Scams: the psychological triggers common to victims

By kschilling

The Advocacy Network


I want to display the psychological triggers in action from a legal brief recently filed by the SEC against a classic scam artist. The complaint brief shows the depths of desperation victims face and the rationalizations those victims will resort to in order to recoup their losses.

Once the psychological triggers are pulled, the results are consistently evident. The only solution is to be fully inoculated and insulated from scams, fraud and predatory sales tactics. Without this basic education and understanding of your financial decision-making behaviors, you will consistently and persistently be open prey for scams, fraud and predatory sales tactics. Victims always believe it can’t happen to them because they are too smart and sophisticated to be lured into an obvious scam or fraud, and yet the list of victims grows exponentially larger each day.

Most scams are not exposed for at least 13 months, and many last for decades before full exposure and legal action is taken. Let’s look at a recent SEC criminal and a civil complaint against a scammer (no names will be used, but a link to the SEC filing will be provided for your review).

“From April 2009 to Feb 2011 (Defendant) obtained more than $12 million from 3 individuals as private advisory clients. (Defendant) made misrepresentations to these investors regarding the historical and current rates of return that (Defendant) earned for advisory clients. (Defendant) also misappropriated approx. $185,000 from these investors.”

(Red flag number one for the victims was that they did no due diligence and could have easily found that the defendant held no securities registration or license to act in an advisory role.)

These victims recruited several other victims and also invested in four separate entities created by the defendant. This behavior displays the desperation phase once a victim has learned they were duped. Each of these investors had simple due diligence tools at their command, but they were sold on the opportunity to make great returns with limited risks and they dove in full force. The desire to gain huge returns with no risk is the consistent bellwether of all scams and frauds, and investors continually are attracted to fairy tales.

Once their psychological triggers have been manipulated, there is no turning back because the next level of psychological pain is guilt and shame for being victimized. At this point, victims would rather become part of the scam than to take accountability for their mistake.

The link for this legal action is here. Read it through and look for the countless mistakes made by the investors (victims).

This process is consistent and can be stopped before it even gets started, but it requires knowledge of how the process is used and how, as an individual, you are susceptible. Without this awareness and self-knowledge, you remain exposed and will be an on-going target for scams, fraud and predatory sales tactics. You can choose whether or not you become a victim; it requires a proactive preventive financial decision-making process, though.