Why are we so gullible?

To answer this question, I scoured my network with the hope of finding a scam victim to use as a case study.

Apparently, people are more interested in analyzing why others get scammed than in sharing their own personal experiences. Who would?

It’s embarrassing to admit you were a victim of a scam. It’s like admitting you didn’t know socks were interchangeable (they are). In the end, and with no case study, I looked in the mirror and said to myself, “Yes Zak, you’ve been scammed.”

I’ve been scammed many times — some successful and some not. I’ve loaned money a couple of times to people with the promise of a quick pay back (I’m still waiting).

Once, on a vacation in Bali, Indonesia, I lost US$50 to a shady moneychanger who used some sort of neuro-linguistic programming to make me think I had counted $100 worth of rupiah. In both instances, I simply shrugged my shoulders and credited my loss to the charge card of experience.

The worst scams I’ve encountered – and the ones that I never seem to learn from – are the ones facilitated by friends.

I can’t count how many times I’ve been invited by a random friend to meet up for a drink or a meal. To my disappointment, the friendly get-together is a ruse used to discuss a unique business opportunity or to sell me a life-changing product.

In one instance, I had to sit through a one-hour sales pitch by a well-dressed smooth-talking guy telling me how rich I could become in 4 weeks. All I needed to start my life of luxury was to pay a P10,000 membership fee and recruit two more people.

Trapped. It is the immediate sensation that hits me the moment I realize I’m being scammed. It is similar to the moment a frog realizes the nice warm bath he’s been given is getting too hot – and there’s no way out.

Wanting to be liked

It’s no coincidence why the most successful scammers may turn out to be your friends. They, along with others whom you trust, like your relatives or your boss, are able to influence you to make decisions you would otherwise not make on your own.

But what about scammers who are outside your circle of influence? According to sociologist Randy David, scammers only need to gain your “implicit trust” to get you to fork over your money. He added, “When we trust, we are simplifying decision-making in an increasingly complex social environment.” 

There is also another reason why scammers are successful in turning the wise man into the fool. An extensive UK government study on fraud has found that scammers “exploit basic human desires and needs – like greed, fear, avoidance of physical pain, or the desire to be liked – in order to provoke intuitive reactions and reduce the motivation of people” to really think hard about the offer.

So the next time you get hoodwinked into a scam, instead of saying you were gullible or greedy, you can say you just wanted to be liked.

Of course, there’s the irresistible temptation of an implausible opportunity. Dean Ricky Lim of the Asian Institute of Management said a scam has the same elements as any sales pitch: AIDA – attention, interest, desire, and action. 

“Scammers grab your attention with a good financial opportunity. They gauge your interest, look for your hot buttons, and raise your behavior to desire. They push you to action – a buy, or extract a promise to buy. It is the nuances of each phase of AIDA that differentiate various scams or hoaxes. Scammers exploit our supposedly rational behavior to get to the end.”

Ironically, this rational behavior is quite predictably irrational. 

Click here to read the full Q&A with Dean Ricky Lim. 

Victims and victimizers

In the analysis of both academics, the Aman Futures and Rasuman Group scams had all the elements of a good scam. First, the ringleaders gained the trust of their potential marks through acts of charity and offers to help without any compensation. Next, they established credibility by demonstrating their “expertise” in finance and investment.

The endorsement of the mayor and other big politicians in the area gave an added boost to their credibility. By then, the pitch was just too good to pass up, particularly with promises of up to 83% in intereset payments! It only took a couple of early payouts before greed set in and victims were pooling the savings of family members and friends. Whether wittingly or not, the victims became the victimizers.

David said scams tell us a lot about the nature of our society, but this doesn’t mean Filipinos are more prone to scams than others. He added that, in a hierarchical society such as ours, we tend to “rely on our patronage networks to access all kinds of services or benefits” – getting free healthcare, obtaining a job, or asking for a favor. It thus seems to me that we are quite content to let others do the decision-making for us, particularly when there is a promise of great returns.

Needless to say, I did not pay the P10,000 membership fee and decided to just walk away. I didn’t lose any money but my ability to trust my friends suffered irreparable damage. Now, I doubt every random invitation I get.

‘Predictably irrational’

Ma. Ceres P. Doyo made a good point about the need for education to help prevent fraud. Lim agrees but warned, “Though education will mitigate the risk of being duped, that’s no reason to be complacent as many wealthy people, even those with postgrad degrees, are routinely scammed.” He added, “We make bad decisions because we behave, in the words of Dan Ariely, predictably irrational.”

A final caveat, it’s easy to damn the scammer for opening a Pandora’s box, but in many cases, the successful scammers don’t often start out with the most sinister of intentions.

In the case of Bernie Madoff, he started out as a legitimate trader making decent returns, but due to his success, he began a ponzi scheme out of a need to satisfy his clients and his ego.

The same goes for the ringleaders of the Aman Futures and Rasuman groups. By the NBI’s account, Aman Futures’ Manuel Amarillo was a religious person, soft spoken and generous.

The NBI suspected Amarillo was initially sincere in his desire to help people become rich. Unfortunately for Amarillo and Madoff, history does not judge intentions. – Rappler.com