Who’s Most at Risk? Breaking Down Fraud and Scams by Demographic
Fraud and scams continue to evolve, with criminals finding new ways to exploit individuals regardless of background. In this article, we explore the most common types of fraud including virtual currency scams, investment fraud, unique scams, and loan scams, to inform you about how they operate, and who is typically affected.
Virtual Currency Scams: A Growing Threat
The rise of cryptocurrencies like Bitcoin, Ethereum, and stablecoins such as Tether has attracted both legitimate investors and a new wave of fraudsters. Virtual currency scams in particular, have increased significantly, often targeting those interested in digital currencies who may not fully understand the associated risks.
Types of Virtual Currency Scams:
Cryptocurrency Investment Fraud: Scammers set up fake platforms or exchanges that claim to offer a significant return on investment. Often, these platforms mimic legitimate businesses, complete with professional websites, fake reviews, and even customer service features. Victims usually discover the scam only when they try to withdraw their funds, at which point they are asked to pay additional fees or taxes.
Fake Initial Coin Offerings (ICOs): Fraudsters entice people to invest in a new cryptocurrency with promises of explosive growth, only for the ICO to disappear once they've pocketed the funds. This type of fraud persists due to cryptocurrencies still not being fully understood and a lack of regulation.
Wallet Impersonation Scams: In these scams, fraudsters impersonate support staff from legitimate cryptocurrency exchanges and convince victims to transfer funds into fraudulent wallets under the guise of "safeguarding" them.
Cryptocurrency scams typically target tech-savvy individuals, particularly younger generations who are attracted by the promise of high returns. The volatile nature of the cryptocurrency market, combined with the lack of regulation, makes it easy for fraudsters to create schemes that appear trustworthy but are ultimately designed to steal investors' money.
Investment Scams: Fraudsters’ Money-Making Machines
Europol’s Online Fraud Schemes: A Web of Deceit report highlights investment fraud as a major crime threat, not only in the EU but globally. Here, scammers are constantly refining their tactics to exploit new opportunities, such as stocks, real estate, and, increasingly, cryptocurrency.
Investment Fraud: A Prolific Scam
Investment fraud is organised crime at its finest. Fraudsters use well-rehearsed schemes to lure victims into parting with their money, often through professional-looking websites and convincing email pitches. Social media has also become a popular hunting ground for scammers, as platforms like Instagram and Facebook allow criminals to reach millions of people with targeted ads promoting fake investment opportunities.
Europol’s report highlights two particularly prevalent forms of investment fraud: pyramid schemes and romance scams. In pyramid schemes, victims are encouraged to recruit others, which builds the illusion of legitimacy and growth. Meanwhile, in romance scams, the fraudster builds a personal relationship with the victim before convincing them to invest in fraudulent schemes.
The tactics used by these criminal networks are sophisticated, with call centres often employed to reassure potential victims. These call centres operate in multiple languages, and the staff may not even be aware that they are part of a scam. As mentioned in the FBI’s Internet Crime Report, investment fraud resulted in over $75 million in losses in the US alone in 2022.
Insights from Our Internal Data on Demographics
Based on our internal data, the types of scams affecting different demographics vary considerably, with specific patterns observed across various age groups and social backgrounds.
Younger Adults (18-34): This group is more prone to virtual currency scams and investment fraud, particularly through platforms such as Instagram and TikTok. Their high engagement with social media and digital investments makes them a prime target for cryptocurrency scams and fake investment schemes. Our data shows that nearly 45% of investment fraud victims in this demographic reported losses linked to cryptocurrency-related scams.
Middle-aged Adults (35-54): Middle-aged individuals tend to fall victim to more traditional investment fraud, such as pyramid schemes and fraudulent pension investments. Our statistics indicate that this group, particularly professionals with disposable income, is targeted through phishing emails and fraudulent investment websites. This group accounts for the largest percentage of victims in pension fraud, with nearly 50% of reported cases involving people aged 40-55.
Older Adults (55+): The older generation is primarily targeted by loan scams and charity fraud, especially those linked to international crises. Many of these individuals are approached by scammers offering bogus debt relief services or fake charities, exploiting their goodwill or financial insecurities. Nearly 60% of charity scam reports come from individuals aged 55 and above, highlighting how these fraudsters prey on their emotions and desire to help.
These demographic insights provide a clearer picture of how scammers strategically target victims based on their age, online behaviours, and financial vulnerabilities.
Unique Scams: Targeting Vulnerable Groups
Certain types of scams are crafted to exploit specific vulnerabilities. One type that has seen a significant rise is the charity scam, where fraudsters appeal to the goodwill of people by claiming to raise funds for victims of international conflicts or natural disasters. These scams are especially insidious, as they manipulate people’s desire to help those in need, often using highly emotional and urgent appeals to create a sense of urgency.
Another emerging threat is re-targeting of fraud victims. Fraudsters often pose as lawyers, law enforcement officials, or recovery experts, claiming they can help victims recover money lost in previous scams. This strategy is particularly effective because it exploits victims’ hopes of getting their lost money back.
In the EU, criminals are also still engaging in logical attacks on ATMs. These involve sophisticated techniques to access the machine’s internal workings and steal money. A related method is shimming, where criminals intercept the communication between a card and the card reader’s chip, allowing them to steal card information.
Loan Scams: Exploiting Financial Vulnerabilities
Loan scams remain one of the most common methods to target individuals in financial distress. These scams often promise quick and easy loans for those with poor credit or pressing financial needs, but they come at a steep cost.
Types of Loan Scams:
Advance Fee Scams: Victims are asked to pay an upfront fee to secure a loan. However, once the fee is paid, the loan never materialises.
Debt Consolidation Scams: In these scams, fraudsters promise to consolidate a victim's debt or reduce their interest rates in exchange for a fee. Unfortunately, the victims' debt remains unchanged, and their money is gone.
Phishing Loans: These scams involve fraudsters using fake loan offers to steal personal and financial information. This data is then used to open credit accounts in the victim's name or drain existing accounts.
Loan scams primarily target those who are already financially vulnerable, such as individuals with poor credit scores or mounting debts. These scams often appear legitimate, complete with contracts and official-looking paperwork, which makes it all the more devastating when victims realise they’ve been duped.
Fallen victim to fraud or a scam?
As scams and fraud evolve, it is crucial to stay informed and vigilant. Whether it’s a virtual currency scam, an investment scam, or a loan scam, the risks are everywhere and can affect anyone. By understanding how these scams operate and recognising their warning signs, you can take proactive steps to protect your money and personal information. Remember, if an opportunity sounds too good to be true, it probably is.