Everyone Falls For Scams: The Low Impact of Intelligence On Scam Complaince

Perhaps you’ve received a letter or an email from a Nigerian prince who is dying, saying he would transfer you ten million dollars if you only would send him your picture and also your bank account information. We face more scams than ever since the advent of the internet, and consequently everyone is far more familiar with them. The impact that scams have on people can be tremendous, people can lose their whole livelihood to one poor decision interacting with a con-man. It’s easy to mark these people as fools, and think they had it coming to them, but that does them a disservice. If we present falling for a scam as something that only stupid people do, then we can’t train people how to avoid a scam without telling them that they’re stupid for needing any training. You can’t teach people if you believe they’re hopeless, and that’s why it’s important to examine exactly why and how different people fall for scams. While many people would like to believe that you have to be dumb to fall for a serious scam, even the most intelligent person can easily fall for a well executed one. A skilled con-man can trick a broad range of people by simply exploiting weaknesses in human psychology. But what kinds of tricks of psychology are employed, how does a scammer manipulate people into falling for scams?

Scammers exploit a wide variety of deep societal and biological vulnerabilities, not just targeting “stupid” people to fall for their traps. The first technique that scammers frequently apply is using an appeal to authority, pretending either to be qualified to give advice on their subject, or else be endorsed by someone “qualified.” Modic and Lea found that people tend to comply more frequently with requests from authority figures. For instance, “an email appearing to be coming from a doctor, offering a new wonder-drug, would be trusted as much as an individual trusts doctors in general, regardless of the authenticity of the drug” (3). People’s inherent trust for those in positions of authority can be traced back to evolutionary origins; people trust in those who are more successful because the behaviors that lead to success are reproductively valuable. From a societal position, ever since we were children we were told to obey authority figures, and that lifelong bias can be leveraged to produce scam compliance. One extensive example of this phenomenon is a series of scams in which the scam artists pretended to be a lawyer and offered fake contact information to confirm their existence, then tried to get people to pay a variety of “fees” to receive some money from overseas, justifying the windfall and these charges using various stories (Blankenship). In Huckleberry Finn, the King makes up some Greek and Hebrew to cover up one of his mistakes, and at the same time establish himself as the sort of person who knows both Greek and Hebrew to gain more credibility with the crowd (165-173).

Con artists leverage other deep seated biases to influence people as well, using visceral triggers that reach deep into the emotions. These are not things that only naïve people succumb to, they’re things that we’re wired to respond strongly to. In “The psychology of scams: Provoking and committing errors of judgement,” researchers from the University of Exeter state it best, summarizing their findings that “scams exploit basic human desires and needs—such as greed, fear, avoidance of physical pain, or the desire to be liked” (6). Appealing to fear inspires people to jump to decisions without proper consideration, if the appeal is formulated skillfully it triggers an irrational response. Another common pattern of scams targets our need to have others like or approve of us. One scam targeted at lonely old people involves offering them companionship and then eventually getting them to give some money to help the person after they get into trouble (fake injury, etc.) this often succeeds because they’re willing to give money to help someone who seems to care about them, and they’re so desperate to have someone involved in their life that they often don’t look very deeply into the relationship beforehand (Sullivan).

Appeals and manipulation don’t just come from purely emotional psychology, it’s possible to manipulate people through economic processes that are effective on rational actors, if offers can be presented in such a way that the opportunity seems worth the risks. It has been found that “individuals are more likely to respond positively to marketing offers when they believe that the goods on offer are either scarce or unique.” In fact, other research has shown that “the ability for rational decision making is lowered under such conditions” (Modic & Lea, 5). By making opportunities appear to be rare, or under time pressure, victims lose their opportunity to fully understand what they’re getting into, and are more likely to impulsively buy it. The circumstances force them into a decision that they likely would not have made had they actually had time to think through the consequences. This forcing of the hand to prevent someone from considering the deal effectively illustrates how a scammer can use psychology to induce compliance in someone who otherwise wouldn’t go with the deal. On the other end of the urgency spectrum, people can also become trapped in scams due to the “sunk cost effect.” With sunk cost, people who’ve put in some money are more likely to put in more later with the hope that they’ll get some payoff in the end. In fact, even people who’ve merely given up some personal information are more likely to give money (Modic & Lea, 24). But while the scammer can use these techniques to induce someone to fall for a scam, they’re not the only components of a scam.

Some people think that you have to be a fool to fall for a scam, but in fact any person can be potentially vulnerable. Even though a person of any intelligence could fall for a scam, is true that there is individual variation in who succumbs more easily to scams—some people are more susceptible to the tricks of an experienced scammer than others are. It’s true that 10-20% of the population is more receptive to scams, but this isn’t the same as stating that only dumb people fall for scams. The Office of Fair Trading’s broad studies find that in general, people “who show above average vulnerability to scams do not seem to be in general poor decision-makers, for example they may have successful business or professional careers” (“The psychology of scams”, 9). While some people fall for scams more than others do, this study shows that it’s not just so-called fools. In many areas, those who fall most often for scams are those that are experienced with the background information of a scam and that do the actual research to find out if the offer is legitimate or not (“The psychology of scams”, 7). Through the previously discussed sunk cost effect, we can see into the thought process of someone falling for a scam. A classic example of sunk cost occurs in the Dollar Auction Game, a dollar bill is offered for sale, with bids in 1¢ increments, but both the top bidder and second bidder must pay out while only the top bidder receives the bill. In the end, even with players that behave perfectly rationally people end up spending more than $1 for the single bill, trying to cut their losses (Shubik). The same principle manifests itself when someone attempts to keep working to minimize their losses from a scam. It’s a calculated risk that they’re taking, and they’ve miscalculated. Someone who’s putting more money in for an uncertain payout is gambling that with just a little bit more investment they’ll be able to profit and recoup all the earlier costs and make it all worth it. This is a simple misjudgment of what the expected value of the investment is, it’s not the behavior of a fool, it comes out of desperation.

In the end, studying how people react to scams reveals the fact that people’s behavior is largely irrational in the ways that people should be expected to be irrational; we are organisms produced through an imperfect process not optimized for the types of deception that we meet in the modern world. At the same time, it’s important to realize that the reasons for people’s behavior with respect to scams can be understood, and that it’s important behavior to understand. According to the Office of Fair Trading, “the psychological reasons for responding to scams involve a mixture of cognitive and motivational processes” (6). It’s important to understand how this mixture works, and have the appropriate compassion. Without that compassion it’s difficult to look impartially at why people fall for scams, and without that compassion it’s difficult to educate people on how to protect themselves. It’s easy to forget that one might make the same mistake as others who appear to have been so foolish, but everyone is a potential victim. No matter how smart you are, you need to know why people fall for scams, so that you don’t.

Works Cited

Blankenship, Gary. “Lawyers’ names are being used to perpetuate scams.” Florida Bar News 1 Oct. 2008: 1+. Academic OneFile. Web. 30 Mar. 2015.

Modic, David and Lea, Stephen E. G., Scam Compliance and the Psychology of Persuasion (June 21, 2013).

“The psychology of scams: Provoking and committing errors of judgement.” University of Exeter School of Psychology. Office of Fair Trading, 2009.

Shubik, Martin. “The Dollar Auction Game: A Paradox in Noncooperative Behavior and Escalation.” The Journal of Conflict Resolution, Volume 15, Issue 1 (March, 1971), 109-111.

Sullivan, Bob. “Seduced into Scams: Online Lovers Often Duped.” Msnbc.com. MSNBC, 28 July 2005. Web. 27 Apr. 2015.

Twain, Mark. The Adventures of Huckleberry Finn. New York: Penguin, 1986. Print.