Investor Protection Campaign Research
& Resources

The Impact of Survey Context on Self-Reported Rates of Fraud Victimization

This study by the Financial Fraud Research Center at the Stanford Center on Longevity is designed to test if the "context"—defined as the survey title, stated purpose, and a set of prior questions—of a survey has an effect on whether respondents admit to being victims of fraud. A survey about fraud victimization was modified to represent three distinct contexts: embodied within a survey about a crime; embodied within a survey about consumer purchasing experiences; and a stand-alone "neutral" survey limited to the questions about fraud, which served as the control context. Results show that respondents that answered the fraud questions embodied in the crime context were less-likely to report being victims of fraud. This inhibitory effect was particularly strong for individuals under the age of 35, over the age of 65, and for those with high self-perceived social status. The effect was opposite for black respondents, however, with this population increasing their reporting of fraud when exposed to the crime context. Fraud reporting for those exposed to the consumer purchasing context did not differ from the control group.

Individual Differences in Susceptibility to Investment Fraud

This study (PDF 1.8 MB) by researchers from Stanford and Yale used multilevel data (e.g., fMRI, survey, demographic) to examine three hypotheses: 1) whether investment fraud victims exhibit more cognitive limitations than non-victims; 2) whether investment fraud victims prefer more financial risk than non-victims; and 3) whether investment fraud victims have less behavioral control in high-stakes scenarios than non-victims. The study did not find support for the first two hypotheses, but victims did report higher impulsiveness and demonstrated less cognitive flexibility, which supported the third hypothesis.

Financial Fraud Study

Infographic: Financial Fraud in the United States
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It's estimated that consumer financial fraud cost Americans over $50 billion a year, and this number doesn't include the money used for its prevention or the social and emotional cost fraud imposes on Americans every year. The FINRA Investor Education Foundation's 2013 research report, Financial Fraud and Fraud Susceptibility in the United States (PDF 417 KB), contributes to a deeper understanding of financial fraud by gauging exposure and response to traditional and Internet-based scams, and the relationships between susceptibility to fraud and various demographics.

Key findings:

  • The ubiquity of fraud solicitations coupled with the inability of many people to recognize the red flags of fraud place a large number of Americans at risk of losing money to scams.
  • Americans 65 and older are more likely to be targeted by fraudsters and more likely to lose money once targeted.
  • The inability of researchers and policy makers to get an accurate measure of financial fraud constrains our understanding of the problem.

Financial Fraud Research Center

Stanford Center on LongevityThe FINRA Investor Education Foundation joined with Stanford University's Center on Longevity and launched this resource for law enforcement, government and research groups studying financial fraud. Emerging technologies continue to fuel financial fraud, and this initiative supports and consolidates scientific research and connects it to practical prevention and detection efforts.

Fraud Risk Survey

Fraud Risk Survey

In 2007, the FINRA Foundation surveyed investors (PDF 159 KB) age 55 – 64 about behaviors that may put them at a higher risk of becoming a victim of investment fraud. Key findings:

  • 80 percent have not checked whether a broker ever violated any laws, and 70 percent didn't check their registration.
  • Approximately 65 percent didn't check to see if the investment was registered with the SEC or appropriate regulatory body.
  • Three times (21 percent) as many known investment fraud victims have attended a free lunch investment seminar as a national sample of investors (7 percent).

Older Investors

Reality Check

A 2006 national telephone survey (PDF 42 KB) of older investors (55 and older) found that:

  • 92 percent felt "somewhat" or "very" confident about managing their finances, and almost 80 percent described themselves as "somewhat" or "very" knowledgeable about investing.
  • But fewer than half—only 44 percent—got a passing grade on a basic financial literacy knowledge test. The older the investor, the less likely he or she is to want to learn more.

Additional Research & Resources