Deceiving the smart (from $90 to $9 Billion). The process

“A New Yorker is the best sucker that ever was born. Because New Yorkers fancy themselves so cosmopolitan and sophisticated, they are the easiest fish to catch".

This sentence caught my attention. Having traveled on business to over 180 countries and having reviewed, as Global Controller, wire transfer and other fraud cases around the world, I thought I knew most tricks. The book showed me why I was wrong.

Wire Transfer Fraud. This does happen at global companies, staffed by seasoned executives. This year, there have been over 40,000 cases, including one scheme at Google & Facebook for over $100 million.

In the organizations where I work, we receive several attempts each year. Trying to prevent these cases, I have studied previous ones. I was curious as to why it happens in places where executives are "streetwise" (Nigerian hits Banco Noroeste $242 Million) and why despite extremely sophisticated compliance processes, every few years someone deceives the largest financial institutions (Morgan Stanley $9 Billion loss). The book explains why: the more exceptional we see ourselves, the easier we may be to con.

These are some of my favorite parts of the book.

Process

1.    Identifying the victim. (The put-up): who is he, what does he want, and how can I play on that desire to achieve what I want.

On wire transfer fraud cases, a typical format is one where the con identifies senior executives traveling (eg CFO) and contacts a junior employee to request an urgent wire transfer authorized by the CFO. The calls are frequently made early in the morning, to remote locations where the employee may not speak great English and when most people will be out of the office. The emails are titled "Urgent" and sent from accounts which seem to be legit. I have witnessed over 20 such attempts in my career.

2.    Empathy and rapport. (The Play): an emotional foundation is laid before any scheme is proposed. We are more trusting of people who seem more familiar and more similar to us, the author says.

Fraudsters use Linkedin & Facebook to research others. I receive such attempts weekly. A few months ago, one of those was from someone with a Linkedin profile similar to mine (she pointed out she had lived in Switzerland, Japan, Sweden, and Dubai). The chronological order was wrong, and the emails were quite amusing.

No, I am not worried about having detailed profiles on Linkedin or Facebook.

3.    Persuasion. (The rope). The book indicates that persuasive strategies could be categorized into two types: 

Alpha: increasing the appeal of something.

Why this is such a wonderful opportunity, why you are the perfect person, how much everyone will gain.

Omega: decreased resistance surrounding something:

A no-brainer—why wouldn’t you do this? What do you have to lose? 

On the Obama student loan forgiveness scam, students receive phone calls where they are told their student loans will be forgiven. They need to act quickly because Trump is going to eliminate the program. For a student with a large debt, the scheme sounds tempting.The fact is that there is no such program.

One student at Rutgers University, who does not have any loans, mentioned how amusing these phone calls are. 

4.    Scheme (The tale). The author mentions that narratives are “intrinsically appealing". “It is no accident that the Bible teaches through parables and stories”, she says. She also describes how powerful the concept of enticing imagination is. Studies of persuasion had people watch an ad about cable television. Those who were told to “imagine the benefits” were much more likely to actually subscribe than those who were told about “the benefits of cable TV.” 

5.    The Convincer.

The author mentions how in March 1889, decades before schemes took the name "Ponzi," William Franklin Miller asked a group of friends for an investment of ten dollars. Each week, they would receive a full 10 percent return. Inside information would allow him to not only guarantee the promised 10 percent return but also to protect the initial investment through a mysterious way. By November, Franklin had over twelve thousand subscribers. The lines stretched down the stairs, out the door. You could see the lucky ones who’d already gotten their dividends descending down the stairs, satisfied smiles on their faces. On November 24, 1889, Miller’s deposits closed in on $1.2 million.

6.    The breakdown. The author points out that by the time things begin to look dicey, we tend to be so invested, emotionally and often physically, that we do most of the persuasion ourselves.

About the Miller case, she writes

“On November 24, 1889, Miller hit another landmark: a lead headline in the New York Times—. And so, that Friday night, as markets shut down for the weekend, Miller fled north arriving in Canada. On Saturday, a crowd of some two to four hundred lingered outside the office. There was Carl Preuss, a cripple, who proudly displayed his receipt for $450 from the day before. He wasn’t anxious—no, sir. He was just seeing what all the hubbub was about. And there was Miss Wolford, there to deposit another $50, to double her account and returns both. She wouldn’t hear of it. It wasn’t just the locals, either. Policemen, firemen, detectives, mailmen: all had, up until the last, received dividends from Miller. “If the officers are not afraid,” why should we be?”

In the organizations where I work, we have designed corporate communication programs to deal with this. The concept is simple. When it does happen, we share it with everyone instead of feeling uneasy about it.

Conclusion: I would recommend this book for someone who wants to learn about how we all –regardless of where we live- make decisions. The Confidence Game can also be used for legitimate purposes in sales, marketing, advertising and human resources. A better understanding of how we make decisions can only help.

I welcome comments on own experiences, both corporate and personal.