The Overoptimism of Gen Z Youth Almost Assures More Scams

Sorry Gen Z, You are Going to be Scammed at a Rate 10x that of the Elderly! Why Gen Z and Millennials’ Overconfidence in Handling Fraud May Be Unrealistic—and Costly

Primary Category: Psychology of Scams

Author:
•  Tim McGuinness, Ph.D., DFin, MCPO, MAnth – Anthropologist, Scientist, Polymath, Director of the Society of Citizens Against Relationship Scams Inc.

About This Article

Gen Z and Millennials are facing fraud at alarming rates, partly due to overconfidence in their ability to spot scams and protect themselves online. This overconfidence is largely driven by cognitive biases and logical fallacies, such as optimism bias, which leads them to believe that bad things won’t happen to them, and the Dunning-Kruger effect, where limited knowledge makes them feel overly secure in handling fraud. Additionally, logical fallacies like “appeal to tech savviness” make them assume that tech familiarity equals fraud prevention skills.

Combined with a lack of practical security measures like multi-factor authentication, this mindset exposes them to significant risks. To mitigate these vulnerabilities, it’s crucial to promote fraud education, real-world case studies, and routine security habits. By replacing misplaced confidence with informed strategies, younger generations can better protect themselves from increasingly sophisticated scams.

Sorry Gen Z, You are Going to be Scammed at a Rate 10x that of the Elderly!

Why Gen Z and Millennials’ Overconfidence in Handling Fraud May Be Unrealistic—and Costly

Young consumers today exhibit a significant sense of confidence in their ability to handle fraud, yet this confidence often rests on cognitive biases and logical fallacies that make them vulnerable to scams and online security risks. This overconfidence isn’t just a personality quirk; it’s driven by psychological tendencies that can impact decision-making, especially when it comes to assessing online threats. By examining these cognitive biases and logical fallacies, we can better understand why Gen Z and Millennials underestimate fraud risks and identify strategies to mitigate this risky overconfidence.

Cognitive Biases Contributing to Overconfidence in Youth

The Optimism Bias

Optimism bias, a tendency to believe that negative events are more likely to happen to others than to oneself, is particularly prevalent among younger people. This belief gives Gen Z and Millennials a sense of personal invincibility when it comes to scams. Many assume that they won’t fall for scams because they believe they’re more tech-savvy than the average person, or simply because “bad things don’t happen to me.”

This bias can lead younger generations to dismiss risk warnings or overlook obvious red flags, believing they’re unlikely to be targeted. For instance, they may disregard security alerts or bypass basic protective measures because they feel they are somehow immune to fraud attempts, despite statistics indicating that scams can affect anyone, regardless of tech familiarity.

The Dunning-Kruger Effect

The Dunning-Kruger effect is a cognitive bias where individuals with limited knowledge or skill in a particular area overestimate their competence. For Gen Z and Millennials, this effect can surface in their confidence around online security. Familiarity with technology doesn’t necessarily equate to expertise in cybersecurity, yet many assume that using social media or navigating apps equates to a strong understanding of fraud prevention.

This bias can lead to risky behaviors, such as reusing passwords or assuming that public Wi-Fi is safe for online transactions, without fully understanding the potential for security breaches. The Dunning-Kruger effect means that many young people think they know enough to spot fraud, even though they may not be adequately informed about the latest tactics scammers use.

The Availability Heuristic

Younger generations rely heavily on the availability heuristic—a mental shortcut where people assess the probability of an event based on how easily examples come to mind. Gen Z and Millennials may be less concerned about fraud because they rarely hear personal stories of people their age being scammed, making it seem less probable or pressing. This bias is strengthened by social media feeds that highlight curated, positive experiences over negative or cautionary tales.

As a result, even if younger people are aware of fraud generally, they may downplay its likelihood, not realizing that fraud incidents are common but often unreported in their circles. This can lead to a false sense of security, making them more likely to engage in risky online behaviors.

The Illusion of Control

The illusion of control bias is the belief that one has more influence over outcomes than they actually do. Younger consumers often think that by taking minimal actions—such as ignoring phishing emails or maintaining a single, moderately complex password—they’re fully protected against fraud. This perceived control can reduce their vigilance, leading them to overlook more comprehensive security measures like two-factor authentication or secure password management systems.

This bias might also make them feel more resilient to manipulation, believing they’d spot a scam instantly and not realizing how subtle and sophisticated modern fraud tactics can be.

Logical Fallacies Reinforcing Overconfidence in Avoiding Fraud

The “Appeal to Tech Savviness” Fallacy

Younger generations often assume that being comfortable with technology translates directly to being safe from fraud. This fallacy overlooks the specialized knowledge required to understand security protocols, phishing techniques, and data privacy concerns. Gen Z and Millennials might reject security advice, believing they’re savvy enough to manage risks on their own, even though many scams are now designed to outwit those very assumptions.

The Survivorship Bias

Survivorship bias occurs when people focus on examples of success or resilience while ignoring failures. Young people who haven’t yet experienced a fraud incident may believe they are “good” at avoiding scams because they haven’t been caught in one. This fallacy can lead to the mistaken belief that because they’ve successfully avoided fraud in the past, they will continue to do so in the future, even as threats evolve.

Confirmation Bias

Confirmation bias is the tendency to seek out information that aligns with one’s beliefs and disregard contrary evidence. If a young person believes they’re less susceptible to scams, they’re likely to interpret any near-miss experiences as validation of their skill, rather than as warnings. They might also ignore credible information on the rising sophistication of fraud techniques, preferring instead to read success stories or fraud prevention tips that align with their sense of competence.

The “It Won’t Happen to Me” Fallacy

This fallacy is a variant of optimism bias, where individuals believe they are exceptions to the rule. While most people might know fraud is common, young people may view themselves as somehow outside the range of typical targets. This can lead them to avoid implementing safety measures, thinking fraud “won’t happen to me because I’m careful,” without realizing that sophisticated scams can deceive even careful users.

The Risks of Overconfidence: Real-World Consequences

Overconfidence doesn’t just make young people more vulnerable to fraud—it also puts them at greater financial risk. Younger generations often have fewer financial resources and less experience handling financial setbacks, making recovery from a scam more difficult. Additionally, their inclination toward online banking, digital wallets, and app-based finance management creates more potential entry points for scammers.

A major issue stemming from this overconfidence is a lack of preparedness. Many younger consumers are not proactive about monitoring their accounts, using complex passwords, or enabling multi-factor authentication, increasing their risk of falling victim to phishing, social engineering, or identity theft.

Strategies for Mitigating Overconfidence

Education on Cognitive Biases and Fallacies

Programs designed to increase fraud awareness should incorporate education about cognitive biases and logical fallacies. Teaching young people to recognize biases such as optimism bias or the illusion of control can encourage them to assess online risks more realistically.

Case Studies and Real-World Examples

Highlighting relatable fraud case studies involving young adults can counteract the availability heuristic. Seeing peers’ stories of being targeted or scammed can make the possibility of fraud feel more real and immediate, encouraging vigilance.

Promoting Practical Security Skills

Workshops and resources that teach practical skills—like setting secure passwords, recognizing phishing tactics, and understanding two-factor authentication—can bridge the gap between perceived and actual knowledge. These skills can help reduce reliance on overconfidence and instead instill a practical, grounded approach to security.

Encouraging Routine Security Habits

Instituting simple habits, such as regularly reviewing bank statements, updating passwords, and using security apps, can help young consumers maintain ongoing fraud protection. Rather than assuming they’re naturally protected, these routines make security a part of daily life, reducing reliance on unfounded confidence.

Conclusion

While Gen Z and Millennials’ overconfidence in their fraud-handling abilities may stem from familiarity with technology, it’s also fueled by cognitive biases and logical fallacies that can make them vulnerable to scams. By recognizing and addressing these biases, younger generations can replace misplaced confidence with informed, proactive habits that genuinely reduce their risk. Ultimately, a balanced approach—where confidence is rooted in practical skills rather than assumptions—will help them safely navigate an increasingly digital world.

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