- In 2020, 50 million Americans lost money in scams. Anyone can be targeted, but research suggests some individuals are more vulnerable.
- Susceptibility to scams may depend on the nature of the scam, demographic characteristics, and personality traits.
- People can avoid scams by buying time before making a decision, seeking trusted advice, and staying up to date on current scams.
Hundreds of types of scams exist: Advance fee scams, phishing scams, romance scams, lottery scams, online employment scams, online shopping scams, charity scams, scamming websites, and more.
Google claimed, in 2020, that it blocked 18 million scam emails related to the coronavirus pandemic alone... every single day. And the total number of phishing emails per day was close to 100 million. Indeed, in 2020, 49 million American consumers lost 56 billion dollars due to identify frauds and various scams—through data breaches, phishing emails, robocalls, etc.
Though scams can happen to anyone, certain factors may increase vulnerability to scams. A paper by Hanoch and Wood, published in the June issue of Current Directions in Psychological Science, discusses who is more susceptible to scams and why. This post summarizes important points from the paper.
Characteristics that increase susceptibility to scams
Predictors of vulnerability to scams can be divided into three groups—demographics, individual differences, and the nature of the scam. These are described below.
Findings in this area are mixed, particularly in terms of education, sex, and race. As for age, some data indicates older people may be at a greater risk of losing more money per fraud incident; nevertheless, victimization rates appear to be highest in the middle-aged age group.
Reasons for the mixed findings likely reflect the fact that scammers use many types of scams and target different groups. And that the targeted individuals vary in how they respond to the scams. For instance, one investigation found, “females were more likely to be victims of sweepstake scams, whereas males were more likely to be victims of foreign lottery scams.” And “older adults were more likely to fall prey to investment scams, whereas younger adults were more often victims of work-at-home and business-opportunity scams.”
Individual differences in mental abilities linked with susceptibility to scammers include the following: Higher levels of impulsivity (low self-control) and risk-taking, lower levels of general cognitive ability, and possibly lower levels of emotional intelligence. This is not surprising, as these factors influence the ability to make the right decision in the face of temptations, pressures, and incomplete or complex information.
More research is needed to determine how aspects of decision making (e.g., perceptions of benefits and risks) concerning an offer can be modified to reduce people’s vulnerability to scams and fraud schemes.
The nature of the scam
Scam susceptibility is also influenced by the persuasive techniques scammers use.
One commonly used persuasion technique is “trust/authority.” For example, scammers might pretend to represent the government (e.g., the IRS) or big businesses (e.g., Amazon, Walmart, Google). Another persuasive technique involves “scarcity.” For instance, a potential victim is warned that only a limited number of prizes are available or there is little time left to collect the cash or prize they have supposedly won.
Other persuasive techniques consist of overstating the benefit while understating the costs, encouraging consumers to make a commitment (in any shape or form), and appeal to negative emotions (e.g., guilt, greed) and even more so to positive emotions (e.g., friendship).
Last, there is also the “sunk-cost effect.” An illustrative case concerns foreign lottery scams, in which “victims are repeatedly asked for further payments to release their alleged winnings.”
Takeaway: How to avoid being scammed
Those who have been scammed know fraud results not only in financial loss but also significant psychological distress. For example, as a victim of identity theft, you might continue to experience self-blame or lack of trust in others, even long after you have financially recovered from having been scammed.
What about those who are unaware of recent or common scams and fraud schemes, have not been targeted by scammers, or have not fallen for a scam yet? These individuals should not assume they are safe and protected from scammers. They are still vulnerable.
But the good news, for everyone, is that there are effective ways to protect yourself from scams and fraud schemes.
In general, some of the best ways to avoid scams consist of staying up to date with the latest scams, finding ways to buy yourself time to think before accepting any offer, and obtaining advice from trusted friends or professionals. Do not make a decision until you have done the necessary research (e.g., on a company, product, service), even if you feel external pressure from a seller or fear missing out on a great deal.
Remember, for most scams to work, victims must participate in their own victimization, either directly (e.g., disclosing personal information, sending money) or indirectly (failing to report the scam). This means that in many cases, potential victims have the power to prevent being victimized.
Let me end with additional suggestions on how to avoid scams (with emphasis on online safety and security).
- Avoid providing personal information to strangers calling or emailing you.
- For online shopping, use trusted apps/websites and secure networks.
- Log on to websites of interest directly (not through other sites).
- Watch out for pop-up messages asking you to call or provide personal info.
- Create strong passwords (random combinations of letters, symbols, and numbers).
- Avoid sharing your passwords or personal identification number (PIN).
- Make sure your anti-malware and antivirus programs are up to date.
- Watch out for sweepstakes scams (e.g., a scam saying you won a cash prize).
- Do not be pressured into making advance payments.
- Get third-party reviews before making major decisions.
- If you have been a victim of a scam or fraud, report it (e.g., to your bank).
- Consult consumer resources (e.g., Better Business Bureau, Charity Navigator).
- Consider getting identity-theft protection (e.g., fraud alerts, identity theft insurance).
- When dealing with contractors, check their license, permit, and website.
- Shred your personal/financial information before disposing of them.