Vulnerability of Albanians to Fall for Investment Scams

Investment fraud has been around for as long as there has been a marketplace. With millions of Leks lost in many years to millions of victims, fraud is a pressing concern. Albania’s fate seems tied to 1997’s pyramid schemes, the most infamous widespread fraud that caused to the country tremendous negative economic impacts such as increased inflation rate and fiscal deficit, depreciation of the LEK currency, decreased capital inflows, and civil disorder with profound losses of 2000 lives and thousands more were impoverished. Evidence from previous fraud victimization surveys is unanimous that repetition of victimization is persistent. Twenty-one years later and still Albanians are being threatened by investment frauds, but the best way to deliver prevention is to understand who and why people fall prey, in order to protect them. There is no single profile of a fraud victim, but certain generalizations can be made about victims of fraud schemes. Through literature review and empirical model this study sought to explore differences between known investment fraud victims and the Albania’s general population in three broad types of profiling analysis: demographic, behavioral and psychological. The results show that younger and not graduated in economics, risk takers, those who see wealth as a measure of success and non-victims of pyramid schemes have wider interests to engage easier in investments fraud activities in Albania. Finally, the paper argues that prevention of fraudulent schemes is better than cure, and that targeted campaigns aimed at fraud victims should be mounted; enhanced and routine data collection on a national level is also necessary.