Fraud is defined as wrongful or criminal deception intended to result in financial or personal gain; it can also be a person or thing intended to deceive others. As we know, fraud can be perpetrated in many ways and can affect anyone at any time. We spend a lot of time learning about different scams and schemes that fraudsters use to get innocent victims to give up their hard-earned money. To understand and combat fraud effectively, we need to analyze the motivations and methods behind fraudulent behavior. One framework that can be used to help with this is called the 4 P’s of Fraud: Pretend, Problem/Prize, Pressure, Pay. Today, let’s take some time to focus on these 4 elements and how we can use them to spot fraud and stop scams before they happen.
Pretend
- Pretending is at the heart of all fraud, especially imposter scams. Scammers will impersonate figures or organizations, such as government agencies or banks, to gain the trust of their victims. They may say they are calling from Social Security, the IRS, VA, Medicaid, etc. Fraudsters may also pretend to be someone from the victim’s own family in order to seem legitimate. They often use spoofing to change the phone numbers that appear on caller ID to aid in the deception.
Problem/Prize
- A scammer will come to their victim with a Problem the promise of a Prize. A problem can be anything from false issues with the victim’s bank account or credit card to someone desperately needing money to get themselves out of trouble. The fraudster sometimes creates a scenario where the victim is potentially at risk of being arrested for some fabricated crime and the only way to get out of it is to give the scammer all their money. These problems can be presented to the victim through phone calls, text messages, emails, or the mail. On the flip side, the victim could be offered a huge prize for winning a contest or sweepstakes. The scammers promise money, luxury cars, or other valuable merchandise and all the victims have to do is send X amount of dollars to them first. The thought of all that wealth makes people see $$ and justify all the money they are spending in order to obtain the ultimate prize.
Pressure
- After the scammer has pretended to be someone else and presented a problem or prize, then comes the third P….Pressure. Fraudsters want their victims to act immediately so they don’t take the time to think things through. They don’t want the person on the other end of the phone to be able to speak to family members first or research the agency they are supposedly from. Victims are pressured to act quickly and to keep all interactions a secret from everyone. They will threaten all sorts of negative consequences if their victim delays action or talks to anyone about it. Phrases like “act now”, “limited time only”, “you don’t want to lose out on this great prize” are all tactics used to force a quick decision. Fraudsters also threaten jail time, computer corruption, or loss of driver’s license or insurance if the problem isn’t taken care of right away. Criminals are diabolical and will stop at nothing to get what they want.
Pay
- Of course, the end goal of every scam is Payment. After all, money is what this is all about. While honest people go get regular jobs, fraudsters make their living stealing other people’s money. Scammers want their payments sent in hard to trace methods such as gift cards, wire transfers, cryptocurrency, or even putting cash in the mail. They also like to use payment platforms such as Cash App, PayPal, and Venmo. All of these forms of payment make it very hard to trace where the money went or get it back if it is tracked down. Typically, when buying gift cards there is no identifying information needed, and the victims can just read off the numbers over the phone. Wire transfers are guaranteed funds so when a financial institution sends an outgoing wire there is very little recourse to retrieve those funds. Criminals do their research, they don’t expect their victims to know or suspect anything.
Now that we know the 4 P’s, we can use this knowledge to avoid fraud.
- Be skeptical of unexpected contact. Legitimate agencies rarely initiate contact to resolve problems or offer prizes by phone or text. Don’t allow yourself to be influenced by the pretender.
- Resist taking immediate action. Stop and think before acting. Ask yourself does this make sense?? Use your powers of reasoning, and don’t allow anyone to rush or pressure you into acting quickly. If the caller says they are a family member hang up and call that person directly at a phone number, you know and trust.
- Be wary of payment methods. Never pay through gift cards, crypto, wires, or send cash through the mail. Legitimate agencies would not ask you for payment in those forms.
- Verify, don’t trust! If you are concerned about a phone call, just hang up. Better yet, if it is a number you don’t know, just let the phone ring. You can always call the organization the caller claims to be from to verify as well.
Scammers are great at what they do. They are master manipulators who are able to convince people to do things they normally wouldn’t. One thing most all scams have in common are the 4 P’s: Pretend, Problem/Prize, Pressure, and Pay. Knowing what to look for and being cautious, taking the time to think before acting, and keeping the 4 P’s in mind can greatly reduce your risk of becoming a victim. Remember, if you can spot a scam, you can stop a scam.
