9 February 2016
International organised crime is often behind consumer scams, which makes investigation of the cases difficult. Therefore, according to an FCCA report, the best way to prevent scams is to try to avoid them in advance. Informing consumers and enhancing co-operation between authorities are the key prevention measures.
The number of scams has increased and they have become everyday occurrences. At the same time, the financial, social and societal losses caused by them have also increased. However, so far, scams have not attracted the interest of political decision-makers or researchers in the same way as other types of crime. For its part, the report on consumer scams made by the Finnish Competition and Consumer Authority (FCCA) strives to uncover the diversity of scams and propose some measures for preventing scams.
From the FCCA's point of view, a scam has occurred when a person is enticed to hand over money, personal data or bank account or credit card details without anything being given in return, or the product received does not correspond to what was promised. Scams are usually planned and implemented with such care that anyone regardless of age, gender, marital status, education, profession or income level may fall victim. On the other hand, older people are especially prone to falling victim to scams, since, due to potential illnesses reducing their functional ability, they may be susceptible to outside influence. Effective use of psychological manipulation makes the scams more likely to succeed.
Consumers who have fallen victim to scams suffer financial losses, but the scam may also affect their physical and mental health, working capacity and interpersonal relations. However, scams also have more extensive impacts on society as a whole. They may diminish consumer trust in online shopping and new technologies, for example. From the viewpoint of legally operating companies, scammers obtain an unfair competitive advantage. Consumer scams are also often linked with the grey economy and financial crime.
Ability to read scams and close co-operation between authorities
As a rule, you should always try to avoid scams in advance, because it is usually very difficult to trace your money afterwards. Consumers should be taught scam literacy, that is, how to identify scams and recognise the multiple methods used in efforts to influence them. In addition, authorities and companies – credit card companies, banks and operators in particular – should offer their customers detailed information about recognition and prevention of scams. Consumers should also be given practical instructions on what they can do to try to get back the money they have paid to scammers. However, providing more information alone is not enough, but the information must be presented in such a form that it is not ignored by consumers.
The prevention of scams also requires that those who have fallen victim to scams report them to authorities. However, many victims of scams may keep it quiet because they feel ashamed, for example, or they do not know which authority they should turn to. The report suggests that reporting of scams could be made easier with a centralised website where consumers could report scams, and the site would steer the report to the proper authority.
The fact that the responsibility for different kinds of scams has been distributed to various organisations, each with different means to intervene in scams, reduces the possibilities for authorities to investigate scams. In addition, scam companies are often registered abroad, which makes them hard to reach. The report underscores the importance of both national and international co-operation. Such means as psychological methods or opportunities afforded by the novel culture of experimentation should also be used in such co-operation.
FCCA reports 1/2016: Kuluttajahuijaukset (in Finnish)
More information on scams is available on the FCCA website
Further information: Helena Tuorila, Senior Research Officer, tel. +358 29 505 3653