In a paper funded by the FINRA Investor Education Foundation, researchers found that online educational interventions increase consumers' ability to recognize and resist fraudulent investment opportunities without affecting their willingness to invest in legitimate investment opportunities.
The researchers found that:
- investors who received educational intervention - and shortly thereafter participated in the simulated investments - were less willing to invest in fraudulent investment opportunities than those who did not receive educational intervention;
- investors who received secondary educational intervention - which occurred three months after the first - invested in fraudulent investment opportunities at a rate 10 percent lower than those who received no educational intervention; and
- regardless of the level of educational intervention, investors were not dissuaded from investing in legitimate opportunities afterwards.
Commentary
While it is disheartening that study participants across the board had a higher willingness to invest in fraudulent opportunities than in legitimate ones, the finding that a three-minute video was sufficient to substantially reduce willingness to invest in these scams is positive. This should be given serious consideration in the context of investor education through social media. It also seems that short videos are a more effective tool than might be expected.
Primary Sources
- FINRA Press Release: New Research: Repeated Exposure to Fraud Awareness Education Reduces Susceptibility to Investment Scams
- FINRA Study: Can Educational Interventions Reduce Susceptibility to Financial Fraud?
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