‘Scamming is just an extreme form of marketing’: A psychologist’s insights on financial frauds in digital age

A mixture of reasons. Sometimes fraudsters are just very clever or they get lucky. They send out multiple scam appeals some of which just happen to hit someone for whom the scam fits well: people who are expecting a communication of the same sort from their bank or solicitor; people who are short of money, those who are in a hurry when the message comes in… And then, yes, people are eager to get money – through greed or desperation. So they want to believe that they can get higher returns, or that they have won the lottery.

The Internet has made it extremely cheap, practically costless, to send out phishing messages, and computer technology has made it much easier to imitate genuine communications convincingly – word-processor-produced documents are much easier to mimic exactly than a typewriter-written, hand-signed letter on headed notepaper that had been professionally printed.

In the days when most scam appeals were distributed by post, fraudsters had to operate out of countries with the cheapest postal rates – Spain and Canada were the favourites – and even then, carrying out a fake lottery scam, for example, required considerable capital outlay.

What’s ‘scam compliance’? Are some people – owing to their psychological make-up – more compliant than others?

Unlike almost all other crimes, scams require some degree of cooperation from victims for them to be pulled off successfully. Scam compliance is fraud-enabling actions that the victims take that ultimately work to their own peril. Among the factors that may lead to compliance are the human tendency to place trust in authority figures, the susceptibility to social influence, sensation-seeking tendencies among some victims leading to the perception of scams as gambles, and a lack of self-control.

Psychologists are divided on whether there is a general personality trait of being open to persuasion – but if you feel you are like that, then it would be a good idea to be extra cautious whenever someone seems to be trying to get you to do something.

My guess – but it is a guess – is that compliance is domain-specific: some people may tend to be compliant towards, say, marketing, and scamming is really just an extreme form of marketing in my view, but not towards, say, romantic approaches.

What do you mean by ‘Scamming is an extreme form of marketing’?

Both scamming and marketing are trying to get you to make a financial transaction that you would not have made spontaneously. In the case of marketing, you will on average end up with some product (goods or services), but the more effective the marketing, the less likely that it will be worth what you paid for it.

Professor Stephen Lea (Photo by Ingmar Visser)

Scamming just takes this to extremes: what you end up with is nothing (or something that is worth almost nothing to you). Both activities use the same well-documented techniques of persuasion.

Often even highly educated, tech-savvy, and finance-literate individuals succumb to fraud as seen in Selva Nadar’s ‘profile investment scam’ in Pune, where IT professionals and individuals from the banking sector were defrauded.

This raises the question: can anyone, irrespective of education and exposure, be defrauded using the right techniques?

It’s a common belief – even shared by some perpetrators, according to our research – that the prime victims of fraud are the old and financially/technically unsophisticated; it’s even been suggested that the reason some ‘Nigerian letter’ scams are so absurd is that the perpetrators are trying to prevent anyone with a modicum of common sense from responding. While there are plenty of case histories of old and poorly financially educated victims, statistics do not bear out the idea that they predominate. In my view, you are right to suggest that “anyone – irrespective of the education and exposure – can be defrauded if the right techniques are employed”.

In the Pune case you describe, the victims were probably vulnerable precisely because they were (relatively) prosperous and tech-savvy. They thought they knew about investment, and I am sure the perpetrator would have flattered them with remarks about their knowledge and sophistication. The result is overconfidence, which is one of the prime causes of falling for a scam (as well as making other kinds of errors).

From a cybercriminal’s perspective, is committing online theft emotionally and physically less (shifted ‘less’) demanding compared to traditional methods involving violence or assault. Does the distance make evasion of ethical and conscience-related dilemmas easier?

This is the kind of thing that is often said, and not only about crime: e.g. in warfare, it is often argued that it is morally easier to drop bombs on a hospital, or fire rockets at one, than to enter it and bayonet the patients face to face. I’m not sure there’s any real evidence base to support this kind of argument. One might also point out that, as well as maintaining ethical distance, cyber fraudsters expose themselves to (a) less danger of giving themselves away by facial expression, tone of voice, etc (b) less risk of physical danger than traditional theft, where a victim might fight back effectively.

In most cases of online fraud, victims often feel reluctant to come out in public because of the possible stigma: ‘How foolish of you to have fallen for this!’

I agree that there is a reluctance for fraud victims to come forward (though it is difficult to measure how prevalent this is), and it applies to fraud in general, not just cyber fraud. I think this is a consequence of the (almost) unique character of fraud as a crime in which the victim has to cooperate – you have to do something to be defrauded, even if it is only clicking on a link in an email. Although there are multiple reasons in these cases, part of it is again the fear of being seen as complicit. That need not be so, because we all are vulnerable. In fact, when media interviewers ask me if I have ever fallen victim to a scam, I have only once (the first time it was asked) answered “No”; nowadays I always say, “Not yet”.