Why People Fall Prey to Fraudulent Claims
Social Psychological Explanations
Chapter 7: Scams and Cons
The cost of fraud to consumers is astronomical. Internet fraud bilked consumers out of $3.2 million dollars last year alone. Telemarketing fraud takes $40 billion dollars a year away from consumers (National Fraud Information Center, 2000). Health fraud takes billions of dollars per year from its victims.
The types of scams and cons are only limited by the ingenuity of the con artist. It is estimated that there are over 800 varieties of frauds and scams (Senate Special Committee on Aging, 1996). Popular scams targeted toward individuals are work-at-home schemes (http://www.fraud.org/telemarketing/teleset.htm). Other scams that affect everyone but are also commonly targeted to older adults are home improvement schemes. Scams sent through a person's email and phishing scams are gaining popularity (http://www.attorneygeneral.gov/).
Businesses are
targets
for con artists too. One type of scam involves advertising. For
example,
as a business owner you pay someone to advertise your company on place
mats or other products. Usually, what happens is that the order is
never
filled. (For a list of other scams against businesses, go to http://www.fraud.org/scamsagainstbusinesses/
).
Older adults
are
desirable targets for all the above frauds. In addition, frauds exist
that
are specifically targeted toward older adults. Health care scams
targeted toward older
adults abound. Many ineffective "aging" products are sold that claim to
miraculously reverse hair loss or to restore aging skin to its youthful
vigor. Anti-aging hormone treatments are gaining popularity. Not only
do these
health schemes bilk individuals out of billions of dollars a year but
also
medicare
fraud is directly related to the rising cost of health care. It is
also hard for older adults to resist fraudulent telemarketers (http://www.fraud.org/welcome.htm).
Why People Fall Prey to Fraudulent Claims
Many victims of scams are older adults. A number of intuitive reasons have been advanced as to why older people are desirable marks for a con artist. Reasons that have been offered are that older people are more naïve and trusting than other age groups, older people are lonely and need someone to talk to, or that older people are not assertive. One common misconception is that older adults who fall prey to telemarketing fraud do so because they are poor or lonely. In fact, the older people that telemarketers prey upon are usually socially active, well educated, and have above average incomes. This chapter will outline why many older people fall prey to con artists. These explanations involve very basic principles in social psychology. As you will see, it may not matter how old you are, how educated you are, or how financially "set" you are, given the right set of circumstances, we can all become victimized by a slick con artist.
Social Psychological Explanations
To begin our discussion, one of the most compelling reasons for people to behave in certain ways is based on the prevailing norms of their culture. Norms are expected rules of behavior. Norms let us know what is proper behavior in different situations. For example, when we meet someone for the first time, we usually shake that person's hand. Other norms guide eating behavior (i.e., it is impolite to chew food with your mouth open, or to talk while chewing your food). Two norms that are important in understanding how people get conned have to do with the norm involving phone use and the norm of hospitality.
The rational approach to using a phone particularly if one has an answering machine is to let the machine take the call. This would not only reduce the number of telemarketing calls that get through but also decrease the chances that a slick con artist will make his or her way into your home via the phone lines. Many people, however, have claimed that letting a phone ring and not answering it is a very difficult thing to do. Also, those who screen all their calls have indicated that they are considered a "bit off" by others. One reason that people are uncomfortable letting a phone ring is because the norm is that a ringing phone must be answered. This norm is so strong that people will rush to answer a phone even to the point that they will practically break their neck getting out of the shower or bath.
One reason why people feel compelled to answer a ringing telephone may have to do with the early importance assigned to the telephone. When the telephone was relatively a new invention, not many people had access to it. Possibly the only place they could find a telephone would be at the local drug store or in a few homes. The phones at these locations would serve primarily as sources of getting important messages to others in the community, such as calling for a doctor. Thus, if the phone rang or someone needed to use the phone it usually was for something important. The present norm of answering a ringing telephone may be a vestige of when the telephone and the person on the other end performed an important function. In other words, we feel that if we do not answer the phone we might miss an important message.
Another related norm involving phone use is that we are expected to be polite when on the phone. Phone etiquette is something that we learn at an early age and it is hard to break the habit. The fraudulent telemarketer is relying on the fact that you were taught to be polite over the phone. And con artists are smart. They know that you might try some polite tactic at hanging up and they will not give in. Then, the only recourse you have is to be rude. There are ways to torment telemarketers to keep them from calling back but these are not for everyone because we do not like to be impolite. Perhaps the breaking of this norm involving the use of phones is best exemplified by a person that dealt with a telemarketer by shouting at him: "How dare you invade my privacy by calling me on my telephone!" Indeed, it is your phone and you can talk to or not talk to anyone you wish.
Many older adults, for example, when they were younger lived in a time when many products were delivered door to door. Milk delivery to one's door step was common, for example. Other types of salespeople would stop by usually once per week to sell household items or products. One type of salesperson that I can remember from my childhood was the Jewel Tea Man. He would come around usually every week and would sell along with tea and coffee a number of products. Usually, he was someone who became well known in the neighborhood. People would usually invite him in and offer refreshment and make small talk as he displayed his products. Now one reason people let these people onto their porch and occasionally into their homes is that these people were usually well known and trusted. Older people are likely to let con artists into their homes because when they were growing up it is possible that door to door salespeople were common and for the most part honest. However, another reason has to do with how we deal with friends and strangers when they come to our door. We may even let complete strangers into our home based on a norm of hospitality.
Norms involving hospitality are prevalent in many cultures and religious traditions. Stories from Greek mythology exemplified the belief that gods sometimes appeared on earth as strangers and that anyone who showed hospitality toward these visitors was amply rewarded. Hindu writings expressly state that hospitality is one of the duties required by its followers. The Torah emphasizes that hospitality toward a wayfarer is a virtuous act. Many acts of kindness and hospitality are documented in the Judeo-Christian tradition. Originally, an act of hospitality in Palestinian homes, the washing of feet became a tradition in the Christian church. Also, kindness performed toward strangers is based on the Judeo-Christian notion that the stranger may be an angel in disguise. It was unheard of to turn someone away who was in need. I can remember my mother telling me about how her mother would provide meals to vagrants who stopped at her door. They in turn would do some work around the house or yard in exchange for the food. Food is also associated with expressions of hospitality. Potluck suppers, an American tradition, may be related to the potlach of the American Indians of the Northwest Pacific Coast. The potlach usually involved the ceremonial distribution of property and gifts and was accompanied by feasts and generous hospitality toward those who attended.
The norm of hospitality dictates that once you invite someone into your home you are obligated to treat that person as a guest. The con artist will capitalize on this norm. He or she may present herself as being very friendly and trustworthy. Con artists may state that they had just visited your neighbor up the road implying that they were let into that person's home and that you would violate hospitality by not letting them into your home as well. They may even play upon your sympathy by indicating that they need this sale or they will be fired or that their kids will not eat this week. Believe me these people are not "angels in disguise" and you should respond by slamming the door in their faces.
Self-presentation and Pluralistic Ignorance
Self-presentational concerns can also explain why people fall prey to con artists. Self-presentation is the act of expressing oneself or behaving in ways designed to create a favorable impression. People have self-presentational concerns particularly when the behavior or situations may place them in an unfavorable light with others. One self-presentational concern we have is that we like to be perceived by others that we are fairly intelligent and competent. In other words, people may be very concerned about appearing stupid in front of other people. Older adults may also have self-presentational concerns with regard to health (see the Martin et al, 2000 reading in your reading packet). These self-presentational concerns may be linked to stereotypes people have about aging and decline. That is people may believe that they do not hear, see, or think as well as they used to. Self-presentation may make us prey to con artists.
How a con artist can capitalize on self-presentation is that people may associate normal confusion and skepticism with stupidity or impairment. One tool that swindlers use to throw us off guard is to talk fast and to be ambiguous and vague about what they say. Other techniques are to speed up transactions by saying that time is running out or that there is only a limited number of items left, or present contracts that are hard to read or are confusing. How these tools capitalize on self presentational concerns is that we may not want to tell someone that we did not understand a word that they said or that we did not understand the terms of a contract for fear of appearing stupid. These fears may be exacerbated in an older adult particularly if the person believes that why he or she did not understand what was being said was because of poor hearing. The person may not want to make this impairment known to others. As a result, the person may act as if he or she understood what was being said. Another self-presentational reason for being conned is that an older adult may believe that the reason that he or she does not understand a contract is because of failing mental functioning. Again, the person may not want to ask critical questions for fear of being perceived as incompetent. A skillful con artist will capitalize on self-presentational concerns by expressing astonishment that the person cannot understand a simple contract or that what was said was in clear, plain English.
A related concept that helps reinforce self-presentational concerns is pluralistic ignorance. Pluralistic ignorance occurs when we fail to realize that others in the same situation would feel, act, and think the same as we do. For instance we may not appreciate, because of pluralistic ignorance, that anyone who was presented with the same "deal" would not understand it either and would be as skeptical and confused as we are. In a sense we come to believe that we are the only one who cannot understand why what we are being offered is such a great deal and if we don't act on it immediately we are stupid. Self-presentation combined with pluralistic ignorance inhibits us from asking critical questions about the product or the deal being offered.
Health scams cost people billions of dollars every year. Older adults are prime targets for fraudulent health schemes. Health and diet scams offer "miracle cures" that restore health and reduce weight. Miracle cancer cures or distorted and inaccurate representations of alternative treatments abound. Anti-aging hormone supplements are gaining popularity. The only safeguard against quackery and fraud in health is to understand how people fall prey to fraudulent health schemes and to learn how to protect oneself against health fraud.
eQuestion#1: Discuss three reasons why you think older adults fall for fraudulent health claims? Utilize the information from this chapter and the links. You can include and reflect on other scams and frauds by also going to www.seniornet.org. Once there, link to "enrichment centers" then link to "money: consumer education."
Representativeness refers to how we judge whether a particular instance fits into some broader category of experience. Using representativeness we are able to estimate the probability of an event or outcome by the degree to which it resembles the general characteristics of a population. Representativeness is a heuristic (see Chapter 2) we use when we look at a particular case and try to determine if it belongs to a certain category. For example, the representativeness heuristic can be used to stereotype someone. Suppose you hear about someone who is shy, likes to stay home on weekends and read, and prefers quiet. If you were asked to indicate whether the probability is higher that this person is a librarian or someone who sales used cars, you might indicate that it is more likely that this person is a librarian and not a used-car salesperson. The reason you may have made this determination has to do with representativeness. The characteristics of this particular person seem to "represent" the general population characteristics (in this example the stereotypical characteristics) of librarians and not the characteristics of used-car salespeople.
How do we use
the
representativeness heuristic when we think about health and how does
the
use of representativeness open us up to health fraud?
Representativeness and Health: Like goes with like
One example of the use of representativeness is that people tend to sort items into categories based on how similar they are to other items. This idea of "like goes with like" is important in understanding how people think about health and why they come to believe that a fraudulent health claim seems to make sense.
The accu-dot was a popular product a few years ago and was exhibited by the Special Committee on Aging as an example of health fraud. The accu-dot is a product that is worn on the body like a bandaid. This "bandaid" has a number of magnets placed on it. The person could place the accu-dot on any part of the body and the curative properties contained in the accu-dot would work on the affected part. Accu-dot is similar to other "health" products presently on the market that use magnets or other metals such as copper.
The popularity of the accu-dot can be explained by the use of representativeness in two ways. One is that many people believe that magnets have restorative properties. To these people, the accu-dot represents the healing power hidden in magnets. Another aspect of the accu-dot is that it may represent something close to another procedure, such as accu-pressure. Again, representativeness is used here in that people may believe that the accu-dot works in some way "like" accu-pressure. Does the accu-dot or similar products work? Probably not. But if you sale them at $19.95 each and if you bank on people's use of the representativeness heuristic you can make a lot of money before your clients figure out that you have sold them a worthless product.
Another interesting example of how representativeness and "like goes with like" perpetuates unfounded and contradictory health remedies has to do with arthritis treatments. Dan Alexander (1954) in his book Arthritis and Common Sense likens the joints in the body to hinges on a gate. Arthritis in the joints is like a gate with rusty hinges. Now how does one free up rusty hinges? By oiling them. He proposed that if the joints in bones are like hinges on a gate then to reduce arthritis is to lubricate the joints. One way he proposed to oil one's joints is to ingest liberal amounts of food containing oils and to stay away from foods that would cut the lubricating effect of oil. Foods that he proposed to be detrimental because they interfere with the lubricating properties of "oily" foods are lemons and vinegar. He observed that as lemon juice in shampoos rinse away oil from the hair so would lemon juice in the body rinse away important oils that combat arthritis. Vinegar was definitely to be avoided by the person suffering from arthritis for the same reason.
On the other hand, DeForest Jarvis in his book Folk Medicine: A Vermont Doctor's Guide to Good Health recommends the use of vinegar as an excellent way to combat arthritis. He observed the methods that plumbers use to free the inside of a furnace's water compartment from calcium. He found that plumbers use an acid compound to break down calcium deposits in furnaces. He likened the body to a furnace and that arthritis may be the result of excessive calcium deposits in the body. He proposed that whatever breaks down calcium such as acids might also break down calcium in the body. His recommendation was to use vinegar in food preparation and to drink it as much as possible to avoid arthritis. Little do these people who tout these treatments seem to realize is that the body can substantially alter the chemical properties of substances after they are ingested. Vinegar, after it is ingested changes from a mild acid to an alkaline (Gilovich, 1991).
Another way people fall prey to fraudulent health claims is based on how much we believe testimonials of others who claim that the product works. Unfortunately, we tend to believe these people more than we disbelieve them. The power of the testimonial is one of the strongest devises used in advertising to promote a product. Experts, movie stars, and common people in these advertisements claim that the product worked for them. Some people in these advertisements go so far as to tell you to forget about what the clinical evidence says. They claim that "it worked for me and that is all that matters." What happens is that the testimonial takes on more importance than the clinical evidence. The clinical evidence is what we should be paying attention to. When we let a testimonial over power statistical evidence we commit a base-rate fallacy. The base-rate simply refers to the statistical information that describes most cases in a population. Thus, the base rate for the effectiveness of a health product is based on clinical trials using a large number of people. When we commit a base-rate fallacy we let one instance (i.e., one testimonial) over ride and discount the information that describes most cases.
Understanding
the Nature of Illness
Other reasons why
people fall prey to fraudulent health claims is that they fail to
understand
the nature of illness. Some medical conditions are self-limiting.
Medical conditions that are self-limiting such as a cold or the flu
tend
to go away with time. Many conditions are cured by the body's own
healing
process. If people fail to appreciate that some medical conditions are
self-limiting even a worthless treatment will appear to be effective.
If
someone happens to take a product at the time that the illness is
subsiding,
the person may believe that it was the product that caused the illness
to go away. Also, symptoms may fluctuate
for
many medical conditions. For example, cancers can go into remission,
arthritis
pain can come and go, the level of discomfort one feels who has had
reconstructive
surgery (e.g., knee) varies. If someone takes a product or undergoes a
procedure when the symptoms are beginning to subside then the person
may
believe that the procedure or treatment caused the amelioration of the
symptoms.
Finally, people fail to appreciate the power of placebo effects. Placebos are usually inert substances that have no pharmacological properties. Just how powerful placebos can be are documented in studies showing that 35-55% of people in clinical trials who are given placebos report that the placebo was effective. A placebo group is always used as a control group in any well-done clinical study testing the effectiveness of a drug or treatment. The effects of the drug being tested must be significantly greater than the reported effectiveness of the placebo group. Many ineffective health treatments capitalize on the placebo effect. If you give people anything, even if it does not work, a fair number of people will report that what you gave them helped.
eQuestion#2:
Pretend that you are an unscrupulous seller of quack health remedies to
older people. Come up with a health product, gimmick, or treatment.
Describe
it and indicate using what you have learned in this chapter how you can
make people believe that your product actually works.
References
Gilovich, T. (1991). How we know what isn't so: The fallibility of human reason in everyday life. New York, NY: The Free Press.
Jarvis, D. Folk medicine: A Vermont doctor's guide to good health.
National Fraud Information Center (2000). Available: http://www.fraud.org/welcome.htm
Senate Special
Committee
on Aging (1996).
eQuestion#2:
Pretend that you are an unscrupulous seller of quack health remedies to
older people. Come up with a health product, gimmick, or treatment.
Describe
it and indicate using what you have learned in this chapter how you can
make people believe that your product actually works. If you cannot
come up with your own scam, plenty are available from http://www.quackwatch.com/.
A wealth of information is available about frauds and scams. Here are the web sites from the chapter.
http://www.nih.gov/nia/health/
http://www.fraud.org/welcome.htm
http://www.attorneygeneral.gov/
http://www.socialpsychology.org/social.htm
Anti-aging
hormone supplements