Mass-Market Consumer Fraud: Who is Most Susceptible to Becoming a Victim?

Keith B. Anderson
Working Paper:

This paper attempts to add to the understanding of what makes consumers more likely to become victims of fraud.  More specifically, we sought to identify personal characteristics that were correlated with being more likely to become a victim.  To do this, we conducted a survey using members of an Internet panel.  Participants were shown two of six mock print advertisements that advertised products in one of three different product categories.  The claims in three of the ads – one each for a weight-loss product, an employment opportunity, and a Caribbean vacation – were sufficiently outrageous that they would likely only be found in advertising for a fraudulent offering.  The other three ads, which were for the same three products, contained only more-plausible claims for the products. Focusing on the likely-fraudulent ads, we identified several characteristics that were correlated with a person being susceptible to consumer fraud, which was defined as being very likely to purchase the likely-fraudulent product if the ad was real or finding the likely-fraudulent ad to be very credible.  These characteristics included consumer literacy, skepticism, overconfidence, taking time to think about the answer to a question rather than accepting the immediate – but actually incorrect – answer, and willingness to take risks.   We also found that many of the characteristics that affect consumers’ evaluations of a likely-fraudulent ad also affect their evaluations of a more-plausible ad.