You likely often receive scam texts, emails or phone calls from fraudsters trying to steal your money using their latest scheme. In fact, consumers are losing billions of dollars to scams every year. But now there's some insight into why people fall for scams.
Like countless other people, Alex Underwood lost his job during the pandemic.
"I didn't know how I was going to pay rent," said Underwood. "I was so strapped for cash. I had maybe $600 to my name total."
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But finally, some good news.
A recruiter reached out about a job Underwood had applied for online. After a 45 minute virtual interview, Underwood landed the job -- $35 an hour plus a signing bonus.
"It was a godsend, it was a miracle," said Underwood.
Underwood's new employer issued him several checks to deposit at his bank. He then told Underwood to pay specific people, using cash apps, for home office equipment, like a computer and other gear. But days later, those checks Underwood had deposited bounced. He was now overdrawn by nearly $14,000; the scammers swiped it all.
"I was just shell shocked, just absolutely shell shocked," said Underwood. "I had a pit in my stomach. I couldn't think straight."
Prof. Marti DeLiema with the University of Minnesota has been studying fraud for years.
"I think that a lot of scams are successful because they hit people at the right time." she said.
DeLiema recently co-authored a study about why people fall for scams. She found that it boils down to how people view the world, and the study breaks that down into four mental frames, or rules of thumb for how we behave.
Let's take Underwood, for example. DeLiema says he would fall into the "opportunity" frame. That's when people are likely to believe they've been dealt a lucky break that leads to financial gain. People who are victims to investment scams fall into this frame, too.
DeLiema says Alex might also fall into the "intelligence" frame. That's when people are afraid to ask questions, thinking they won't appear very smart.
"I better not ask questions. It seems a little strange, but again, I don't want them to think I'm naive. I don't want them to regret hiring me," said DeLiema.
Another mental frame is "compliance." People in this category tend to respect authority figures, and may be more willing to do what they're told if contacted by somebody in a position of power. IRS scams are huge here.
For Miyana Evans, she fell into this frame when she thought her bank was contacting her about potential fraud. She ended up transferring her money to a fraudster.
"They were like, 'We can stop it if you act now,'" Evans said. "I was like, 'OK, let's get this done.'" And the last mental frame is "order."
This refers to people who believe the world has a natural balance. For example, if you're a good person, you think you deserve good things. This sets you up to fall for a scam involving a promising opportunity.
"Good people who do good things, good things happen to them," said DeLiema. "And bad people are punished because they do bad things."
So what can help people from falling for scams? DeLiema says it's spreading the word like Underwood and Evans are doing.
"No one's not vulnerable to some form of fraud," she said. "If you haven't fallen for a scam, you just haven't met the scam that you're susceptible to yet."