How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities

Financial scams continue to grow more complex and difficult to detect as scammers innovate and fine-tune their tactics. Scammers are pulling from the toolkits of legitimate businesses, personalizing their offerings to attract prospective “customers.” Likewise, they are leveraging strategies to add legitimacy to the scam, customizing how they contact and convince victims to engage.

PYMNTS Intelligence’s 2024 report, “The Impact of Financial Scams on Consumers’ Finances and Banking Habits,” produced in collaboration with Featurespace, finds that financial scams have never been more prevalent. However, past estimates have underreported the full scope of scams. Data shows that 3 in 10 U.S. consumers — roughly 77 million individuals — lost money to a scam in the last five years. The financial implications are often severe. Most victims lose more than $500, and many suffer thousands in financial damage.

Scammers are not just preying on older generations. Scam victims cut across demographics — including age, education and income. Still, specific groups are more susceptible to different types of scams, depending on both scammer targeting and situational exposure. For example, younger consumers, who are early in their careers, may be exposed to job search scams more than other scams.

For consumer-facing financial institutions (FIs), understanding the true scale and damage of financial scams is also critical to protecting customers. Scammers do more than deceive their targets, causing mental and emotional damage. These criminals undermine consumer trust and confidence in FIs, online transactions and the financial system as a whole.

These are just some of the findings detailed in “How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities,” a PYMNTS Intelligence and Featurespace collaboration. The report is based on a survey of 10,103 consumers conducted from July 26, 2024, to Aug. 19, 2024. It explores the tailored strategies scammers leverage to deceive consumers and how FIs can protect their customers.

• Scammers Attract Victims With Tailored Financial Scams
• How Financial Scammers Maximize Engagement
• Key Tactics for Gaining Financial Scam Compliance
• Conclusion
• Read More
• Methodology

Scammers Attract Victims With Tailored Financial Scams

Personal circumstances make consumers more vulnerable to different scams, thus enabling scammers to use tactics similar to those businesses use to acquire customers when initiating a financial scam.

New data reveals that consumers’ unique circumstances make them more vulnerable to types of scams most relevant to their interests and habits. For instance, Generation Z consumers are often early in their careers and job hunting and are three times more likely than baby boomers and seniors to be victims of job listing or employment scams. Nearly 8% of Gen Z scam victims report losses to such schemes.

Older generations face higher risks from fake eCommerce scams. These scams impact baby boomers and seniors more than three times as frequently as Gen Z. Similarly, for identity theft scams, 23% of victims were Generation X consumers, and 20% were women.

Scammers also adapt to factors like income, education and life stage, creating highly convincing scenarios that resonate with individual victims. This level of personalization enables scammers to exploit human psychology effectively. By aligning their messages with a target’s fears, aspirations or habits, they make their scams more believable and harder to detect.

For example, sweepstakes scams are more likely to target seniors who may feel financially insecure. Baby boomers and seniors are twice as likely to be victims of these types of scams as Gen Z consumers. Meanwhile, investment scams prey on high-income individuals seeking lucrative opportunities. Government benefits scams are more prevalent among low-income and less-educated individuals.

Consumers’ unique vulnerabilities are likely due in part to self-selection. For example, consumers looking for jobs are naturally more at risk of encountering a job board scam. However, as scammers adopt advanced techniques, we must consider that they are intentionally targeting and exploiting consumers’ unique vulnerabilities. Rather than one-size-fits-all targeting, savvy scammers may be beginning to customize their scams to target groups most likely to be impacted by specific types of scams.

How Financial Scammers Maximize Engagement

Financial scammers personalize their first contact with targets based on the consumers’ character traits and the scam type.

First impressions matter. Often, scammers carefully choose the first point of contact or chance to get a buy-in by aligning with potential victims’ habits and preferences. This can also make financial scams appear more legitimate — and keep potential victims from becoming suspicious. Scammers utilize a mix of digital and traditional channels to initiate communication, seeming to approach victims in ways they are most likely to engage. The most prevalent digital channels were email and social media, with each around twice as prevalent as text messages.

Digital communication methods, such as email and social media, dominate as primary contact points, particularly among younger demographics like Gen Z. Data shows that 21% of the scams that Gen Z consumers fell victim to were initiated via social media. Older generations, such as baby boomers, are more frequently contacted through channels they trust more: 23% via email and 21% via phone calls.

Additionally, scammers adapt their outreach to the scam type. For instance, online platforms account for 42% of eCommerce scam contact points, while phone calls dominate debt collection schemes, comprising 39% of initial contacts. These moves mirror common legitimate forms of communication in those fields and can build credibility.

Importantly, scammers also leverage generational habits to maximize impact. For instance, Gen Z’s reliance on digital platforms makes them two times more vulnerable than baby boomers and seniors to social media fraud.

This adaptability demonstrates scammers’ understanding of both digital trends and traditional behaviors. It indicates scammers’ overt efforts to tailor the scam experience to exploit consumers’ unique vulnerabilities.

Key Tactics for Gaining Financial Scam Compliance

After first contact, scammers leverage tactics that align with the financial scam type to gain buy-in from victims.

Once the scammer makes contact, they employ carefully chosen tactics to manipulate victims into compliance. These methods often involve building trust, leveraging fear or offering financial incentives, depending on the scam type.

For example, scammers posing as trusted entities such as employers are particularly effective in job listing scams. Eighty-six percent of victims reported that the scammer used this tactic. Similarly, 83% of debt collection scam victims reported that scammers pretended to be a trusted entity.

Coercion and threats are common in identity theft scams and government benefits scams. Data shows that 22% of identity theft victims and 42% of government benefit scam victims reported that the scammer used these tactics.

Surprisingly, when it comes to sweepstakes or investment scams, scam victims were likely to say the scammer used trust-based tactics. That said, among all scam types, victims who experienced these scams were the most likely to say that the promise of financial rewards was a factor.

Generational differences also play a role. Younger individuals, such as those from Gen Z, report experiencing a broader range of manipulative tactics than older groups. This could indicate that scammers adjust their strategies based on perceived skepticism or susceptibility. In turn, that aligns with data showing that scammers target younger victims with more elaborate scenarios that can capitalize on overwhelming the target. The variety of scams older consumers are often victims of, such as marketplace scams, tend to be simpler and require less advanced tactics.

Scammers’ ability to shift their tactics highlights the necessity for FIs to adopt dynamic defenses. As scammers continue to refine their tactics, FIs must invest in advanced analytics and behavioral monitoring to stay ahead of these tailored threats. Proactive measures, such as scenario-based training for consumers, can empower individuals to recognize and resist manipulation.

Conclusion

Scammers have adopted advanced techniques for their financial scams, drawing parallels to how businesses personalize consumer outreach. This shift reflects a growing sophistication in fraud strategies. Rather than one-size-fits-all targeting, savvy scammers exploit consumers’ unique circumstances. This makes scam victims more vulnerable to the types of scams most relevant to their interests and habits. Scammers also employ carefully chosen tactics, such as building trust, leveraging fear or offering financial incentives to manipulate victims into compliance once they make contact. In fact, scammers make overt efforts to tailor the scam experience to the unique scam. As scammers continue to refine their tactics, FIs must invest in advanced analytics and behavioral monitoring to stay ahead of these tailored threats.

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• The Impact of Financial Scams on Consumers’ Finances and Banking Habits

Methodology

“How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities,” a PYMNTS Intelligence and Featurespace collaboration, is based on a survey of 10,103 consumers conducted from July 26, 2024, to Aug. 19, 2024. The report explores the tailored strategies scammers leverage to deceive consumers and how FIs can protect their customers. Our sample was balanced to match the U.S. adult population in a set of key demographic variables: 51% of respondents identified as female, 33% had a college degree, 38% earned more than $100,000 annually and 29% were millennials.