Digital payments are a routine part of daily life for many people. As such, the risk of online fraud is rising alongside this convenience. Identity theft, email compromise, scams, and misleading investment schemes all exploit technological weaknesses and often user naivety and can lead to big financial losses.
Research in the American Journal of Finance and Accounting has looked at technological threat avoidance theory (TTAT), a framework used to understand how individuals respond to technology-related risks. The study sheds new light on what motivates users to protect themselves from online financial threats, if they do at all. It considers user attitudes towards fraud and the perception of potential financial loss with the aim of identifying the specific influences that lead to a user taking protective action.
The team surveyed users of online payment platforms and found that rather than an abstract fear of fraud, the decisive factor in whether or not people took preventative measures was simply the perceived financial loss. This finding suggests that awareness campaigns focused on general threats may be less effective than approaches that point out the direct financial consequences of online fraud.
Online fraud costs us roughly US$1 trillion per annum, and it is likely that figure is rising year on year. There are millions of reported cases and probably many more that are never reported. The losses that people bear when a victim of online fraud erodes overall trust in the digital systems on which we rely. Moreover, widespread, organised fraud can disrupt financial infrastructure, threatening broader economic stability and making it almost impossible for regulators to maintain oversight and control.
Facing such problems, the digital economy needs technological innovation in payment systems to incorporate effective strategies to influence user behaviour. Such strategies need to make it difficult for users to compromise themselves through technological naivety. Policymakers, platform developers, and financial educators also need to help in the design of interventions that align perceived risk with actual behaviour and so strengthen the individual against threats as well as help maintain trust in digital financial systems.
Peswani, R. and Vijay, P. (2026) ‘Minimising exposure to cyber frauds in digital finance: perspectives from technology threat avoidance theory’, American J. Finance and Accounting, Vol. 9, No. 1, pp.76–98.
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