How accountants can help.
By CPA Trendlines Research
Scams are getting more sophisticated, more subtle and more likely to lead to more loss, according to a report from the Better Business Bureau Institute for Marketplace Trust.
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If you don’t believe the prevalence and danger of scams, check your email inbox. Count the messages from Nigerian widows, pill pushers, fake companies, dietitians, contest announcements, purveyors of snake oil, and so on. Imagine if that many thieves were sniffing around your house day and night.
Many of these scams aren’t so easy to identify, and every accountant should be helping clients identify the dangers.
Loss Soared
While the number of people reporting a scam to the BBB Institute dropped by 14.6 percent to 44.4 percent in 2024, the median monetary loss soared by 30 percent, reaching $130.
But don’t let that triple-digit median imply that losses are easy to bear. Certain genres of scam lead to losses of thousands of dollars.
- Investment and cryptocurrency scams are the worst. Eighty percent of those who got sucked into one of these get-rich schemes suffered a loss, and the median was about $5,000.
- Employment scams are the second riskiest. They made up 14 percent of all scams. The median loss is $1,500.
- Romance/friendship scams are ranked third but had the highest median loss: $6,099.
- Online purchase scams have fallen to fourth place, now accounting for 30 percent of reported scams and an atrocious 87.5 percent reporting a loss.
What Clients Need to Know
Aside from specific scams of the day, clients need to know three general facts.
- People over 65 report the highest losses, at a median of $160, with 18- to 24-year-olds close behind, at $150. But the 35-54 cohort reported losses more often than any other groups.
- Email was the most reported contact method, but social media was the top reported payment method.
- The most common impersonated organization is Publishers Clearing House (“You have won!”), while a fake U.S. Postal Service (“We have a package for you!”) has fallen to second place.
- Facebook is the most reported social media platform, at 57 percent. Instagram was less than half that at 22.4 percent. Whatsapp and TikTok were in the single digits.
- Of those who reported an investment scam, 45.3 percent said the incident involved cryptocurrency.
- Forty percent of those reporting an employment scam were looking for the flexibility to work from home.
The High-Touch Approach
Some scams are high-volume temptations blasted out to millions of people, with a small percent but large number of gullible people taking the bait, albeit for relatively little loss.
But there has been an increase in a “high-touch” approach that targets a few individuals but works them for weeks or months, slowly inducing them to make an investment or send money out of love or friendship.
These long-term, high-touch scams can bilk people out of tens of thousands of dollars. The eventual loss of trust in a relationship can be emotionally devastating.
The suffering goes far deeper than financial loss.
- 66 percent report losing a lot of time.
- 39 percent lose personal information.
- 30 percent have mental health impacted, especially by anger, loss of trust, anxiety depression and shame.
- 15 percent suffer financial instability.
- 8 percent have their credit health suffer.
- 8 percent lose some capacity to earn a living.
Helping Clients
Accountants are trusted. They have personal relationships with their clients. They are the professionals who can warn clients about the dangers and discuss the reliability of suspicious offers and opportunities.
By becoming a central source of information regarding scams, an accounting firm can not only help protect clients but also maintain a positive, helpful, ongoing relationship with clients throughout the year.
Here are a few ways you can help.
- Provide clients with tips on identifying scams and lists of warning signs. This could be part of a blog, podcast or newsletter.
- Provide an ongoing list of reported scams, possibly on your website.
- Ask clients to report scam attempts, perhaps to a website.
- Periodically check with individual clients, especially the young and the elderly, to ask if they are making suspicious investments, having an online relationship, or have questions about suspicious communications.
- Offer advice, including emotional support, to clients who have been scammed.
It’s a jungle out there, and your clients need a good professional on their side.