Bastion Balance Tip Of The Day: Fraud and Scam Risk Factors “All You Need To Know Moving Forward”
In the modern era of the internet, no serious investor or entrepreneur is unaware of issues like malware, hacking, chain emails, or phone cons. Yet the fact remains that many people fall prey to fraudsters and con artists regularly. For this reason, it is important to examine factors that make individuals vulnerable to this type of crime. Much of the research that has been done into this matter can be found at The Conversation, but we are here to provide you with some crucial insights.
Headquartered in Seoul, Bastion Balance Korea is a wealth management firm that specializes in protecting, growing, and preserving our clients’ assets. We have a long history of helping clients, and currently manage over $1 billion USD in assets worldwide. Contact the firm for more information on financial exploitation, wealth management, and investment advice.
Traits That Cause People to Fall for Scams
Human beings are communal animals, and we have millennia of social norms ingrained in our brains. This makes it easy, unfortunately, for con artists to take advantage of certain traits and tendencies that affect our psychology.
1. Herd Mentality
Humans thrive in society, which means we are programmed from birth into living in distinct groups. Many experiments have been done to test this “herd mentality,” and they all show the same thing: when one person does something, or a plethora of people take part in an action, it becomes much more likely that the test subject will likewise take part in that action. There’s even a joke-term for this: “monkey see, monkey do!”
One study was performed in a hotel area with the purpose of getting guests to engage in environmentally friendly behaviors. The study’s architects found that appeals to the importance of these behaviors were far less effective than simply posting signs that said things like “most people engage in these behaviors.” When people thought that others were also doing the acts, they were more willing to perform them themselves.
In the world of financial crimes, this concept is exploited by con artists who make claims such as:
- “80% of people at your age purchase this product.”
- “Most clients in your situation have received relief through [whatever fake product or investment opportunity the criminal is selling].”
- “3 out of 4 investors have experienced high returns on this investment.”
2. The Principle of Scarcity
An oft-used sales principle, manufactured scarcity is usually coupled with the Fear of Missing Out (FOMO) to pressure people into making commitments that extended reflection might make them realize are unwise. For example, you may receive an email or phone call about a particular sale or product that is only available for a short time. While deadlines do exist in the real world, they can also be a sign that something is not right with the offer.
Fraudsters do not want you to spend significant time thinking about, researching, or trying to understand their schemes. By using the principle of scarcity, they can create psychological fear and a drive to take advantage of their offer before you have properly thought through the situation.
Always take time to reflect on the ways you use your money and manage your wealth. If an opportunity seems too good to be true, it almost certainly is.
3. Just Like You
Finally, another common way for fraudsters to “hook” people into their scams is by posing as a familiar entity. This is especially true in phishing and email scam situations, in which the perpetrators of financial exploitation crimes often pretend to be a member of the organization they are targeting. Other ways that this tendency to trust people who seem like us is used in scams include:
- Con artists asking for personal information and remarking about how they share those birth dates, have family in your area, etc.
- Con artists posing as members of authority groups like the police or government departments.
- Con artists ramping up the severity of their requests as you get more familiar with them (i.e. starting with simple requests for innocuous information before demanding payment).
These are only some of the psychological risk factors that fraudsters exploit in order to prey on innocent people. One important step to take is to always step away from an offer and reflect on the request before committing to any course of action. It is also advisable to research and verify the offer instead of simply trusting the request or potential opportunity.
For more assistance with wealth and asset management, including advice on risk management, contact Bastion Balance in Korea.