Common Persuasion Tactics In Fraud

Back in February of 2009, the FTC held a fraud forum which covered quite a bit of interesting information. But one thing that stood out for me was The Undercover Audiotapes Project which consisted of analysis of  300 undercover fraud tapes completed by AARP and the FINRA Investor Education Foundation in 2006 which identified the most common persuasion tactics used by con men by scam type.

The overall results were as follows:

  • Phantom Fixation (22.39%)
  • Scarcity (15.11%)
  • Source Credibility (10.88%)
  • Comparison (9.53%)
  • Social Proof (5.58%)

Phantom Fixation (dangling the prospect of wealth and riches)

The examples of frauds using Phantom Fixation were some of the more historically common types of fraud such as investment fraud and lottery fraud.

But there’s a more subtle form of Phantom Fixation used by marketers  of business opportunities or other types of internet marketing products  in the form of either an explicit or implied “I did this and you can, too”.  But usually that’s not strictly true at all.

Sometimes it’s as blatant as marketers showing “Proof of Income” or “Proof of Traffic” screenshots were actually generated from sources that have nothing to do with the product they’re selling.  But, even if the techniques, methods, or strategies being sold work, often there are unspoken (or unknown) factors that contributed to the success of the technique, method, or strategy.

Sometimes a marketer will use a phrase like “not long ago I was a total newbie”. But what does “not long ago” mean? 3 months, 6 months, a year, a decade?

Vague statements like “not long ago I was a total newbie” essentially are utilizing a more subtle form of phantom fixation. They are implying “I was just like you and got my results in a short period of time” even if that isn’t true at all. And so the prospect/victim becomes “fixated” on the idea that they can achieve the same results in a “short period of time” which they may think is a few weeks or months when in truth it was years for the marketer.


Certainly there are legitimate times where a product or service (especially service) are limited. But more often than not scarcity claims are completely made up. While many people reading this might think that it’s obvious that the scarcity claims are made up – among the target market of fraud perpetrators it often isn’t obvious.

And fake scarcity shows up in more places than many people probably realize, as recently revealed in the recent Syndicate Scarcity post at the Salty Droid site (note, initially I had labeled this “irrefutable proof”, but now I merely consider it a major indicator that  it’s going on, since not all conversations are acted upon).

Source Credibility

There are many different ways fraud perpetrators implement “source credbility”.  Phishing scams, phony titles, basic social engineering methods,  using fake agency names that sound like real goverment agencies.

Those are all simple examples of faking “source credibility” that are easy to disprove.

But it gets trickier when a person or group of people who are committing fraud bring an outsider who has real credibility (or a high perception of real credibility) into their circle.  They are leveraging that person’s credibility as well as his strong relationship to  his or her customer/prospect base or social network. And fighting against that form of source credibility often involves disrupting strong loyalty that is embedded within an arena of “social proof”.


The most prevalent example of this in fraud probably is in the area of fake comparison pricing, fake discounts, or faking the value of “bonuses” in an offer – all of which the FTC’s Guides Against Deceptive Pricing clearly identifies as deceptive. The guides cover many interesting and more subtle scenarios, but the basic principle is:

“If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison.”

Of course “reasonably substantial period of time” is quite vague which is unfortunately probably a necessary vagueness since FTC Guidelines can’t possibly hope to cover all possible scenarios and market places.

Social Proof

Social Proof has been made somewhat “famous” (or infamous) in Internet Marketing circles via Jeff Walker’s Product Launch Formula.

The more I read and understand about social proof the more I question whether it can ever be used as an ethical persuasion technique at all.

As mentioned in my write up Social Network Analysis, “Trusted Hubs”, and Timelines the field of Social Network Analysis provides a compelling REASON why “Social Proof” is usually NO proof at all:

Sabater and Sierra state:

“the information that comes from other agents can be correlated (what is called the correlated evidence problem). This happens when the opinions of di fferent witnesses are based on the same event(s) or when there is a considerable amount of shared information that tends to unify the witnesses’ way of  thinking”.  In both cases, the trust on the information shouldn’t be as high as the number of similar opinions may suggest.


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  1. Definitely get the Weapons of Fraud book from AARP. It has some good examples of how people can use the telephone to defraud.

    Unfortunately, yet again, the FTC has had a conference on fraud and failed to understand what the legal issue is.

    At law, general representations, such as “You will become rich beyond your wildest dreams”, are treated as puffery. No reasonable person would rely upon them.

    What Anthony Pratkanis has decisively shown is this: there is a certain category of puffery, sentences which describe the phantom fixations, or phantom dramas, which are critical to enabling fraud.

    The existence of phantom fixations will are both material, unreasonable to rely upon, which enable fraud is a problem for the legal treatment of fraud.

    It is disappointing to continue to see that no real understanding has been made in this field despite Pratkanis’ excellent academic work.

    • Just added a link to Anthony Pratkanis’ site at Social Psychology. I’m pretty excited about what I see there. Thanks for the info.

      Also added a link to the Weapons of Fraud write-up at AARP.

      I’m aware of the FTC’s statements about puffery as described within their policy statement on deception. In the statement they claim that “puffery” isn’t always an out, although what they say and what they do are I’m sure two different things:

      “The Commission generally will not pursue cases involving obviously exaggerated or puffing representations, i.e., those that the ordinary consumers do not take seriously.42 Some exaggerated claims, however, may be taken seriously by consumers and are actionable. For instance, in rejecting a respondent’s argument that use of the words “electronic miracle” to describe a television antenna was puffery, the Commission stated:

      Although not insensitive to respondent’s concern that the term miracle is commonly used in situations short of changing water into wine, we must conclude that the use of “electronic miracle” in the context of respondent’s grossly exaggerated claims would lead consumers to give added credence to the overall suggestion that this device is superior to other types of antennae. Jay Norris, 91 F.T.C. 751, 847 n.20 (1978), aff’d, 598 F.2d 1244 (2d Cir.), cert. denied, 444 U.S. 980 (1979).”

      • Paul, the above is a traditional analysis of puffery. Should the statement be relied upon or not – puff statements are not to be relied upon.

        However, consider what Pratkanis has found out about the use of phantom dreams by conmen:

        “The victim may become so obsessed with the possibilty of obtaining that phantom that he or she may reallly be able to live their fantasy or “phantom” dream and thus become disconnected from reality and logical reasoning.” and,

        “The basis of every scam is the phantom. A phantom is something that a person desperately wants, but is normally completely unavailable -the hope of things unseen becoming real.”

        Once you can trap into that desperation, fake up the unavailable to becoming real, you have got your target.

        But all of those statements about the phantom are traditionally analyzed as whether they are puffs or not, instead seeing the criminal purpose.

        “What the criminal does does is to focus your attention on the phantom to an unhealthy degree, rational thought and action is replaced with animal energy:

        Let’s go, go, go. Go the bank now, write a cheque now, send it to me now, do it, do it. Now.”

        It is in this context, scarcity becomes important.

    • “What Anthony Pratkanis has decisively shown is this: there is a certain category of puffery, sentences which describe the phantom fixations, or phantom dramas, which are critical to enabling fraud.

      The existence of phantom fixations will are both material, unreasonable to rely upon, which enable fraud is a problem for the legal treatment of fraud.”

      Here’s an idea – and this is basically just a BIG shot in the dark based on only a VERY rudimentary understanding of these fields – but it sounds like theoretically you might be able to combine text mining, semantic similarity, and predictive analysis to come up with proof that certain types of phantom fixations are material to a specific fraud case.

      For instance in the case of a defined sales presentation (sale letter or video):

      1. Text mine it and categorize it conceptually
      2. Use semantic similarity to cross-reference against Pratkinis’ research.
      3. Use predictive analysis to analyze the results of categories of “1 & 2″ to predict consumer/victim reaction.

      Again, this is all just a wild shot in the dark, since I have only a very rudimentary understanding of those 3 fields.

      But I recall you studied game theory, isn’t that right, so that would be related to the predictive analysis piece. Or maybe that piece isn’t necessary at all. Or maybe the whole idea is wrong. LOL.

      • Wanted to follow up and mention that I discussed this idea with a friend who has more knowledge than I do in this area (although not real expertise) and he said this idea seems plausible, but that ultimately you would likely have to use this to form hypotheses and then test those hypotheses in a laboratory setting.

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