How Scams Use Psychology to Exploit Human Nature

Dan Ariely talks about how scams use psychology to get you to flal into their traps.

Most of us think we’re pretty rational people. But psychology and behavioral economics show that’s not always the case. Our intuition can easily mislead us, and factors like trust, authority, stress, empathy, and even self-image can affect our decisions. When we know how our minds work, it becomes more obvious how scams use psychology to exploit our blind spots.

See Why You Fall For Scams with Dan Ariely for a complete transcript of the Easy Prey podcast episode.

Dan Ariely is a renowned behavioral economist, bestselling author, and professor of psychology and behavioral economics at Duke University. His research focuses on human decision-making and the frequently irrational forces that shape what we choose and why. Through his research, influential books, and TED talks, Dan brought behavioral science into the mainstream consciousness and provides practical insights into what we do and how we can make better decisions.

The Story of Half of a Beard

Dan’s favorite way of talking about who he is and what he does is also the story of why he has half a beard. He suffered a bad burn many years ago that left most of his body covered in scars, including the right side of his face. Hair doesn’t grow on that side. He shaved for years, following advice to blend in and look less different.

Then he went on a month-long hike, and decided to keep the beard he’d grown for a few weeks because he’d never let it grow again. And two things happened. The first was that people thanked him. One woman told him that she had burn scars on her arms and had never worn a short-sleeved shirt, and Dan being public with his injury made her consider that she should stop hiding.

The second thing was that Dan found himself more accepting of his injuries. He’d lived with them for a long time, but the advice that he’d been given was about hiding. Shaving was about looking less different. Not hiding led to more self-acceptance. To Dan, that’s what behavioral economics is about –things we think that are good for us but aren’t and vice versa. He thought blending in was a good idea, but didn’t understand the influence of hiding on his self-perception.

Social science is about discovering where our intuition is wrong. With scams and fraud, a lot of elements don’t fit with our intuitions. We’re thinking one thing but something else is happening, that’s why we get in trouble. But with scams, trouble isn’t just an awkward conversation – it could be losing your life savings.

We think about security and fraud and so on … we think one thing, something else is happening. That’s why we get in trouble.
Dan Ariely

We Aren’t as Rational as We Think

There’s a lot of victim-blaming when someone gets caught in a scam. We think we behave mostly rationally, and that anyone who fell for a scam was stupid. But other factors influence us more than we realize, and scams use psychology and behavioral tricks to manipulate us.

In the world of misbelief, people don’t generally wake up thinking that they want to believe in a dark cabal controlling the world. There’s a process. Dan tells the full story in his book Misbelief: What Makes Rational People Believe Irrational Things. But it starts with stress. Not just the “I have so many emails” kind of stress, but the kind where you feel like you don’t understand the world.

One study looked at tribes of fishermen, some that fished on lakes and some that fished on oceans. Lakes are more stable, but oceans can have huge fluctuations. And the ocean fishermen develop more superstitions. Why? Because humans don’t do well when we feel like we don’t have control. When we’re stressed and feel like we don’t understand, we want control.

Another study had participants looking at images of random black and white dots, and researchers asked if they saw images. They showed these images three times during a skydiving trip: On the ground, when they got on the plane, and right before they jumped. As stress increased, people saw more patterns. In our evolutionary history, that makes sense. If you’re stressed because you think there might be a tiger, your brain wants to spot the tiger as fast as possible.

Human psychology's pattern recognition affects how we fall for scams.

Inaccurate beliefs start with stress. Something bad happened or we don’t understand something – unemployment, serious illnesses, and covid are all examples. And we’re looking for a story. We want something that explains what’s behind it. And ideally, we won’t be at fault.

The Brain is a Double-Edged Sword

Dan’s favorite metaphor for human skills is a vintage Swiss Army knife. If you had the option, a Swiss Army knife would never be your first choice for any task. It’s not particularly good at anything. It’s useful because it works okay for a lot of different things and it’s easy to carry. The human brain is similar. It’s not really all that good at any particular thing, but it’s okay at a lot of different things.

The human brain as a decision-making tool is … not great at anything, kind of okay in lots of things.
Dan Ariely

It’s a vintage Swiss Army knife because our processes are forged in our evolutionary history. Back then, we were facing very different challenges. We lived in small communities, we had a different food environment, and we had to worry about physical safety concerns like tigers but not about crypto or smart technology. So we have this vintage Swiss Army knife that we’re using to face new challenges, and it’s not really up to the task. People are out there trying to take advantage of the places we fail.

It’s not just scams trying to use psychology to exploit us, either. One of the best investments for companies in the U.S. is lobbyists. It turns out people are cheap – buy someone a beer and a sandwich and in half an hour, they’ll be your friend. It’s great that we can make friends so easily. But once you mix that with politics, it’s dangerous. These tools from our evolutionary history are great, but in the modern world they can also make us vulnerable.

We have these tools from our evolutionary history that served us. But now in the modern environment, they expose us to be vulnerable.
Dan Ariely

We’re Vulnerable by Nature

Another issue in security is low-probability events. Think about texting and driving. The chances that you’re going to get into an accident on any given time you text and drive are pretty low. Every time you check your phone while driving and don’t get into an accident, you learn the wrong lesson. Our brains are wired to learn from experience. When you experience doing something risky with no consequences, your brain starts thinking that there won’t be consequences. You get a false sense of security and become comfortable.

Every day your account doesn’t get hacked even though you have a weak password, every time you let a device collect private data and nothing bad happens, you learn the wrong lesson. With low-probability events, every time that unlikely bad thing doesn’t happen, we learn the wrong lesson. Experience isn’t always a great teacher.

Humans are fallible in specific, predictable ways. It’s who we are, and we’re not going to change any time soon. Security has to take that into account. We can’t say “just don’t fall for scams,” just like we invented sweaters and heaters instead of saying “just be cold resistant.” We need to create systems that help us overcome our limitations, not assume we’re perfectly rational systems limited only by our willingness to comply with best practices.

You can’t come to somebody and say, “Be cold resistant.” No … we build heaters, we build sweaters, we build things to overcome our body limitations. In the same way, people are not going to be perfectly rational.
Dan Ariely

Building Systems from Psychology

It’s more difficult to build systems around psychology to protect ourselves from scams, but it’s not impossible. What is impossible is getting someone to be on alert all the time. If every phone call was someone trying to scam us, we’d learn. But if it’s only 1% of phone calls, we’re not going to be on full alert all the time.

There are ways that systems can help. Dan recently met a startup that puts a little window on the side of a video call to do background checks. It can identify things like the person on camera doesn’t match the photo on their LinkedIn profile. In one demonstration he saw, it also noticed that the person was using urgency, which is a common scam sign, and prompted the user to ask a particular question.

When you’re sitting in the car next to someone, you have no problem going silent for a minute to pay attention to driving. But when talking with someone on the phone while driving, they can’t see what’s going on in the car. We keep the conversation going, even we get into an accident. We’re too polite for safety! We’ll probably never go into video calls and just ask the other person to prove they’re not a scammer. It’s too rude, and we’re not wired for that. Our instinct is to follow social rules, give into social pressure, and obey authority. So scams use these elements of our psychology against us.

We won’t fully solve these problems because they’re caused by how we think on a fundamental level. But we can get better, and we need tech that helps us in real time.

The Human Side of Security

Dan thinks people in the tech world must not understand social science. He teaches at Duke University, where IT seems to be the enemy of everybody else. They force people to change things, the two-factor authentication software doesn’t work sometimes, things happen at random times, and it’s frustrating and a pain for everyone. Nobody from IT at Duke has ever explained why they’re doing things or how it helps. Dan is happy to pick up trash around campus and engage with students for the university, but IT doesn’t seem to think about recruiting help, just forcing compliance.

Adding more collaboration to security can help use psychology for good.

Operational transparency is an important concept here. Imagine three travel websites. On one, you search and get results immediately. On the second, you search, it loads for twelve seconds, and you get results. And on the third, you search and still have to wait twelve seconds, but while you wait, it tells you that it’s searching Delta flights, searching American Airlines flights, and so on. People like instant results and are annoyed by the twelve-second load time. But the interesting result is that when they have to wait but get that information about what the site is doing, they’re happier than if they got instant results. That awareness of what’s going on in the background is beneficial.

Dan knows IT is probably doing great things. But nobody has ever explained or showed him what they do so he can be grateful for it. All he sees are the frustrating things that he doesn’t understand. They’re not taking human nature into account. If they did, Duke IT could recruit the people as allies and people would be happier with them.

There is something about the technology world that is not taking human nature into account.
Dan Ariely

Hard-Wired for Authority

We as humans don’t always respect authority, but there are some areas where we do. One of those is when we’re feeling out of our depth or that we’re in an environment that’s not our own. Human society is hierarchical, and we’re wired to accept instructions. Some of the most amazing psychological experiments ever done were about adhering to authority. Several old experiments had people with authority asking participants to torture others, and a shocking amount of people did. When we’re uncertain, we’re generally likely to obey an authority. That’s why scams love to pretend to be authorities.

When somebody tells us something to do in an environment that we’re not sure what is the right thing to do, we are very, very adherent to that instruction.
Dan Ariely

Scams also use other elements of our psychology to make us more uncertain and more likely to comply. They add time pressure. They make you feel like asking questions would be impolite or cause a problem. And they try to keep you from thinking about the consequences. In many experiments, the authority didn’t start out asking people to do real harm – they started small and got them used to obeying first before escalating. When we don’t know the exact rules, we tend to look around to see what’s expected of us. But when the person we’re interacting with expects to take advantage of us, we can get into trouble.

Psychology Tricks to Protect Yourself

It’s very hard to go against the grain and say something or ask questions, even if you feel like something’s off. There was an amazing experiment where they showed groups of people three lines on one side and one on the other, and asked which of the three lines was the same as the one on the other side. All but one person in the group gave the same, obviously wrong, answer. Most of the time, the last person also gave the wrong answer. The more authority the other people in the group had, the more likely they were to give the same answer as the group even though they knew it was wrong.

In the middle of a scam, it’s very difficult to stop and ask questions. The whole thing is designed to prevent questions and push you to act. Dan recommends everyone decide never to act quickly on anything. Set yourself a rule that you won’t do anything, not even say “maybe,” with less than three hours of notice. Once you have that rule, it’s essential to apply it everywhere. As soon as you start making exceptions, it opens the door for scammers to convince you that they should be an exception.

Another thing to do is bring in an outside perspective. And this doesn’t even mean another person. The cognitive part of your mind may know you’re in danger, but the emotional part feels too scared, embarrassed, or whatever else to act. Giving people advice is more cognitive. Stop and ask yourself, if you had a friend in this situation, what would you tell them? That gives you some of that outside perspective so you’re thinking more rationally. Then you have to turn around and accept that advice. It’s tricky, but it will make you more aware.

Dial Down the Desire to Fit In

Some researchers did some studies on the concept of “free.” When a store offers free ice cream, people will stand in line for forty-five minutes. But these same people wouldn’t wait that long if the ice cream was ten cents. That’s the tricky thing about free. If you wouldn’t wait forty-five minutes for ten-cent ice cream, don’t do it for free!

In the case of free things, you can circumvent this by asking yourself, “What if it was cheap but not free?” You can use a similar trick when thinking about authority. What if it was your friend instead of this authority figure asking you to do that? Would you still feel the same urgency, need to act, and hesitation to ask questions if it were someone else asking? This will help you sort out how much of it comes from authority versus what they’re actually asking you to do.

You have to practice this to get good at it. Even better, start practicing phrases like “Can I get back to you?” We have to remember that time is on our side. Scams use psychology to get us to at fast, because they know that the longer it takes, the more info we can get and the more we’re able to think about it better. The more delays we can add into anything, the less likely it is that we’ll get caught in something.