©2007 Newhouse News Service
We're taught from
childhood that if something sounds too good to be true, it
probably is. So why are we so susceptible to get-rich-quick
It's human nature, experts say.
"We are ... wired to react in certain ways. Everybody is a potential
victim," said Les Henderson, the Sudbury, Ontario-based author of
"Crimes of Persuasion."
The Federal Trade Commission estimates that nearly 25 million
Americans are victims of consumer fraud each year — 11 percent of the
We may think we make decisions after dispassionately weighing pros
and cons, but research finds our choices are largely driven by emotion
and unconscious cues. Fraudsters understand the psychology, and play to
Some of the quirks that make us vulnerable:
— We're driven by fear and greed.
"If you break it down to the fundamentals of how decisions are made,
it's to avoid pain and to gain pleasure," said Darrin Farrow, a wealth
manager in Westlake, Ohio.
Con artists bait us with warnings about moldering in a run-down
nursing home or tempt us with the opportunity to provide for children
and grandchildren, said Joseph Borg, Alabama's securities commissioner
and president of the North American Securities Administrators
Criminals also play on conspiracy theories, feeding the subtle
paranoia that we don't know the right people or strategies to land that
big payday. We see hedge fund managers and technology entrepreneurs
raking in the millions, and think, "Why not me?"
— We each think we're special.
Pyschologists call the notion that we're all above average a
"self-serving bias." This leaves blind spots.
"People sometimes overestimate their own ability to be skeptical,"
said Lori Richards, director of the inspections group at the U.S.
Securities and Exchange Commission. "At one time or another we've all
We also overrate the ability of law enforcement to crack down on
fraud. If something is openly advertised in the newspaper or discussed
in a conference room at a high-end hotel, we assume it's legitimate —
sometimes to our detriment.
— We believe our friends.
So-called affinity frauds involve a con artist joining a church,
country club or other community and convincing victims to bring friends
and families into a scheme.
"The people down the chain still don't know they've been victimized
so they recruit other people," said Alex Johnson, head of the special
investigations unit for Regence, a health insurance company based in
On the advice of a friend who had invested in a particular firm, Luis
Corona, a 72-year-old former airline technician in Boynton Beach, Fla.,
went to a seminar hoping to protect his retirement savings. Pretty soon,
a salesman was coming by his house for dinner or coffee cake, often
pointing out their common interests.
"He never mentioned about the investment," Corona said. "He said, 'I
just stopped by to say hi to you.' ... He's got a nice personality, nice
smile, he looks very convincing."
Corona spent more than $75,000 to purchase three viatical settlements
— insurance policies on a terminally ill person that were to pay off in
three or four years when the person died. He lost the entire amount, and
sank another $4,000 into lawyer fees trying to recoup his investment.
— We're influenced by appearances.
The most successful criminals put us at ease with subtle cues and
context — appearing to be like us — while imparting a false urgency to
get in on the deal before the opportunity passes. They use official
terminology and pitch investments that seem plausible.
"People are taken in by glitz," said Franklin Widmann, chief of the
New Jersey Bureau of Securities. "If something looks fancy, they get
Karyn Solochek thought she was dealing with a fellow information
technology professional until she and her husband were arrested while
trying to cash the checks the customer had sent. The customer had asked
her to wire back the "accidental" overpayment via Western Union.
"He spoke the same lingo," said Solochek, a former wholesaler who is
now an anti-fraud activist in Brunswick, Ga. "He was very knowledgeable
about computers, said he was in his own computer company, and not to
She credits help from Fraud Aid and a feisty lawyer with keeping her
out of jail, although she had to plead guilty to a misdemeanor. Her
husband pleaded to petty theft and spent three weeks in jail.
— We think differently once we are committed.
"Sometimes victims become so psychologically invested in what they
perceive as a righteous investment program that they refuse to believe
it's a con game," said Regence's Johnson.
In a phenomenon known as cognitive dissonance, when our attitudes and
actions seem inconsistent, we adjust the attitudes rather than change
course, said Keith Durkin, chair of the department of psychology and
sociology at Ohio Northern University. When we don't regard ourselves as
patsies, we can't accept the reality of being defrauded.
"Their identity is threatened when people tell them they're being
conned," Durkin said.
Fraudsters rely on this when they use the foot-in-the-door technique,
first asking victims for something small, knowing it's more likely
they'll obtain something big later on.
Once we've sent $25 for an informational packet, we're emotionally
invested in the legitimacy of an operation and more likely to commit
$500 to a sketchy "business opportunity" — then another $500, or $1,000,
and so on, down the path to financial ruin.
"People will lose hundreds of thousands of dollars," said Henderson,
the author. "The guy's been arrested and behind bars, and the people
will be believing in him as if it's a cult."
— At the right moment, any of us can be a victim.
It's not just the elderly or inexperienced who fall prey. Exhibit
one: the former treasurer of Alcona County, Mich., who sent more than
$1.2 million in county funds and $72,500 of his own money to Nigerian
scam artists. In June, Thomas Katona was sentenced to prison for up to
14 years, after pleading guilty in May to multiple counts of
embezzlement and forgery.
In Theresa Mack's 22 years as an FBI agent, she encountered several
wealthy, highly educated business owners who lost millions of dollars to
"A lot of victims are under some type of stress. They're having a
problem and their judgment is clouded," said Mack, who is now a senior
manager of investigation at Cendrowski Corporate Advisors in Bloomfield
In one of the newest cons, criminals pose as employers on career Web
sites and ask job hunters for Social Security numbers and other personal
information. They then use that data for identity theft or extortion,
said Adam Levin, the Mantoloking, N.J.-based chairman of Identity Theft
"You're desperate to get a job, so you'll tell them anything they
want," Levin said. "The bad guys are really, really good at what they
(Katherine Reynolds Lewis can be contacted at