Correlates of Compliance: Examining Consumer Fraud Risk Factors by Scam Type

Abstract

Consumer fraud reports in the United States have increased each year along with median losses. Using survey data from 1,175 American and Canadian consumers who reported a scam to a North American consumer complaint organization, this study examines the correlates of engaging with (i.e., responding to) and complying with three types of consumer fraud: opportunity-based scams, threat-based scams, and consumer purchase scams. Consumers were less likely to engage with and lose money in threat-based scam solicitations relative to opportunity-based and consumer purchase scams. Risk factors, including household income, loneliness, financial fragility, and financial literacy, varied across scam categories. Different risk factors were associated with engaging in the scam than were associated with actually losing money. Having advance knowledge of fraud prior to being targeted was protective across scam types. Results derived from this unique data set that combined fraud reports from a consumer complaint organization with survey responses suggest that education about specific scams is effective at protecting against victimization. Additional research is needed on how to effectively deliver fraud awareness messages to those who are most susceptible.