A new study shows that a little financial literacy can be a dangerous thing. A new report by NASD's Investor Education Foundation that focuses on the victimization of senior citizens by investment fraudsters suggests that "financial literacy" is no bar to getting fooled. In fact, the study finds that investment-scam victims score higher on financial literacy tests than non-victims.

Other headline takeaways from Off the Hook Again: Understanding Why the Elderly Are Victimized by Economic Fraud Crimes: Investment-fraud criminals use a wide array of different influence tactics - from friendship to fear and intimidation tactics - to defraud the victim Fraud pitches are tailored to match the psychological needs of the victim Investment-fraud victims are more likely to listen to sales pitches Fraud victims are more likely to rely on their own experience and knowledge when making investment decisions Fraud victims experience more difficulties from negative life events than non-victims

More detailed findings provide insights into the methods used by criminals such as influence tactics, techniques of psychological manipulation and hyperbolic sales spiels. The report also probes the psychology of the victims, finding them, generally speaking, to be inclined to optimism and generally trusting of their own gut feelings and hunches in assessing investment pitches. Once fooled, they're also unlikely to not report the crime - possibly out of embarrassment.

Off the Hook further emphasizes the need for fraud-prevention programs and fraud-awareness drives.

NASD is a private-sector regulator of the U.S. securities industry. Officially, it abandoned the name "National Association of Securities Dealers" several years ago.

Click here to download the report - here for the slide presentation of the report given at the sec.gov Securities and Exchange Commission's "Seniors Summit: conference in Washington, D.C., last week. -FWR

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