Psychological and Emotional Factors Make Us Vulnerable to Fraud

By Sonya Sellmeyer, IID Consumer Advocacy Officer

Why are some people more vulnerable to fraud than others?

We know from studies that the regression of cognitive function in older adults makes this population more apt to be victimized by scammers. Beyond cognitive decline, we also know that a person’s current state of mind, stress, fatigue and isolation increase the likelihood of being scammed.

The pandemic has left many stressed, experiencing brain fog from endless video calls and fatigue from simultaneously home schooling and working. Con artists know this and have taken advantage of people letting their guard down due to mental exhaustion.

Even those in the technology industry have been scammed during the pandemic. In a recent Tessian survey,  nearly half (47%) of people working in this industry said they’ve clicked on a phishing email at work.

We all know that sinking feeling when we open an email too quickly and click on a link we should not have. In fact, most major data breaches occur due to human error, just like in the tech industry phishing email study.

Phishing has been a growing problem since the onset of COVID-19. In April 2020, Google reported more than 18 million daily email scams related to COVID-19 in a single week. Hackers are taking advantage of psychological factors such as stress, isolation and uncertainty — three factors that affect people’s decision-making.

Studies have shown that anxiety can disrupt neurons in the brain’s prefrontal cortex that help us make smart decisions. Stress can cause people to choose the potential reward of a decision over possible risks, ignoring negative or gut reactions. Victims want a company’s “too good to be true” offer so much, they ignore their own instincts or negative reviews from a trusted source and still buy into the scam.

Since scams and other online influence attempts are often designed to inspire an emotional response such as excitement, hope, love, desire or fear, people may base their judgments on emotional responses rather than on systematic consideration of the various risks and benefits.

The influence instrument that is used, such as compliance with an authority, like the IRS impersonator scam, also plays a role in the scammers’ game. Urgency adds stress to the situation — look out for emails, texts or phone calls that demand money or personal information within a short timeframe.

A consumer’s vulnerable state also factors into how well the scammer can evoke the right emotion to achieve the con. For instance, individuals in financial difficulty may respond to a “get rich quick while working from home” scam or those who are emotionally lonely may give money to a potential admirer as part of a romance scam. However, they may be less vulnerable to other types of scams that don’t fulfill their current emotional needs.

Psychological Techniques Used by Scammers

Scammers employ many psychological techniques to lure their victims into the scam. Five common techniques include:

1. If someone does something for us, we are more apt to do something for them. Time-share sales are a good example of this technique. “We’ve provided you with a nearly free vacation. How can you be so ungrateful and not listen to my presentation to buy into this incredible opportunity to have vacations like this annually.”
2. Research shows that if a person believes other people are doing something, then they feel it must be OK for them to do it, too.
3. Incremental Commitment. Con artists like to get people talking and agreeing to small steps that escalate over time. It typically starts with trivial questions like, “How are you today?” Once the scammer gains a rapport with you, the questions get more personal, like “Who do you bank with?” before getting to “And what is your account number again?” The con artists are grooming you to obtain the information they need and to gain your trust.
4. Fear of Missing Out (FOMO). When a product is only offered for a limited time and there are only a few left in inventory, buyer beware. Scammers realize people don’t want to miss out on the next big opportunity and are more apt to buy when scarcity and urgency are in the mix.
5. Through social media channels, scammers know a lot of personal information about their target. The con artist may call you on your birthday, mention it’s their birthday, too, and provide you with a special birthday offer. They know people are more eager to comply to requests or invest with people who are more like themselves. They may even learn the names of your loved ones and use that information to con individuals into believing that “Johnny” is in jail or otherwise known as the grandparent scam.

When scammers use a combination of these psychological ploys, they can be powerful tools to persuade victims to do something against their best interests.

By being aware and understanding when these psychological principles are being used, as well as being self-aware of your current mental and emotional state, you are more likely to avoid becoming a victim of fraud.