Scams and subjective wellbeing

This research used data made available via the Office for National Statistics (ONS) Secure Research Service, which is being expanded and improved with ADR UK funding.

Authors: Which? and Simetrica-Jacobs

Date: November 2021

Research summary

Using secure data, researchers found that scam victims are associated with significantly lower levels of life satisfaction, lower levels of happiness, and higher levels of anxiety. With 3.7 million incidents of fraud experienced in 2019-20, the estimated total losses in wellbeing associated with fraud victimisation amount to £9.3 billion per year. This research helped Which? lobby successfully the UK Government to include online scam advertising in the Online Safety Bill.

Since the beginning of the Covid-19 pandemic, fraud offences (which include scams) have risen by around a quarter in Great Britain and are among the most prevalent crimes in England and Wales. Most of these offences take place online, and many have noted the growing use of online platforms by fraudsters to hook victims through messages, fake websites, and fraudulent advertising.

Discussions around the ‘costs’ of fraud or scams largely centre around victims’ financial losses with little mention of their psychological impacts. Which? therefore sponsored research into the relationship between scam victimisation and subjective wellbeing.

This research sought to answer three main questions:

• Is being a scam victim associated with lower levels of wellbeing and, if so, to what extent?
• How does this relationship differ by type of scam and whether the scam involved the internet or not?
• If there is a relationship between being scammed and wellbeing, how can this be valued in monetary terms and how does it compare to the financial losses suffered?

Data used

The project accessed the Crime Survey for England and Wales (CSEW) through the ONS Secure Research Service.

The CSEW is a victimisation survey that is carried out face-to-face and asks residents in England and Wales about their experiences of a selected range of offences in the 12 months prior to the interview.

A random subset of participants are asked about their subjective wellbeing each year, including all four of the standard questions on life satisfaction, happiness, anxiety, and sense of things they do in life being worthwhile. These questions are answered on a scale of 0-10 in which high values indicate greater wellbeing, except for anxiety for which lower values indicate less anxiety. Measures of subjective wellbeing like ‘life satisfaction’ provide a broader assessment of how people feel about their lives and can be used to uncover the scale of non-financial impacts.

This research also follows best-practice guidance from HM Treasury published in 2021 to translate these wellbeing impacts into monetary values.

DOI (Digital Object Identifier): Office for National Statistics, released 26 October 2021, ONS SRS Metadata Catalogue, dataset, Crime Survey for England and Wales. 10.57906/bs66-9627

Methods used

To achieve a sufficiently large sample size of victims, the researchers combined three waves of data from the CSEW running from the year ending March 2018 to the year ending March 2020. This gave a total sample of:

•  17,186 people of whom;
•  1,094 (6.4%) had been a victim of any fraud and;
•  533 (3.1%) had been scammed online.

Types of fraud in the CSEW data:

• Bank and credit account fraud: this includes fraudulent access to bank, building society, or credit card accounts or fraudulent use of plastic card details.
• Consumer and retail fraud: when goods or services are made using fraudulent means, or when goods or services are paid for but fail to materialise, are misrepresented at point of sale, or are faulty or stolen. This includes bogus callers, ticketing fraud, phone scams, and computer software service fraud.
• Advance fee fraud: when a payment is made to fraudsters who claim to be in a position of authority, such as a foreign government official, to transfer money or for a promise of employment, wealth, or gifts. This includes lottery scams, romance fraud, and inheritance fraud.
• Other fraud: those not covered by the above categories. This includes investment fraud and charity fraud.
• Online fraud: frauds where the internet or any type of online activity was related to any aspect of the fraud.

The researchers used multivariate regression analysis - a technique used to measure the degree to which various independent variables, such as being a fraud victim, and various dependent variables, such as life satisfaction, are linearly related to each other. This method was used to compare fraud victims with non-victims of crime and to estimate the relationship between each wellbeing measure and being a fraud victim. The researchers controlled for the key determinants of subjective wellbeing, including age, ethnicity, education, and social grade.

The researchers then estimated the monetary equivalent value of the associations between scam victimisation and wellbeing by combining the CSEW data with previous research on wellbeing valuation. Key to making this valuation is the relationship between income and life satisfaction. This allowed the researchers to estimate how much extra income would be needed for a level of life satisfaction that equates to what would be expected if the person were not a scam victim (the ‘compensating surplus’).

Research findings

The report shows that being a scam victim is associated with significantly lower levels of life satisfaction, lower levels of happiness, and higher levels of anxiety. It is also associated with people self-reporting worse general health, although to a much smaller degree.

Researchers found that victims who experience a financial loss on average lose around £600. However, when valued using an approach in HM Treasury’s guidance on wellbeing analysis, it is estimated that the lower level of life satisfaction experienced equates to an average impact of £2,509 per victim.

The research found a similar wellbeing effect regardless of whether a scam takes place online or offline. The estimated wellbeing impact of online fraud is higher at £3,684, but the difference between online and offline is not found to be statistically significant in this research. With 3.7 million incidents of fraud experienced in 2019-20, the estimated total losses in wellbeing associated with fraud victimisation amount to £9.3 billion per year.

The wellbeing impacts identified are also comparable to other crimes recorded in the CSEW data. The losses in life satisfaction associated with being a fraud victim (or internet fraud victim specifically) are comparable with victims of theft. This demonstrates that fraud is not a victimless offence. Individuals targeted by fraudsters face similar impacts to those who might more traditionally be thought of as victims of crime.

Further findings included:

• Around two thirds (67%) of the victims in the sample experienced bank and credit account fraud.
• The next highest incidence was of consumer and retail fraud, followed by advance fee fraud and other frauds.
• Around half (49%) of the victims in the sample experienced fraud which took place over the internet.

Research impact

The wellbeing costs from scams are significant, and when valued in monetary terms likely far outweigh the estimated financial losses of victims. With the central estimate of wellbeing losses at £9.3 billion per year, policymakers risk seriously underestimating the scale of harm if they do not focus on the psychological as well as financial consequences for victims.

Overall, these results provide vital insights into the total psychological harm associated with fraud against individuals. It is now increasingly clear that the non-financial impacts of these crimes need to be taken at least as seriously as the financial losses, and that harm may extend much further than previously assumed.

Many parties must take action to reduce and prevent fraud victimisation, in addition to the police. With scams being perpetrated through a range of channels, businesses including online platforms, telecommunications providers, banks, and others should apply proactive approaches to reduce consumer harm from fraud. When scams do happen, victims need proper support – including but not limited to fair redress and reimbursement from financial institutions.

This research was in part commissioned to lobby the UK Government for more comprehensive action against online scams. The report was presented to MPs by the Director of Which?, who called successfully on government to include online scam adverts in the Online Safety Bill. This initiated the development of regulations to ensure more content policing on online platforms.

Matt Gardner, Economist at Which?, said: "This project really advanced our understanding of the scale of emotional harm experienced by victims of fraud. The quality evidence it gave us was an important part of our successful campaigning efforts to get scam advertising included in the Online Safety Bill. Once passed, this will make a real world difference in reducing the incidence of fraud online and the associated financial and wellbeing harms."

Research outputs

Publications and reports

• Which? and Simetrica-Jacobs research report, November 2021: Scams and Subjective Wellbeing

Blogs, news posts, and videos

• Simetrica-Jacobs article, March 2022: What impact does being scammed have on wellbeing?
• BBC News article, October 2021: Scams: Cost of impact on wellbeing calculated as £9bn a year
• Which? Consumer Insight, October 2021: Scams and Subjective Wellbeing

About the ONS Secure Research Service

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