When we think about financial scams, we often assume that it’s our elders who fall prey most often. But according to a recently released Federal Trade Commission (FTC) report, statistics show that millennials are more than twice as likely to lose money in financial scams than senior citizens. Of Americans who reported financial fraud to the FTC in 2017:
- 40% of fraud victims in their 20s also reported losing money.
- 18% of fraud victims 70-years-old and older reported losing money.
Despite the higher number of losses by younger victims, their total monetary loss is much lower than elders who fall for these scams. Scam victims in their 20s reported a median loss of $400 compared to $621 for those in their 70s and $1,092 for those 80 and above. It remains to be seen whether this discrepancy is due to the younger victims realizing their mistake sooner, the older victims having a higher net worth, or other factors completely.
Whatever the reason, the statistics suggest that while younger consumers may be more comfortable with modern financial technology and mobile banking options, the need for consumer education remains high—a sentiment shared by the acting director of the FTC’s Bureau of Consumer Protection, Tom Pahl. “While we received fewer overall complaints in 2017, consumers reported losing more money to fraud than they did the year before,” Pahl said in a statement published along with the report. “This underscores the importance of the FTC’s work in educating consumers and cracking down on the scammers who try to take their money.”
Wondering what kind of scams are actually tricking people out of their hard-earned money? The most commonly reported schemes include phony debt collections, identity theft, and impostor scams where someone pretends to be a trusted person such as a government worker, a tech support agent or a family member in an emergency.
While these tactics were cited most often, there’s one type of scam that resulted in the highest total loss per incident. According to the FTC report, travel, vacation, and timeshare-plan schemes accounted for an average loss of $1,710 each.
When it comes to the methods and mechanics of fraudulent activity, phone calls were the communication method used in nearly 70% of cases, and wire transfers continued to be the most frequently reported method of payment, accounting for $333 million in losses.
As you’re planning your credit union’s financial education opportunities, consider adding content aimed at younger members. Helping them secure their money at a young age is one of the most helpful ways to ensure their long-term financial success. If you’re looking for relevant education resources specifically designed for younger members, check out this link for details on a new pilot program.