Advisors looking to sharpen client conversations around fraud prevention now have data pointing to where the biggest blind spots sit: outside of identity theft, most Americans struggle to name the scam tactics most likely to be used against them.
New research from the FINRA Investor Education Foundation, conducted with RAND, found that when 1,509 US adults were asked to describe fraud schemes in their own words, only half brought up identity-based fraud, the category involving stolen Social Security numbers, account passwords or other personal data.
Awareness of every other major fraud category was far lower: 20% named threat-based fraud, 17% cited opportunity-based fraud, 16% mentioned consumer-based fraud and just 14% referenced imposter schemes, where a fraudster poses as a trusted contact, business or agency.
The findings, published in a brief titled "Patterns in Fraud Awareness: What Comes to Mind When Americans Think About Financial Fraud," suggest that fraud education efforts may be too narrowly focused.
Respondents were not given category options but were asked to freely list up to five tactics fraudsters use, a method designed to capture what genuinely comes to mind unprompted rather than what people recognize when shown a list.
Participants who answered more questions correctly on a three-item quiz covering interest rates, inflation and diversification were substantially more likely to identify threat-based, imposter-based, identity-based and consumer-based schemes. Awareness of opportunity-based fraud, tactics built around promises of quick money or prizes, did not move with literacy scores.
"This new research exposes a knowledge gap that fraudsters actively exploit. However, it also shows that Americans with higher financial literacy were better able to identify fraud, and that awareness of certain fraud schemes was associated with avoiding losses," said FINRA Foundation President Christine Kieffer. "Understanding which types of fraud are top-of-mind for consumers and which are lesser-known is important for developing effective fraud prevention education, strategies and tactics that address both familiar and emerging schemes. This is an area of focus at FINRA and the FINRA Foundation every day."
The recognition gap carried real consequences. Respondents who identified threat-based tactics, those using fear or urgency to force quick payment, were less likely to report having lost money to a scam. By contrast, naming identity-based or imposter-based fraud was linked to a higher chance of reporting having been targeted in the first place, though researchers noted this likely reflects sharper pattern recognition rather than being singled out more often.
Awareness split unevenly across demographic lines as well. Adults 40 and older were three times more likely than younger respondents to mention consumer-based fraud, tactics involving fake or misrepresented goods and services. Women recognized imposter-based schemes at nearly double the rate of men but were less likely than men to cite identity-based fraud. Respondents earning $50,000 or more were twice as likely as lower earners to name threat-based tactics, while college graduates were more likely to flag consumer-based fraud but less likely to flag threat-based schemes than those with only a high school diploma.
The scale of the problem underlying the research is substantial. Consumers reported 3 million fraud cases to the Federal Trade Commission last year, translating to $15.9 billion in reported losses, up from $12 billion the year before.
Because most fraud goes unreported, the FTC pegs the true 2024 toll closer to $196 billion, with 2025 losses expected to top $200 billion once final figures are in. Beyond financial damage, researchers point to victims commonly reporting shame, elevated stress, depression and disrupted sleep, with older victims also showing measurable physical health effects tied to fraud exposure.
Of the survey's full sample, 72% said they had been targeted by a fraudster at some point. Among that group, 54% went on to interact with the scammer, and roughly a third of those who engaged ultimately lost money.
The report's authors say the results point toward more targeted fraud education rather than one-size-fits-all campaigns, given how unevenly awareness is distributed across age, gender, income and education levels.
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