"... scam victims often have better than average background knowledge in the area of the scam content."If you don't believe the research read the cautionary tale Why we keep falling for scams in the Wall Street Journal, written by Stephen Greenspan a university professor psychologist specialized in (studying about) gullibility. Of all people, he was one of Bernie Madoff's victim investors and uses himself as a case study. His interesting conclusion - spreading assets and savings around is a way to reduce the risk of losing all through unforeseen disasters such as a scam. Works for investments in general too, I'd add.
"... scam victims report that they put more cognitive effort into analysing scam content than non-victims. This contradicts the intuitive suggestion that people fall victim to scams because they invest too little cognitive energy in investigating their content, and thus overlook potential information that might betray the scam"
" ... People who show above average vulnerability to scams do not seem to be in general poor decision-makers, for example they may have successful business or professional careers."
"... some people become 'chronic' or serial scam victims:"
"... victims are often acting against their own better judgement: with some part of their minds they recognise a scam for what it is."
Source: The psychology of scams: Provoking and committing errors of judgement a University of Exeter study sponsored by the UK Office of Fair Trading released in May 2009
David Krueger's recent book The Secret Language of Money (which I will soon review) also discusses how scammers ultimately depend on our complicity and emotional responses overwhelming our rational brains. He cites one clever investing scam that I've not seen described before. He calls it the Uncanny Forecaster Scam. To get the trust and confidence of the victim, the scammer posing as a broker calls 100 people and tells half that it will go down and the other half that it will go up. No investment is asked for yet. Then he calls back the half for which the answer was correct and again tells half that group that it or any other stock will go up and the other half that it will go down. Presto! Half will be right again! Then he calls back the targets who are by now impressed with his expert forecasting and suggests they send along $25k or whatever for another suggested investment. Bye bye money.
I like one scam avoidance guideline in the Exeter study: "... if you
think an offer might be a scam, it almost certainly is – your gut instinct is almost invariably right."
One mental antidote to scams might be to adopt what might be called the government bureacracy decision-making rule - avoidance of error at all costs: be so skeptical that nothing is ever approved if there is the slightest chance that it could go wrong.