Bank fraud has evolved significantly past the cracking codes or breaking into a highly secure vault that you’d see in the movies. Now, it’s about breaking into minds. Scammers have honed psychological tactics to the point where it’s something of an art. They are a potential threat to even the most cautious and intelligent of individuals and, when looking at the psychology behind these scams, it’s easy to see how anyone could fall victim to these scams. By better understanding the emotional maneuvers of your average fraudster, you can better shield yourself and your finances when you’re faced with a potential scam.

What are the mind games behind fraud?

Urgency: Have you ever had a fraudster call you and say something like “immediate action required”, “you must pay now”, “the police will come to your home in the next hour if you do not pay the fine” or “if you hang up, this opportunity will be lost”? These examples show how the fraudster creates immediate urgency around a specific topic area.

Why this works so well: Our brains are trained to respond to immediate threats. These kinds of messages can hijack our natural instinct and cause us to act out of panic, often in ways that we wouldn’t react normally if observing the situation from the outside.

How to mitigate this situation: Breathe! Genuine communications, especially from trusted financial institutions, provide reasonable timeframes for all penalties or actions required from customers. There is always the opportunity to discuss anything that sounds unreasonable or unrealistic with a banker you know. Make sure you always double-check with your bank before making any hasty steps.

Authority: Have you ever had a fraudster call you and say something like “Hello, this is Director Jane Smith from the bank’s elite fraud division, we’ve detected suspicious activity on your account” or “hello, I’m calling from the IRS’s tax fraud division about a penalty on your taxes last year”? All these examples show how fraudsters can use the mental power of authority to force you into making a decision that could lead you to being a victim of fraud.

Why this works so well: From childhood, we are taught to respect authority. Scammers can exploit this deference and they pose as figures of trust to lower our defenses or to cause us to be less likely to ask intelligent questions about the situation.

How to mitigate this situation: Even if they sound official, always verify. Disconnect the call and reach out to the organization using a trusted contact method, like a customer service hotline.

Affinity and Empathy: Have you ever had a fraudster call you and say something like “Hey, this is your neighbor down the road, I’ve encountered a bit of a financial mishap… can you help me?” or “Hey this is one of your son’s friends, I’ve run into a bit of an issue with…”? These are all examples of how fraudsters try to use people and places you’re familiar with to gain leverage over you when convincing you to go along with their fraudulent scam.

Why this works so well: We always want to help people that we trust. Humans are social creatures and can quickly empathize with and trust those that are around us. Fraudsters try to feign or exploit this connection to go against our better nature… and wallets.

How to mitigate this situation: Validate the claim. A quick call to a mutual acquaintance or friend can help. Additionally, asking just a few probing questions can quickly reveal the suspicious nature of the outreach to you.

Who is at risk?

It should be clear that no one is immune from fraud. We are all people and, many of the tactics that fraudsters use to defraud their victims are based on human emotions that we all share. Do not assume that you are not at risk for fraud. Additionally, there are specific groups that we see are often even more at-risk for fraud:

• Elderly individuals: often, the elderly are less up-to-date with evolving banking trends or the scams that have become more popular in today’s society. Additionally, the elderly often have grandchildren or kids that are used as emotional leverage when trying to get them to fall for a fraudulent scam.
• Lonely individuals: those who are missing strong social connections are significantly more vulnerable to emotional manipulation by fraudsters. Loneliness is one of the most strongly correlated personal attributes to being susceptible for fraud.
• Tech Naïve: those who have less of a strong understanding of online security are often the easiest targets for fraudsters. Thankfully, of the three categories of population vulnerable to fraud, this is an easy one to overcome! Many online courses or information is available to help learn about online technology and security.

How to protect yourself

• Educate and reflect: Update yourself on banking fraud tactics and reflect on any unsolicited communications “why am I being rushed” or “is this similar to other interactions I’ve had with this organization”.
• Relationships as shields: Lean into your trusted relationships and share your suspicious encounters with others, harnessing collective wisdom and creating mutual accountability in fighting against fraud.
• Cultivate a healthy skepticism: Adopt a “questions first” mindset. An extra layer of caution can always be helpful when dealing with fraudsters. It doesn’t take much extra time to be skeptical and it can go a long way in protecting your finances.
• Employ banking safeguards: Pair your psychological defenses with technical defenses. Use multi-factor authentication and always double check website URLs.

In Conclusion

The theater of scams is a sophisticated one, and the psychological manipulation tactics that are employed by fraudsters could create victims anywhere. As they play on our fears, loyalties, and respect, our best defense is to work to more easily recognize these manipulations and not to respond with fear, but with informed skepticism. Embrace your relationships and share knowledge among your friends and family. As always, if you have any questions or doubts about your ability to safeguard against fraud, the financial experts at Hickory Point Bank are here to help you safeguard your finances against fraud.

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