Beware the "free" lunch
It's nice to have a gourmet meal prepared by a celebrity chef - but $70,000 is a little too much to pay for that privilege. That's the amount of money that one elderly couple lost in an unscrupulous investment scheme. They, along with about 90 other investors who "were elderly and of limited means," were cajoled into high risk investment schemes over fancy lunches and dinners.
Milt Freudenheim discusses these free-lunch scams in his New York Times article Bad Investment Advice Can Turn a Free Meal Costly.
"Financial fraud is the No. 1 consumer protection issue for AARP," said Andres Castillo, who heads an AARP program that monitors free lunch seminars and similar presentations. In an AARP survey last year of people 55 and older, 9 percent said they had attended a free financial seminar within the last three years. That translates into approximately 5.9 million people, the group said.Freudenheim quotes one S.E.C. official as saying that if a person tries to sell you something, you should ask two questions before you go further: "Are you licensed?" and "Is the product registered?"
Freudenheim also offers consumer resources, some of which we're recommended previously:
- FINRA background Check - a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers
- The U.S. Securities & Exchange Commission's investor education site - check out brokers and investment advisers
- North American Securities Administrators Association - use the map to find your local regulator. The site has other good investor advice, as well.
We would also add:
The National Association of Insurance Commissioners map to state insurance departments, where you can review agent licensing information.