The tactics of the financial "terrorist" defined.
13 ways they try to push your buttons
A new study by the NASD Investor Education Foundation describes the following 13 most popular tactics scammers use to get people to invest in their schemes:
Landscaping. Scammers create an environment that makes you feel as if there are no other options except the one they are telling you about. "You've won the lottery! To get your cash, follow these three easy steps...."
Friendship. You trust your friends without asking them tough questions, so scammers tell you about their children and ask about yours.
Comparison. Everybody loves a deal, so the criminal makes it sound like a deal by comparing it to a more expensive product. "The regular price of this rare coin was $300 and we are selling it to you for only $100."
Dependent. This ploy taps into people's desire to help. A con artist might plead: "I'm in trouble, my father has died, and I need your help."
Source Credibility. A con artist might attach the product to an established, credible source. "Warren Buffett said he is also investing in this property."
Social Consensus. Everyone else wants this, so it must be good. "The phone is ringing off the hook, other people want this opportunity if you don't."
Reciprocity. Scammers try to make their targets feel beholden to them. This is the idea behind "free lunch" seminars and the reason fraudulent companies send slick folders of "educational" materials.
Reactance. People don't always like to be told what to do. The con artist, sensing someone might might resist for the sake of resisting, might resort to reverse psychology.
Fear and Intimidation. Often used at the end of a scam to close the deal. "If you don't want to make up your mind right now, that's where I come in, I will make up your mind for you."
Phantom Fixation. The promise of guaranteed wealth. "This is a no-brainer, you will be guaranteed at least $3,000 a month."
Commitment. There's no turning back now, unless you want to lose everything you have already "invested."
Authority. The person you are speaking to is a "licensed" real estate investor, a CEO, or someone else in a position of power.
Scarcity. "You are lucky to have even received this call. There are only two spots left."
What to do before you invest
Before signing the dotted line on an investment, seniors should take some precautionary steps, says Doug Shadel, director of AARP for Washington State, and coauthor of "Weapons of Fraud," a publication that examines the world of scam artists. He offers the following advice for seniors:
• Make sure the person pitching the investment doesn't have any complaints against him or her. Call the NASD Investor Education Foundation's hotline at 800-289-9999 or try your local Chamber of Commerce to find your state securities regulator.
• Never invest on the spot. If you are at a free lunch seminar, on the phone, or approached at the door, take time to remove yourself from the situation and do research. If you are told that you'll miss your chance if you don't invest now, recognize that as a scam tactic and stand firm.
• Read all the materials sent to you as well as any information you can find about the company that is not distributed by the company itself.
Clipped from this article in the Christian Science Monitor, which suggests that financial savvy can actually be a subtle disadvantage when it comes to avoiding being scammed, and street smarts may well be a better defense. It does seem to miss the obvious, that all cons play on the profit motive of the victim, which is to say, only if you are as greedy as the conman will you take his hook. (outright theft, like a pickpocket's trade, obviously requires little "social engineering" for its success)