Why do so many people each year get cheated with phony investments?

Each year, investors lose more than $1.2 billion to various scams. Especially vulnerable are elderly consumers, who may not completely understand the opportunities they are offered. And, after being scammed, older consumers may be too embarrassed to report their losses to government authorities.

Some of the most common tactics used to attract people to deceptive investment schemes include

• Developing trust, in which con artists create a friendly connection by telling you about their family and asking about yours.

• Offering an impossibly attractive investment opportunity, for example, land that is cheap compared to other real estate or guaranteed returns of over 50 percent.

• Establishing credibility. The scam artist might imply that the investment is safe because it is advertised in The Wall Street Journal or mention that the company is “licensed” with the state.

• Creating social pressure by implying that many other people have made this investment. They may even mention names of people the investor knows.

• Generating fear to close the deal, since “you wouldn’t want to miss this opportunity.”

• Implying limited availability, such as “these are the last two rare coins available.”