The young and the riskless

I never thought I’d say this, but there are two great advantages to being 55: (a) I’ve had my first covid jab (one shivery night afterwards but apart from that – woohoo!), and (b) I’m not being targeted quite as doggedly by fraudsters or aggressive sales tactics.  Youngsters, however, are paying the price for their porcelain complexions and silent knee joints by having to be ever more vigilant against such approaches.

Earlier this month, fraud prevention service Cifas confirmed that more than 40% of the more than 17,000 cases of money muling in 2020 involved victims aged 21 to 30 – leading the media to dub them “generation Covid”.  According to Cifas, “with thousands [of young people] facing job losses as a result of the pandemic and graduates entering the jobs market at a time of unprecedented uncertainty… criminals are exploiting people’s financial difficulties by using social media platforms, jobs websites and phishing emails to approach them with offers of easy cash”.

Last week a friend contacted me to say that her daughter – aged 20 – had narrowly escaped “financial meltdown”.  Daughter had received a text purportedly from Royal Mail, claiming that a parcel was waiting to be delivered to her but she needed to click on a link to pay the £2.99 settlement.  Now, daughter is engaged in online shopping 23½ hours a day and employs a postman pretty much full-time so this did not seem unusual to her – the only thing that concerned her was the word “settlement”, which she asked her mum about.  Mum was suspicious and unearthed the warning from the trading standards people.  We’re all old and cynical, and know how the postal system works, but with customs changes post-Brexit and general pandemic shenanigans, even the savviest of us can be tricked.  Now there’s a jolly slogan: just don’t click – it might be a trick!

And yesterday the Financial Conduct Authority issued the results of research it commissioned into “Understanding self-directed investors”.  What caught my eye was the FCA warning that “younger investors are taking on big financial risks”: “There is a new, younger, more diverse group of consumers getting involved in higher risk investments, potentially prompted in part by the accessibility offered by new investment apps.  However, there is evidence that these higher risk products may not always be suitable for these consumers’ needs as nearly two thirds (59%) claim that a significant investment loss would have a fundamental impact on their current or future lifestyle.”  In other words, they’re staking what they can’t afford to lose.

But even the investor who is longer in the tooth displays a worrying lack of awareness.  The word “risk” runs through the bones of every MLRO like Blackpool through a stick of rock.  But the FCA’s research reveals that “there is a striking lack of awareness and/or genuine belief in the risk of investing, with over four in ten (45%) [respondents] not viewing ‘losing some money’ as a potential risk of investing – despite the presence of disclaimer warnings”.  They then turn a second blind eye to danger: “Additionally, most have high confidence in their abilities to identify scams and fraud, although in reality strategies largely rely on an investment opportunity ‘not feeling right’ or looking unprofessional” – despite some confessing to having fallen for scams that looked perfectly professional.  Add to this the boredom that comes with being stuck at home during lockdown, the speed with which investment “buzz” can be generated on social media, and the spare money that some people have now that they can’t go out or on holiday, and it’s prime time for fraudsters.

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