Why So Many More People Are Falling for Scams

Phishing is getting much more sophisticated with AI, resulting in high rates of engagement and monetary loss.

A recent survey from MacAfee indicated that phishing is becoming increasingly sophisticated, and as a result, consumers are more likely to “click” on phishing emails, increasing engagement rates and placing consumers at risk for compliance and financial loss. Our work with fraud victims and related research has found that consumers report non-economic losses like irritation, depression, lost time, feeling foolish, and becoming less confident. According to the survey, most consumers would choose a one-time root canal over a year of scam messaging.

To understand the increase in scam compliance, it's helpful to think about the process in stages. In our lab, and consistent with the research in the field, we have identified several steps to fraud victimization. These steps are user characteristics, engagement, and compliance.

User characteristics refer to facts about the user: their age, mental status, mood, emotional distress, confidence, and quick analysis of risks/benefits. Engagement refers to whether or not the victim actually clicks on a link, answers a call, or opens a letter that is likely a scam.

Compliance refers to the consumer’s victimization, or compliance with the text instructions which results in monetary loss. Compliance with scams is much, much higher than previously thought, with recent studies suggesting monetary loss about 45 percent of the time after engagement.

McAfee, the antivirus software company, completed a survey of 7,000 individuals in seven countries to better understand phishing-type scam exposure, engagement, and compliance. Their startling results indicate almost ubiquitous exposure to scams around the world, on a daily basis. They note that there are now fewer spelling mistakes and typos, and as a result, it is extremely difficult for consumers to use those cues to help identify scams.

The most common scams that lead to engagement include:

• “You’ve won a prize”: 25 percent of Individuals engage.
• Fake missed delivery notices: 20 percent of individuals engage.
• Information about a purchase that person did not make: 22 percent of individuals engage.
• Sign-in and location verification messages: 20 percent of individuals engage.

The report highlights that dealing with scams is part of daily life for most Americans, and it estimates the typical consumer spends about 90 minutes a week dealing with scams in some way including trying to determine whether or not an email is valid. Even experts can no longer reliably identify a scam message.

It is important to note that this press release has not yet indicated peer review and there should be some caution in the interpretation of these preliminary findings. However, if verified, these results speak to the importance of structural changes to reduce scam exposure, like changes in banking laws that may allow banks to flag high-risk transactions, increased penalties for scam operators, and better supports for consumers who are likely to be targeted on any given day.

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