Thinking about fraud

Cognition is key to combating fraud

04 September 2018

4 minute read

In an age where technology can go a long way to protect us all from fraud, why do many scams still work?

Most fraudsters want you to do something. It could be clicking a link to take you to a convincing, but fake, bank website, or opening an attachment containing malware to capture your login details the next time you visit your bank online.

While this may prompt you to stop and think before you click the link, it doesn't necessarily help you identify when a fraudster is trying to manipulate you into a lapse of judgement.

Fast and slow thinking

Psychologists, like the Nobel prize-winning Daniel Kahneman, describe two systems of cognition. One is fast and makes snap judgements about situations, and the other is a slower system that does the deeper thinking on more difficult problems.

Our ‘fast brains’ handle much of our daily activity and our ‘slow brains’ sit in the background, validating choices and waiting for the situations where we struggle to make an instant judgement. Fraudsters don't want your deeper-thinking slow brain to do any work because it significantly decreases their chances of success. Successful scams are designed to appeal to your more intuitive, fast-thinking brain.

Act now...

Two major scamming tactics are designed to tap into our natural human instincts. The first involves creating urgency to act in some way, and the second appeals to our natural social curiosity.

Creating urgency to do something is perhaps the most common. You might get an email telling you that your online account may have been compromised and that you need to log in to set a new password. Alternatively, you might get a phone call from someone claiming to be from tech support, who needs to access your computer remotely.

Both scenarios are designed to create a mild state of panic, which engages our fast brain to act quickly to restore order. Since most of us are naturally trusting of others, we can be prone to that momentary lapse of judgement that lets the fraudsters in.

It’s important to look out for situations where you’re being asked to make a quick decision. It may be a fraudster trying to stop you having time to think more carefully about what you’re doing.

A warning to the curious

Our normal human social interactions are also a potential weakness. There are some very creative examples of fraud designed to play on our natural curiosity.

For example, you might get an email that has been spoofed to look like it has mistakenly come from an HR team. There may be a file attachment promising to tell you the annual salary details of your department. Do you open the attachment? It might well contain a virus that can capture personal details from your computer.

This type of fraud isn't trying to create a quick decision, so it has to pass the scrutiny of our deeper-thinking brains. Most of us would accept that the best snap judgement when mistakenly receiving an email containing sensitive information is to let the sender know and delete the email without looking at what we were not supposed to see.

However, it’s incredibly tempting to take a look, because we naturally want to understand where we rank relative to our peers. For this kind of fraud to work, it’s essential that everything looks as authentic as possible – the sender's email has to look right, it has to be from a recognisable name who should have access to the data, and the mistake has to look honest. Then the fraudster hopes our natural curiosity and personal moral code will be enough of a weakness to open the attachment.

Fighting fraud

Fraud is easily preventable if you follow the top tips like stopping and thinking, or not opening attachments you didn't expect to receive. However, following those tips can be difficult because we have to manage our own behaviour and resist the fraudsters’ attempts to manipulate our emotional state.

Ultimately, a momentary lack of human resolve can be all it takes for a fraudster to get what they need.

To find out more about how to stay safe online, contact your Wealth Manager.

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