Online scams – why young people may be more at risk
Workplace Thought Leadership Team | June 21, 2022
Time to read: 4 minutes
Online crime surged during the pandemic and some fraudsters are now exploiting the cost of living crisis. Younger people may be more exposed due to their interest in high-risk investments and use of social media.
The cost of living could be the next frontline for scammers, with criminals using the crisis as a way to lure potential victims.
The head of the UK’s specialist police unit for fraud, DCI Gary Robinson, said he thought fraudsters could capitalise on people’s financial anxieties to persuade them to hand over their personal details. This could include sending messages offering rebates on gas and electricity and playing on people’s vulnerabilities.
Young people might be particularly at risk. This is due to their increased interest in high-risk investments and greater use of social media to find financial information.
The Financial Conduct Authority (FCA) surveyed 1,000 people aged 18–40 who invest in high-risk products, such as cryptocurrency and forex.
The research found that 76% of respondents said they were driven by competition with friends, family and acquaintances and their own past investments. More than two-thirds (68%) likened it to gambling.
Hype on social media and in the news is driving new investors to take-up high-risk investments, the survey found. Almost six-in-ten (58%) of respondents agreed that constantly hearing about an investment on the news, on social media, and from other people encouraged them to purchase specific products.
Most of those who purchased forex or crypto (57% and 69%, respectively), incorrectly believed these were regulated by the FCA. As a result, they were unlikely to understand the lack of investor protection and the risk to their money.
Increased online exposure
These behaviours raise the prospect of some young and inexperienced savers being particularly at risk of scams, particularly online.
Standard Life is part of Phoenix Group. Last year, Phoenix Group research found that 29% of people aged 18–34 fell victim to a scam or fraudulent activity in the past year . By comparison, only 12.5% of people aged over-35 were caught out by an online scam.
During the first year of the pandemic, 49% of all people aged 18–34 looked online or on social media for financial information. A quarter (26%) used Google or other search engines; 20% used YouTube; 18% turned to TikTok; while 15% used to Facebook.
Half of these young people reported receiving unsolicited financial advice.
Younger people also appear less suspecting than older age groups. Just over a third of those aged 18–34 felt the advice they received was suspicious or illegitimate, compared to more than half of people aged over 55. A fifth of young people said they found it interesting and engaged with it.
Five steps to spotting an online or social media scam
With fraudsters capitalising on new technologies and platforms, online vigilance is more important than ever. Below are five steps that can help employees – of any age – to identify online scams:
1. Check a website’s security measures – especially before sharing personal information. Look for the closed padlock symbol and https:// in the address bar of your browser; the letter ‘s’ stands for secure and means your data is encrypted. Genuine websites will have a certificate from a trusted certification authority (CA), demonstrating that they are safe and secure for users: this certificate forms part of the https process. You can view this certificate information by clicking on the padlock in the address bar.
2. Don’t allow yourself to be pressured into making a decision quickly. Pressure to make quick decisions may increase the chance of you making a poor decision. It is also an indicator of suspicious activity. Some scammers promise time-limited exclusive offers – even sending documents with couriers, who wait while you sign. The financial trade body’s anti-fraud campaign, Take Five, advises consumers to stop and think before handing over any money or personal details.
3. Think about the contact you have received. Is this how the company usually contacts you? Would your normal provider really text you about a financial opportunity? Think about whether it’s sensible for the company to contact you this way.
4. If it sounds too good to be true, it probably is. Sometimes an offer may be explained in a way that will not arouse suspicion. Think very carefully about the risks.
5. Don’t provide personal data until you know the company you are dealing with is regulated. If you have already done this and are concerned about how it might be used, contact your provider who can add additional security levels to your plan to provide further protection. The Get Safe Online website has a checker tool to help you quickly find out whether a page is likely to be legitimate. You can also search the Financial Conduct Authority’s online register of regulated investment firms.
If anyone suspects they’ve been approached by fraudsters, they should report it quickly to the FCA online or on 0800 111 6768. If they’ve lost money to investment fraud, they should report it to Action Fraud online or on 0300 123 2040.
This article shouldn’t be taken as financial advice and is based on our understanding in June 2022.
Standard Life accepts no responsibility for information contained on external websites. This is for general information only.