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Angelita Williams (202) 728-8988
Mike Rote (202) 728-6912

New Fraud Research: Low Financial Literacy Levels and Social Isolation Increase Consumers’ Likelihood of Being Scammed

Joint Research by FINRA Foundation, BBB and Stanford Center for Longevity show increased public awareness from news media reports, word of mouth and business intervention boost consumers’ defenses

WASHINGTON – The FINRA Investor Education Foundation (FINRA Foundation) today released new fraud research that shows that the scams with the highest engagement and victimization rates involve online purchases and social media—outpacing telephone, mail and email fraud. In addition, individuals who are socially isolated or who have low financial literacy levels are more likely to lose their money to a fraudster.

“Despite the enormous personal and financial costs of fraud victimization, few studies have explored the process of fraud victimization and the factors associated with losing money,” said FINRA Foundation President Gerri Walsh. “Our goal is to better understand the conditions under which scam targets do not become victims in order to develop more focused and effective public education tools and strategies to protect consumers.”

The 24-page report titled, “Exposed to Scams: What Separates Victims from Non-Victims,” was issued in concert with the BBB Institute for Marketplace Trust and the Stanford Center on Longevity, in recognition of World Investor Week, which starts today. Throughout the week, securities regulators, stock exchanges, international organizations, investor associations and other stakeholders from almost 90 countries offer consumers an array of activities to increase awareness of investor education and protection.

During the study, researchers surveyed more than 1,000 Americans and Canadians who were targeted by scammers and reported the fraud to the BBB. Nearly half of those surveyed did not engage with the fraudster. However, nearly a quarter lost an average of $600.

Some key findings include:

  • When phone and email were used by scammers to target consumers, relatively few consumers engaged with the scammer or lost money. However, when exposed to a scam on social media, 91 percent engaged and 53 percent lost money. Similarly, 81 percent of consumers who were exposed to a fraud via a website said they engaged and 50 percent lost money.
  • Consumers were more likely to be victimized if they did not have anyone to discuss the offer with. Consequently, those who engaged scammers and lost money were less likely to be married and more likely to be widowed or divorced. Generally, those who engaged, and those who lost money, reported significantly higher feelings of loneliness. Social isolation appears to play a role in fraud victimization.
  • The likelihood of victimization for this sample is greater for individuals who are under financial strain, are younger adults, or have low levels of financial literacy.
  • Research showed that 51 percent of people who reported a third-party intervention were able to avoid losing money. Cashiers, bank tellers, employees of wire transfer services and other financial services companies where consumers were about to send money to a scammer, served as an important last line of defense.
  • Nearly half of those surveyed said the news media was their primary source of information about scams. Word of mouth was the next best form of protection and awareness.
  • Prior knowledge of fraud helps decrease the chances of victimization. One-third of consumers who were targeted by a scammer, but did not engage, already knew about the specific type of scam. In addition, consumers who understood the tactics and behaviors of scammers did not engage with the fraudsters.

“The path to victimization begins with engagement,” Walsh added. “However, we now know that there are a number of steps consumers can take to protect themselves ahead of time, as well as in the moment, such as talking to people who have no stake in the outcome and doing additional research before sending any money or sharing personally identifiable information.”

FINRA Investor Education Foundation
The FINRA Investor Education Foundation supports innovative research and educational projects that give underserved Americans the knowledge, skills and tools to make sound financial decisions throughout life. For more information about FINRA Foundation initiatives, visit

FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit