The True Cost of Financial Fraud
~ By Gerald Rome, Colo. Securities Commissioner ~
When we hear of someone who has become the victim of a financial fraud, the natural reaction is to ask: how much did they lose? Will they be able to recoup any losses? Usually the conversation ends there before any mention is made of the mental or physical toll that victimization of this sort can take. Fraud is a crime, just like any other, and its effect can reach far beyond a person’s financial well-being. Whether a person has lost a substantial amount of money or just a little, the mental and physical repercussions can be equally significant.
An important study released earlier this year found that nearly two-thirds of financial fraud victims reported experiencing one or more “non-traditional” costs of fraud – those relating to the physical and mental problems experienced by the participants.
Sixty-five percent of the 600 victims surveyed stated that they had experienced a significant increase in stress, anxiety, difficulty sleeping, and/or depression. Perhaps more troubling, nearly a quarter of victims reported experiencing significant physical health problems in the period following the crime. These effects ranged from chronic headaches to severe events such as heart attacks. Additional research has shown that senior citizens who are financially exploited or defrauded have a mortality rate three times higher in the seven years following their victimization than non-victims. Clearly, the effects of fraud extend far beyond a bank account.
Those surveyed also reported the loss of trust that they experienced, not only in others, but in themselves. Half the victims surveyed blamed themselves, not the criminals, for being defrauded. What really stands out to me, though, is that all those surveyed who stated they had been defrauded, ONLY 35 percent reported the incident to the authorities! When those who didn’t report the crime were asked why, many stated it was due to embarrassment that they had fallen for a scam.
So, what lessons can we learn? First, it is important to remember that if you or a loved one have been victimized by a financial scam, self-care is extremely important. Seek counseling if you find yourself experiencing any of signs of depression, anxiety, or unusual stress. And, don’t be too hard on yourself – fraud truly can happen to anyone, and there is no point blaming yourself. Take it as a learning experience and move on as best you can, while remaining wary of future offers. Finally, please don’t let embarrassment prevent you from reporting the crime to the proper authorities. If you have been taken in by a fraud, it is nearly certain that you aren’t the only victim, nor will you be the last. In order to help regulators like me prevent the horrible effects of fraud from taking a toll on someone else, we need your help to catch the fraudsters.
Financial fraud is one of the most rapidly increasing crimes in the country, and its effects reach well beyond a person’s ability to pay his or her bills. It could truly be a life or death matter. So if you suspect that you or someone you know has been scammed, please contact the Division of Securities at (303) 894-2320. And as always, be on your guard!