how people tend to think about financial scams.?
They look from the outside and think “wow, poor thing, how did you not realize you were falling for a scam?”
Hence the bucket of cold water: this same person who thought yesterday’s scam was too obvious ends up falling into tomorrow’s. Because the truth is, we’re all potential victims of a financial scam – all of us.
But why do we fall so much for scams? Why do so many people, including those who know the signs, end up handing over their information and money?
“OK, everybody falls, but I wouldn’t fall”
It’s natural to think that if you know the signs of a scam, it will be easy to spot it in real life. But history testifies against it.
American researcher Stephen Greenspan, PhD in psychology from the University of Rochester, wrote in 2008 the book Annals of Gullibility: Why We Get Duped and How to Avoid It – in free translation, “Annals of credulity: why we are deceived and how to avoid it ”.
Two days after picking up the book, Dr. Greenspan discovered that he had been the victim of one of the biggest financial fraud schemes in history – he had given his money into the hands of financial operator Bernie Madoff, who was running a Ponzi Scheme.
Basically, Ponzi schemes work like this: Clients give control to a person or company to manage their finances, invest and return with profits. But, in practice, the fraudster uses the money of new customers to pay the old ones and, in a syllable way, convinces people to continue investing. After all, if too many people want to withdraw the money at once, the scheme breaks and is revealed.
That’s what happened to Madoff in 2008. When the scheme was discovered, he was arrested and sentenced to 150 years in jail. But the damage was done: he claimed some 37,000 victims , ranging from prominent figures (such as Hollywood celebrities) to ordinary people who had entrusted their life savings to him.
In other words, if Dr Greenspan, who is literally an expert in the psychology of scams, fell into a scam, we are all liable too.
Why do we fall for scams so easily?
First, because people are just bad at noticing when they’re being lied to. Dr. Greenspan himself talks about this in an interview with the series Explaining , on the Vox channel.
Other researchers raise even more hypotheses. Professor Robert Cialdini, who has taught marketing and psychology at American universities such as Stanford and Arizona State, comments that one of the most used psychological tricks is the fear of missing an opportunity that other people are taking advantage of.
Scammers advertise their schemes as something amazing, which few people have discovered so far – but which is about to explode and by then it will be too late to participate.
That is, they create a sense of urgency , making people act before they think.
This can apply to any type of scam. Bernie Madoff’s scheme was extremely sophisticated, but simple scams can claim even more victims in everyday life.
Something as common as a promotion ad on social networks can be a scam: you click, you are directed to the store’s website, enter your data and purchase. Only that page was fake and you ended up giving your information to a fraudster – who can use it to impersonate you or spend your money.
The art of eating around the edges
It is also part of the psychology of scams to gradually gain the victim’s trust.
Think of it like this: if someone calls you and asks you for your card number and password right away, you won’t respond, right? But a good scammer will ask harmless questions and win you over with charisma.
Without realizing it, you start revealing more and more personal information, like the name of a pet, your mother’s birthday, the street you live on… All those common questions used for password recovery on websites.
Just one key piece of information among several others that seem useless and that’s it: the scammer has made his victim.
Shame and lack of reporting
There is another factor that makes life easier for fraudsters: most people who fall for scams do not report .
A 2020 study by the European Commission revealed that 40% of fraud victims do not tell anyone what happened. Most feel ashamed of having fallen for the coup or fail to report it to the police because they know that, in most cases, there is nothing that can be done to get their money back.
With this, fraudsters manage to make tens, hundreds and even thousands of victims before being caught. Reporting is very important so that other people in the future do not experience the same suffering.
Increased blows in times of crisis
Hard times make us more vulnerable and scams tend to proliferate. Rising unemployment and pandemics, for example, are ideal conditions for fraudsters, because they rely on promises we desperately want to believe.
At the beginning of the Covid-19 pandemic, for example, there was the scam of false registration of the vaccine, false request for emergency aid and dozens of others.
Phishing attacks , for example (a type of scam in which the victim is tricked into passing their data), doubled in January 2021 compared to 2020. Scams in which someone impersonates a bank or telephone exchange employee have increased 340%, according to the Brazilian Federation of Banks.