THE UNITED STATES RESEARCH REPORT FROM A 2012 NATIONAL SURVEY Prepared for the

FINRA INVESTOR EDUCATION FOUNDATION By

APPLIED RESEARCH & CONSULTING LLC

SEPTEMBER 2013

320 West 13th St. • Seventh Floor • NY, NY 10014 Tel: 212.226.1007 • Fax: 212.226.0240 Email: [email protected]

Financial Fraud and Fraud Susceptibility in the United States Research Report – Prepared for the FINRA Investor Education Foundation

2 September 2013

TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................................... 3 KEY FINDINGS ........................................................................................................................................................... 4 IMPLICATIONS ........................................................................................................................................................... 6 BACKGROUND ........................................................................................................................................................... 7 RESEARCH METHODOLOGY .................................................................................................................................... 8 DETAILED FINDINGS ............................................................................................................................... 9 FRAUD SUSCEPTIBILITY .......................................................................................................................................... 9 Investment Attitudes ............................................................................................................................................. 9 Investment Opportunity Solicitation ........................................................................................................... 11 Investment Scam Pitches .................................................................................................................................. 11 Red‐Flag Persuasion Tactics ........................................................................................................................... 16 Fraud Exposure Assessment ............................................................................................................................ 17 Financial Exploitation and Affinity Fraud ................................................................................................ 19 PERSONALITY & FRAUD SUSCEPTIBILITY ......................................................................................................... 22 Personality Assessments .................................................................................................................................... 22 Personality and Fraud Susceptibility .......................................................................................................... 23 APPENDIX A ............................................................................................................................................ 25 SURVEY QUESTIONNAIRE ..................................................................................................................................... 25

Financial Fraud and Fraud Susceptibility in the United States Research Report – Prepared for the FINRA Investor Education Foundation

3 September 2013

EXECUTIVE SUMMARY

1. The ubiquity of fraud solicitations, coupled with the inability of many people to recognize the red flags of fraud, place a large number of Americans at risk of losing money to scams—with older Americans at greatest risk. 

Financial fraud solicitations are commonplace. A new survey by the FINRA Investor Education Foundation found that more than 8 in 10 respondents were solicited to participate in a potentially fraudulent offer. And 11% of all respondents