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Financial literacy and fraud vulnerability in digital finance: Evidence from the 2024 NFCS

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  • Ibrushi, Denada
  • Palacios Diaz, Mercedes
  • Wang, Solomon

Abstract

This paper examines how financial literacy shapes vulnerability to financial fraud through its effects on fraud victimization and scam awareness. Using data from the 2024 National Financial Capability Study, we find that higher financial literacy is associated with a significantly lower likelihood of experiencing financial fraud and a greater awareness of attempted scams. The effects are heterogeneous: the protective impact is strongest among highly literate individuals and cryptocurrency investors, while improvements in scam awareness are most pronounced among individuals with lower literacy and those not investing in crypto markets. Our findings highlight financial literacy and targeted financial education as effective policy tools for enhancing consumer protection in increasingly digital financial environments.

Suggested Citation

  • Ibrushi, Denada & Palacios Diaz, Mercedes & Wang, Solomon, 2026. "Financial literacy and fraud vulnerability in digital finance: Evidence from the 2024 NFCS," Finance Research Letters, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:finlet:v:94:y:2026:i:c:s1544612326002059
    DOI: 10.1016/j.frl.2026.109674
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