The Science behind Scams: Tactics Scammers Use to Lure Consumers

BBB Consumer Alerts

Ever wonder how scammers do what they do? When it comes to investment scams, scammers are getting more and more sophisticated, and actually quite talented at deceiving people, resulting in more victims. FINRA Investor Education Foundation provides some interesting theories on the psychology of a scam. Here are some of the most common tactics:

  1. The “Phantom Riches” Tactic. Dangling the prospect of wealth, enticing you with something you want but can’t have. “These gas wells are guaranteed to produce $6,800 a month in income.”
  2. The “Source Credibility” Tactic. Trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience. “Believe me, as a senior vice president of XYZ Firm, I would never sell an investment that doesn’t produce.”
  3. The “Social Consensus” Tactic. Leading you to believe that other savvy investors have already invested. “This is how got his start. I know it’s a lot of money, but I’m in—and so is my mom and half her church—and it’s worth every dime.”
  4. The “Reciprocity” Tactic. Offering to do a small favor for you in return for a big favor. “I’ll give you a break on my commission if you buy now—half off.”
  5. The “Scarcity” Tactic. Creating a false sense of urgency by claiming limited supply. “There are only two units left, so I’d sign today if I were you.”

Whether online or in person, no matter what the offer, you always have the right to:

  • Just Say “No”.
  • Ask for information in writing.
  • Consider the offer before making a decision. Never let anyone rush you into a purchasing decision.
  • Not give out or verify personal information.
  • Bar salespeople from entering your home.
  • Hang up on or walk away from scammers who demand money from you under threat of arrest.

Source:, FINRA Investor Education Foundation

For the newest study on the science and psychology of scams, check out the FINRA Foundation’s Exposed to Scams: Can Challenging Consumers’ Beliefs Protect Them From Fraud?. This study is a collaborative effort between, the FINRA Investigator Education Foundation, BBB Institute of Marketplace Trust, International Association of Better Business Bureaus, Federal Trad Commission, University of Minnesota, and Metro Tribal, LLC.

If you’ve spotted a scam (whether you’ve lost money or not), report it to BBB ScamTracker. Your report can help others avoid falling victim to scams. To find a business you can trust, check out

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