Consumers’ fear of credit card fraud over retirement plan fraud is a “dangerous blind spot,” as retirement plan frauds are on the rise, warns a LIMRA Secure Retirement Institute study published Monday.
The study, Financial Fraud and Retirement Accounts: An Opportunity to Engage, Educate and Build Trust, showed that 83% of American cardholders are concerned about credit card fraud but only 53% of retirement plan savers expressed worries over fraud in their retirement plan.
The incidence of fraud is increasing among individual life insurance contracts, individual annuities and defined contribution retirement plans, LIMRA SRI found.
LIMRA SRI stated that more than a third of consumers expressed interest in getting more information on how to detect and prevent financial fraud, opening the door for more education from advisors.
The consumers surveyed indicated that they get their financial fraud prevention financial information from financial service companies, credit bureaus, financial advisors/planners and, lastly, companies that manage retirement savings plans.
In general, the study found that almost 80% of American consumers surveyed, weighted for the population, are concerned about financial fraud.
LIMRA SRI stated in a release accompanying the report that consumers tend to worry about “high-touch” products, such as credit cards and bank accounts, much more than they worry about retirement vehicles such as long-term savings accounts, like workplace retirement plans, IRAs and annuities.
The spike in retirement plan product fraud “is driven not only by the increased appeal of financial accounts that hold larger pools of money, but also by new developments in security for credit and debit cards that have prompted criminals to re-evaluate their targets,” stated Ryan Scallion, a LIMRA SRI associate research analyst.
More than one in 10 American consumers have fallen victim to financial fraud in the past two years, according to the report. Indeed, in 2017, identity fraud losses totaled $16.8 billion, according to a 2018 report by Javelin Strategy & Research.