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Why do smart people fall for scams?

October 8, 2023

This month, our articles have shared some of the ways that you can safeguard yourself and your family from the multitude of scams out there.

Here, in a nutshell, are the key points that you need to remember:

—Education: Stay informed about common scams and share this information with your family.

Michelle Herting: How to protect yourself from the ‘Dirty Dozen’ of IRS scammers

—Skepticism: Encourage a healthy level of skepticism, especially for unsolicited offers or requests for personal information.

—Verification: Always verify the caller’s identity for the authenticity of offers, especially if they involve financial transactions.

—Privacy settings: Be cautious about the information shared on social media, as scammers often use social media to gather personal information.

It seems simple enough, right? Why, then, do smart people still fall for scams?

Teri Parker: Guarding yourself from scams, imposters and fraudsters

Smart people can fall for scams for several reasons, and these reasons are not necessarily related to intelligence. Scammers are skilled at exploiting human psychology and emotions, and they use various tactics to deceive even the most intelligent individuals. Here are some reasons why smart people might fall for scams:

1. Overconfidence: Smart individuals may believe they are too intelligent to be tricked. This overconfidence can lead them to underestimate the possibility of falling victim to a scam. When you are feeling secure about a particular opportunity, it doesn’t hurt to do a bit more research and talk to others before acting on it.

2. Emotional manipulation: Scammers often appeal to emotions, creating a sense of urgency, fear, or excitement. Even intelligent people can be swayed by their emotions and make impulsive decisions. If a particular opportunity presents itself and you feel a lot of emotion around it, stop. It’s best to get a good night’s sleep first, and then let reason help you make a rational decision, rather than making a quick emotional one.

3. Sophisticated scams: Scammers use sophisticated techniques, such as creating realistic-looking websites or official-looking emails, making it difficult for anyone, regardless of intelligence, to distinguish between scams and legitimate offers. If you encounter something new, or you are faced with a unique or new opportunity from one of your “tried and true” sources, check twice. Ask questions of an educated third party.

4. Social engineering: Scammers excel at social engineering, manipulating people into revealing confidential information. Intelligence does not always protect against tactics that exploit trust and human relationships. Anytime someone new begins to ask you for information that you generally keep private, please pause and investigate first.

5. Limited information: Intelligent people can fall for scams when they lack specific knowledge about a particular area. For example, someone well-versed in science might not be knowledgeable about financial scams. It never hurts to educate yourself before you make a move. And if someone tells you there’s no time to investigate, this is a big red flag.

6. Momentary lapses in judgment: Smart individuals are not immune to making impulsive or irrational decisions, especially when they are under stress, fatigued, or distracted. Again, get sleep, make sure you aren’t making a rash or emotional decision, and check with a trusted advisor if you need more information.

7. Lack of experience: Some smart individuals, especially younger ones, might lack life experience to recognize certain scams. Scammers often target younger people who may not be as familiar with common tactics. Educate your children, even when they are young adults out in the world. A big scam right now is one that promises to pay off your student loans. You can imagine how many young people will jump at that.

8. Psychological manipulation: Scammers use psychological tactics, such as authority bias (trusting figures of authority), scarcity (creating a sense of limited availability), and social proof (showing that others have fallen for the scam) to deceive people. Are you prone to trusting others easily? You may want to ask yourself what that’s about and to slow down a bit when you feel an authority figure is presenting you with a “great opportunity.” Do your homework first.

9. Fear of consequences: Scammers often threaten legal action, financial ruin, or embarrassment. Even smart individuals can be coerced into compliance out of fear of negative consequences. If you or someone you know is being bullied into contemplating something to avoid these circumstances, please reach out for help. If you don’t know who to call, your estate attorney, your CPA, or your wealth advisor are all educated in this way and can provide you with assistance or resources.

10. Cognitive biases: Cognitive biases, such as confirmation bias (interpreting information in a way that confirms existing beliefs) or optimism bias (believing that bad things are less likely to happen to oneself), can cloud judgment and lead intelligent people to make poor decisions. Again, if you are presented with a new opportunity, such as a charity that supports your beliefs and values, do your homework. There are many great causes out there, and sadly there are just as many scams that will abscond with your funds and direct them to a criminal bank account.

Falling for scams is not an indication of a lack of intelligence. Scammers are adept at exploiting human vulnerabilities and emotions, making it crucial for everyone, regardless of their intelligence, to stay vigilant, informed, and skeptical of unsolicited offers and requests.

The lesson here? Whenever you aren’t sure about something, don’t act on it immediately. Review the reasons people fall for scams, above, and ask yourself if one of these is your motivator. Talk with a trusted advisor or friend before you move forward. As the old adage says, “If it seems too good to be true – it probably is!”

Patti Cotton serves as a thought partner to CEOs and their teams to help manage complexity and change. Reach her via email at [email protected].

Orange County Register

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