Can a Science of Social Influence Be Used to Stop Economic Fraud Crimes?
Every year Americans lose over $100 billion in telemarketing, investment, and charity fraud. While this dollar figure is staggering, it doesn't capture the true costs of this crime. Fraud not only impoverishes victims financially, but it can also impoverish them emotionally and drive a wedge between victims and family members. Economic fraud crimes have societal consequences as well, resulting in a loss of trust that impacts the business community and erodes the very fabric of life in American society.
For the last 50 plus years, researchers have been investigating experimentally the nature of social influence (Cialdini, 2001; Pratkanis, in press; Pratkanis & Aronson, 2001). Can this research be put to use to prevent economic fraud? Fortunately, the answer is a resounding yes.
Eight years ago, I was asked to by Doug Shadel - State Director of AARP Washington - to share my expertise on social influence and to join a team of fraud fighters consisting of himself, Bridget Small (Director of Consumer Protection for AARP), and Melodye Kleinman (of WISE Senior Services). Our team has applied the core findings of research on social influence to understanding economic fraud, conducted surveys of victims, carried out experiments investigating the effectiveness of intervention strategies, developed educational materials (see AARP, 1997; 2001), trained volunteers to fight this crime, and warned over a quarter million potential victims about fraud crimes. As a result of our work, we have developed an understanding of the nature of the crime and some strategies for preventing it.
What We Have Learned from Our Research on Economic Fraud Crimes
First, we have learned that the weapon that is used in fraud crimes is social influence. No one knowingly gives their hard earned cash to a con criminal - they think that they are making an investment, winning a prize, providing for charity, or some similar positive goal. The con criminal is a master at using one high-powered influence tactic after another to sell a deception. Given that the weapon in a fraud crime is an invisible one - social influence as opposed to a gun or a knife - there is a tendency by both victims and observers not to recognize economic fraud for what it really is - a crime.
Recently, Doug Shadel and I analyzed over 600 undercover tapes used in fraud investigations (see Pratkanis & Shadel, 2005). In these tapes, law enforcement officials took over a victim's phone line and then tape recorded the con criminal's pitch. In listening to these tapes, we found that con criminals would play different roles - authorities, friends, even dependents - to create a platform of trust. They would then use many well-established social influence tactics to sell the crime - tactics that are well-known to social influence researchers such as foot-in-the-door, social consensus, expert snare, self-generated persuasion, and norm of reciprocity. These pitches were social influence cocktails, placing enormous pressure on the target to go along with the scam.
A second thing we have learned is that just about anyone can fall prey to this crime; it impacts a large cross-section of our society (AARP 1996; 2003). Con criminals go where the money is and thus older Americans with their nest eggs are a prime target of this crime. The stereotype of the frail or lonely victim does not stand up in our surveys of victims. While some victims are indeed lonely, others are active leaders in their communities. Indeed, we find that con criminals profile their victim's psychological and other characteristics to find their Achilles' heel (and we all probably have one) to construct the exact pitch that is likely to be most effective with each victim. For example, in one of our surveys (AARP, 2003), we found that victims of lottery fraud (which emphasizes luck) believed that the world controls them (a psychological trait known as external locus of control) whereas victims of investment fraud (which emphasizes mastery of one's fate) believed that they control the world (or a trait of internal locus of control). The con pitched the exact scam to take advantage of the person's psychological characteristics.
Third, we have identified effective strategies for preventing this crime. At WISE Senior Services, we have developed a reverse boiler room approach where senior volunteers contact potential victims with a warning message. The volunteers call potential victims whose names appear on criminal call or mooch lists that have been recently seized by the F.B.I and other law enforcement agencies. The volunteers talk with these potential victims, explain the nature of the crime, and help develop strategies for preventing the crime. In a series of experiments we tested the effectiveness of this intervention strategy. We first had our volunteers contact the victim with a prevention message and then, a few days later, professional telemarketers attempted to "take" the victim in a simulated scam. We found that our interventions were effective in reducing victimization rates by 50%. Peer counseling is an effective tool in our fight against economic fraud crimes (see AARP, 2003).
Finally, as a result of our research and work with victims, we have identified components of a prevention message that are most effective. Successful prevention messages are ones that provide the potential victim with (a) a specific warning about the crime and, (b) most importantly, coping strategies for dealing with the crime that build a feeling of self-efficacy - a feeling that "I can take charge of the situation and hang up." We encourage everyone to develop their plan for getting off the phone and to have it ready to go when the need arises. On the other hand, messages that increase fear and defensiveness not only do not work but may actually boomerang and increase victimization rates (see AARP. 2003).
Three Opportunities and Challenges in the Fight against Economic Fraud Crimes
Our research also suggests three opportunities and challenges for those interested in preventing this crime.
First, it is important to remember that economic fraud is a crime. There is a tendency to blame the victims in this crime and to believe that "there must be something about them" that led to victimization. Instead our research shows the power of the fraud criminal's weapon of influence. Victim blaming is harmful to victims and hinders law enforcement's ability to obtain accurate and timely information about the crime. The victims of economic fraud should be included in any Victim's Bill of Rights. Sentencing for economic fraud should match the magnitude of the crime and not the charm of the con. We need continuing federal efforts in investigating and enforcing fraud laws.
Second, we now have tools, knowledge, and strategies which have proven to be effective in preventing economic fraud. This information needs to be disseminated to fraud fighters. For example, Doug Shadel in collaboration with the Attorney General in Washington State has trained over 2,500 volunteer fraud fighters since October of 2003 who in turn have educated close to 100,000 people in their communities about fraud. We have now begun a series of peer counseling events to reach those whose names have been stolen by identity thieves. We need more of this sort of intervention. I would like to see the tools for effectively dealing with this crime in the hands of every victim's advocate in local and state prosecutor's offices, the efforts of Washington State duplicated in other states, and the creation of regional centers to fight economic fraud patterned after the remarkably successful program at WISE Senior Services.
Finally, we need research that focuses on the chronic victim - the 50% or so of victims that we did not successfully help in our call center research. Our research shows that chronic, repeat victims find themselves in a rationalization trap of being confronted with two discrepant thoughts: "I am a good and capable person" but yet, "I just sent my hard-earned money to a scammer." In such a situation, it is difficult to admit that one has been taken in a fraud without damaging self-esteem. We are currently investigating strategies for resolving this rationalization trap in the hopes of finding effective interventions for use with the chronic victim.
AARP. (1996). Telemarketing fraud victimization of older Americans: An AARP survey. Washington, D.C: AARP.
AARP. (1997). Don't fall for a telephone line. [Video]. Washington D.C.: AARP. AARP (2001). Weapons of fraud. [Video]. Washington D.C.: AARP.
AARP. (2003). Off the hook: Reducing participation in telemarketing fraud. Washington, D.C.: AARP. [Available on the web at: http://www.aarp.org/research/frauds-scams/telemarketing/aresearch-import-179-D17812.html].
Cialdini, R. B. (2001). Influence. Boston: Allyn & Bacon
Pratkanis, A. R. (in press). Social influence analysis: An index of tactics. In A. R. Pratkanis (Ed.), The science of social influence: Advances and future progress. Philadelphia: Psychology Press.
Pratkanis, A. R. & Aronson, E. (2001). Age of propaganda: The everyday use and abuse of persuasion. (Revised edition). New York: W. H. Freeman/Holt.
Pratkanis, A. R., & Shadel, D. (2005). Weapons of fraud: A source book for fraud fighters. Seattle, WA: AARP Washington. Available at: http://www.aarp.org/states/wa/
About the Author
Anthony Pratkanis is an experimental social psychologist. His research program has investigated such topics as the delayed effects of persuasion, attitudes and memory, groupthink, affirmative action, subliminal influence, persuasion and democracy, and influence tactics such as the pique technique, phantoms, the projection tactic, the 1-in-5 prize tactic, expert snare, and altercasting. He has served as an expert witness in numerous litigations including Oregon's case against Publisher's Clearing House and California's cases against MCI/Worldcom and against Cingular Wireless and currently serves as an expert on marketing for the National Association of Attorneys General's Tobacco Litigation Group. A fellow of APA, he is the founding editor of a new academic journal, Social Influence, scheduled to appear in Spring of 2006 from Psychology Press.This article is based on testimony given before the United States Senate Special Committee on Aging on July 27, 2005.