Financial scams using social media and digital technologies are “relatively cheap and scalable,” according to M. Owen Donley III, chief counsel of the Office of Investor Education and Advocacy at the Securities and Exchange Commission.

“We’re increasingly seeing a tie with digital and social and retail-facing security fraud,” Donley told the crowd gathered at a recent SIFMA seminar.

Retail-facing fraud directly targets individual investors and can often include offering frauds, Ponzi schemes, pyramid schemes, market manipulation, pump-and-dumps, and advance fee fraud.

An unofficial analysis by the Office of Investor Education and Advocacy found that 48% of the SEC’s litigation releases dealt with retail-facing issues.

Donley described a retail-facing fraud scheme in the ‘80s that used fax machines.

“They’d send faxes to a hundred addresses. They’d send two faxes, one after another,” Donley said. “And the first fax would say something like this, ‘Dear Dr. Smith, the hot stock tip I promised you came in. Blue Horseshoe loves Anacot Steel. Your friend, Dave. Now we’re even.’ And they’d wait five minutes and they’d send a second fax. And the second fax would say, ‘Please disregard prior fax. Sent to wrong address. Ignore, ignore, ignore.’”

A scam like this is “really hard to scale,” Donley said.

“First of all, you have to have a fax machine,” he said. “You [have] to dial all those numbers, you [have] to find doctors’ numbers. As interesting as [this scam] was, it wasn’t going to be systemically important.”

However, scams using today’s technology are much more scalable. Which may also explain how prevalent fraud has become.

A FINRA Foundation survey from 2013 found that more than 80% of respondents were exposed to financial scams. The same survey of nearly 2,400 U.S. adults age 40 and older also found that 40% of those surveyed could not identify some classic red flags of fraud.

Additionally, a 2015 Risk Alert issued by the SEC found that 54% of the examined broker-dealers and 43% of the examined advisers had received fraudulent emails seeking to transfer client funds.

“Has anyone not received less than 100 email scams? Of course everyone’s seen them,” Donley said. “That’s terrifying, but what is more interesting and what’s more scary is personalization with social and digital communication.”

All the data that advisors are able to mine from social media – “what your hobbies are, where you live, where your kids go to school” – criminals also have access to the same data too.

Additionally, more people are making decisions from social media. According to a 2013 Cogent report, nearly 70% of the affluent U.S. investors surveyed made an investment decision based on content found through social media. (The report is based on a nationally representative survey of over 4,000 investors with more than $100,000 in investable assets.)

What especially concerns Donley is the growing number of older Americans on social media.

“The terrifying model are people who are physically isolated without a lot of people to talk to, but they have access to social media,” Donley said. “They tend not to be good with privacy settings.

Research from Pew Research Center has shown that older Americans are the fastest-growing demographic on social media.

“If you have a criminal who knows a vulnerable person with money, they know their habits, they know what they like, they know where their kids live, and that is how they will enter the equation,” Donley said. “…This is a real problem.”

Why should financial advisors care?

Securities fraud discourages investing,” Donley said. “There’s lots of data that fraud makes people less likely to invest. That affects your business. More tangibly, every dollar that someone spends on these frauds –these are people that want to invest, these are people that are looking for investment opportunities –that is money left on the table. And I don’t care how successful you all are, that’s billions of dollars left on the table.”

Donley called for advisors to help investors protect themselves. One way advisors can do this is through education.

“I think using education, including anti-fraud content, not only helps attack investment fraud but … helps you build a trustworthy brand,” he said.

— Related: Advisor Social Media Use Grows, as Do the Different Ways It’s Used