Immigrants: Are they more at risk for financial fraud?
By: Jairo Riveros, chief strategy officer and managing director of the U.S. and LatAm at Paysend
Fraud risks continue to rise around the world. In fact, consumers reported losing more than $5.8 billion to fraud in 2021. Financial fraud is especially prevalent in underserved Latin American communities because financial education is a lower priority in these regions. For instance, in 2019, Mexico registered approximately 10.2 million online scams, Brazil nearly 613,500 and Argentina almost 13,000.
Specific demographics are more at risk for financial fraud, including the poor, elderly and immigrants, this non-stop scam economy is costing people more than just money.
“Falling for a scam” is often considered taboo among many immigrant communities and is often followed by a sense of shame and guilt. But as fraudsters become more sophisticated, it’s becoming increasingly difficult to determine the difference between a quality financial opportunity or a risky one.
Most Common Financial Frauds Impacting Immigrants
There are a number of reasons scammers have set their eyes on immigrants living in the U.S. Between language barriers, differing sales tactics and skepticism or trust of governmental institutions, immigrants can be viewed as particularly vulnerable consumers. And while scams can target people of all ages, older populations that may not be as accustomed to using technology, can be more at risk.
Amid the pandemic, scam culture became more widespread, especially taking advantage of those looking for employment and even governmental assistance. Many scams targeted Latinos in New York in the form of WhatsApp and Facebook posts offering help in the form of cash, groceries and other incentives to get people through their financial struggles. On the other hand, as communities rebuild post-pandemic, some people are looking to improve their wealth by making greater financial investments -- while sometimes not questioning the legitimacy of some opportunities.
As tools and technologies like WhatsApp and digital money apps become a go-to source for scammers, immigrants are feeling a growing sense of anxiety.
How Immigrants Can Keep Their Finances Secure
Here are some of the ways different parties can help keep consumers safe and break the cycle of financial fraud:
Government: The Consumer Financial Protection Bureau is making moves with new plans to tighten bank rules around money-transfer scams. The proposed plan will tighten the rules around fraudulent money transfers via payment services such as Zelle, CashApp, etc. by pushing banks to repay more customers harmed by alleged scams.
Consumers: As more businesses and services begin accepting digital money transfers as a method of payment, users need to be able to recognize and report potential scams. By promoting greater financial education, consumers can be armed with the knowledge of what may be a red flag. The FCC recommends consumers avoid clicking unknown links they receive via text or email and delete any suspicious messages or requests, as these could expose them to other scams. Also, users should not share their personal financial information with any unverified source.
Technology Providers: Technologies should have proper security protocols in place to either alert consumers of potential risks or block irregularities. Additionally, providers should also have a dedicated anti-fraud or security team to keep consumer money safe both proactively and reactively.
The demand for digital money solutions has surged and so have the risks. While consumers and immigrants may never avoid scams altogether, we must all play our parts in creating an environment built on safety and security for all.
Jairo is the Chief Strategy Officer and Managing Director for the USA and LATAM at Paysend, a global Fintech company born in 2017, based in the UK and regulated by the FCA, servicing over 7.7 million customers in 60+ countries.