Social isolation is a risk factor for scam loss

The coronavirus crisis is forcing people to distance themselves from others, work remotely, and spend time indoors and online. While social distancing is a good health practice to reduce the spread of the coronavirus, it may be helping scammers.

Research from the Better Business Bureau (BBB), the FINRA Investor Education Foundation, and the Stanford Center on Longevity found that people are more likely to lose money to a scam when they are socially or physically isolated from others, if they are actively engaging online, and if they are financially vulnerable.

“According to our research, social isolation is a key risk factor for susceptibility to scams, as is financial vulnerability,” said Melissa Lanning Trumpower, executive director of the BBB Institute for Marketplace Trust, BBB’s foundation that conducted the research.

“Add increased time spent online and coronavirus creates the ‘perfect storm’ for scammers, because all three of these factors have increased dramatically.”

As bricks-and-mortar businesses close or curtail services and the financial markets experience a high level of volatility, many consumers are left to wonder if they will have a job or an immediate way to provide for their loved ones. As people turn to the Internet seeking new or temporary employment, they are also at increased risk of employment scams.

Employment scams are deemed the riskiest scams of 2019, making up 9.3 percent of all scams reported and a median dollar loss of $1,500.

Despite these factors, there are steps everyone can take to protect themselves and their family from losing money and compromising personal information.

Contact someone you trust

Don’t be afraid to contact a friend, or a company or organization you trust for advice. Isolation is a risk factor for scams. Feelings of loneliness were associated with being more likely to engage with and lose money to scammers. This was especially true when the individual felt he or she lacked companionship and was isolated from loved ones.

Fact: Scammers will try to isolate their victims.

Don’t click on a link before you do your research

Before clicking a link or sharing personal information online, stop, pause, and research the company or person. People are more likely to lose money to scams perpetrated online.

Consumers who are approached online (email, website, social media, internet messaging, and online classifieds) are significantly more likely to report losing money.

Fact: A staggering 81.2 percent of consumers lost money to online purchase scams in 2019.

Beware of job offers that sound too good to be true

Employment scams were the No. 1 riskiest two years in a row. As traditional jobs are cut and workers begin to seek new roles or remote opportunities to fill the void, they must be wary of job offers that sound too good to be true.

Fact: Scammers prey on jobseekers, particularly those seeking remote jobs.

Learn about cyber risk and scams

Learn about scammer tactics to help avoid falling prey to scams and be wary of any offer to “get ahead” that seem too good to be true. Those who are financially vulnerable are more susceptible to scams.

Individuals under financial strain and those with lower levels of financial literacy may be more susceptible to scammers. Specific risk-factors include:

• Household income of $50,000 per year and below.
• Spending more per month than one’s earnings, not saving money, and having significant amounts of debt.
• Feeling compelled to “catch up” or “get ahead” financially.

Fact: According to the Exposed to Scams report, those who heard about the scam before they were targeted were significantly less likely to lose money (9 percent vs 34 percent).