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Survey Shows Millennials At Greatest Risk For Fintech Fraud
Updated March 14, 2018 7:29 AM
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(INDIANAPOLIS) - A new survey of securities regulators by the North American Securities Administrators Association (NASAA), of which the Indiana Secretary of State's office is a member, underscores why regulators, the industry and investors, especially Millennials, must step up to be vigilant amid the rapid pace of development spurred by advances in financial technology (fintech).

The results come from NASAA's recent Pulse Survey on fintech and the technological innovations shaping new investment and financial products. The poll conducted from mid-November to mid-December 2017, collected responses from NASAA members - state and provincial securities regulators in the United States, Canada and Mexico - about the challenges of adapting to new financial technology products and changes in and how financial services are delivered to investors. The findings offer a unique insight into the concerns and perspectives of the investment industry's local cops on the beat.

One-third (34 percent) of securities regulators said the rapid development of financial technology is a positive development for investors, while 20 percent expressed concern with the potential negative impact of fintech on investors. Almost one-half (46 percent) said it is too soon to tell, citing benefits such as lower costs and greater accessibility to investments among groups not previously reached by traditional methods, but cautioning that sufficient investor protections must be in place so that easier access does not translate into greater exposure to risk or fraud.

Top takeaways include:

  • Millennials most at risk for fraud: Regulators viewed Millennials as both most likely to use fintech products (84 percent) and also as most at risk of fraud from fintech products (41 percent). While Baby Boomers were viewed as least likely to use fintech, they were still viewed as the second most likely demographic group to be at risk of fintech fraud (38 percent).
  • Not all risks are created equal: While all regulators viewed fintech at large as having a high (28 percent) or moderate (72 percent) chance of fraud, the risk varied widely by specific products with ICOs and cryptocurrencies being most commonly identified as high risk (94 percent) and robo-advising being least commonly identified as high risk (3 percent).
  • Fraudsters most knowledgeable: More than half of regulators (56 percent) said they viewed fraudsters as the most knowledgeable about the risks of fintech, nearly all respondents felt that investors were the least knowledgeable about these risks (94 percent).
  • Fighting fintech fraud is getting harder: Three-fourths of respondents (75 percent) felt that preventing fintech fraud is getting harder.

"My office is focused on the potential for fraud when it comes to new technologies and products, but we also recognize that these innovations may benefit investors, which makes appropriate regulation and investor education critical," said Secretary of State Connie Lawson.

"State securities regulators are learning about new technologies and uncovering potential threats every day, but to keep pace with innovation we can't do it alone. The industry and its investors should carefully approach any new investment product or technologies and collaborate with regulators to identify and end new threats that may arise," said Securities Commissioner Alex Glass. "Investors benefit when regulators and industry work toward solutions that promote both innovation and investor protection."

The Indiana Securities Division urges investors to contact the office before making investments or committing to investment professionals. The Division offers a wealth of free investor education materials through its Indiana MoneyWise program, and can help investors research the background of those selling or advising the purchase of an investment. The Division can be reached at 317-232-6681 or through its website at

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