Young Consumers Face Greater Risk of Payment Fraud

A recent J.D. Power survey reveals that consumers under 40 are more likely to fall victim to payment fraud and scams than their older counterparts. The findings highlight how younger generations’ reliance on peer-to-peer (P2P) payment platforms and online shopping exposes them to higher risks.

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The survey, which gathered responses from 22,982 account holders across 32 financial institutions, found that 42% of bank customers under 40 had experienced fraud or scams in the past year, compared to 29% of all respondents. Among those under 40:

• 17% reported sending money to scammers via P2P platforms like Zelle.
• 10% admitted to purchasing items from scammers using credit cards.

By contrast, these numbers dropped significantly for older demographics, illustrating a clear generational divide in fraud vulnerability.

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Why Are Younger Consumers More At Risk?

The primary culprits are P2P payment platforms and online debit or credit card transactions, which are frequently used by younger consumers. Scams often take the form of impostor schemes, where fraudsters build fake professional or romantic relationships to persuade victims to send money.

While banks like Zelle’s parent company, Early Warning Services, have implemented measures to flag suspicious transactions, many scams still slip through.

Interestingly, 46% of bank customers who experienced fraud reported an improved opinion of their financial institution afterward. This counterintuitive finding stems from banks’ swift action to reimburse victims and prevent future fraud. Financial institutions are increasingly adept at identifying and addressing fraudulent transactions, earning customer loyalty despite the negative experiences.

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What's Next?

As fraud rates remain high, it’s clear that younger consumers need to be more vigilant in their digital financial habits. At the same time, banks and payment platforms must continue enhancing fraud prevention strategies, leveraging advanced technologies like AI to protect customers from growing threats.

Kubera Payments is committed to staying at the forefront of payment security, ensuring our customers are equipped with the tools and knowledge needed to navigate today’s digital landscape safely.

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