There's a Reason Even The Smartest People Fall For Scams

Conmen and swindlers have always existed (shoutout to Leo DiCaprio playing Frank Abagnale, Jr.) but thanks to technology, it’s never been easier for scammers to find victims. And in 2024, it unfortunately seems that most of us have some experience with getting scammed.

Whether you got catfished by a cute pair of jeans in an Instagram ad, duped by fake Amazon reviews, or deceived by an email phishing scheme, there's a chance that you’ve lost time, money, and trust to a scammer.

Gallup reports that 15% of people in the US say that they or a household member has been the victim of a scam in the past year. While older adults are often the target of fraudsters, Experian resorts that adults aged 35 to 44 are most likely to fall for scams and that those aged 18 to 24 lose the most money.

Online fraud, in particular, is an increasingly pressing problem that leads to an estimated 2.7 billion dollars in economic loss each year. Not only does it harm individual financial well-being, but it can also seriously affect people's mental well-being.

The Psychology of It All

There are a variety of psychological factors that scammers exploit. One model suggests people are more vulnerable to scams due to situational variables  (like time or social pressure) as well as cognitive, emotional, and personality factors. For example, people who tend to be more agreeable may be more likely to comply with scams.

Trust and Credibility

"Scammers often impersonate trusted authorities or entities to establish credibility. They may mirror language and communication styles, or even impersonate friends and family to foster a sense of familiarity and trust," explains Dr. Robert Cuyler, PhD, the chief clinical officer at Freespira.  "Once trust is gained, victims are more likely to comply with instructions without scrutiny."

Scammers often learn more about their victims and target their messaging to make themselves seem more trustworthy and authoritative. The phone calls, emails, and texts you get from people posing as your bank or a trusted website are good examples. They might go to great lengths to appear legit.

Emotional Manipulation

Fear is a major factor that makes people more vulnerable to scams, says Dr. Mary Poffenroth, PhD, a biopsychologist, faculty member at San Jose State University, and author of "Brave New You." Our brains are wired to react quickly to perceived dangers. This can protect us when we are at risk but can also lead us to ignore our more logical thought processes.

Fear, urgency, danger, and other strong emotions often make us jump in without thinking things through first. A scammer might tell you to act quickly because something bad will happen. Or they might make you think you’ll miss a once-in-a-lifetime opportunity if you don’t act now. 

When this happens, we're more likely to fall for the scam without evaluating the situation rationally.

Cognitive Biases and Heuristics

Cognitive biases and heuristics are also key factors in falling for scams. These mental tendencies lead us to think in biased, irrational ways, which scammers then exploit for their own selfish gains. 

Biases that can play a role include:

• Confirmation bias leads us to prefer information that supports our beliefs. That's why scammers create messages that align with our concerns or expectations.
• Optimism bias causes us to overestimate the probability that good things will happen to us (while also underestimating the chances bad things will happen).
• Authority bias suggests that we're more likely to comply with authority figures. Scammers rely on this and regularly try to mimic perceived authorities, such as the government or organizations.

Heuristics, or the mental shortcuts we use to make everyday decisions, also play a part. These handy cognitive rules of thumb are efficient; they speed up decision-making and are often accurate. However, they also make us susceptible to mistakes and bad choices.

For example, if trusting online reviews has led to good purchasing decisions in the past, we’re more likely to trust them when making shopping choices. Scammers exploit this heuristic by fabricating reviews and testimonials. Since they seem authentic, we believe they must be truthful, which can lead to over-relying on that source of information and ignoring red flags.

Social Influence and Conformity

Whether we notice it or not, social norms and expectations can play a big role in getting duped by scammers. In situations where we feel pressured or uncertain, we are more likely to look to others for clues about how to respond.

Factors that can affect our susceptibility include:

• The desire to fit in (normative social influence): A scammer might make it seem like *everyone* else is doing it, so you should too.
• Looking to others for guidance when we're uncertain (informational social influence): If the situation is unclear and the person trying to persuade you seems like an expert, you may be more likely to fall for their deception.
• The need to do something for someone after they do something for us (reciprocity): If a scammer seems to do something for you, like giving you a free sample or a small favor, you're more likely to feel like you owe them something in return.

According to Dr. Poffenroth, reciprocity is one of the major psychological reasons people fall for scams. By making people feel indebted, even in subtle, unspoken ways, scammers create a psychological debt that they use to control their victims. "The victim finds it psychologically more difficult to refuse later demands since the first 'favor' functions as a foot-in-the-door tactic," Poffenroth explains.

Vulnerability Factors

There are several factors that can make you more vulnerable to scams. 

However, it’s important to remember that *anyone* can be deceived. If you look at situations where people have become victims of fraud and think, 'That could never happen to me; I'm smarter than that,' you’re probably being misled by your own biases.  

Some other factors that can leave you more open to being scammed include:

Financial Difficulties and Desperation

You're more likely to fall for a scam when you're in financial trouble. If the scam promises a solution to eliminate your money woes, it can muddle your thinking. 

Desire for Quick Financial Gains

Sometimes, the promise of a quick and easy buck is all it takes to dupe someone into falling for a scam. The promised outcome is so good, so tempting, that you ignore all the red flags that would normally raise your suspicions. It’s important to keep in mind that if something seems too good to be true, it probably is.

Depression, Loneliness, and Social Isolation

Evidence suggests that you’re more likely to fall for a scam if you’re experiencing certain psychological states. For example, one study found that depression, loneliness, and social isolation can increase the risk of being exploited by others. Other research has found that lonely older adults were significantly more at risk of being defrauded.

Telemarketing scams can be particularly effective on lonely, isolated people. Phone scammers know lonely adults are more eager to engage in these conversations to fulfill their communication and interaction needs. That leaves them more open to the deceptive messages these grifters use to defraud their victims.

Factors like stress and anxiety can also contribute to a susceptibility to scams. Anxious people experience disruptions in areas of the brain associated with decision-making. Being under a lot of stress can also impair decision-making abilities.

Lack of Knowledge and Awareness

Poor familiarity with common scam strategies and low experience with technology are also linked to an increased risk of being defrauded. Some groups, particularly older adults, are less familiar with technology in general, which can make them a target for online scammers. 

Identifying authentic emails, websites, and links is sometimes tough, particularly as scammers become increasingly adept at disguising their tactics. So you can imagine how hard it would be for a digital novice. This lack of knowledge and awareness leaves people more prone to trusting imposters.

Dr. Cuyler also notes that people who think they're *too* smart to fall for scams may also be more susceptible. "Those who believe themselves to be too savvy to fall for scams may let their guard down, making them vulnerable to missing warning signs or taking unnecessary risks," he says.

Exploitation Techniques

Vulnerability factors certainly have an effect on whether we fall for scams, but the nature of the scam itself can also impact the likelihood of victimization. Swindlers are rarely as obvious as the infamous Nigerian prince promising large sums of money in exchange for your help. Many scammers today use sophisticated methods and rely on highly effective psychological tactics to exploit their targets.

Impersonation and Deception

Scammers also use impersonation and deception to con people into giving them money, information, or other valuables. Chances are good that you've probably encountered this type of scam online—an email scammer posing as your bank, fake Facebook accounts impersonating people you know, or callers pretending to be IRS agents or other government officials.

Fear and Urgency Tactics

Fear and urgency can be powerful psychological tools that scammers use to take advantage of others. They might call posing as an authority (like your bank or credit card company), and claim that your account has been compromised or that you have an outstanding balance. 

Because they are able to trigger feelings of fear (someone is stealing your money!) and urgency (you need to act fast to stop this from happening!), you might hand over crucial information about yourself without thinking things through.

Social Engineering and Manipulation

Social engineering refers to using manipulation tactics to get people to give up private details about themselves. It essentially involves using psychological tactics to exploit your vulnerabilities, like your desire to help others or need to fit in with the group.

For example, a scammer might call pretending to be from your internet service provider’s tech support department. They then tell you they need to access your computer so they can fix a security issue. Because you trust your internet provider and fear leaving yourself vulnerable to hackers, you might turn over passwords and other information without checking to see if they really are who they claim to be.

Phishing often relies on social engineering strategies. These schemes use fake emails or text messages that look real.

Use of Technology and Digital Platforms

Technology and online platforms have given scammers new tools and methods for exploiting their victims. Social media, dating apps, online marketplaces, and even children's gaming platforms are rife with all types of fraud. 

But online marketplaces aren't the only target of scammers. Scammers can set up fake websites, clone social media accounts, and even use different technologies to hide their identity and location. 

Scammers are also increasingly making use of AI technology to help them run their schemes. For example, that customer service chatbot that pops up on a site may actually be trying to lead you into sharing sensitive information. And because they can mine data provided by algorithms and databases, the responses they give can seem highly personal and trustworthy.

Examples of Scams We Fall For

It seems most people have at least one scam story–something they or someone they know experienced. According to Experian, the median loss for young adults between the ages of 18 and 24 is around $155 per scam. 

It can be a stressful experience, but some scams have far more serious, lasting, and devastating effects. The father of my childhood best friend, for example, lost the bulk of his life savings to a Ponzi scheme.

"Sadly, I witnessed my 80-year-old neighbor go through this. Unfortunately, by the time we knew, it was already too late. Her entire life savings was gone," says K.D. Gates, a writer and master's in clinical mental health counseling student. "Her reasoning? Because she thought she would receive enough money to pay off her mortgage and live a more comfortable life."

Examples of scams you should watch for include:

• Online marketplace scams: Scammers may offer counterfeit items, take money without delivering the promised goods, or "overpay" and then ask you to send them a check for the difference. Use caution when buying or selling on Craigslist or Facebook marketplace.
• Phishing scams: These involve texts or messages that look like they are from a legitimate business. They then ask you to enter your personal information, including your name, passwords, and credit card information.
• Sweepstakes scams: People tell victims that they've won a prize but then demand payment to cover taxes or to claim their winnings.
• Romance scams: You may also encounter scammers on dating websites, where they create fake profiles, communicate with their victims, and then fabricate stories about needing money to help with some type of hardship.
• Online shopping scams: This type of scam is incredibly common and might involve taking money for counterfeit, substandard, or non-existent items.
• Employment scams: If you are a job seeker, be sure to be wary of this type of fraud. Scammers post fake job offers that require you to pay a fee for training, equipment, background checks, and other services. They may also send fake checks to cover expenses, then ask the victim to wire money back to cover "overpayment."

Scams leave both financial and emotional wounds. After falling victim, you might be left feeling ashamed, embarrassed, guilty, and isolated. In fact, many people refuse to acknowledge that they’ve been swindled.

That can make reaching out for help or reporting what happened harder. In some cases, the effects can be devastating, leading to financial losses that are extremely difficult to recover from, particularly for older adults who have left the workforce and are living on a fixed income.

Prevention and Protection

It’s important to be aware of the different types of scams out there to protect yourself. Remember, falling for a scam doesn't mean you're foolish! It just means that scammers are skilled deceivers. Anyone can fall victim to a scam.

Education and Awareness Programs

Scammers are becoming increasingly sophisticated and more likely to use AI, other digital tools, and psychological strategies to manipulate you. Being aware of the types of scams taking place, how they work, and where you might encounter them is a good way to stay alert.

"Fraud and scams can target anyone, and consumer education and awareness are some of the best defenses," says Darius Kingsley, the head of consumer banking practices at Chase Bank. 

Practice Mindfulness

Poffenroth says that mindfulness can be an effective strategy for helping you live more in the present and become more aware of your ideas and emotions. 

"Developing this ability helps people to become more sensitive to their emotional responses in perhaps dangerous circumstances. This higher self-awareness enables a pause between stimulus and response, freeing more room for more logical decisions."

She also points to research showing that regular mindfulness practice can help strengthen the neural circuits that are linked to emotional and cognitive control.

Recognize Red Flags and Warning Signs

Keep your eye out for things that don't seem right. Make it a policy not to click suspicious links or respond to offers that seem too good to be true. Even if a link, email, or phone call seems legit, maintain some healthy skepticism. When in doubt, call the source directly and ask if they are really trying to contact you.

Strong Security Habits

Do a personal security check-up on your own habits. Don’t use an easy-to-guess password, and avoid reusing other places. Guard your personal information carefully. Turn on multi-factor authentication when it's available as an added layer of security. Always verify websites by checking the URL instead of just trusting the first site that comes up in search results.

Reporting Scams and Seeking Help

So, what should you do if you get scammed? The Federal Trade Commission suggests taking immediate action to protect yourself, including calling your credit card company, bank, gift card issuer, or wire transfer company to inform them of the fraudulent charge and request your money back.

"Remember that financial scams can, and do, happen to anyone. Don't feel embarrassed. Share your experience with friends and family and ask for help," Kingsley suggests. "If you feel you’ve been scammed, contact your bank to verify recent transactions to ensure there is no fraudulent activity on your account."

If you’ve shared personal information with a potential scammer, change your passwords and sign up for an identity protection service to alert you of potential problems. Credit monitoring services, such as the free Chase Credit Journey tool, can send you alerts if your personal information is exposed in a data breach. 

Keep in Mind

The truth is that it can be *really* hard to detect scams, so give yourself a break if you’ve fallen victim to one. It happens to almost all of us at some point. Being skeptical, learning about scammers' tactics, and practicing good safety strategies can help minimize your risk.

If you have been victimized, document what happened, contact your financial institution immediately to stop or reverse any charges, change your passwords, and report the crime to the FTC and local law enforcement.