Scams and why we so easily succumb

The recent scamming of internet users looking to buy tickets to the Beijing Olympics is not surprising. These scams are ubiquitous and our response to them is predictably irrational (thanks, Dan). A basic understanding of human psychology can shed light on why we (continue to) succumb to scams, both online and in other contexts.

When it comes to succumbing to a scam, there are three psychological principles that work in concert to trick us into falling for them. They are , 1. Trust, 2. Scarcity, and 3. Endowment.

Each of these principles/behaviours/forces are really useful evolutionary tools, and on the plus side have contributed to humans being such a successful species.

Trust is one of the backbones of a civil society – human beings would prefer to trust others than to distrust them. It is an evolutionary necessity that we trust the people and the institutions around us. Every time we walk out the door, we need to be able to trust that the people around us will behave in a way that we expect them to – otherwise we would never get anything done.

For example, in Australia, we trust that everybody on the road will drive on the left-hand side (obviously this is different in other countries – but trust is about communities as well). It is also important that we trust big business, institutions, people in positions of authority, even famous people, because we can’t be constantly assessing their bona-fides.

So we take a risk, and trust that they will do the right thing. When it comes to scams, what we do is give over that trust to others – in other words, when we see a particular claim from a “professional” looking institute, we make a judgment, and trade off the time it takes to do the, at times significant, amount of research to find out if it is true, and take the risk that it is true.

In other words, trust is a willingess to take a risk. If we see a claim, we make a decision that if it wasn’t true, someone, somewhere, somehow would challenge it. The problem is that we don’t look very far to see if someone has challenged it – we are notoriously lazy when it comes to seeking new information. Partly because it might challenge something that we already believe. Our ego is very good at accepting information that we want to hear, and rejecting information that doesn’t conform, or suit, our current thinking.

In many scams, and in many marketing activities, this is then combined with scarcity, to make the rejection of the offer/scam even more difficult. Scarcity has the effect of making something seem even more valuable simply by the fact that we give it more utility if we think it is only available for either a short-time, or to a small group of people. If we think something is scarce, such as tickets to the Olympics, or a short-term but high earning investment, our mind will give it more weight predominantly because we uncritically apply an implicit rule of “what is rare, is good”, or “what is scarce, is extreme”.

Scarcity is closely related to the commodity principle, in that any commodity will be valued to the extent that it is unavailable. So, if we think that only a few tickets are on offer, or that something will disappear if we don’t act straight-away, then the value of that thing is enhanced in our minds.

And finally, the scam works on the effect of endowment, in that once we think that the product is ours to buy, or own, we take immediate psychological possession of it, and view our ownership (even if it is only in our mind) as the new status quo. What this also means is that once we own something, we place more value on losing than prior to us owning it.

So, all of these factors combine to make us easily susceptible to scams, such as the Olympic ticketing, the Nigerian Princess, or the woman asking you for money to help her leave Ukraine and get to know you better…

The best way to resist these scams is to create some form of psychological break, so that we can think a bit more about the offer This is often difficult when scarcity is involved, but this is the risk that we take. Prior to purchasing something, talk to somebody else, and tell them that you are doing it. They might ask the questions that your ego won’t let you ask, such as, have you looked into the risks?

Another way to gain information is to Google the site or the name of the site, and go beyond the first page of Google, to see if anyone is writing about the scam. Although the actual site might be the first couple that comes up, it is highly likely that others are being scammed, and with the huge numbers of blogs, etc., on the net, it is possible that others are writing about it.

Ultimately, you need to step back and take some time to think it over. Make a cup of tea, and then think a bit more about the offer. Although this might mean that you lose your place in the queue, it might be better than losing $1000 or even $50,000.

This entry was posted in Consumer Behavior, Philosophy, Social Psychology and tagged , , . Bookmark the permalink.

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