I’m just reading a fascinating report on the psychology of why people fall for scams, commissioned by the UK government’s Office of Fair Trading and created by Exeter University’s psychology department.
It’s a 260 page monster, so is not exactly bed time reading, but was drawn from in-depth interviews from scam victims, examination of scam material, two questionnaire studies and a behavioural experiment.
Here’s some of the punchlines grabbed from the executive summary. The report concluded that the most successful scams involve:
Appeals to trust and authority: people tend to obey authorities so scammers use, and victims fall for, cues that make the offer look like a legitimate one being made by a reliable official institution or established reputable business.
Visceral triggers: scams exploit basic human desires and needs – such as greed, fear, avoidance of physical pain, or the desire to be liked – in order to provoke intuitive reactions and reduce the motivation of people to process the content of the scam message deeply.
Scarcity cues. Scams are often personalised to create the impression that the offer is unique to the recipient.
Induction of behavioural commitment. Scammers ask their potential victims to make small steps of compliance to draw them in, and thereby cause victims to feel committed to continue sending money.
The disproportionate relation between the size of the alleged reward and the cost of trying to obtain it. Scam victims are led to focus on the alleged big prize or reward in comparison to the relatively small amount of money they have to send in order to obtain their windfall.
Lack of emotional control. Compared to non-victims, scam victims report being less able to regulate and resist emotions associated with scam offers. They seem to be unduly open to persuasion, or perhaps unduly undiscriminating about who they allow to persuade them.
And here’s a couple of counter-intuitive kickers:
Scam victims often have better than average background knowledge in the area of the scam content. For example, it seems that people with experience of playing legitimate prize draws and lotteries are more likely to fall for a scam in this area than people with less knowledge and experience in this field. This also applies to those with some knowledge of investments. Such knowledge can increase rather than decrease the risk of becoming a victim.
Scam victims report that they put more cognitive effort into analysing scam content than non-victims. This contradicts the intuitive suggestion that people fall victim to scams because they invest too little cognitive energy in investigating their content, and thus overlook potential information that might betray the scam.
Interesting, people who fall for scams often have a feeling that it’s dodgy. The report suggests we trust our gut instincts. If it seems too good to be true, it probably is.
We like to think that only other people fall for scams, but as I’m working my way through the report it’s becoming clear that those things that we think make us resistant to scams (a keen analytical mind) are not what help us avoid being a victim.
A really fascinating read and a great example of applied psychology.
Link to Office of Fair Trading report page and download.
Mind Hacks 
What’s most interesting is that people who fell for the scam thought more about it. I wonder though if people who don’t fall for scams just immediately recognize it as one, fitting it into a pattern, so they don’t have to analyze or think about it.
To “have better than average background knowledge in the area” micht be precisely what makes the whole design of the scam (if it’s well prepared) more convincing, because every question you might have on the details of it would have been taken into account by scammers, so even if your guts tell you to back off, your knowledge-based mental checklist (that scammers have figured out) is giving you the ok. By the way, there’s a british series called the Hustle that shows an entertaining simplification of the process.
I never understood the scams~ they look fake and they ask me for money~ criteria enough to give them the flick 🙂
I think Lilian hit the nail on the head. I’ve always stayed far away from scams and I’ve done that by not even giving the time of day to anything that seems to have certain “Scam-like” characteristics on first glance. I know someone else, however, who is constantly going from one scam to the next. I think he feels like he needs to at least investigate each of these programs and try to judge their worth based on the details of their claims. Well many of these scams are pretty good and reading their material is only going to draw you in.
They do put effort into analyzing the scam… The problem is that sometimes we forget that people are pieces of shit scammers when they’re floating through life and trusting in the goodness of people, that’s how good and intelligent people get scammed. They get deceived by the kindness of the person, the trust they feel from the person, the fact they feel subconscious a desperation in the person and from themselves, they get sucked in by the small steps which leads to them feeling committed. A scam is no different then being lead on, lied to, and betrayed from a friend or a lover. It happens to good, honest, intelligent people.
In the 1987 flick “House of Games”, Joe Mantegna’s character clearly shows the transaction of confidence in a con game. A 2 minute scene with William H. Macy shows it all very quickly, then bigger things start to happen. This is the first film that David Mamet directed, and the arc of the story is rather remarkable. I don’t want to say much about the plot of the film, but it definitely has most if not all of the attributes listed above in its cons.
The Exeter study is one in a series of studies which should force the regulators to abandon their total reliance on due diligence and information as sufficient for prevention of fraud.
I wish the authors linked up their observations which what is known about cognitive dissonance.
I wrote a short piece about business opportunity and franchise fraud and decision making here, which may be of some interest to your readers:
http://www.bizop.ca/blog2/due-diligence/the-psychology-of-scams.html
I was scammed; and I now know that I was a typical victim. Retired, pension pot, looking for a dream. I was scammed over a property in another country and had hoped to retire to the dream. I was taken in by a women and her father and although I understand how they scammed me it is hard to explain. The result is I have lost my pension pot, own a property which is a white elephant and feeling just about as low as it is possible to feel. I read the comments here and identify with many of them. I just wish their was justice but of course there isn’t.
If at any moment you have a ‘gut feeling’ that something, ANYTHING, is odd or bizarre, back out immediately.
Never care about the sellers perception of you, he doesn’t give a damn about you, he just wants your money.
Call your bank tell them you’ve been scammed and void the payment, cancel your credit card, and if you went through paypal challenge the transaction.