Ponzi schemes and Bitcoin scammers aside, we have been victimized by scammers since before recorded time. One such example was Jacob, who chose to side with his mother and scam his father into blessing him.
In the 21st century, we are subject to the power of the internet. Our sophisticated technology has enabled the unleashing of ever more powerful and AI generated scam techniques against us.
According to Wikipedia, the definition of a scam includes “confidence trick, con, con game, confidence game, confidence scheme, rip off, grift, hustle, bunco, swindle, flim flam, swindle and bamboozle.
The perpetrator is often referred to as a scammer, confidence man, con man, con artist, hustler or swindler. The intended victims are known as marks, suckers, stooges, or gulls (from the word gullible). When accomplices are employed they are known as “shills.”
Because they can
The swindlers who try to scam us maintain their anonymity and operate with greater impunity, targeting the unsuspecting on a worldwide basis. According to the Federal Trade Commission (FTC), there have been millions of scam-related complaints with financial losses amounting to over 8.8 billion as of 2023.
How are we victimized? According to the publishers Taylor and Francis in their 2017 E-book, “Not a Victimless Crime,” we are victimized psychologically, emotionally and financially.
Psychological Impact
Taylor and Francis’ book says “many (victims) experience feelings of shame, guilt, and embarrassment, which often prevent them from reporting the crime. Many victims blame themselves. Others experience strong feelings of retribution toward the perpetrator.”
It’s not uncommon to get angry at someone who has swindled you. What you may do with the anger is something to consider looking at closely. How have you reacted when you’ve been scammed?
According to Basia Spalek in her Briefing #4 in the Centre for Crime and Justice Studies article (August 2007) “anxiety, stress, fear and depression are also common emotional reactions to crime… a victimizing experience can alter a person’s cognitive meanings about the world, so that they may view their environments with distrust.”
Why are we susceptible? Are there cognitive biases at play?
One key reason people fall for scams is due to cognitive biases. These are systematic errors in thinking that affect our decisions and judgments. Optimism bias, for example, leads us to believe that negative events, such as falling for a scam will not happen to us. According to Terry Sharat and Sarah Zheng, co-authors of the Medical Xpress paper in 2011, this bias can cause individuals to lower their guard when confronted with fraudulent offers. Sharat and Zheng found that “poor lie detection was associated with over reliance on one’s own honesty.”
If you are honest you have an optimism bias that others will be honest too.
Another bias that plays a significant role in our being scammed is confirmation bias, where individuals seek out information that confirms their existing beliefs.
Raymond Nickerson, in his article in the Review of General Psychology in 1998, “Confirmation Bias: A Ubiquitous Phenomenon In Many Guises,” found “scammers exploit this by creating narratives that align with the victims’ expectations, such as promising easy financial gains or tapping into fears like identity theft.”
Social engineering tactics used by scammers
A false sense of urgency, fear, or excitement. Scammers are adept at manipulating emotions and behavior using social engineering tactics. They create a false sense of urgency, fear, or excitement to cloud their targets judgment. For instance, scams often involve time sensitive offers, such as “limited time” deals or threats like “your account has been compromised,” to pressure us into acting without thinking critically.
You may have seen this but didn’t take it for a scam. When I’ve gone online to order airline tickets, hotel rooms and restaurant reservations some sites will now routinely use social engineering tactics. There will be a pop up saying how many seats are available on the plane, or how many others have recently booked hotel rooms or how many others had made reservations for the restaurant. These are social engineering tactics and may be fraudulent. I’m now suspicious that these numbers are real, what about you?
Trust building through familiarity or authority.
Trust building through familiarity or authority is another powerful engineering tactic that unscrupulous scammers may use. Scammers may impersonate trusted institutions like banks or government agencies, making their offers seem legitimate. Some may even pretend to be a friend or relative in distress, relying on the emotional connections to bypass your skepticism.
David Gragg’s 2003 article, “A Multi-Level Defense Against Social Engineering” (a white paper on Sas.org) suggested that “victims are subject to be less critical of a scammer’s offer” when “1. A person is in a heightened emotional state, 2. When the person is given too much information and feels overloaded, 3. When the victim has gotten something from the scammer and feels obligated to return the favor, 4. When the scammer is a common enemy in order to establish a “us- them mentality” and 5. Following someone who the victim believes is in authority.”
As suggested by Gragg, cognitive overload is a common manipulation period scammers may try to overwhelm us with excessive information, complex jargon, or multiple conflicting messages. Admittedly this causes confusion, which is their ultimate intent. The more confused we are the less we use our critical thinking abilities. Too much information is as bad as not enough, making it harder for us to identify the scam and influencing our decision in order to reduce our cognitive burden.
Daniel Kahneman in his 2011 game changing book, “Thinking Fast-Thinking Slow,” says “we have two mental systems of thinking. We work through dilemmas and everyday problems using one of these two systems. When we use System 1 or thinking fast we are taking the lazy way out and relying on our intuition rather than using System 2 and considering all the information that is in front of us.”
So how do we protect ourselves?
Unsolicited contact. This is where scammers whether by e-mail text or phone call will reach out on their own and try to get you to give them personal information. Refuse the contact or verify before accepting the offer.
The offer is too good to be true. Like Bernie Madoff’s Ponzi scheme where he was offering unbelievable returns or rewards. This is where the scammer plays on a person’s desire for financial gain or solutions to problems. Evaluating the realism of such offers and asking for verifiable evidence is crucial in protecting yourself against the scam.
Pressure tactics. Time sensitive offers are designed to create pressure and prevent you from thinking critically. Scammers often use phrases like “act now” or “limited time” which is meant to rush you into making a poor decision. Recognizing and resisting these pressure tactics can help you avoid falling for a scam.
Payment methods that can’t be traced. Scammers prefer untraceable payment methods such as wire transfers or gift cards, because these methods are difficult to reverse or track. When a service or product requires payment through unconventional means, it should raise your immediate suspicion.
Vague or no contact information. Legitimate businesses provide clear contact information that can be independently verified. Scammers on the other hand, often omit or provide vague contact details. Checking the legitimacy of an organization’s website, domain name, and customer service contacts can help you verify their authenticity.
Emotional Manipulation. Many scams rely on emotional manipulation to cloud your judgment. Scammers create urgency by praying on fears of financial loss or excitement over winning a “prize.” Being aware of how emotions influence your decision making can help you stay rational when faced with the pressure of a fraudulent offer.
If we know all this why do we keep falling for the pitch?
We have the illusion of control. One reason we fall victim on a repeated basis is our illusion of control. Scammers make their victims feel as though they are making an empowered choice, leading to a false sense of security. Victims may believe they are in control, when in reality the scammer is guiding their actions through carefully crafted psychological strategies.
Repetition and familiarity. Scammers often build trust through repetition and familiarity. Repeated exposure to the same offer or message lowers our defenses creating an illusion of legitimacy. This is known as foot- in-the-door phenomenon where scammers make small initial requests to build report before asking for larger commitments.
Scammer profiles and personalized tactics. Scammers are skilled at tailoring their approach based on the individual’s profile, adapting their tactics to the target’s age, profession or cultural background. This personalization makes the scam more believable and increases its chances of success. For example, older adults are often targeted with investment or health related scams, while younger individuals may face employment or tech support fraud.
The role of shame. Yaniv Hanoch and Stacey Wood in their 2021 APS Journal article, The Scams Among Us: Who Falls Prey and Why, found “some victims of scams often remain silent due to feelings of shame and embarrassment. This reluctance to report the crime perpetuates the scam cycle and allow scammers to continue operating. The psychological impact of falling for a scam can lead to a cycle of victimhood, where the individual feels too ashamed to seek help, making them vulnerable to future scams.”
What can we do to protect ourselves?
-Educate ourselves about the different types of scams.
-Be vigilant and report scams to the State Attorney General and the Federal Trade Commission.
-Practice good cybersecurity.
-Be aware of how our emotions can cloud our judgement.
I hope this column helps you as much as the research has helped me and changed my behavior.
Be well. Stay safe. Be sure to vote!
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