Cracking the code: why people fall for scams – UNSW Newsroom

UNSW Business School experts explain the psychological factors that cause people to fall victim to scams – and what protection can be offered.
UNSW Business School's Dr Kam-Fung (Henry) Cheung says awareness is a shield against scams that equips individuals with the knowledge to identify and avoid fraud. Photo: Getty
Australians lost a staggering $3 billion to scammers last year, surpassing any previous year. That’s equivalent to the cost of rebuilding three new hospitals. The latest Targeting Scams report from the Australian Competition and Consumer Commission (ACCC) highlights the urgency of the issue.
In 2022, investment scams accounted for the highest losses at $1.5 billion, followed by remote access scams ($229 million) and payment redirection scams ($224 million). Small and micro businesses experienced a substantial 95 per cent increase in losses, reaching $13.7 million, primarily due to payment redirection scams. Overall, there was a 73 per cent rise in scam losses across the Australian business community, totalling $23.2 million, underscoring the urgency to understand the reasons behind scam victimisation and implement proactive measures against fraud.
In an interview with the UNSW Business School, Dr Kam-Fung (Henry) Cheung, Lecturer in the School of Information Systems and Technology Management (ISTM), and Shesha J. Maheshwari, a research student in the School of ISTM, emphasise the importance of understanding the psychological factors that make people vulnerable to scams. The experts say financial desperation and a lack of awareness about evolving scam techniques contribute to why many individuals today are being taken in by scams. 
According to Dr Cheung and Ms Maheshwari, there are six key reasons people fall victim to scams.
Dr Cheung explains that awareness is a shield against scams that equips individuals with the knowledge to identify and avoid fraudulent activities. “It promotes a vigilant mindset that is essential in today’s world where scams continue to evolve and adapt to changing circumstances,” he says.
But it is also crucial to remember that anyone can fall victim to a scam regardless of their age, education, or background, adds Ms Maheshwari, whose work focuses on phishing attacks with a particular focus on smishing attacks – a type of phishing attack that is conducted via Short Message Service (SMS) or instant messaging on a mobile device. “Scammers are skilled at exploiting vulnerabilities and manipulating people’s emotions and trust,” she says.
Ms Maheshwari also notes she has observed younger generations, driven by curiosity and a propensity for risk-taking, often hold the belief that scams will not affect them personally, which renders them more vulnerable. To promote online safety, she suggests a shift in mindset from “it won’t happen to me” to “it could happen to me, so I must remain aware and vigilant.” 
She says: “Awareness and vigilance play an important role in safeguarding against frauds and scams. Staying informed and maintaining a sceptical mindset empower individuals to make informed decisions and protect themselves from falling victim to scams.” 
Stay cautious with emails, especially from unfamiliar sources or seeking personal/financial data; be wary of typos, suspicious links, and mismatched email addresses. Photo: Getty
According to Dr Cheung and Ms Maheshwari, falling victim to scams does not reflect personal weakness or naivety, as scammers are highly skilled manipulators, capable of deceiving anyone. And to better protect themselves against potential scams, individuals can take the following precautions.
In addition to these proactive measures, the Australian government and ACCC have taken steps to address the issue of scams. Establishing the National Anti-Scams Centre, launched July 1, 2023, is a significant initiative to combat scams. Over the next three years, the centre will build its information-sharing capabilities and bring together government and private sector experts to tackle harmful scams head-on.
Finally, Dr Cheung and Ms Maheshwari reiterate that falling for a scam doesn’t reflect a personal weakness or naivety. “Highly skilled scammers are manipulators who exploit psychological vulnerabilities and use sophisticated tactics to deceive people from all walks of life, including highly educated and cautious individuals. 
“Acknowledging this fact can help victims overcome any feelings of self-blame or shame and instead focus on reporting the scam, seeking support, and learning from the experience to prevent future occurrences.”
To report a scam or seek assistance, you can visit the National Scam Centre website. You can also report scams to ReportCyber and ScamWatch.
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