Why People Fall for Scams
For most of us, they’re a nuisance — those emails, phone calls, letters, faxes, text messages and knocks on the door we recognize as scams. You might wonder: do people really fall for that stuff?
Last year, the Canadian Anti-Fraud Call Centre (CAFC) received over 42,600 complaints from Canadians about mass marketing fraud — including 11,940 reports from victims who suffered a collective loss of over $48.5 million. In the first four months of 2012, the CAFC has received 13,775 complaints from Canadians with nearly 4400 victims and a loss of $21 million.
But here’s the scary part: the CAFC estimates that these statistics represent only 5 per cent of actual cases — most incidences are never reported. Many scams are about stealing personal information, not money, and some people don’t even know they’ve become victims.
Things don’t look any better for our U.S. neighbours. The Federal Trade Commission’s Consumer Sentinel Network (CSN) reports nearly 1 million fraud related complaints in 2011, and estimates about two thirds of them were from victims who had lost cash. That’s more than double the 437,585 complaints received in 2005, and a staggering jump from 137,306 complaints in 2001.
You might think we’ve become wise to the cons, but the top scams don’t change a whole lot from year to year. It may be easy to dismiss victims as greedy, desperate, naïve and socially isolated, but experts note that victims can be any age, come from any walk of life and be successful and educated.
So what’s going on?
Their ploys are becoming more sophisticated. We’re often told that poor language skills and unprofessional looking communications are a hallmark of scams. While that guideline often holds true, crooks are now crafting slick websites and perfectly worded communications. Experts note that people still fall for the old Nigerian or 419 scam because the crooks now forge legal documents and credentials.
Scammers are also more adept at impersonating organizations and institutions we trust, like our banks, governments (especially at tax time), police and charities.
They can personalize scams. We pay more attention when we see our name, say some experts. Personalization makes us feel that an offer is exclusive to us (rather than a scam sent out to many). It’s now easier for crooks to find out a little information about us to make their scams look legitimate.
Consider the grandparent or emergency scam where the caller pretends to be a grandchild in trouble in a foreign country. Scammers can glean details from social media sites to make the request for cash sound legitimate.
They repeatedly target victims. Some people are more prone to scams than others, experts warn — like teenagers, seniors and people who are particularly susceptible to persuasion. Once crooks find a vulnerable person, they will try other cons or sell that person’s information with other criminals. Thanks to new media, it’s even easier to share.
They know how to play our heartstrings. As the case of alleged cancer sufferer Ashley Kirilow demonstrates, scammers know how to play to exploit people’s willingness to help. Every time there is a natural disaster in the news, they’re quick to react with charity scams. Since the start of the recession, employment scams and debt services scams have preyed on people’s financial worries.
It isn’t just one-offs we need to watch. Perpetrators of romance or dating scams are adept at forming an ongoing emotional connection with their victims. Experts note a sense of commitment makes people more likely to part with their cash.
They know people will take a gamble. Worried about missing out? A 2009 survey from the UK Office of Fair Trading (OFT) found that some people know an offer is likely a scam, but are willing to gamble “just in case”. It’s a common misconception that scams involve big amounts of money. A smaller amount is often more appealing — after all, what’s a $100 fee when you could win $5 million?
Expert warn that people tend to focus on the potential pay out rather than the immediate loss. Promises of high pay for little work, free trips and big cash prizes invoke an emotional response that can override common sense.
They count on overconfidence. You might think knowledge about a particular topic — such as investing — might help you dodge some scams, but the opposite can be true. Surprisingly, the OFT survey found that people who were knowledgeable about investing still fell prey to investing scams and people who regularly entered draws and played the lotto still fell for prize scams. Why? One theory is that overconfidence causes people to let their guard down.
They catch people not paying attention. We’re busy, we’re distracted and we’re becoming more used to the fast pace of communications. It’s now easier for us to click on a questionable link or subscribe to a service (like jokes or trivia on your cell phone) without realizing it.
They know people will pay attention too. Do you delete those spam emails without opening them, and hang up on questionable callers? Experts have found that people who successfully avoid scams are the ones who disregard them without a second thought. People who take time to read or listen can fall for the persuasive techniques.
Another common trick is to send a text or make a call and hang up right away. When curious people respond to the number on their display, they may be unknowingly calling a premium line or signing up for a service they don’t want.