Financial scam arists rely on one thing to succeed and it isn’t lack of financial knowledge.
For someone to fall victim to a financial fraud, most people assume that a lack of financial literacy is the cause. But in a study co-sponsored by FINRA, it turns out that victims of financial fraud tend to have more financial knowledge than the general public. These victims were indeed illiterate in the art of persuasion. In an interview of Doug Shedel author of “Outsmarting the Scam Artist,” it’s clear that Shedel sees it that way. Every year, billions of dollars are transferred from victims to scammers with promises of low-risk, high-return investments serving as the bridge. A lack of financial literacy can explains part of it, but Shedel touches on something that most people don’t think about: financial scammers have developed and mastered techniques that work to convince people to believe despite their better judgement.
3 Ways to Outsmart Financial Scammers
Shedel was given access to hundreds of phone conversations recorded by the FBI between victims and financial fraudsters. After transcribing and analyzing the content, they found certain tactics worked consistently well:
- “Phantom fixation”: This refers to the unattainable financial goals that we dream about but can’t attain. Promising 1,000 percent return on 30 days or 5 percent monthly returns with no risk are typical examples of how con men use phantom fixation to appeal to greed.
