Stacey Wood, Scripps College
Pi-Ju Liu, University of California, San Francisco
Yaniv Hanoch, University of Plymouth
Patricia M. Xi and Lukas Klapatch, Claremont Graduate University
Scripps College Professor of Psychology Stacey Wood, a leading scholar on elder abuse, recently expanded her examination of why older adults may be more vulnerable to certain types of consumer fraud to lead a team of researchers from three prominent universities in the exploration of risk factors for individuals susceptible to sweepstakes-type scams. The research study, which was recently published in the Journal of Experimental Psychology, is entitled: “CALL TO CLAIM YOUR PRIZE: Perceived Benefits and Risk Drive Intention
to Comply in a Mass Marketing Scam.” The findings were also cited in the Better Business Bureau’s sweepstakes fraud study, released June 5, 2018.
Are consumers lured by the amount of money promised in mass marketing scams to the point where they may even discount the risks associated with responding to them? An analysis of over 500 adults sampled over the course of two experiments designed to get at the underlying psychological factors involved in responding to Mass Marketing Scams (MMS) suggests the answer is “yes.” MMS represents one of the most rapidly growing crimes, costing billions of dollars worldwide and extracting an enormous toll on individuals who fall prey to sophisticated MMS techniques.
In the study, based on 25 real scam solicitations that were successful at “hooking the victim” in the Los Angeles area, the chance to win a large sum of money such as $25,000 influenced the perceived risks of participation—including the possibility of identity theft, and further persuasive tactics by scammers. While prior research models have explored primarily the way the marketing ploys are presented to consumers, the recent research published in the Journal of Experimental Psychology by Scripps College Professor of Psychology Stacey Wood et al delves into the individual differences of the scam victims themselves.
“Our data supports the view that demographic disparities can play a part in response rates for these type of sweepstakes scams in particular. We found that less-educated consumers are more likely to be susceptible to the opportunity for a large reward, which is consistent with other research studies that tie similar behavior to such attributes as patience, delayed gratification, and opportunity for financial education,” Wood said.
The researchers found the most important factor in deciding whether to respond was the person’s assessment of the risk versus the potential reward. Almost half of their subjects indicated an interest in responding, which was more than researchers had anticipated. When the study added a requirement that people pay an activation fee of $5 to $100, nearly a quarter of the subjects still had an interest in responding.
Wood et al were also looking at how differences in risk-taking behavior may be related to such factors as comfort with finances and math, loneliness or general financial status, all of which show up significantly in Wood’s research on the susceptibility of the elderly to fraud.
“Contrary to popular belief, our data shows that age was not a significant risk factor regarding the promise of a reward in this study. That said, future studies may be designed to sample larger groups of elderly participants,” Wood noted. She said that numeracy, loneliness and financial status were not relevant factors in the MMS results.
The study also explored how activation fees might impact interest in responding to the scams. Among the demographic variables, age and education independently predicted responses after controlling for the activation fee, such that older adults and highly educated participants were less likely to “make the call,” and high activation fees deterred individuals reporting a high likelihood to respond.
“In our second experiment, in particular, participants were less likely to indicate they are willing to call when there is an activation fee, although there was no difference between $5 or $10. Similar to our first experiment, risk and benefits assessments remained the highest predictors of intention to respond.”
The study suggests something of a paradox, Wood concludes. On the one hand, consumers are for the most part able to recognize potential scams. The lure of the prize is largely driving individuals’ behaviors, leading many of them to discount the possible risks. The sentiment seems to be: “After all, what harm can be done by just responding to a letter?”
On the other hand, protecting consumers from such alluring offers poses a much more difficult task than “just saying no.”
Wood says that despite efforts by governmental agencies as well as private companies to warn about the risks, there is a clear need for better consumer education regarding the high likelihood of risk associated with promising-sounding sweepstakes. As one example, scam-avoiding materials may be incorporated into existing school eSafety programs. In addition, because the presence of an activation fee helped reduce intention to comply with the scam, another possibility is to encourage consumers to ask themselves if they will be willing to pay an activation fee before replying to these scams.
Finally, given that perception of benefits and risks were the most important factors in intention to comply in both experiments, one clear option is to encourage individuals to focus only on the risk and discount the benefits.
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