Weapons of Fraud: How con
criminals scam the public and
what we can do about it
Anthony Pratkanis
University of California
How do Americans lose $40 billion in
telemarketing fraud and $100 billon a year in
fraud and what can be done about it?
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Some common scams include:
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1-in-5 prize tactic
Canadian lottery tickets
Gold coin investments
Phony Internet investments
Charity fraud
Oil and gas scams
Repeat victimization through reload
Myth vs. Reality
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Myth: Fraud victims are stupid, naïve,
gullible, greedy, mentally deficient, elderly,
etc.
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Fundamental attribution error
Ultimate attribution error (stereotypes of seniors)
Self-serving bias of the criminal
Reality: The weapon in a fraud crime is
social influence; the con criminal establishes
a powerful situation that induces compliance
How do we know what is myth
and what is reality?
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Our sources of knowledge
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Multiple AARP & FINRA surveys of victims (plus
control)
Call Center experiments and experience
Analysis of 320 undercover fraud tapes
Trained over 2,500 fraud fighters
Warned over quarter million potential victims
Science of social influence
Research Team
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AARP (Doug Shadel)
National Telemarketing Victim Call Center (Melodye
Kleinman plus Volunteers)
FBI
A. T. & T Wireless
Department of Justice
US Post Office
California Bureau of Corporations
Network of Fraud Fighters
FINRA
Victim surveys find no evidence
for Myth of Weak Victim
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In general, AARP surveys have looked for a
victim profile and has yet to find one.
Victims come in all shapes and sizes – some
are active in their community and leaders
whereas fit more stereotypic notions
Willie Sutton robbed banks because that is
where the money is; con criminals rob seniors
because that is where the nest eggs are.
Emerging evidence shows that seniors are
taken less often (just the target of more
pitches)
Survey of lottery & investment
victims: No victim personality profile
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Trust
Conformity
External vs. Internal Locus of Control**
Susceptibility to hypnotic suggestion
Willingness to give false confession
Need for cognition
Reliance on intuition
Desire for consistency
Impulsivity to buy
Victims are More Likely to Have
Experienced a Negative Life Event
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Survey asked about 25 standard life stress events
such as:
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Problem with troublesome neighbors or co-workers
Death of a spouse or partner
Developed a condition that limits your physical activity
Difficulties in relationship with a spouse or loved one
Recently moved or changed residences
Negative change in financial status
Change in social activities for the worse
Hypothesis came from the cultic literature, which
finds that negative life events are a predictor of
joining a cult
Investment fraud victims more
likely to have a negative event
Average # of negative life events experienced
26
13
0
5.89
Non-victim
7.73
Investment Victim
Non-victim
Investment Victim
Financial literacy of investment fraud
victims and non-victim investors
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Asked participants eight financial literacy questions:
 The APR is the most important thing to look for
when comparing credit card offers. True/False
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Over a 40-year period, which do you think gave
the highest return? Bonds, Stocks, Bank savings
account, IRA, No answer
 With compound interest, you earn interest on
interest in addition to your principle. True/False
 When an investor diversifies his or her investment,
does the risk of losing money decrease, increase
or stay the same? Decrease
Opposite to myth: Victims are
more financial literate than nonvictim investors.
% Correct on Financial Literacy Scale
100
80
60
41
40
48
58
32
20
0
Non-victim
Likely Active Invest Victim Lottery Victim
Investor nonvictim
Reality: The Weapon in fraud
crimes is Social Influence
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Phantom fixation
Social Consensus
Altercasting (Agent of Authority, friend,
helper/humanitarian, expert/insider)
Scarcity
Norm of reciprocity
Commitment & Consistency
Door-in-the-face
Plus many others
Scam pitches are tailored to the
“hot buttons” of targets
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The con criminal profiles the potential victim through in-take
interviews, list exchanges, and records psychological
information about the victim on lead-sheets.
The con criminal tailors the pitch to meet the psychological
profile of the victim.
 Tailoring influence attempts (using the information to create
phantoms, similarities, consistency traps, obstacles to the
scam, etc.)
 Tailoring the scam to the victim:
 High internal controls were more likely to fail prey to
investment fraud
 High external controls were more likely to fail prey to
lottery scam
 (Such results are consistent with social psychological
findings on individual differences and influence)
The 1-in-5 prize tactic
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Students told at the end of an experiment:
 You have been randomly selected by our
computer to receive one of these prizes: a
TV, compact-disk player, multicolor
university mug, VCR, or $50 mall gift
certificate.
 To claim your prize, you need to write
essays for 2 hours
 Control: Asked to stay and write essays.
1-in-5 Prize Tactic results
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Across 2 experiments:
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20% compliance in the control treatment
100% compliance in experimental treatment
Powerful effect (Self-reported victim rates are
between 11% to 31% in surveys)
Anyone can fall prey
Multiply determined: phantom fixation, norm
of reciprocity, positive affect, etc.
How is this crime prevented?
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Given: The weapon in fraud crimes is
social influence.
Then: How is the crime prevented?
Research question:
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Can social influence be used to fight undue
influence?
If so, how?
Our Approach: The Call Center
Research
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Imagine you have 5-10 minutes to talk with a
potential victim. What would you say?
Santa Monica’s Reverse Boiler Room: Call
victims whose names have been seized in FBI
raids and warn them.
Does it work?
If so, what works best and why?
Develop interventions scripts for use at other
centers
The Research Approach
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NTVCC Senior Center volunteers call potential
victims using an intervention script.
Potential victims are from seized mooch lists
(very active lists; common to find someone
who just lost money)
Professional telemarketers call shortly
afterwards with a sting pitch to assess
victimization
Experiment 1: Investment
Fraud
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We contacted 119 at-risks individuals whose
names were obtained from a call-list of a
fraudulent investment firm.
Received an intervention of:
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Control (What is your favorite TV show?)
Prevention: Forewarned
Within 5 days received a sting message from
novice or professional telemarketer
Forewarned Message
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Calling from LA and working with the FBI
Told their phone number had been found in a
raid of fraudulent telemarketers
Dialogued about their recent experiences (to
gather info for law enforcement) and
discussed how to deal with fraud
Provided general info about fraud crimes
Provided specific info about investment fraud
Told never to invest over the phone
The sting
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Delivered by novice or professional
telemarketers
Developed in cooperation with a retired
fraud criminal to mimic his “in-take”
sting to secure initial compliance
Employed well-known influence tactics
such as foot-in-the-door, norm of
reciprocity, altercasting, and scarcity
The specific sting
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I am John (Jill) from Royal American Rarities
Did you get the mailer offering a free
Sacagawea Golden Dollar? (no mailer sent)
Good thing I called – last day of the offer
For qualified investors such as yourself, we
are offering a free Sacagawea Golden Dollar,
with no obligation, just for reviewing our
investment package
Can I mail you the free coin today?
Ethical Safeguards &
Debriefing
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FBI on-site to monitor the procedures
Researchers monitored overall participant
reactions
Debriefing:
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Letter (with a Sacagawea Dollar) explained the
dangers in responding to such offers
Materials and brochures describing the nature of
fraud crimes and what can be done about it.
Toll-free number for those who wanted to discuss
any aspect of fraud crimes.
Exp 1: Results
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90
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60
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40
30
20
10
0
Control
Forewarned
EXPERT
NOVICE
Summary of Findings
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First demonstration of an effective
deterrent to this crime
Forewarning works
Skill of the fraud criminal makes a
difference – skill at using the weapons
of influence
Exp 2: Charity Fraud
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Will the “forewarned” message
generalize to charity fraud?
Can it be strengthened by more specific
information about the crime?
This experiment conducted as a result
of Sept. 11
Charity fraud methods
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Contacted 55 at-risk individuals from a
“criminally-qualified” list
Received an intervention of:
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Control (What is your favorite TV show?)
Prevention: Forewarned with questions
Within 3 days received a sting message
from a professional telemarketer
Same debriefing procedures
Charity Prevention Script
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Similar to previous “forewarned with
fear” script with these additions:
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Warning about people calling using Sept.
11 pitch
Ask for a registration number
Ask how much goes to the charity
If they can’t answer these two questions,
don’t agree to give them anything
Charity Sting
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John (Jill) from Citizens for a United
America raising money for NYC relief
Anonymous philanthropists giving
matching money up to $50 million
Pledge now and receive an American
flag pin
Exp. 2: Results
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15
10
5
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Control
Forewarned
Summary of Findings
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Forewarning worked again
Worked with a charity as opposed to an
investment fraud
Few in Forewarned treatment asked the two
questions (just hung up)
Specific instructions were more impactful
Lower compliance rate overall may be due to
the more demanding request and general
media warnings
Next question: Can compliance
be reduced further?
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Teaching volunteers to use these tactics
in their communications with possible
victims:
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Self-generated persuasion
Vivid appeals
Exp 3: Self-generated persuasion and
vividness scripts
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We contacted 100 potential victims to
tests 2 new scripts
New scripts: self-generated persuasion
and vividness plus control
Procedures were the same as in
Experiment 1 with the Sacagawea sting
Self-generated persuasion
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Same as forewarned script with these
additions
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Can you help us by tell us what to say to victims?
What would you tell someone like yourself who is
about to fall prey to this crime?
What would you tell them on how to develop a
plan for getting off the phone?
What would you tell them on how to determine if
the call is fraudulent?
What would you tell them to convince them not to
do business with such a person?
Vividness appeal
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Same as forewarned script with these
additions:
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Imagine a person at your door with a dark
ski mask. Would you let them in?
Its no different when a stranger calls.
Experiment 3: Results
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Control
Self-generated
persuasion
Vividness
Summary of results
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Self-generated persuasion reduced
victimization
Vividness increased victimization
Sacagawea lost her luster
Volunteers found it difficult to
administer the self-generated script and
easiest to administer the vividness
script
The Bottom line of Our Call
Center Research
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Reverse boiler rooms such as the
NTVCC Senior Center are an effective
tool for the prevention of economic
fraud crimes!
Some prevention messages are better
than others
Prevention messages that
work!
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Forewarning
Specific information about the crime
along with specific steps to avoid that
crime
Self-generated persuasion (although
hard to administer)
Prevention message that
doesn’t work
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Do NOT use:
Vivid appeals that increase the potential
victim’s defensiveness
Do NOT raise anxiety without providing
a strong coping mechanism
Getting to “yes” does not equal
getting to “no”
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Different Influence Tactics for “No”
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Many influence tactics are irrelevant
(scarcity, phantom fixation) for “no”
Some may boomerang (vividness)
Others are useful, but can’t carry the day
(authority cues, information campaigns)
Successful “no” tactics involve teaching
and practicing coping responses
Research Application: Western
Union Settlement
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As a result of an agreement with State Attorneys
General, Western Union has funded $8.2 million
worth of prevention messages from a nationwide
network of reverse call centers.
FINRA Investment Fraud Seminar
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FINRA has created a multi-million dollar campaign to
teach a social norm: Before you invest, ask and
check the broker’s license and the product’s
registration number
 Print and TV PSA campaign
 Taught via 2 hour seminars teaching about the
crime, social influence, and prevention skills
This campaign was designed using our fraud
research and the science of social influence
Specific Goal
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The goal of this campaign is to turn investors from
“passive” recipients of influence attempts to active,
critical investors.
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Question-asking: Establish a social norm to question;
change the investor from a passive recipient of influence to
one who actively questions and counter-argues the pitch.
Checking: Establish a social norm of verifying professional
license and product registration with authorities prior to
investing.
Influence resistance skills: Develop a knowledge of the
influence tactics used in fraud along with skills for identifying
their use and for resisting these appeals.
Outsmarting Investment Fraud:
Seminar
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Three Sections
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Fraud Risk (Nature of investment fraud and
personal vulnerability)
Influence Tactics used in Fraud
Prevention (Ask and Check)
Incorporates moderated presentation, videos,
and learning activities & exercises
Full version runs 90 minutes; adapted to
range from 30-90 minutes in different
settings
Outsmarting Investment Fraud:
Seminar
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Group exercises
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Investor Fraud Risk Quiz
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Explores individual behaviors, such as asking/checking,
attending free seminars, etc., resulting in a personalized
risk score (green, yellow, red).
Based on research; used to overcome illusion of
invulnerability
Influence-spotting practice
Role play exercises
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Teach & practice “ask and check” behavior
Outsmarting Investment Fraud:
Seminar
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Video/DVD Modules
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Risky Business video teaches about investment fraud using
interviews with victims and con criminals.
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Provides an overview of investment fraud
Weapons of Fraud video demonstrates common influence
tactics and relates them to investment fraud
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Builds influence-identification skills
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Smart Shopping Network video tests knowledge of influence
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Preventing Investment Fraud video includes interviews with
in a humorous manner.
victims, con criminals, and state securities regulators and a
sequence on the right way and the wrong way to respond to
a pitch
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Models how to deal with fraud and teaches “ask and check”
Seminar Evaluation: Behavior Change
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Respondents were randomly assigned to a
first seminar (N= 117) or to a second seminar
delivered one week later (N = 158)
After the first seminar but before the second,
a retired con criminal pitched seminar
participants on an oil and gas scam
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Measure: Would they agree to accept additional
communications (portfolio) about an oil and gas
investment?
Con criminal used “foot-in-the-door” plus every
influence tactic he knew to accomplish this goal
Seminar Results
Seminar Results
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Although blind to treatment, our con criminal
could identify those who went to the seminar
because they were asking so many
questions.
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Con criminal was very frustrated by the questions
and even got angry at one of our seminarattendees and hung up
Self-report data also showed participants
rated the seminar as excellent overall and in
all components (6 or 7 on a 7pt scale)
Closing thoughts about fraud
research
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The science and the human side of
fraud fighting.