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When emotions get the best of you

Created date

July 14th, 2016
Senior Scams Prevention Act has been introduced in the Senate. If passed, the bill would create a federal advisory council to develop educational materials for retailers, financial institutions, and wire transfer companies.

When is the worst time to make an important decision? Whenever your emotions are at the command. Scammers know this and use it to their advantage. It’s why so many ads have the words “limited-time offer” attached. They want your money while you’re still excited about what they’re selling, not after you’ve had time to mull it over.

An interesting study funded by AARP Fraud Watch and the Financial Industry Regulatory Authority’s (FINRA) Investor Education Foundation and conducted by psychologists at Stanford University sheds new light on how scammers use this basic fact of human nature to prey on older people.

The researchers tested a group of 40- to 50-year-olds and another group of 65- to 85-year-olds. Each group was stimulated to induce excitement or anger. A control group was not induced to excitement or anger. 

Then the test subjects were shown advertisements deemed to be misleading by the Federal Trade Commission. Participants were asked to rate the believability of the ads and state how likely they would be to purchase the product if cost was not a consideration. 

In the older group, both excitement and anger increased participants’ intention to purchase items compared to the control group. In the younger group, there were no significant differences in intention to purchase, suggesting that heightened emotion did not impact younger adults’ susceptibility. 

Further, for the younger adults, greater believability was associated with greater intention to purchase, while believability and purchase intention were not significantly related in the older adults. 

These findings suggest that older adults’ intention to purchase was not based on the credibility of the ad but rather on their emotional states when presented with the ad. Also, the direction of the emotional state, whether anger or excitement, didn’t matter, showing that both emotional states have a broad influence on older adults’ susceptibility to fraud. 

This study seems to indicate why older people fall victim to unscrupulous fraudsters more often than younger people.

‘Money is emotional’ 

“This research is a major advance in our understanding of how fraud works. Recognizing the mechanisms of scams helps investors to protect themselves,” says Gerri Walsh, president of the FINRA Investor Education Foundation. “Money is emotional, and managing your emotions around financial decisions is critical to avoiding fraud.”

What’s the takeaway? Don’t let your emotions or scammers get the best of you. Before you make a purchase or invest in something, think it through. Sleep on it. Do as much research as possible. 

“Whether the con artist tries to get you caught up in the excitement of potential riches or angry at the thought of past and future losses, the research shows their central tactic is the same and just as effective,” says Doug Shadel, Ph.D., and research lead for AARP’s Fraud Watch Network. “Cons are skilled at getting their victims into a heightened emotional state where you suspend rational thinking and willingly hand over your hard-earned money to a crook.”