Why do people fall for scams? The five levers

People fall for scams because con artists don't target intelligence; they target five human levers: greed, trust, authority, fear of missing out and shame. The data backs this up: in the 2019 Exposed to Scams study of 1,408 people in the US and Canada who had been targeted by a scam, those who lost money were more likely to feel that the contact seemed official, that there was urgency and that they might miss out on an opportunity. And those who already knew about that scam lost money in 9% of cases, compared with 34% of those who didn't.

Why do smart people fall for scams?

Because a scam isn't an intelligence test. A University of Exeter report for the UK's former Office of Fair Trading (OFT), published in 2009, studied victims and non-victims and found something counterintuitive: many victims knew more about the subject of the scam than others did and spent more time weighing up the offer, not less. Prior knowledge breeds confidence, and confidence lowers your guard.

History keeps proving it. Bernard Madoff didn't fool the naive: for decades he fooled banks, charitable foundations, professional money managers and experts. Gregor MacGregor sold the bonds of a country that didn't exist on the London Stock Exchange, the most sophisticated market of his day. What worked in both cases wasn't the victims' ignorance but the pulling of the right levers.

What are the five levers of deception?

This is the framework MATERIUM uses to explain every case, our take on con artist psychology. Throughout each episode we point out which lever is being pulled, and at the end we sum it up in a Law of Deception. Here are the five, with a case from the series for each.

1. Greed: the promise of making too much, too fast

In 1925, Victor Lustig convinced a group of scrap dealers that the French government was going to tear down the Eiffel Tower and was quietly selling off its iron. The buyer didn't ask many questions because the profit was huge. Hence Law of Deception No. 1: “The victim's greed does the con man's work.” The full story is in the Victor Lustig case.

Today: the platform that guarantees you 2% a day, the “trading bot” that never loses.

2. Trust: the bond or social proof that lowers your guard

In 1920 Boston, Charles Ponzi didn't need to sell. His first investors were paid on time and brought in their neighbors, their families, their coworkers. The proof that it worked was that someone they trusted had already been paid. That's Law of Deception No. 3: “Pay the first ones, and they'll bring you the next.”

Today: the WhatsApp group where everyone posts screenshots of their gains, the person you met on a dating app who, weeks later, recommends an investment.

3. Authority: the title, the seal, the position no one questions

Bernard Madoff had been chairman of the Nasdaq. That prestige worked as an alibi for decades: who was going to doubt him? In 2009 he was sentenced to 150 years. His Law, No. 6: “Prestige is the perfect alibi.” MacGregor used the same trick with a real general's rank and a made-up prince's title.

Today: the email with your bank's logo, the call from the “IRS agent” or “HMRC officer,” the video of a celebrity recommending an investment, which may have been made with artificial intelligence.

4. Fear of missing out (FOMO): the opportunity slipping away

OneCoin didn't sell a coin; it sold a revolution: the promise of getting in ahead of everyone on the cryptocurrency that was going to replace bitcoin. It raised more than $4 billion, according to the FBI, and its founder, Ruja Ignatova, vanished in 2017. Law of Deception No. 5: “Sell the revolution, not the product.”

Today: “only 48 hours left,” “the people who got in last month have already doubled their money,” the new technology “the banks don't want you to know about.”

5. Shame: what stops you from checking and reporting

The story goes that the scrap dealer who bought the Eiffel Tower from Lustig never reported him because he was too ashamed to admit he'd been fooled; that detail comes from later press accounts. What has been measured is the pattern: in a 2013 FINRA Foundation survey, only 4% of respondents admitted to having been a victim of fraud when asked directly, even though 11% had lost money in a likely fraud. And a 2022 report by AARP and the FINRA Foundation warns that victims blame themselves, and that this blame makes the crime seem less like a crime.

Today: the victim who doesn't tell their family, who pays one more “fee” to avoid admitting the loss, who doesn't report it in time.

How do you switch off each lever?

One antidote for each, easy to remember:

• Against greed: ask yourself exactly where the money you're being promised comes from. If no one can explain it and prove it, it doesn't exist.
• Against trust: separate the person from the product. Your friend can be honest and the business they've joined can still be a fraud.
• Against authority: check on your own, never through the channel that contacted you. Call the official number yourself and look the firm up in the regulator's register: FINRA BrokerCheck and the SEC's Investor.gov in the US, the FCA Register in the UK.
• Against FOMO: give yourself 24 hours. No legitimate investment disappears because you waited a day; scams do, because they need you not to check.
• Against shame: talk about it. Explaining the offer out loud to someone else takes many traps apart, and if you've already paid, telling your bank and the police quickly is what gives you the best chance.

Why does knowing the trap work?

Because deception depends on surprise. In the Exposed to Scams study, 30% of those who never engaged with the scammer already knew about that scam before it reached them, compared with 12% of those who did engage. Having heard of the trap cut the likelihood of losing money from 34% to 9%. That's the whole point of MATERIUM: telling real scams with their mechanism in plain view, so that the next time you see it in a new disguise, you recognize it.

This isn't a small problem. According to the FBI's 2024 Internet Crime Report, investment fraud was the category with the highest reported losses in the US, about $6.5 billion.

If you have a specific offer in front of you, run it through the scam checker. If you want to see the levers in action, start with the documented cases or with the Ponzi scheme, the fraud that has repeated itself more often than any other in history.