Investment scams have emerged as the costliest fraud type in 2024, with victims losing an average of $19,471.34, according to a comprehensive report by Barclays.
At a Glance
- Investment scams increased by 29% in 2023, with social media being a major platform for these scams
- Investment scams accounted for 33% of all money lost to scammers by Barclays’ current account customers
- Purchase scams make up 74% of total scams reported, highlighting their prevalence
- 93% of scam victims fell victim online, with 75% of scams originating on social media and tech platforms
- Barclays urges cross-industry collaboration and increased awareness to combat the rising threat of scams
Investment Scams: The Costliest Threat
Barclays’ 2024 report reveals a disturbing trend in the world of financial fraud. Investment scams have risen to the forefront as the most expensive form of scam, with victims losing an average of $19,471.34. This represents a significant 29% increase from the previous year, highlighting the growing sophistication and prevalence of these fraudulent schemes.
The report shows that investment scams now account for a staggering 33% of all money lost to scammers by Barclays’ current account customers. Men appear to be particularly vulnerable, with the average claim for investment scams rising to over $20,017 for male victims. This alarming trend has prompted Barclays to call for immediate action to address the issue.
Scammers use social media to lure people into investment scams. Last year, the average victim lost over £14,000.
Never invest on impulse. Always use the FCA’s ScamSmart tool to help you decide if something could be a scam.
Find out more: https://t.co/FKcRsxCRoj#TakeFive pic.twitter.com/4Q1DZEELw6
— Barclays UK (@BarclaysUK) April 26, 2024
Social Media: A Breeding Ground for Scams
The report highlights the significant role social media platforms play in facilitating these scams. A large portion of young people, aged 18-34, have encountered suspected investment scams on social media. This finding has led to increased scrutiny of the responsibility of tech companies in preventing such crimes.
“It’s worrying to see such a rise in investment scams – with victims often heartlessly scammed out of large sums of money that they have been saving for their future. The banking industry works hard to educate, identify and intercept scams, but the only way to drive real change is to target these scams at their source. With the majority of investment scams now taking place on their platforms, social media firms must take responsibility, act on their promises and deliver a robust verification system to protect innocent people from falling prey to fraudulent investment adverts,” said Stephanie Mac Sweeney, Head of Fraud Strategy at Barclays.
Barclays is urging social media platforms to improve verification of financial advertisements as part of the Online Fraud Charter. This call to action is supported by consumer sentiment, with 77% of consumers believing tech companies should do more to prevent scams, and 64% thinking they should reimburse victims.
The Broader Scam Landscape
While investment scams lead in terms of financial losses, purchase scams remain the most prevalent, accounting for 74% of total scams reported. These scams, however, result in lower average losses of about $813 per victim. The report also reveals that January saw the highest value of reported scams, driven primarily by investment scams.
“The variety of scam tactics and channels continued to evolve considerably this year, but it’s clear that there are a number of enduring scam trends. The majority of scams started on social media once again, purchase scams continue to be the most reported scam type, and consumers demonstrated they are overwhelmed by the scam risks posed to them and their loved ones,” Barclays’ Kirsty Adams said.
Barclays’ report underscores the need for increased awareness and vigilance among consumers. The bank emphasizes the importance of due diligence and offers tips to identify investment scams, such as pausing before investing, seeking second opinions, and verifying the legitimacy of offers through the Financial Conduct Authority (FCA).
Looking Ahead: Combating the Scam Epidemic
As the scam landscape continues to evolve, Barclays stresses the importance of cross-industry collaboration to effectively combat these fraudulent activities. The bank is hopeful for progress in the fight against fraud in 2025, emphasizing that joining forces is crucial to tackling this epidemic.
As scammers continue to adapt their tactics, it’s crucial for consumers to stay informed and cautious. Barclays’ report serves as a stark reminder of the ongoing threat of financial fraud and the collective responsibility of individuals, financial institutions, and tech companies in combating this growing problem.
