Scams, Rip-Offs and the Psychology of Greed

Suppose you won a million dollars in the lottery, and in in order to collect your winnings, lottery officials required you to enter a special vault that was protected by a high-voltage electrical barrier.

Would you attempt to enter that vault for a million dollars, or would you walk away and forfeit your winnings?

My guess is while most of you would probably walk away, a few of you would attempt to enter that vault. After all, no risk, no reward right?

Amazingly, every single day, people are performing the equivalent of the aforementioned lottery analogy by entering a vault of scams, despite all the obvious warning signs.

And guess what happens? They get electrocuted. Metaphorically speaking, of course.

But why? Why do so many people continue to fall victim to obvious rip-offs and scams both online and off? Personally, I find it beyond comprehension that so many people can be that gullible - but the evidence suggests they are.

A couple of years ago, I remember reading a story about the arrest of the notorious spammer, Robert Alan Soloway. How notorious was he? It is estimated that he sent out billions of e-mails a day. Yes, I said billions with a "B."

Among the myriad of Internet schemes he was involved with, he sent out e-mails claiming he would send as many as 20 million e-mail advertisements in two weeks for $495.

And gullible consumers fell for his scams hook, line and sinker. Authorities estimated he raked in approximately 1.6 million dollars from his illegal enterprise.

Which brings me back to the question...Why? Why do people continue to fall for this nonsense. We've all heard the warning cliches, since we were children:

"Let the buyer beware."

"If it sounds to good to be true..."

Phishing Anyone?

For example, with all the talk in the media nowadays about identity theft, how is it possible that so many people continue to fall for "phishing" scams?

For those of you not familiar with phishing scams, it's basically a spam e-mail or pop-up advertisement stating words to this effect:

"We suspect an unauthorized transaction on your account. To ensure that your account is not compromised, please click the link below and confirm your identity."

Phishing is designed to steal your personal information, credit card numbers, bank account information, Social Security number, passwords, or other sensitive information.

If you get an email or pop-up message that asks for personal or financial information, delete it immediately. Whatever you do, DO NOT click on the link in the message. Legitimate companies DON'T ask for this information via email.

Another scam that people continue to be victimized by, that always leaves me scratching my head is the "Nigerian Letter Scam." This classic scam has been been around for decades. Here's how it works:

Nigerian Letter Scam

You receive an e-mail from someone claiming to be a Nigerian official, relative or the surviving spouse of a former king or prince. Con artists offer to transfer millions of dollars into your bank account in exchange for a small fee. If you respond to the initial offer, you may receive some "official looking" documents. Typically, you're then asked to provide blank letterhead and your bank account numbers, as well as some money to cover transaction and transfer costs and attorney's fees.

Sensing another easy payday, the con artists keep stringing you along making up excuses for the delay of the transfer, and asking for more and more money. And in some instances, you may even be encouraged to travel to Nigeria or a border country to collect your riches. Of course, there really wasn't any money to begin with, and you can kiss the money you sent them goodbye.

A word of warning...there have been reports of people traveling to Nigeria to meet with these con artists and being murdered.

So, why with a worldwide communication medium like the Internet, where news both good and bad travels at the speed of light do people keep getting ripped-off by same old scams? And why do the con artists who orchestrate and commit these scams do so?

In my opinion, it comes down to one thing - greed. Or as David Hannum once stated, "There's a sucker born every minute." (And yes, it was Hannum who originally coined that phrase, not PT Barnum as has been erroneously reported.)

The Demon Greed

In her book Greed: The Seven Deadly Sins, author Phyllis Tickle states:

"Greed is a sin we see readily in others, but rarely acknowledge as our own--and therein lies its power."

And Chinese philosopher Chuang Tzu once stated:

He who considers wealth a good thing can never bear to give up his income; he who considers eminence a good thing can never bear to give up his fame. He who has a taste for power can never bear to hand over authority to others. Holding tight to these things, such men shiver with fear; should they let them go, they would pine in sorrow."

But this quote by Janwillem van de Wetering is my favorite:

"Greed is a fat demon with a small mouth and whatever you feed it is never enough."

The Psychology of Greed

I completely agree with the aforementioned quotes, and I think they accurately explain why people like Bernie Madoff - individuals who have so much want so much more. It's almost like they're drug addicts - junkies addicted to material wealth, and they'll do whatever it takes to get that next fix - including rip-off family members and friends.

In fact, in his article "Looking at Greed as an Addictive Dysfunction," psychotherapist Mel Schwartz writes:

"The saga of the Bernard Madoff debacle, AIG bonuses and the host of other repugnant behaviors actually reveal a terrible dysfunction in our culture, which has now come to our screeching attention. We are a society that is addicted and ultimately maddened by our obsession with profligate abundance and extravagance. How inconceivable is it that a man who has attained so much success and wealth and earned the rewards of privilege and prestige, feels compelled to ruin himself and his investors in his vainglorious attempt to have yet more? When is enough yet enough?

Madoff is a sick man; not simply due to the devastation that he unleashed on so many, but because his craving is no different than a junkie prepared to do anything for their next fix."

Well said, Mr. Schwartz, well said. And I couldn't agree more. Bernie Madoff and his ilk are scumbags, plain and simple.

How to Avoid Being Scammed

So how can you protect yourself from being scammed?

First of all, you should realize, at some point in their life, everyone has been scammed at some level. And if you haven't yet been a victim, it's probably just a matter of time.

That being said, there are definitely some common sense steps that you can take to greatly reduce your chances of becoming a victim:

1. Unless you signed up to receive e-mail solicitations from a particular company, DELETE all spam. DON'T open it, and DON'T send scam artists your hard-earned money!

2. Don't EVER respond to any e-mail or pop-up that asks you to login to your account to confirm your personal information. Legitimate companies would NEVER ask you to confirm your personal information via an e-mail.

3. DON'T ever accept offers or business propositions at face value - not even from friends or family members. ALWAYS check things out with with the Better Business Bureau, Department of Consumer Affairs and the Attorney General.

In addition, websites like Scam.com and RipOffReport.com can be very helpful in avoiding scams.

4. Use common sense. Remember, if it sounds too good to be true, it probably is!