Researchers are coming to new conclusions as they dig into the question of what makes some people and not others fall victim to fraud and online scams.
Victims often hate to admit they’ve been conned, so research is difficult. Even so, experts estimate that $40 billion to $50 billion a year is lost to consumer fraud, says a study by the Financial Fraud Research Center at Stanford University’s Center on Longevity.
The victims aren’t who you’d think
Some 30 million Americans are sucked into some type of financial fraud each year, says the American Psychological Association. Fraud comes in all shapes and sizes, from online dating-site deception, debt-collection scams, fake rental ads and worthless or nonexistent product sales to work-at-home schemes. (This Financial Fraud Research Center diagram gives a detailed breakdown.)
Victims include older people, yes, but also younger ones. Educated and undereducated. White-collar and blue-collar. Dumb people and smart ones. The Stanford study says:
An emerging conclusion in profiling research is that there is no generalized profile of a “typical” victim. Profiling studies that analyze victims by type of scam, however, have yielded a clearer picture of scam-specific profiles. In other words, while everyone is vulnerable, some people may be more vulnerable to particular scams than others.
AARP’s 2014 report, Caught in the Scammer’s Net, lists risk factors that make adults more likely to become victims of certain types of fraud. You’re likely to be targeted if you are:
1. A white man
The typical victim of investment fraud is a man. He’s middle-aged, educated, financially literate and white, and he’s under financial pressure, psychologist Laura Carstensen, founding director of the Stanford Center on Longevity tells The American Psychological Association.
This makes sense, when you think about it. People who don’t ordinarily buy investments aren’t likely to fall for an investment scheme, or even to be offered it. In a phone interview with Money Talks News, Marti DeLiema, postdoctoral research fellow at the Financial Fraud Research Center, said:
Fraud victimization is really associated with exposure. The more you engage in the marketplace the more likely you are to be vulnerable. You have to be in the market for a product to get hooked.
Elders do get hit hard by scammers and they’re more likely to lose a significant amount of money to fraud, but generally that’s largely because scammers pick on them more.
Some susceptibility does come with age-related decline. Researchers have found that older people can have a harder time spotting liars, probably because of a decline in “emotional recognition,” or the ability to read others’ emotions accurately, the fraud researchers at the Stanford center said. But elders’ long experience in life also helps them spot fraud. On balance, they aren’t more susceptible than anyone else. DeLiema says:
We have found that older adults are disproportionately targeted, but once they are targeted they are not more likely to be victims. Most PSAs (public service announcements) are targeted at the elderly. Perhaps those messages are working, and maybe experience can outweigh cognitive decline.
Some services are marketed as useful to helping keep elders safe from fraud.
Contrary to popular wisdom, younger adults actually are more vulnerable than older people, according to research by Judy Van Wyk of the University of Rhode Island and Karen A. Mason of Washington State University in the Journal of Contemporary Criminal Justice. People 18 to 25 stood a 77 percent chance of becoming victims compared to people 65 to 75, who had a 44 percent chance, according to the study.
Scam artists alter their tactics depending on the unique vulnerability of their targets, says DeLiema. A young woman might not fall for a ‘grandparents scam’ (in which con artists pose as a grandchild in trouble) but she might fall for a weight loss scheme or a juice cleanse or an anti-aging cream because she feels insecure about aging.