When you think of tax scams, many of us immediately conjure up images in our heads of our gullible grandmothers, right? Poor grandma, she just sits in front of her television all day and buys cheap jewelry from public access shows for 20 times what they are really worth. Probably because the hosts are so dreamy, and because he literally just said “there is only one left in the world, so buy now!” But, hey, guess what? You need to cut her some slack because it’s easier than you think to fall prey to scammers.
Rumor has it that millennials are far more likely to be scammed than the elderly when it comes to the tax season. So, either old age and dementia is setting in way faster than normally with the millennial generation, or our nation’s youth needs some serious educating about how to avoid being scammed during tax season. Hopefully, the latter. But who know, maybe it’s both…
Millennials are getting scammed hard right now
In 2017 more millennials than older individuals reported being victims of fraud. An incredible 40 percent of consumers, ages 20 to 29, made fraud complaints to the Federal Trade Commission complaining that they had lost money. Only 18 percent within the 70 and older population reported similarly, according to an annual report from the federal agency. Although, take heart ye millennial consumers, because we still beat out the 60 to 69 age range for the “most likely to be scammed” award (hooray!). Out of the roughly 2.68 million people to be scammed in 2017, the Baby Boomers represented nearly 20 percent of that figure. We may not be as scam-savvy as the silent generation, but at least we still beat out the Baby Boomers. I call that a win. But still. We can — and should — do better.
This thing called “optimism bias” is eating millennials alive
Although the stereotyped victim of a scam is usually older people, or ignorant people, and most of the time both, the results have borne out the opposite: educated adults from the age range of 25-34 are most often being scammed right now. And listen to this: More than half of those individuals who lost money to tax fraud had a college degree, according to a 2016 study from the Better Business Bureau. Experts have hypothesized a pretty convincing reason for this: “optimism bias.” Namely, optimism bias leads us into making assumptions. Assumptions like: Ahh! We know better than to get scammed!”. That inordinate level of confidence allows us to act recklessly. Why does that sound like such a very convincing thesis? Probably because arrogance is a pretty prime quality of the millennial character (at least, very often it is. Not to stereotype).
When millennials take risks online, according to these experts, they say to themselves “others are at risk of online fraud, but not me.” And this feeling of security paradoxically leads them to taking greater risks than most demographics rationally would. For instance, millennials are much more inclined to share personal information online. You know the image of that old, cantankerous father who doesn’t want to put his name onto a form because “the government is always watching?” Well, that’s not how millennials are.
We throw our information at the web. Think about the game FarmVille! Also, younger consumers are less exposed to what scams look like, apparently. Counter-intuitive as it may seem, according to Monica Vaca, associate director of the FTC’s Division of Consumer Response and Operations: “Older consumers, [and not younger ones] are doing a really good job recognizing fraud when they encounter it … They’re taking the next step to warn other people about it.”
Seniors get duped for greater amounts
Younger people get duped far more frequently, but older generations get duped far more devastatingly. That is, they give up the big bucks whereas millennials give up small amounts, but way more often. The median loss for people between the ages of 70 and 79 was $621 last year versus just $400 for those ages 20 to 29, according to the FTC.
“It’s possible that some older consumers have a little bit more money to lose,” Vaca said. “It might also be that con artists, when they get someone on the phone, might assume they have more money to lose.” Many researchers believe that the damage might actually be far worse on older bank accounts than the statistics bear out, due to things like failure to report (or failure to know you were robbed!) Some even estimate that close to $3 billion is stolen annually from seniors by fraudsters, according to Consumer Reports.
Although some generations were scammed less frequently than others (The Silent Generation wasn’t scammed as often as millennials, who in turn were not scammed as often as the Baby Boomers), and some generations were taken for more than others (the Silent Generation got hit way harder than millennials). There is clearly an issue for all of us here that needs to be addressed — understanding how to spot a scam(mer) when you see one.
Altogether, consumers lost $905 million to fraud last year — a 7 percent increase from 2016. Travel and vacation scams were the most costly. The median amount lost per individual scam was $429, but for travel and vacation scams it went a little higher: $1,710.
Other costly scams included debt collection (23 percent of all reports), identity theft (14 percent) and imposter scams (13 percent). Credit card fraud was the most common form of identity theft, constituting more than 133,000 reports. I think the moral of this story is be more careful, and always live by the “better safe than sorry” dictum.
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