Research: Why do consumers fall for scams?

Scam season is approaching. While consumers are preparing to massively shop online for the holiday season, scammers are ramping up their websites. The Ecommerce Foundation surveyed 5200 consumers from 42 countries to better understand who is being scammed and why scams are successful.

Consumers receive 55 scams attempts a year

Of the participants in the survey, 72% think they have been approached by at least one scammer in the past year. The number of scam approaches has remained stable in comparison with the year before, with 23% of the respondents even noting that they have been approached far fewer times. Still, the average consumer is approached 55 times a year by a scammer. The most popular scams are attempts to gain personal information (15%), unexpected winnings (15%) and scams related to buying and selling online (14%).

The number of scam attempts differs strongly per country. Nigeria and South Africa suffer the most with 82% of the participants from these countries having received at least one scam attempt last year. Countries that are closely following are the United States (81%), Australia (79%), Canada (79%) and the UK (72%). In comparison, ‘only’ 59% of Spanish and 55% of Indian participants reported receiving a scam.

Super confident consumers, but 73% have still fallen victim

Most consumers (75%) feel very confident that they can recognize scams. People with a Bachelor’s (79%) or Master’s degree (78%) overall feel more confident than people with no education (66%) or those with little education (55%). However, of those who reported having been approached for a scam, 73% state to have fallen for a scam at least once last year with 46% of them losing money while 20% lost personal details. 17% of the people surveyed were drawn into the scam but did not suffer any losses. Remarkably, people with higher education (PhD, Master, and Bachelor) report to have been scammed more than people with less education. 53% of those with a PhD reported having lost money or other assets to a scammer. Only 34% of respondents with no schooling reported being scammed.

image: % of people who have fallen for a scam/education level

The amount of experience in online shopping has a strong impact on vulnerability towards being scammed: those who have none or very little online shopping experience fall for scams more easily (51%) than those who shop online on a weekly or monthly basis (25%). Consumers who got scammed are only slightly less confident that they can identify the next scam than those who have never been scammed before, which might make learning to recognise a scam difficult.

Why do we fall for scams?

While participants believe that they are very good at identifying scams, reality shows otherwise. 50% of those who have fallen for a scam did not identify the scam until it was too late. 30% also cited a lack of knowledge as a reason for falling for a scam. Consumers are also gamblers: 21% stated going for the lure of money or even suspected a scam but chose to risk it. Another reason cited is that consumers do not do enough research before they buy from a new online store. Not reading the small print, not checking reviews, and simply acting on impulse were named frequently.

People over 65 were especially vulnerable to not being able to identify the scam until it was too late. Young people also are more willing to take a risk, suspecting a scam, but still going for it. The same applies to people with an annual income higher than $50.000.

Finally, recognizing a scam is also reported to be difficult. Participants see ads on Facebook, Pinterest, and Google as legit. Scammers are increasingly professional making it even difficult for experts to recognized forged emails from PayPal and DHL, fake company papers, and IDs.

The impact of scams

The average amount lost amongst American participants is $1000. While most people lose relatively small amounts, the number of investment and romantic scams increase the average significantly. Some of the participants claimed to have lost up to several hundreds of thousands of dollars in cryptocurrency schemes.

Men (40%) are more prone to losing money than women (32%). When American men lose money they also lose nearly 3 times as much as American women. The impact of falling for a scam is significant. People from low-income countries like Nigeria, Columbia, and Kenya lose money the most frequently, followed by Australia and to a lesser extent Brazil, Italy, Mexico, and Spain.

The emotional and social impact may, however, be even more significant than the money lost. People who got scammed state they lost trust in themselves and other people.  People are fighting back, by trying to scam the criminal, revealing his identity, or just having a good laugh by frustrating the scammer.

How can we fight scams?

40% of those who were approached by a scammer never reported the offence. While, on average, participants received 55 scams annually, 18% reported only one, 11% - 2 scams and 6% - 3 scams. In total, only 7% of all scam approaches end up reported. The main reason why consumers do not report scams is that they do not know to whom to report (45%). Other key reasons are that it would not make a difference (23%) or that it is too complicated (22%).

More than half of participants believe that the best way to fight scams is to block scammers from the internet and social media (55%). Half of the consumers also think that scammers should be prosecuted more severely, and a single organization should be set-up to report and fight scams (32%). Educating consumers more is also believed to reduce the number of scams (46%).

41% of participants believed that consumer protection agencies should take the lead in fighting scams. However, consumers also feel that they themselves are responsible (35%). Other kinds of organisations consumers feel should take responsibility to fight scammers are payment service providers (35%), governments (34%) and credit card companies (31%). Remarkably the police (20%) and Interpol/Europol are named less (19%).

Scams are global, requiring a global approach

The study shows that everyone can fall for a scam no matter their age, gender, education level, income, or country of residence. Greed, but more importantly a lack of education seems to be the main reason consumers fall for scams. Consumers are looking for a central institution to report and fight online scams on a global level. Consumer protection agencies are looked upon to take the lead in this endeavour but consumers see that they too have to take responsibility.

Download the full report here.