New research says that despite being digitally savvy, millennials are actually the age group most likely to fall victim to financial scams. What are the mistakes they are prone to, and how can accountants help?
“The reason is quite straightforward,” says Lucy Cohen, author of The Millennial Renaissance, “which is that young people are used to digital communications – we live our lives there.” When smartphones are used for everything, Cohen says, “it’s easy to miss something fraudulent amongst all the real communications.”
1. Consider any unexpected tasks
Not only are younger people on more apps and sites, but they are also more likely to trust those services; perhaps older people are more instinctively suspicious, Cohen suggests. “The advice for young people is to know yourself – know what you have coming in and are expecting, and be cautious of anything that looks unusual, unexpected or which rushes you into a decision.”
Key takeout: Millennials are so used to life online that there’s a need to take a step back and consider anything unexpected.
2. Be aware of the implications of giving away data
Is there more of a willingness on the part of young people to surrender data, and is that contributing to the problem? “Yes, definitely. The younger generation is more used to giving data up in exchange for benefits. It’s not that different to the previous generation, those familiar with Facebook and Twitter; but the pace is much faster.”
Go back a couple more generations, Cohen says, “and your phone number and your name on the electoral register was all that was public – you could apply to be ex-directory, that was a thing!” Today, things could not be more different. “Companies want your data to make money, and the question for young people is: how willing are you to do that; how much are you comfortable to live with? The issue then is to be more aware of it, and know your boundaries.”
Key take-out: Data is far more of a commodity than it was just two generations ago, and people need to consider the implications of this.
3. Double check anything unfamiliar
Sharing too much data can lead to identity theft: recent research from Lloyds suggest that there was almost a four-fold increase in the number of 18 to 34-year-olds being caught out by impersonation scams in the year to July.
Going forward, will things get better or worse – will there be more or less cyber fraud? “This is a moveable feast,” says Cohen. “As you close one hole, another opens; it’s the nature of criminality, which is opportunistic. You owe it to yourself to have a bit of awareness, know about scams and remember the fact that someone will want to cheat and exploit opportunities.”
Key take-out: Rather than assuming that something’s safe unless proved otherwise, assume nothing is safe unless you’re reasonably confident about it.
4. Take your time – don’t rush
Awareness, rather than alarm, is the watchword. “These scams have always existed – it used to be postal scams, or people on the doorstep. They’ve always been there, it’s just that the format has changed.
Young people might be targeted by fraudsters who know what their particular interests and tastes are, and so disguise themselves as being from a legitimate company. To address this, “go and check. Most big companies will have phishing policies on their websites. If you’re savvy, you can identify whether an email is real or not.”
Never follow a link on an email, Cohen says. “Instead, go independently – look the company up yourself.” And if you realise there’s a potential phishing scam happening, “report it. The genuine company will want to know what’s happening.”
Key take-out: If something demands immediate action, it is very likely to be fraudulent. “Nothing needs to be done instantly,” Cohen argues. “There is never a legitimate reason to tell someone, you have to do this straight away – it can always wait until you have checked its veracity.”
5. Take personal responsibility
Whilst accountants and financial services companies can help by educating young people, there is also the need to take personal responsibility for understanding the mechanics and risks – and of understanding finances more generally. “I was lucky in that I took business studies which make you think about your finances,” says Alexandra Bond Burnett, MD of Blue Arrow Accounting.
“If young people don’t have that, they can get stuck; they might have no idea what an invoice is, or understand what tax is. The differences between tax and NI, for example, can floor people.”
Key take-out: There’s an ‘arms race’ between customers identifying what the scams are and avoiding them, and criminals finding new ways of tricking people. Staying on top of this means staying alert, thinking carefully and never being rushed into anything.
Finally, what about the future? “Facial recognition and AI payments are becoming more commonplace”, says Bond Burnett. As with most technologies, “this can be scary, to begin with, but it does mean a boost particularly for local economies.” Such changes in the ways we pay for things are likely to help in the drive against financial crime and online scams. But we all, young and old, need to educate ourselves and be aware of the dangers.
Further reading on fraud:
- How to help your customers avoid fraud
- How to protect your business from corporate identity fraud
- The steps businesses should take to prevent fraud
Mark Blayney Stuart is Business Journalist of the Year, Wales Media Awards 2017 and Former Head of Research at the Chartered Institute of Marketing.