Why we keep falling for fraud

Fraud is an increasingly widespread risk. Nearly 4 in 10 American adults report having been a victim of fraud, and many more adults (58%) say they worry about becoming a target, according to a 2026 AARP researchopens in new window report. The 2025 Internet Crime Reportopens in new window from the U.S. Federal Bureau of Investigation (FBI) shows cyber-enabled crimes defrauded Americans of nearly $21 billion in 2025, a $4 billion increase from 2024. Banks have been stepping up their efforts as front-line defenders, interrupting suspicious withdrawals and transfers—reflecting a growing recognition that fraud has outpaced traditional prevention measures and has far-reaching impacts on individuals’ finances and well-being.

Psychologists posit that many victims experience lasting mental and emotional effects. “It’s often a very traumatic experience, and our culture tends to blame the victim,” said Stacey Wood, PhD, a professor of psychology at Scripps College in Claremont, California, where she conducts research on financial scams and fraud, specifically on the cognitive processes that underlie financial and legal decisions. “I frequently see a constellation of symptoms in people who have been defrauded, including negative thoughts about their own capacity, anxiety, depression, and worsened relationships with their support system,” she said. And research suggests that being defrauded once is a risk factor for a second or third round of fraud, which can compound the financial and emotional effects (DeLiema, M., et al., Journal of Elder Abuse & Neglect, Vol. 36, No. 3, 2024opens in new window).

Experts agree that more research and systemic change are urgently needed to blunt the rise and growing cost of these crimes, as well as more awareness among psychologists of the lasting effects of fraud on people’s mental health. More research is also needed on ways to bolster people’s resilience and lower their susceptibility. “The real magic can happen if there are organizations involved with prevention,” said Yaniv Hanoch, PhD, a professor of decision science at the University of Wolverhampton in the United Kingdom who studies decision-making and risk-taking. The rapid acceleration of fraud in today’s technological landscape exposes the limits of these organizations’ systems, which still rely heavily on individual vigilance, Hanoch said. “Social networking sites, banks, telecommunication companies, and governments should carry the heavy burden.”

Anyone can commit fraud, but today many large-scale scams are led by criminal organizations that use layered psychological techniques to draw in vulnerable victims. “It’s not a mom-and-pop operation,” said Hanoch. “It’s organized crime, often led by big players in the field and terrorist organizations.” Federal agencies such as the U.S. Department of Treasuryopens in new window and the FBI have reported extensively that terrorist organizations often fund their operations through criminal activity that includes credit card and check fraud. Compounding the issue, technology “makes it easier for fraudsters to operate at scale,” said Christopher Chabris, PhD, a professor and the director of decision sciences at the Geisinger Research Institute in Danville, Pennsylvania, and coauthor of Nobody’s Fool: Why We Get Taken In and What We Can Do About It.

The smartphone is a single point of entry for many scammers, who can easily reach victims through calls, texts, and email via one device most people always carry with them. In recent years, artificial intelligence (AI) has proven an especially powerful fraud accelerant. The FBI in its 2025 Internet Crime Report noted that $893 million of total fraud losses that year were linked to AI. The New York Times reported in May 2026 that fraudsters often use AI to create fake ads and web stores purporting to sell in-demand brands and items. Criminals can more easily conduct live video or audio calls using a realistic avatar and deepfake voice to impersonate trusted individuals and institutions. According to a 2026 press release from the Federal Trade Commission, imposter scams comprised 1 in 3 reported scams in 2025: People reported losing $3.5 billion to such scams, with almost $1 billion lost to bank and government impersonators.

Personal details posted on social media also allow scammers to quickly find sensitive information that can make a scam more believable. A common one is posing as a family member who says they need an immediate wire transfer to get out of trouble, said Hanoch. “If you’re active online, [criminals] can harvest information easily, like your name, family members, and where you travel.”

Psychologists who study decision-making and fraud understand that scammers are relying on established cognitive and psychological principles, including truth bias, to exploit potential victims. Truth bias describes people’s default assumption that a source or message is credible, especially when we are distracted, rushed, or working with limited information. “We need to believe people for society to function,” said Dan Simons, PhD, a professor of psychology at the University of Illinois Urbana-Champaign and coauthor with Chabris of Nobody’s Fool.

Criminals’ use of urgency and time pressure is deliberate because it can interfere with a person’s reasoning ability, Simons said, instilling anxiety that causes people to act before they take a step back to examine the situation (Kelley, N. J., et al., Computers in Human Behavior, Vol. 142, No. 107648, 2023). Being forced to make decisions quickly often results in poor performance—in this case, giving money to a criminal.

Distraction often adds another variable to the already complex equation. Scammers tend to strike during times of day when people are likely to be busy, hoping they will have less attentional capacity to consider potential risks. In one qualitative study, interviewed scam victims reported they were contacted when they were tired, distracted, or busy with work (DeLiema, M., et al., Victims & Offenders, Vol. 18, No. 7, 2023). When someone’s working memory is occupied with another task, Chabris said, they are more likely to remember statements—even completely made-up ones—as true rather than as unknown or false.

In one study, participants judged short videos of a speaker’s statements labeled “lie” or “truth.” When a distracting task added cognitive load, they leaned toward calling statements “true,” but only when forced to choose. Given the option to say they were unsure, that bias disappeared (Street, C. N. H., & Kingstone, A., British Journal of Psychology, Vol. 108, No. 3, 2017). “In our book, we advise readers to give more consideration to remaining uncertain about things rather than jump to tagging them as true or false,” said Chabris.

Scammers also create vulnerable emotional states to reel people in. Excitement about a prospective opportunity, whether earning fast money, getting a job offer, or meeting a potential date online, can temporarily cloud judgment and lead to irrational decisions. Inciting fear—for example, “If you don’t pay the IRS now, you’ll be arrested”—can also interfere with rational thinking, said Hanoch.

Fraud tactics can include drawing out details about a victim’s personal history, including painful or traumatic experiences, in order to identify emotional vulnerabilities scammers can use to manipulate the person more effectively. Martina Dove, PhD, a psychologist who studies scam techniques and vulnerability and the author of The Psychology of Fraud, Persuasion and Scam Techniques: Understanding What Makes Us Vulnerable, recently analyzed scam manuals for Reuters to help uncover the psychological tactics scammers use to identify vulnerable individuals and build trust through tailored manipulation. “They’ll say, ‘If a victim tells you this, then you need to be this type of person to convince them,’” she said.

Another element of personalization, Simons said, involves introducing scams that are consistent with a person’s expectations. For example, a scammer may target a university professor who is giving an invited address at an out-of-town conference by posing as the organization arranging travel for the conference and collecting credit card information for incidentals.

In one study, a scam victim reported they had filed a whistleblower claim with the Internal Revenue Service (IRS) to report their employer. Later, that participant received a call from an IRS imposter who said he needed to purchase gift cards to process the whistleblower claim (DeLiema, M., et al., Victims & Offenders, Vol. 18, No. 7, 2023opens in new window).

There is no single personality trait, cognitive habit, or life phase that makes one person vulnerable to fraud and another immune. “There are so many cases of knowledgeable, intelligent people, even experts in psychology and finance, who have been totally taken in by the right scam,” said Chabris.

Cognitive decline among older people is one (Journal of Alzheimer’s Disease, Vol. 49, No. 3, 2015). “There could be loss of awareness of being in a scam situation or loss of memory about what a scam is or what it could look like,” said Duke Han, PhD, a professor of psychology, family medicine, gerontology, and neurology at the University of Southern California.

Increased loneliness and social isolation, both common among older adults, also play a role; elders may pick up the phone more readily or unknowingly lean into the truth bias, hoping to make a social connection. Older people, Han said, are also targeted more because of their cumulative wealth compared with younger counterparts.

Yet young adults are increasingly frequent targets and scam victims, comprising 44% of total scam reports in 2023 (California Department of Financial Protection and Innovation, 2026opens in new window). Han posits that this demographic’s high social media use and more limited resources and financial experience may be contributing factors. Lack of awareness, Hanoch said, also plays a role—neither young people nor parents and teachers think of young adults as potential fraud targets, so they are less likely to put up safeguards and be cognizant of the possibility the person on the other side is a scammer.

For example, scammers frequently reach out to recent college grads via text message to collect “unpaid tuition” or offer a cheap apartment and ask to collect a month’s rent without an in-person tour. According to Marti DeLiema, PhD, an assistant professor of social work at the University of Minnesota and the associate director of education at the university’s Center on Healthy Aging and Innovation, scammers also often target job seekers. A common approach involves contacting LinkedIn users, conducting a fake virtual interview, and then convincing them to send money for an application fee or job-related equipment for an opportunity that does not exist.

In her research, DeLiema also found that those experiencing financial fragility—having little to no access to emergency funds—had an increased risk of falling prey to “get rich quick” and other opportunity-based scams (International Journal of Consumer Studies, Vol. 47, No. 3, 2023).

Being part of an affinity group—such as certain religious or cultural groups—can also increase vulnerability. DeLiema has found that scams often circulate through like-minded communities, so scammers may intentionally target members of these groups so that misinformation spreads easily. Research suggests pyramid schemes in particular flourish in areas with identifiable affinity groups, such as religious communities, and specific age groups, such as recently retired people (Bosley, S., & Knorr, M., Journal of Financial Crime, Vol. 25, No. 1, 2018opens in new window).

Overconfidence is another recognized risk factor; in one study, it was one of the strongest predictors of online fraud victimization among adults (Balakrishnan, V., et al., PLOS One, 2025opens in new window). “The more confident you are in your ability to thwart attempts, the more likely you are to be a victim, because you won’t put up guards to protect yourself,” said Hanoch. Dove’s research has also shown that certain behavioral tendencies, such as impulsivity and lack of vigilance, can make people more vulnerable (doctoral thesis, University of Portsmouth Department of Psychology, 2018opens in new window).

As the fraud landscape grows more complex, psychologists can help play a role in education, advocacy, and supporting victims, whether building awareness of scams among patients and clients or consulting for financial and other organizations. “We need organizations to hire more psychologists to serve as fraud and prevention specialists to look for anomalies, create secure infrastructure, help people understand scam psychology, and make communication about scams more engaging,” said Dove, who has been consulting for nonprofits and other organizations for more than 10 years, applying her research expertise to generate systemic strategies for scam prevention. For one organization, she developed communication programs focused on scam prevention as well as guidance for family members and friends supporting someone being actively manipulated by a scammer.

Psychologists can also help build awareness of the myriad ways that experiencing fraud can impact people and educate themselves on the best way to talk through risk and suspicious requests (being aware of common scams can help;  AARP has a robust online resourceopens in new window). According to Hanoch, psychologists can also create prevention programs that can be implemented in schools.

For those with certain risk factors, anything that addresses the risk factor can mitigate fraud. For example, prompting socially isolated older adults to spend more time with others could reduce the likelihood of falling for a scam. Encouraging friends and family to stay grounded can help counter some people’s tendency to fall for a too-good-to-be-true scenario.

Caution with social media use can also decrease exposure to fraud and make it more difficult for scammers to find sensitive information. “Certain online activities and behaviors can increase the risk of fraud, like posting a lot of personal information and accepting follow requests from people you’ve never met,” said DeLiema.

Mental health professionals can also be mindful about supporting people who have been impacted by scams. There is often very little restitution for scam victims: According to the Global Anti-Scam Alliance’s 2024 Global State of Scamsopens in new window report, just 4% of fraud victims receive back any or all of their stolen money—which can significantly affect people’s mental health, contributing to depression, anxiety, and post-traumatic stress. “Even if a judicial system awards damages proportionate to the financial impact, they don’t often recognize the psychological impact,” said Hanoch.

Mental health professionals should also be attentive to related dynamics, such as damaged relationships and guilt over the impact on loved ones. Victims may have borrowed money from friends or family or unknowingly drawn a loved one into a fraud, which can significantly strain those relationships. They may suffer from anxiety about finances or depression related to questioning their financial responsibility or decision-making ability.

Because every scam and victim is different, there is no single, evidence-based treatment. On a practical level, patients may benefit most from encouragement and support in building financial literacy or credit recovery skills. DeLiema advises adopting a nonjudgmental, normalizing communication style while borrowing from trauma-informed modalities used to treat grief, relationship issues, substance use or gambling disorders, domestic violence, or other chronic victimization populations. “We need to move out of this mindset of blaming victims for their victimization and recognize fraud for the sophisticated crime it is,” she said.