How do language barriers contribute to both the increased targeting of limited-English-proficient (LEP) immigrants in investment fraud and their decreased likelihood of reporting these crimes compared to English-proficient individuals?

Abstract:

Financial fraud targeting limited-English-proficient (LEP) immigrants is an urgent but understudied consumer protection issue. While investment scams cost Americans over $4.6 billion annually (FBI, 2023), most research has focused on digital fraud among younger populations or elder financial abuse (AARP, 2023), overlooking how linguistic barriers create vulnerabilities. This study analyzes SEC/FTC complaint data (2020–2024) and conducts interviews with LEP scam survivors to investigate how tactics like forged translations and cultural impersonation exploit language gaps, while monolingual reporting systems discourage victims from seeking help (FDIC, 2021). We hypothesize that LEP immigrants face higher targeting rates and lower reporting rates compared to English-proficient individuals. Our findings will support policy innovations such as multilingual fraud detection algorithms and culturally adapted financial education, aiming to make financial protections more equitable for immigrant communities.

​

Introduction:

Financial fraud is one of the most pervasive and costly crimes today, with investment scams alone accounting for over $4.6 billion in losses in 2023 (FBI, 2023). Vulnerable populations, particularly limited-English-proficient (LEP) immigrants, are disproportionately targeted due to linguistic and cultural isolation (CFPB, 2022). In addition, due to the fact that fraud schemes have become increasingly sophisticated, especially in the aftermath of the COVID-19 pandemic’s shift to digital platforms, LEP communities remain especially vulnerable due to limited access to resources and protections.

​

While past research has focused on digital scams among younger demographics and elder financial exploitation (FINRA, 2022), the specific vulnerabilities of LEP immigrants remain largely overlooked. Although AI-driven fraud detection tools have improved the identification of suspicious activity (SEC, 2023), they often fail to account for language and cultural nuances, which makes them less effective in detecting scams targeting non-English speakers. A review of regulatory complaints shows that fewer than 15% of fraud cases involving LEP victims mention language accessibility as a factor (GAO, 2023), exposing a critical gap in both protections and policy. Sociolinguistic and criminology research further suggests that language barriers deeply influence trust in financial systems and vulnerability to culturally tailored scams (Urban Institute, 2022), yet these dynamics have not been systematically studied in the context of investment fraud.

​

This study investigates how language barriers shape fraud victimization and reporting behaviors among LEP immigrants, focusing on scams like cryptocurrency "pig butchering" and Ponzi schemes. We hypothesize that LEP immigrants experience both higher targeting rates and lower reporting rates than English-proficient individuals, with linguistic isolation facilitating exploitation. Through analysis of federal complaint data and interviews with victims, this research aims to inform policy innovations, such as multilingual fraud alerts and culturally adapted financial education, to better protect immigrant communities and promote financial equity.

 

Literature Review:

Since the early 2000s, research on financial fraud victimization has focused largely on demographic factors like age and socioeconomic status (Button et al., 2014), often overlooking linguistic vulnerability. More recent studies from Zhang and Lee (2018) reveal that scammers systematically exploit language barriers through forged documents and impersonation of bilingual authorities, with LEP immigrants facing 2.3 times higher victimization rates than English-proficient individuals. Traditional fraud detection methods, reliant on financial pattern recognition algorithms (Ngai et al., 2011), often miss culturally-specific scams and language-based red flags. Patel and Chen (2020) found that standard models failed to detect 68% of immigrant-targeted scams, despite advances in natural language processing that could enhance multilingual scam detection. The emerging field of linguistic criminology highlights how language barriers worsen fraud impacts. García (2019) identified three key mechanisms: limited access to prevention resources, difficulty verifying information, and fear of engaging with authorities. Building on this, Wong et al. (2022) found that LEP victims were 74% less likely to report fraud, with only 12% of incidents involving LEP individuals appearing in official databases. Although multilingual fraud alerts and culturally adapted financial education programs show promise (Roberts et al., 2023), their implementation remains inconsistent, and no study has systematically evaluated their effectiveness across different immigrant communities or scam types, a gap this study aims to fill. Building on these findings, this research applies a mixed-methods approach to investigate how linguistic vulnerabilities influence both the risk of investment fraud and the likelihood of reporting.

 

Methodology:​ 

This study employs a mixed-methods approach to examine how language barriers influence investment fraud experiences among LEP immigrants. The research begins with a quantitative survey administered through community partner organizations in English, Spanish, Mandarin, and Arabic. Participants will complete a 20-minute anonymous questionnaire assessing three key areas: fraud victimization (including types of scams encountered and financial losses, grouped into three ranges: less than $1,000, between $1,000 and $10,000, and greater than $10,000), reporting behavior (whether scams were reported and reasons for non-reporting), and language proficiency (self-rated English ability on a 5-point Likert scale and primary language used in financial transactions). Building on the survey results, the study will conduct in-depth interviews with 15-20 fraud victims to gather richer qualitative data. These 45-minute sessions, conducted in participants' preferred languages by bilingual researchers, will explore how scammers specifically exploited language and cultural vulnerabilities, the challenges faced when seeking help, and participants' suggestions for improving fraud prevention resources. All interview audio will be transcribed and translated while maintaining confidentiality through pseudonyms. For analysis, quantitative data will identify correlations between English proficiency and fraud likelihood, while qualitative data will be thematically coded to reveal patterns in scam tactics and systemic reporting barriers. This two-phase approach provides both statistical trends and personal narratives to comprehensively understand linguistic disparities in financial fraud victimization and recovery.

​

Conclusion:

This study underscores the urgent need to address language-based disparities in financial fraud protection. By showing how linguistic barriers heighten both victimization and underreporting among LEP immigrants, it lays the groundwork for more fair and equitable policy solutions. The findings call for reforms such as multilingual fraud detection and culturally tailored financial education to better protect vulnerable communities and promote economic justice for immigrant populations.

​

References :

AARP. (2023). The Scope of Elder Financial Exploitation: What It Costs Victims. https://www.aarp.org/pri/topics/work-finances-retirement/fraud-consumer-protection/scop e-elder-financial-exploitation/

 

Button, M., et al. (2014). Understanding fraud victimization: Key demographic risk factors. Journal of Financial Crime, 21(3), 321–335.

 

Consumer Financial Protection Bureau (CFPB). (2022). Financial exploitation of immigrant consumers. https://www.consumerfinance.gov/about-us/blog/immigrants-facing-unique-financial-cha llenges/

 

Federal Bureau of Investigation (FBI). (2023). Internet crime report 2023. https://www.fbi.gov/contact-us/field-offices/philadelphia/news/fbis-internet-crime-compl aint-center-annual-report-released-for-2023

 

Federal Deposit Insurance Corporation (FDIC). (2021). Barriers to banking among limited-English-proficient populations. https://www.fdic.gov/about/limited-english-proficiency-factors-considered Financial Industry Regulatory Authority (FINRA). (2022).

 

Financial fraud and susceptibility in the digital age. https://www.finra.org

 

García, M. (2019). Language and financial vulnerability: A criminological perspective. Cambridge University Press. Government Accountability Office (GAO). (2023). Language access in federal financial agencies (GAO-23-501). https://www.gao.gov/products/gao-23-501 Ngai, E., et al. (2011). Machine learning for fraud detection in financial services. Expert Systems with Applications, 38(10), 12596–12604.

 

Patel, R., & Chen, L. (2020). Gaps in fraud detection for immigrant-targeted scams. Journal of Consumer Protection, 15(2), 210–225.

 

Roberts, A., et al. (2023). Effectiveness of multilingual financial education programs. Financial Innovation, 9, 1–18.

 

Securities and Exchange Commission (SEC). (2023). 2023 annual report on investment fraud trends. https://www.sec.gov/newsroom/press-releases/2023-234 Urban Institute. (2022). How scammers target immigrant communities. https://www.urban.org/research/publication/how-scammers-target-immigrant-communitie s

 

Wong, T., et al. (2022). Language barriers and fraud reporting disparities. Journal of Immigrant & Refugee Studies, 20(4), 512–528.

 

Zhang, L., & Lee, K. (2018). Exploiting language gaps in financial fraud. Criminology Review, 45, 89–107.