Why younger consumers face greater fraud risks

Today's younger consumers have never known a world without online shopping, social media or digital payments. They discover brands on social platforms, make purchases through mobile apps and are often the first to embrace new payment technologies.

This digital confidence has transformed the way people shop, but it has also created new opportunities for fraudsters.

While payment fraud affects consumers of every age, emerchantpay's latest Fraud Frontiers report reveals that younger generations face a disproportionate level of risk. As scams become increasingly sophisticated and personalised, understanding why younger consumers are more vulnerable is becoming essential for merchants looking to build trust, protect customers and deliver secure payment experiences.

Why are younger consumers more vulnerable to fraud?

Younger consumers are more exposed to payment fraud because they spend more time engaging with digital channels than any previous generation. From discovering products through social media to shopping with unfamiliar retailers and using emerging payment methods, their digital habits naturally create more opportunities for fraudsters.

At the same time, cybercriminals are becoming increasingly sophisticated. Rather than relying solely on stolen payment details, fraudsters now use artificial intelligence (AI), social engineering and behavioural data to create highly convincing scams that are tailored to individual consumers.

Our research found that 57% of Gen Z consumers have noticed an increase in financial scam attempts over the past year, compared with 46% of Gen X. Additionally, 42% of Gen Z consumers believe they are increasingly being targeted with personalised scam advertisements on social media, highlighting how younger audiences are becoming prime targets for increasingly sophisticated attacks.

“Gen Z is not necessarily less aware of technology, but they are navigating a fraud landscape that looks very different from the one previous generations experienced. Fraudsters are adapting their tactics to fit the digital environments younger consumers trust, which means effective protection requires a deeper understanding of how people discover, shop and pay online.”

George Ralchev, Chief Risk Officer, emerchantpay

Social media has become a major fraud channel

Social media has evolved far beyond a place to connect with friends. Today, it is one of the fastest growing shopping channels, where consumers discover brands, browse products and make purchases without ever leaving their favourite platforms.

Unfortunately, fraudsters have followed consumers there.

Fake online stores, sponsored advertisements, cloned websites and impersonation accounts are becoming increasingly sophisticated. Advances in artificial intelligence allow criminals to create convincing product images, realistic brand messaging and highly personalised adverts that closely resemble legitimate businesses.

Fraud Frontiers insight: 42% of consumers aged 18 to 34 believe they are increasingly being targeted with personalised scam advertisements on social media.

Many scams also rely on psychological triggers to encourage impulsive purchases. Common tactics include:

• Flash sales with countdown timers
• Exclusive discounts that seem too good to miss
• Fake customer reviews and testimonials
• Brand impersonation through cloned accounts and websites
• AI generated adverts that closely resemble legitimate campaigns

Digital confidence doesn't always mean fraud awareness

Growing up online has made younger consumers highly confident users of technology. They are quick to adopt new payment methods, shop through social media and explore unfamiliar brands.

But digital confidence does not always mean fraud awareness.

Unlike traditional scams, today's attacks are highly personalised. Fraudsters use artificial intelligence and publicly available information to create messages that reflect a consumer's interests, shopping habits or recent online activity. Fake websites, checkout pages and customer support messages can closely imitate legitimate brands, making them much harder to identify.

For younger consumers, these scams often appear in the digital channels they use every day. The combination of familiarity, convenience and highly convincing content can make it easier to trust fraudulent communications without recognising the warning signs.

For merchants, this reinforces the importance of creating secure and trustworthy payment experiences. Clear communication, strong authentication and intelligent fraud prevention all play a role in protecting customers while maintaining a seamless checkout experience.

The most common fraud threats affecting younger consumers

Fraudsters are constantly adapting their tactics to match the way younger consumers shop and pay. While the methods continue to evolve, most scams fall into a few common categories.

• Fake online stores- Fraudsters create convincing ecommerce websites that imitate legitimate retailers to steal payments or personal information.
• Social media scams- Fake advertisements, influencer impersonation and counterfeit products lure consumers into making purchases that never arrive.
• Phishing and smishing- Emails and text messages appear to come from trusted brands, banks or delivery companies to trick consumers into revealing sensitive information.
• QR code fraud- Fraudulent QR codes redirect users to fake payment pages or malicious websites that capture card details.
• Account takeover- Criminals use stolen usernames and passwords to access customer accounts and make unauthorised purchases.
• AI powered impersonation- Artificial intelligence is increasingly used to generate convincing messages, advertisements and websites that closely resemble trusted brands.

While each scam is different, they all rely on the same objective: creating enough trust or urgency for consumers to act before they stop to verify whether something is genuine.

For merchants, understanding these fraud trends is essential. Recognising how customers are being targeted helps businesses strengthen fraud prevention, improve authentication and build safer payment experiences without adding unnecessary friction.

Why do some scams fail to fool younger consumers?

Despite being more exposed to online fraud, younger consumers are not equally vulnerable to every type of scam. In many cases, fraudsters have had to change their tactics because traditional scams are becoming less effective with digitally native audiences.

For example, younger consumers are generally less likely to trust unsolicited phone calls claiming to be from a bank, government agency or technical support team. They are also more familiar with two-factor authentication, password managers and app-based banking, making some older fraud techniques easier to recognise.

Examples of scams more commonly associated with older generations include:

• Unsolicited phone calls claiming to be from a bank or government agency
• Tech support scams warning that a device has been infected
• Prize, lottery and sweepstakes scams
• Email scams with generic messages sent to thousands of recipients
• Postal scams requesting payments or personal information

Instead, cybercriminals are focusing on scams that feel native to the digital experiences younger consumers use every day. Rather than pretending to be a bank over the phone, fraudsters are more likely to impersonate a favourite brand on social media, promote fake products through sponsored advertisements or send personalised messages that mirror genuine shopping or delivery notifications.

Fraudsters are no longer relying on consumers' lack of technical knowledge. Instead, they exploit familiarity, convenience and trust in digital platforms.

Fraud has become personal

Modern payment fraud is no longer limited to stolen card details or compromised accounts. Increasingly, cybercriminals are using artificial intelligence and behavioural data to create highly personalised scams that are far more convincing than traditional phishing attempts.

Rather than sending the same message to thousands of people, fraudsters can now tailor scam emails, text messages and social media advertisements using publicly available information, browsing behaviour and shopping interests. These attacks, often referred to as personalised phishing or spear phishing, are designed to appear relevant and trustworthy, making them much harder to detect. Emerging research has also demonstrated how generative AI can automate highly personalised phishing campaigns using information gathered from public social media profiles.

Consumers are already recognising this shift. According to Mastercard's global cybersecurity research, 80% of consumers received at least one scam attempt in the past year, while 43% of Gen Z reported engaging with a scam attempt, almost twice the rate of Gen X. The research also found that younger consumers often have greater confidence in their ability to spot scams, despite being more likely to interact with them.

How merchants can reduce fraud without increasing checkout friction

Consumers expect businesses to protect their payments without slowing down the checkout experience. In fact, too much friction can be just as damaging as fraud, leading to abandoned baskets, false declines and lost revenue.

The most effective fraud prevention strategies use intelligent, risk-based authentication rather than applying the same level of security to every transaction. Low-risk payments can be processed quickly, while higher-risk transactions receive additional verification only when needed.

Merchants can strengthen payment security by combining multiple layers of fraud prevention, including:

• Strong Customer Authentication (SCA) to verify genuine customers for higher risk transactions.
• Scheme tokenisation to replace sensitive card data with secure digital tokens, reducing the risk of stolen payment credentials being used.
• Behavioural analytics to detect unusual purchasing patterns, account activity or checkout behaviour that may indicate fraud.
• Device intelligence to identify suspicious devices, locations or login attempts before a payment is authorised.
• Fraud screening to analyse risk signals and stop fraudulent transactions before they are completed.

Working with an experienced payment service provider gives merchants access to continuously updated fraud intelligence across multiple markets, payment methods and industries. As fraud tactics evolve, these insights help businesses adapt their fraud rules without compromising the customer experience.

The result is a payment journey that protects both merchants and consumers while improving authorisation rates, reducing false declines and building long term customer trust.

FAQs

Looking ahead

The fraud landscape will continue to evolve alongside digital commerce.

Younger consumers will remain among the earliest adopters of new shopping channels, payment methods and emerging technologies. Unfortunately, fraudsters will continue to follow them.

Protecting the next generation of shoppers requires more than stronger security. It requires a deeper understanding of consumer behaviour, evolving fraud techniques and the technologies that enable businesses to deliver payment experiences that are both secure and seamless.

At emerchantpay, we help merchants achieve this balance through advanced fraud management tools, intelligent payment data and optimised authentication strategies. By combining robust security with frictionless payment experiences, businesses can protect their customers, strengthen trust and support sustainable growth in an increasingly digital economy.

Want to learn more? Download our latest Fraud Frontiers report to explore the latest fraud trends, consumer insights and practical strategies for staying ahead of emerging payment threats.

You can also contact our team to discover how emerchantpay's fraud prevention solutions can help protect your business and your customers.