New Target: Annuities Sales Fraud


Annuities are a helpful financial tool to secure your finances and create a dependable source of income. Programs such as Social Security provide continued cash flow through annuities for seniors after they retire from the workforce. They can also allow you to provide for your grandchildren in the future.

Despite how helpful and generally low-risk annuities are, their sales have decreased in past years. Annuities themselves do not seem to be the problem. What seems to be the issue are the reports of increasing fraud cases involving annuities since 2015. 

Annuity fraud

While the variety of annuity products can be beneficial for senior citizens, it can also give unethical brokers many tools to work with. They also often target other aspects of annuity sales, including:

  • Buying an annuity: One of the most common fraudulent tactics is to trick you into buying a charitable gift annuity. Since the charities themselves request continued donations, scammers often pose as the employees. 
  • Selling an annuity: Annuities establish a stable cash flow. However, if someone faces serious financial troubles, it is possible to sell an annuity and retrieve a lump sum. Scammers may try to trick you into thinking your finances are low to convince you to sell your annuity. They claim this is to benefit you, when really it benefits them. 

Some scams may also target an annuity you have already created. For example, a scammer may try to convince you that your annuity will expire and frighten you into giving them your private information, so they can fix the matter. It is highly unlikely your annuity will expire. Most annuity contracts do not expire until the individual or beneficiary is 115-years-old. 

What you can do

Even if annuity fraud is on the rise, you have ways to protect yourself. One of the best strategies is to be informed. There are specific regulations outlined for annuities that are available. If you are considering buying an annuity, it is a good idea to review the regulations.

There are also resources to research insurance companies or brokers and review their licenses. The New York Department of Financial Service’s database and others like it provide straightforward information of what investment companies can and cannot do. 

Being an informed investor can help safeguard your finances in the future. However, if you find you are faced with annuity fraud, there are also ways to restore your investments and your future through legal claims and through the Financial Industry Regulatory Authority (FINRA).