What You Need to Know
- Scammers often promised easy money or lucrative investments, or posed as IRS agents demanding payment of back taxes, a study found.
- Two overseas call center workers using the back taxes scam defrauded their targets out of $57,000 in 10 days.
- Engaging with scammers and losing money was associated with social isolation and low levels of financial literacy.
With World Investor Week just around the corner, Oct. 4 to Oct. 10, a two-year study released this week asks why some people are more likely to lose money to fraud.
The research found that attitudes and beliefs that shape the ways in which study participants looked at the world — called “mental frames” — may have influenced how they reacted to scams, according to investigators from the FINRA Investor Education Foundation, the Better Business Bureau Institute for Marketplace Trust and the University of Minnesota.
They propose that mental frames that govern compliance, opportunity, intelligence and order may have affected the way that interviewees interpreted what scammers told them.
People were more likely to lose money if they believed that authority should not be challenged, financial opportunities are a zero-sum game with clear winners and losers, the world is organized to benefit good people and asking too many questions can make a person seem ignorant.
“This research gives us new ways to understand who is at risk for losing money to financial scams and opens novel possibilities for protecting people against different forms of fraud,” Gerri Walsh, FINRA Foundation president, said in a statement.
“We hope these insights into the role that beliefs and attitudes play in fraud victimization will stimulate additional research and the development of effective strategies to reduce consumer losses.”
Investigators identified study participants from a pool of people who had filed reports with BBB Scam Tracker, an online fraud reporting tool. Researchers from Metro Tribal, an ethnographic-based social insight firm, conducted in-depth interviews that yielded key insights.