Does Knowledge Protect Against Foolishness? The Role of Financial Education in the Prevention of Financial Fraud

In view of the rising number of cases of financial fraud worldwide, the topic of financial fraud has received surprisingly little attention in the field of financial education research. However, financially literate people are expected not to become victims of financial fraud. Therefore, they need to be able to recognise fraud attempts, handle their data carefully and cautiously and take into account that a high return usually goes hand in hand with a high risk. Based on a systematic overview of common financial scams the paper analyses existing evidence on understanding financial risks and being careful with personal data, as well as research on the positive effects of financial education. It particularly examines the importance of financial education in recognising financial fraud and the effectiveness of financial education interventions in preventing financial fraud, and draws implications for financial education programmes
and the teaching of personal finance.