BOSTON–Saying the findings are “stark,” a new report has found the escalating sophistication of financial scams is leaving financial institutions with little choice but to re-evaluate their defense strategies, with new research revealing that criminals are mimicking legitimate business tactics to defraud consumers.
The report, “How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities,” produced by PYMNTS Intelligence in collaboration with Featurespace, offers new insights into the evolving landscape of financial fraud, according to the organizations.
“This study defines financial scams as a type of fraud involving misleading victims to gain access to their accounts, personal information or trust to obtain money, specifically considering only those resulting in financial losses,” PYMNTS stated. “The findings are stark: three in 10 U.S. consumers, roughly 77 million individuals, have lost money to a scam in the last five years, with most victims losing more than $500, and many suffering thousands in financial damage.”
The report said the trend marks a significant increase, with scams representing 27% of total dollars lost by financial institutions to fraud in the U.S. in 2024, up from 12% in 2023.
‘Fine-Tuning Tactics’
“Scammers are innovating and fine-tuning their tactics by drawing from the toolkits of legitimate businesses, personalizing their offerings, and customizing how they contact and convince victims to engage,” stated PYMNTS in releasing its findings. “They exploit consumers’ unique circumstances and vulnerabilities, with victims cutting across demographics including age, education, and income. This growing sophistication necessitates a deeper understanding of scammer methodologies beyond just their prevalence.”
How Scammers are Adapting
The report offers some of the specific strategic adaptations by scammers, including:
Tailored Initial Contact Methods
“Scammers meticulously select initial contact points, mirroring legitimate communication channels to build credibility and maximize engagement with potential victims,” PYMNTS stated. “They adapt to generational habits, for instance, initiating 21% of scams that target Gen Z consumers via social media. In contrast, older generations like baby boomers are more frequently contacted through channels they trust, such as email (23% of scams) and phone calls (21% of scams).
“Furthermore, the contact method often aligns with the scam type itself: online platforms account for 42% of eCommerce scam contacts, while phone calls dominate debt collection schemes at 39% of initial contacts,” the company continued.
Strategic Compliance Tactics
Once contact is established, scammers employ carefully chosen tactics to manipulate victims into compliance, often involving building trust, leveraging fear or offering financial incentives, according to PYMNTS.
“Posing as a trusted entity is particularly effective, reported by 86% of job listing scam victims and 83% of debt collection scam victims,” the report states. “Conversely, coercion and threats are more common in identity theft scams, reported by 22% of victims, and significantly more prevalent in government benefits scams, reported by 42% of victims. The promise of financial rewards is a primary factor in sweepstakes and investment scams.”
Generational Tactic Adaptation
According to the report, scammers significantly adjust the complexity and range of manipulative tactics based on the victim’s generation.
“Younger individuals, such as Gen Z, report experiencing a broader array of manipulative tactics, often within more elaborate scenarios designed to overwhelm them,” the report states. “In contrast, older consumers are frequently targeted with simpler marketplace scams that require less advanced manipulative strategies, aligning with observed differences in perceived skepticism or susceptibility across age groups.”
‘Urgent Need’
PYMNTS said its analysis of scammer strategies underscores the urgent need for financial institutions to implement dynamic defenses, including advanced analytics and behavioral monitoring, to stay ahead of these evolving threats.
“Such proactive measures are critical not only for protecting customers’ finances but also for safeguarding consumer trust and confidence in the broader financial system, which scammers actively undermine,” the company said, adding the report also highlights the importance of empowering individuals through scenario-based training to recognize and resist manipulation.
