- Our Town
Better Business Bureau risk index contains some surprises
A new “risk index” from the Better Business Bureau (BBB) has identified the riskiest scams currently doing the rounds; and it has also provided some surprises as to who is most (and least) likely to fall for a scam.
The new algorithm measures risk along three dimensions: exposure (how likely are you to be exposed to the scam?); susceptibility (if you are exposed to the scam, how likely are you to lose money?); and monetary loss (if you do lose money, how much is it likely to be?). Exposure x Susceptibility x Monetary Loss = Risk Index.
According to the algorithm, the riskiest scam is the face-to-face home improvement scam, followed by fake cheques and money orders, employment scams, online purchase scams, advance fee loan scams, tech support scams, and family or friends in an emergency and needing money scams.
“This is a new initiative that the Better Business Bureau in the United States put together, to find out the riskiest scams and who is the most at risk,” says Evan Kelly, senior communications adviser for the BBB serving Mainland B.C. “A lot of the scams on their list align with our own top 10 scam list.”
One of the surprising findings of the index is that seniors are not the group most susceptible to scams, says Kelly. “More young people fall for scams, but they tend to lose less money. People aged 65 and older are less susceptible, but they lose more money. They fall for bigger scams, like the home improvement one, and sign bigger cheques.”
The index also revealed that men were more vulnerable than women in seven of the top 10 scam categories.
“Men are more susceptible to investment fraud, while with women it is online shopping fraud,” says Kelly, adding that the top scam varies depending on the age group.
“Younger people are most likely to fall for the employment and fake cheque and money order scams, while with people aged 45 to 64 the top scam is the home improvement one. Seniors are most susceptible to the family or friends emergency scam.
“The finding that surprised the Better Business Bureau the most was that seniors are not the most vulnerable age group when it comes to scams. We felt that seniors and immigrants were the most susceptible, but this index turns that on its head.” He adds that one of the reasons that younger people are more likely to fall for scams is that they have “optimism bias”, which is a tendency to underestimate the likelihood of experiencing adverse events. “They feel like they’re invincible.”
The home improvement scam is the only one on the list that involves face-to-face contact. It makes the exposure rate low, but those confronted with a high-pressure, plausible-sounding person literally on their doorstep are very susceptible and tend to suffer a high median loss.
The fake cheque and money order scam turns up as a component in many other scams. Consumers think that when a cheque or money order has cleared their bank account they are safe to spend those funds. In reality, it can take several weeks for a fake cheque to be detected and returned, with the consumer responsible for repaying any of the funds that were spent.
If you are asked to deposit a cheque or money order and then send funds back for any reason, it’s a big red flag.
“Scams erode trust in the marketplace,” says Genie Barton, president of the BBB Institute. “Scammers damage the reputations of the well-respected brands they spoof, and they slow commercial growth by making consumers hesitant to do business online.
“Every dollar stolen by a scammer is a dollar not spent with a reputable business that has competed fairly to earn those dollars.”