The Growing Challenge of Scams in the Digital Age

Today, scams are a bigger problem than ever before. In a 12-month period between October 2022 and October 2023, 15% of U.S. adults reported that someone in their household had fallen victim to a scam.

Phishing emails, fake job offers, romance scams are all on the rise. Much of our daily lives have moved online and so, too, have scammers. One of the biggest challenges in dealing with scams today is the sheer volume and variety of scams we face, as outlined in our recent white paper, How Cash App Is Fighting Scams.

The first challenge in combating scams is defining and categorizing them. Currently, there is no universal framework that exists for classifying scams, which means it’s hard to understand the true size and nature of the problem, and thus, more difficult to solve.

Scams range from simple crimes to elaborate schemes. There is the romance scam, where victims are manipulated into sending money to people they’ve met online with whom they think they are in a romantic relationship. Then there are fake online stores that sell nonexistent items, who’ve convinced customers that they are legitimate. There’s the investment scam where criminals ask for cash in exchange for “can’t miss” stock or crypto opportunities before disappearing with the victim’s cash. These represent just a handful of examples of scams that exist across the payments ecosystem. They evolve rapidly, exacerbating the problem and making it difficult for law enforcement and financial institutions to keep up with new trends.

In the absence of a universal framework, government agencies and financial regulators have begun to take steps to classify scams. While these steps are in the right direction, those efforts primarily focus on traditional financial institutions, like banks and credit card companies, and fail to capture the ways in which scams manifest on other digital platforms, such as social media platforms, instant messaging services, and peer-to-peer (P2P) payment apps.

Recognizing the widespread impact of scams and the need for a classification of scams, Cash App studies how scammers operate in order to identify and combat scams. Leveraging large transaction datasets, our teams analyze patterns in scam activity, using the findings to create a unique scam detection framework to protect our users.

Informed by our research, we focus on two main categories of scams: Imposter Scams and Deception Scams. Imposter scams happen when a scammer pretends to be someone the customer trusts, such as a government official or a friend. The scammer then manipulates the victim into sending them money. Deception scams, on the other hand, often involve misleading promises, like a fake job opportunity or an investment scheme, to trick users into giving them money.

With our data-driven research and findings, Cash App has not only improved its ability to spot and prevent scams but also created a classification of scams to protect customers within its ecosystem, with the hope that this could be used across other P2P payment platforms in the future.