Why Are There So Many More Scams During COVID?

Long-term stressors make psychological vulnerabilities worse.

Posted Sep 29, 2020

The coronavirus pandemic is an epidemiological and psychological crisis with many consumers living in isolation, facing financial hardship, and at high risk for developing psychological disorders including anxiety and depression. All of these factors have been linked to increased risk of financial fraud in older adults (see Liu, Wood et al. 2017; Wang et al . 2018).  

Lichtenberg, Stickney and Paulson (2013) have developed a model of fraud susceptibility based upon three factors, depression, changes in social-needs fulfillment, and financial satisfaction. Social needs fulfillment refers to humans' needs for status, validation, and affection. The factors have been found to naturally decline as individuals age, and transition to retirement. However, these are much more widespread across age groups during the pandemic. Those who are isolated won’t experience as much affection. Those who have lost jobs will have lost status and opportunity for external validation. Financial satisfaction may have also been dealt a blow during the pandemic with record high levels of unemployment, furloughs, and downsizing.

Depression as a risk factor for fraud and financial exploitation has extensive empirical support (Beach et al., 2010[1]). Lichtenberg, Sugarman, Paulson, Ficker, and Rahman-Fillipak (2016) reported that a diagnosis of depression significantly increased the likelihood of fraud vulnerability using the health and retirement survey data in a large sample. Depression and loneliness were also found to be independent predictors of financial exploitation in older adults is a study of 395 participants (Liu, Wood, Xi, Berger, & Wilber, 2017). Social isolation has also been related to depression (Antonucci, 1997)[2].  

The pandemic has increased psychological distress across age groups. Overall, given the data suggesting that depression and isolation have increased during the pandemic it is reasonable to assume an increase in psychological vulnerability to fraud and scams across the lifespan. 

I have written already two posts about common scams during the pandemic. Like the virus itself, the scammers will mutate to exploit new opportunities and niches. Below are some scams that I am seeing out there at this stage into the pandemic.

Contact Tracing Text Message Scams: Typically, contract tracers are usually hired by the state’s department of public health to identify any individual they may work with or come into close contact with while possibly infectious. Those names and phone numbers are kept in an online system. You will receive a text letting you know a health worker will be calling you and you may then receive health message texts for a 14-day period reminding you to self isolate and monitor your health. The scammers take advantage of this system by sending text messages that closely resemble legitimate messages. However, the spam texts contain a link to click on. Once that link is clicked it will download software onto a machine or device giving scammers access to your personal and financial information (source). 

Work-From-Home / Money Mule Scams Increasing: The New York Times reported an increase in online human resource schemes of 295 percent in comparison to 2019. In these schemes, fraudulent funds are “laundered” through legitimate looking accounts and then sent to other “vendors.” Potential mules are instructed to deposit checks in their account, keep some of the funds and then send off a certain amount often to oversees accounts. Alternatively, stolen goods are shipped to the mules home and the mule is instructed to repackage and reship the products. These positions are often advertised on legitimate job boards. At a time with record unemployment and many individuals searching for remote work, these schemes have increased dramatically.  

Stay safe out there! And be aware of mental health factors that may put one at risk for scams and fraud.