The Psychology of COVID Fraud
Part 2: Why do scams spread during a pandemic?
Posted Jun 30, 2020
There have been reports by the FTC of record levels of scams occurring during the COVID-19 pandemic. Scammers are opportunists who quickly mutate in order to take advantage of the latest headlines. For example, the FTC has reported websites that were selling fake pets are now selling fake masks. In terms of romance scams, now there is a reason to never meet in person. In addition, however, scammers are taking advantage of the uncertainty faced by consumers, the implausibility of events, and true scarcity.
Humans hate uncertainty and will work to mitigate it in order to increase feelings of efficacy and control. That may lead to seeking information, spending more time online including social media where they will be exposed to scams like fraudulent treatments and conflicting information.
The COVID-19 virus has been called a “black swan event," or an incredibly rare event that is typically negative. As a result, implausible even scammy scenarios may seem less implausible to consumers. For example, you may get an email from your company president. This is a rare event most of the time, but in these times with rapidly shifting workplace expectations, one might be more tempted to click on a link. Documents that were once always signed with a witness may be sent now for an “electronic signature” and may seem more plausible — after all the courts are closed.
We are also in a time of real scarcity. Research on persuasion tactics has identified several factors that can influence peoples’ behavior. Indeed, we judge things that are scarce to be more valuable. Scarcity is frequently employed by legitimate businesses and organizations to encourage consumers to buy their products. However, during difficult times, such as when disaster strikes, people are afraid and uncertainties about the future can create outsized demand (as it did for gloves and masks).
Other factors that seem relevant are age, sense of overconfidence, financial literacy, risk-taking tendencies and the ability to have self-control. Contrary to what might be expected, older adults are not necessarily more likely to become victims. Fraudsters and scammers have designed and developed different scams to target different age groups. At this point, we simply do not know if age has any bearing on responding to COVID-19 related scams. As fraudsters have frequently used the internet, it is possible that younger, rather than older, individuals are at a higher risk. Likewise, over-confidence in the ability to detect a scam might be at greater risk as they are, mistakenly, that they can detect and identify scams and fraud. Finally, being a risk-taker and having low self-control are additional factors that can place a person at risk of becoming a victim.
Though easier said than done right now, taking the time to carefully read ads, examining their legitimacy, being hypervigilant, and staying calm can be helpful during this uncertain time. First, take your time. No legitimate company or service would place them under severe time pressure. If they do, this should serve as a red flag that the offer or the service is likely to be fraudulent. If consumers are even slightly unsure about the legitimacy of a website, they should take the time and Google the URL. This is one of the easiest and quickest ways of reducing one’s chances of becoming a victim.
Consulting with a family member or a friend should be a second defense. Often scammers and fraudsters threaten consumers not to speak to family members, friends, or law enforcement agencies. No bank, hospital, or other legitimate organizations would ever make such a demand or request. This is another clear warning sign. Consulting a friend or a family member is often the best thing we can do. Or if it is a work-related phish, call your boss over a well-established channel — their cell number. Now, probably more than ever. Anyone asking for money transfer or personal information should raise another loud alarm bell. If you have not interacted with that person or organization before, or you initiated the transaction, being asked to send money or provide personal information is a clear sign of danger.
Read part 1 of this series here.