The psychology of a scam: Why smart people fall foul

It can be easy to assume that you’re too intelligent to fall for a financial scam. You’re financially literate, know what to look out for, and don’t take things at face value.

However, technology has given scammers increasingly sophisticated platforms from which to operate – and as the tech evolves, so does the psychology of the scams.

According to Cifas, rogue delivery messages, shopping scams, and investment scams remain among the most prevalent, with consumers losing an average of £1,400 each time. Rather alarmingly, only 71% of victims reported the offence to the police, with shame, self-blame, or fear of not being taken seriously suggested as the reason(s) why.

It’s vitally important to remember that victims of scams are just that: victims. The perpetrators are the ones at fault.

However, arming yourself with knowledge of the psychological tricks scammers use and what to look out for can help you beat them at their own game.

Some scams are easy to spot, while others play on our vulnerabilities

So many people have received the classic “Nigerian prince” or “lawyer for a long-lost relative” scam emails that they’ve almost become a parody. You see them in your inbox, laugh at the audacity, and press delete.

But scammers are getting much more sophisticated in their psychology and are learning how to exploit our vulnerabilities. Age, background, or education offer no immunity, and anyone can fall foul of these traps.

Here are four of the psychological factors scammers frequently exploit.

1. Our sense of fear or urgency

Your bank account has been compromised, and you must act quickly to prevent anything further from being stolen. What do you do? Your head might tell you to ignore the call or text and do some due diligence. But your heart is probably panicking, and you just want to nip this in the bud. That may lead to you handing over sensitive details.

Your bank will never ask you for personal information, such as your PIN. The best thing to do is to hang up or ignore the message and contact your bank directly.

2. An inherent trust in certain providers

You trust your mobile provider and receive regular billing emails. So, when one lands in your inbox on the day you’re expecting it, you click on the link. But rather than your bill, it’s a hoax, and you’ve just downloaded malware.

Perhaps your internet provider calls and claims they’re doing urgent security maintenance and need access to your computer. You’re vigilant and want to keep things safe, so you hand over your passwords, thinking you’re doing the right thing. However, you’re actually handing data to scammers.

3. Our ingrained cognitive biases

We all have unconscious biases that make us more likely to believe certain things without really questioning them.

For example, you may be automatically inclined to obey authority figures. Scammers can tap into this by claiming to represent the government or professional organisations. This is known as “authority bias”.

Similarly, “confirmation bias” means we’re less likely to question anything aligned with our pre-existing beliefs. Scammers can exploit this by creating messages tailored to those concerns.

Meanwhile, if you generally believe good things are more likely to happen than bad, leading you to be overly trusting at times, this is your “optimism bias” at work.

4. A strong sense of social norms

Like it or not, most of us are driven by what we perceive as social norms. Scammers capitalise on this by sending communications that make us want to fit in or to return a favour.

We can develop a sense of social reciprocity, which makes it harder to say “no” because we feel obliged to return a favour.

Certain moods or mindsets can make you extra vulnerable to falling foul of a scam

Sadly, experienced scammers know how to get to us when we’re at our most vulnerable. These are the times we’re more likely to fall for a scam and can include:

• • Episodes of loneliness or social isolation
  • Experiences of financial trouble
  • Periods of stress or anxiety.

Scams are inherently cruel and exploitative, targeting people when they are at a low ebb.

Being on the alert can help you more readily spot a scam and prompt you to double-check

Having a good general awareness of the types of scams out there can help you be more vigilant.

Some of the more common types of scams include:

Phishing messages

This type of scam is incredibly common, with messages seemingly coming from a trusted sender. Believing the message is genuine makes you less cautious about giving out personal or financial information.

Always check first: a genuine company will be happy to offer you some reassurance.

Authorised push payments

These occur when you send money to someone posing as a real payee. While you might think this would be obvious, once again, technology is the scammer’s friend.

It can be difficult to spot scammers in social media adverts or online marketplaces, as transactions rely on an implicit element of trust.

Follow your bank’s safety protocols when setting up a new payee – for example, use two-factor authentication.

Investment scams

An investment that seems too good to be true is probably just that. While you might receive an initial cold call, fraudsters are adept at using fake celebrity endorsements, websites, or testimonials to convince you that they’re genuine.

We’re always happy to talk to you about any investments, so please do get in touch before taking any action, especially if you’re unsure.

WhatsApp messages

A more recent type of scam involves receiving a WhatsApp message claiming to be from your child, telling you they’ve lost their phone and desperately need money.

Don’t call the number or reply. Instead, contact your family member using their usual number, or speak to them face to face before sending money.

Impersonations

These scams involve someone claiming to be from your bank calling and telling you that your account is unsafe and you need to move your money to a “safe” account. In reality, you’ll be sending it directly to a scammer.

Banks will never ask you to do this. Moreover, they will never ask you for any specific security details, such as your PIN, password, or passcode.

Get in touch

Scams are deeply unpleasant and can cause personal distress, as well as financial difficulties. We urge you not to take any financial action without first checking with the relevant company or authority.

Please feel free to contact HarperLees if you would like any assistance to confirm any email or contact is authentic before agreeing any action or spending.

If you’d like to talk to us about any other aspect of your finances, please email us at info@harperlees.co.uk or call 01277 350560 and we’ll be very happy to help.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.