Financial Fraud Also Costs Victims Stress, Anxiety, Depression: FINRA Report
A recent report by the financial industry’s independent regulatory agency indicates that victims of investment fraud not only suffer economic damages, but also often suffer stress, anxiety, depression and other psychological injuries.
The Financial Industry Regulatory Authority (FINRA) issued a research report last month, titled “Non-Traditional Costs of Financial Fraud” (PDF), which suggests that two thirds of all cases of financial fraud also result in non-financial harm for the investor.
“Fraud’s effects linger and cause distress well after the scam is over. For the first time, we have data on the deep toll that fraud exerts on its victims, and the results are sobering,” Gerri Walsh, the foundation’s president, said in a press release. “This new research underscores the importance of the FINRA Foundation’s work with an array of national, state and local partners to help Americans avoid fraud, and assist consumers who have been defrauded.”
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The report was created by the FINRA Education Foundation, and found that the most common non-financial side effect of financial fraud was severe stress.
Researchers conducted a survey of 600 self-reported fraud victims who were 25 or older and who have primary or shared decision-making responsibility in their household’s financial decisions.
The report found that the harm from financial fraud goes much further than costs to bank accounts and savings.
According to the findings, 65% of financial fraud victims reported experiencing at least one type of non-financial cost, with half of those citing stress. Thirty-eight percent of victims reported suffering sleeping problems, and 35 reported having bouts of depression. The larger the amount of money lost to fraud, the greater the number of non-financial problems likely to be suffered by the victim, according to the report.
The victims also suffered other financial costs that were indirectly related to their losses, such as late fees, legal costs, overdraft charges and similar.
One reason victims of financial fraud are often so stressed out is because they often blame themselves, the report determined.
“Victims of financial fraud place a good deal of responsibility on themselves for the incident,” according to the report. “Just under half (47 percent) blame themselves for being defrauded, and 61 percent feel that they were defrauded because they were too trusting.”
FINRA is a non-governmental agency that acts as a self-regulatory agency for investment firms. It was created in July 2007, as a successor to the National Association of Securities Dealers, handling all disputes between investors and stockbrokers or other financial firms. FINRA arbitrators resolve stock broker fraud claims that can include charges of breach of contract, breach of fiduciary duty, negligence, misrepresentation, unauthorized trading and other claims that investments were improperly handled.
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