Digital Scams More Likely to Hurt Black and Latino Consumers

In particular, a 2021 FTC report, “Serving Communities of Color” (PDF), notes that members of predominantly Black and Latino communities who reported scams are more likely than those in white communities to have conducted their transactions using cash, cryptocurrency, or money orders, which offer minimal fraud protections, while members of predominantly white communities are more likely to have used credit cards, which offer substantial legal protections. 

In addition, those in Black communities were more likely than others to have used payment apps such as Venmo and CashApp or gift cards, while those in Latino communities are more likely than others to have used bank or wire transfers—all of which, again, offer relatively few fraud protections compared with credit cards. 

Carla Sanchez-Adams, a senior attorney at the National Consumer Law Center (NCLC), suspects these findings reflect different levels of access to various financial products across these communities. “Rates of being unbanked and underbanked are much higher in Black and Latino households, which, as a result, often won’t have access to some of the safer payment methods,” she says. “Instead, you’re going to use cash, money orders, gift cards—those things that don’t require you to have a bank account.” 

Compounding the problem, experts believe, is that Black and Latino consumers are disproportionately targeted by a wide variety of digital scams. An earlier FTC report (PDF) notes that many scammers target recent immigrants “preying on their need to adjust their immigration status,” and that both communities are targeted because of historical economic and financial inequities that make them more vulnerable, for example, to debt-related fraud such as credit repair, debt relief, and advance fee loan schemes.