How Financial Literacy and Fraud Awareness Work Together

In today's world, financial literacy is not just about budgeting—it’s a critical defense against fraud. According to research from the FINRA Investor Education Foundation, people with stronger financial knowledge are significantly less likely to fall victim to scams. That’s why fraud education should be an essential part of every bank's financial literacy strategy.

The Connection Between Financial Literacy & Fraud Awareness

Being financially literate means more than just understanding money—it means being able to spot scams, secure personal information, and make smart decisions in a risky digital world. People who understand financial principles are less likely to fall for fraud tactics like phishing, identity theft, or fake investments.

Building a Financial Literacy & Fraud Awareness Program

Effective programs should use a variety of formats and outreach methods to meet people where they are:

• Online Resources: Videos, blog posts, and webinars help teach fraud prevention in digestible formats.
• In-Person Workshops: Ideal for community outreach or targeted education for seniors, students, or new customers.
• One-on-One Consultations: Personalized advice helps high-risk individuals strengthen their financial habits and fraud defenses.
• Promotional Campaigns: Use newsletters, emails, and social media to reinforce tips and promote awareness months.

13 Common Fraud Scams—and How Financial Illiteracy Fuels Them

1. Investment Scams: High-pressure tactics exploit those who don’t understand risk or due diligence.
2. Phishing Emails & Texts: Scammers steal logins and credit card numbers through fake communications.
3. Identity Theft: Fraudsters exploit gaps in knowledge about data security and online safety.
4. Advance Fee Scams: Upfront payments promised in exchange for fake prizes or loans.
5. Ponzi Schemes: People fall for “too good to be true” promises without knowing warning signs.
6. Lottery Scams: Individuals pay fake fees for nonexistent winnings.
7. Romance Scams: Scammers emotionally manipulate victims for money through fake relationships.
8. Charity Scams: Fake fundraisers capitalize on emotional generosity and lack of verification.
9. Employment Scams: Fake jobs requiring “training” fees or sensitive info to apply.
10. Social Security Scams: Impersonators steal information by pretending to be officials.
11. Get-Rich-Quick Seminars: Misleading claims deceive those who don’t understand investing.
12. Rental Scams: Fake listings trick renters into sending deposits for properties that don’t exist.
13. Work-from-Home Scams: Promises of easy income lure people into fraudulent schemes.

Why Millennials Are at Greater Risk

Millennials often rely heavily on mobile banking and social platforms—making them top targets for fake payment requests, phishing, and app-based fraud.

Without a strong foundation in how finance works or how scams operate, they may not recognize the risks of digital convenience, leaving them vulnerable to both short- and long-term damage.

Examples of Digital-Age Fraud Millennials Face

• Phishing through text or social media DMs
• Fake banking or payment apps that steal credentials
• Fraudulent payment requests via Venmo, Zelle, or Cash App
• Subscription or crypto investment scams
• “Urgent” refund requests that exploit FOMO (Fear of Missing Out)

Conclusion: Why Financial Literacy Must Include Fraud Education

Financial literacy isn’t complete without fraud awareness. Understanding how scams work—and how to avoid them—is just as important as budgeting or saving.

Financial institutions that invest in these combined efforts will build stronger, more secure relationships with their customers—and help create a safer financial future for all.