Jim Winsett of the BBB. Q. Who are the victims of scams and fraud?
A. My answer is based on a recent survey and report released by BBB. Everyone knows that older Americans - especially the elderly - are the most likely to be scam victims, right? Turns out, this is a myth. In fact, according to a new report link by BBB Institute for Marketplace Trust, millennials are more likely to be scammed than boomers.
BBB Institute, the educational foundation of the Council of Better Business Bureaus, just surveyed 2,021 adults, asking whether they'd lost money to a scam in the previous year. Roughly 30 percent of those ages 25 to 34 were scam victims, while less than 10 percent of those 55 and older were.
Marketplace scams affect one in four households each year at an estimated loss to individuals and families of $50 billion, yet most consumers believe they are invulnerable. This report offers key findings and recommendations from a 2016 survey by the Better Business Bureau (BBB) of more than 2,000 adults in the U.S. and Canada.
Participants were asked about their perceived vulnerability to scams, who they think is most likely to be scammed, and about the factors that helped them to avoid being scammed. BBB's survey results show strong evidence of optimism bias; individuals tend to believe others are more at risk of being scammed than themselves. They also view scam victims through a distorted lens - as elderly, alone, and pitiable, or gullible, unintelligent, and worthy of scorn.
In fact, earlier research - buttressed by BBB's survey results - supports an understanding that we are all at risk, and that those most likely to be victimized tend to be younger and better educated.
These findings have important implications for public education and awareness efforts. For individuals to be receptive, they must first recognize their own vulnerability.
The shame and stigma attached to scam victimization contributes to under-reporting of these crimes. This study found that when individuals do report, they are most often motivated by a desire to warn others rather than the hope of recovering their lost funds.
A public education effort is needed that taps into this desire to help, tackling the illusion of invulnerability through the stories of victims from all segments of society, while conveying the knowledge and information needed to detect and prevent fraud.
While the themes of deception and misappropriated trust are perennial, fraudsters have evolved alongside the legitimate economy in their sophistication, reach and use of technology and innovation.
The "snake oil salesman" traveling door-to-door or working a small carnival crowd is a world away. Today's con artists strike from the anonymity and distance of the internet, quickly and affordably casting a wide net to catch unsuspecting victims in their carefully spun cons. They operate as shapeshifters, often masquerading as the corporations, agencies, and institutions we trust the most, and they use the tools of the legitimate economy to separate victims from their money.
If awareness efforts are to be effective, they must be as nimble and responsive as the scammers themselves, leveraging technology to bring real-time information to the public about current scam types and techniques. Even as the internet and new technologies have undoubtedly facilitated the expansion of the scam marketplace, they must also be embraced as part of the solution.
While there is no question the online world is rife with cons and fraudulent schemes, it also overflows with examples of people helping one another - displays of human kindness from individuals we call "citizen heroes." From virtual fundraisers to blogs and message boards spilling over with helpful advice, there is no shortage of good will in the online community. Leveraging the reach of the Internet to channel this human desire to help can turn the tables on fraudsters.
It is a potential game changer from both the prevention and prosecution angles. The voices and stories of others have the potential to normalize the problem in a positive way, shedding the shame and stigma of victimization with the message that, if it can happen to other people like me, it can happen to me.
To help consumers fight back, BBB is using the very technology scammers have so ably deployed. BBB Scam Tracker, launched in 2015, is a new tool that enables the public to report scam activity, from bogus IRS notices to phishing scams to phony shopping sites.
BBB Scam Tracker collects and presents scam data in a searchable online "heat map," showing consumers the number and types of scams and hoaxes reported in their communities. The tool provides a window on the scam landscape, enabling data-driven consumer alerts and tips based on current information. Data also are shared with law enforcement agencies for investigative purposes. BBB Scam Tracker's crowdsourced approach is designed to leverage the altruistic impulse. The details of an individual's report appear on the BBB Scam Tracker map alongside the stories of other victims and targets who have come forward to help.
Consumers we surveyed said they were more likely to turn to BBB to report scams than anywhere else (including the police), and BBB was identified as second only to Google for researching scams. We can expect this trend to gain momentum with the growth of BBB Scam Tracker. www.bbb.org/scamtacker.
By every available measure, marketplace scam victimization has reached epidemic levels with no signs of abating. The Federal Trade Commission estimates there were nearly 40 million incidents of fraud in 2011. This figure puts the risk of fraud victimization at more than four times greater than the risk of violent crime, burglary, larceny, and motor vehicle theft combined.
Behind these numbers are people who are harmed both financially and emotionally - homes are lost, finances are devastated, hearts are broken, and trust is violated. But individuals are not the only victims. Ethical businesses that strive every day to do the right thing rely on the marketplace to operate by a playbook where fair and honest practices are rewarded.
Scammers break these rules, unfairly gaining the upper hand. A seminal 1995 study, Victimization of Persons by Fraud, plainly put forward a vision for consumer awareness and education efforts: This study suggests the value of public education programs aimed at the prevention of personal fraud, because fraud attempts were less likely to be successful if the intended victim had heard of the fraud before.
Information programs need to highlight the fact that victimization by personal fraud is a pervasive threat to all segments of society, identify the types of fraud that are current, and the kinds of action that can help persons detect and prevent fraud. Today, we have yet to see a public outreach effort fully materialize that is both aligned with this call to action and commensurate with the scale of the problem.
The time for such action is long overdue. The business community, government, the media, law enforcement, non-profits, and citizen heroes all have an important role to play. Successful outcomes will come through the long-term efforts of multiple players who collectively create a movement toward personal empowerment and a fundamental shift in perceptions of individual risk.
Jim Winsett is president of the Better Business Bureau in Chattanooga.