Millennials Reporting More Electronic Scams, but Smaller Losses than Individuals Over 40
Scams, whether initiated online or over the phone, affect people of all ages. However, to the surprise of some, the Federal Trade Commission (FTC) has found that individuals in the millennial generation, which the FTC defined as people between 20 and 39, are 25 percent more likely to report losing money to fraud from electronic scams.
In its report, the FTC analyzed the reporting rates of fraud from September 2017 to August 2019, including the following types:
1. Online shopping
2. Business imposter scams
3. Government imposter scams
4. False check scams
5. Romance scams
6. Business opportunity/worker-at-home plans
7. Debt management/credit counseling
9. Travel vacations
10. Tech support scams
In comparing reporting rates by people from the ages 20 to 39 to those 40 an over, the FTC found that millennials were more likely to report, and less likely to avoid, four of the top five types of fraud, including online shopping, business imposter scams, government imposter scams, and false check scams. The most significant disparity in reporting between the age groups is in connection with online shopping, where millennials are twice as likely to report losing money. Millennials were also 93 percent more likely to report losing money from fake check scams, 66 percent more likely to lose money on scams that promise to fix debt-related issues, and 48 percent more likely to lose money in scams that promise money through investment. The only scams people 40+ were found more likely to report are romance scams and tech support scams.
. The FTC also looked at the amount people lose in connection with these scams. For millennials, the median loss reported was about $400. However, for those 40 and above, the amount was notably higher, breaking down as follows: $500 for people 40 to 59, $640 for people 60 to 79, and $1,700 for people 80 and older. Notwithstanding the disparity in the median loss per scam, the FTC reports that the individual losses sustained by millennials still added up to nearly $450 million over the course of only two years, of which $71 million was related to online shopping scams.
The FTC also looked at how these scams were initiated. For example, for people 40 and older, they were five percent more likely than millennials to report a scam initiated via phone. In contrast, millennials were 77 percent more likely to report losing money via a scam initiated via email, 23 percent more likely to report losses when they initiated contact with the veiled-fraudster, and 14 percent more likely to report losing money online.
The disparity between the age groups noted by the FTC, and the medium by which such losses occurred, is consistent with other recent studies assessing the manner in which these types of scams occur. For example, in another recent study conducted in tandem by the Better Business Bureau, the Financial Industry Regulatory Authority and the Stanford Center on Longevity (and reported by The Wall Street Journal), it was found that the majority of consumers that fell prey to scammers (i.e., millennials, per the FTC) did so on legitimate websites and social media.
Anyone is susceptible to being defrauded by electronic scams. People should always remain cautious when they are contacted by others demanding money, and heed the FTC’s tips to avoid being scammed. Specifically, no matter the manner in which the purported scam is initiated, if someone has contacted you to demand money or personal information, be sure to review the request and discuss with someone you trust. For online shopping, know who you are dealing with, know what you are buying, know what it will cost, and review the terms of the deal. For debt-related fraud, know your rights under the Fair Debt Collection Practices Act to be able to recognize debt-related scams and frauds.