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5 Ways Fraudsters Use Your Emotions To Take Your Money


Scams are planned strategically by fraudsters to take money away from you. Despite increased awareness and use of technology, smart scammers have been targeting people from all backgrounds, ages and income levels using sophisticated thought out methods. These fool you because they look so much like a real thing, catching you off-guard, attacking you when you least expect it.

5 Ways Fraudsters Use Your Emotions To Take Your Money

Here are 5 such ways in which your emotions and beliefs are used against you to make bad financial decisions:

1. Fear of missing out

There have been cases where a stock's price is artificially shot up by fraudsters by pumping a large sum into it.

Investors observe this rise and want to become a part of the hype due to FOMO (Fear Of Missing Out). As investors join the race, the stock's price inflates and the fraudster withdraws their investment with profit causing a dramatic loss for those who joined the hype.

It is important to understand the reason for a rise in the stock's price before you decide to purchase it. Stock markets are unpredictable and there are many speculators out there looking for easy money.

2. Close association with the fraudster or another investor

In what came to be known as the IMA scam, a Bengaluru-based private firm called I Monetary Advisory Group floated a Ponzi scheme, wherein investors were offered interests as high as 36 to 64 percent (according to an Indian Express report). The scheme was pitched as being in line with the Sharia principles of Islam.

Using religious beliefs, the firm targeted middle-class Muslim families in and around the same area who entrusted their life savings to the firm for financial goals like marriage or purchase of a car.

Considering the fact that it was a Ponzi scheme, the initial investors did get their money and returns from investments made by the next group, thus building faith in the scheme.


There are several examples like these where the fraudster can gain trust by targeting a respected member in the community.

For the next victim, the fraudster will use emotional connection or proximity to the first victim and sweet talk to build rapport and gain their trust. One could fall for their niceness or even the association with their native place.

Do not give away money with making sufficient research on the finance company and their registration will a regulatory like RBI. You also need to do some research on the recent regulatory changes on the said scheme.

Ideally, if investment returns are too good to be true, you should always avoid it because there are high chances that it is illegal or not stable or are being associated with high-risk securities making you even lose the amount you invest.

3. Peer pressure

This is linked to the first two ways. A friend talks of a scheme that is helping them earn high interest and you start wondering if you have been wasting time and potential of your savings by just keeping them in your bank account.

These could be any kind of money-making or personal benefit promise-a Ponzi scheme, a registered scheme, a commission-based product selling scheme, etc.

Now while they may not all be fraudulent ones, the benefits of these schemes may have been exaggerated and most likely not suit your personal needs or lifestyle. Even if it were a fraudulent scheme, it would be hard to detect in the initial stages

There are many private schemes where one makes a profit from adding new members to the scheme. Despite knowing many people who have participated in it, it is wise to stay away because they may not have understood the basic mechanics of how the company is earning the profit to reward its agents.

4. Free advice

Everyone is always looking out to give free advice on how to deal with your money problems. Friends, colleagues, relatives and even bankers want you to go for products that you may not even need.

It is common for bank employees at branches to push their products on you. Same goes for a friend or neighbour or colleagues who is an agent for an insurance company.

These are licensed products and not scams but these are being mis-sold to you.

Senior citizens who prefer visiting branches over internet banking and have a good amount of money saved are often their targets.

You could be sold a life insurance product even if you don't have any dependents or a health insurance scheme that does not cover your medical condition. You keep falling for their benefits because you trust the brand name and consider the bank employee an expert. You are also taking their word for it being your best option because you haven't done your own research on what other options are available in the market.

Unless your friend or colleague is a qualified expert in giving out financial advice, it is better to hire a financial planner to give you personalised advice for a fee, as you do with a chartered accountant at the time of filing your taxes.

5. Imposters over the internet/phone

You may have received several e-mails or text messages carrying names of established banks handing out rewards, offering loans, offering credit cards or starting an investment towards a mutual fund scheme. It could anything. There are even phone calls being made by such fraudsters, claiming to be calling from the bank's sales team.

These "bank officials" contact you from a general phone number and handover an e-mail address that will look very much like that of a bank. For example, or

For a second you may fail to notice the difference and do not question the brand's reputation.

You end up giving your bank account number, PAN, date of birth and other personal details to these officials for KYC purposes, only to find the balance in your bank account siphoned away.

Therefore, if you wish to apply for a credit card or loan, call the registered number yourself or visit a branch.

Beware of reward-winning calls/e-mails/text messages as well.

Read more about: fraud bank fraud
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