Entries Tagged "cons"

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On Financial Fraud

There are some good lessons in this article on financial fraud:

That’s how we got it so wrong. We were looking for incidental breaches of technical regulations, not systematic crime. And the thing is, that’s normal. The nature of fraud is that it works outside your field of vision, subverting the normal checks and balances so that the world changes while the picture stays the same. People in financial markets have been missing the wood for the trees for as long as there have been markets.

[..]

Trust — particularly between complete strangers, with no interactions beside relatively anonymous market transactions — is the basis of the modern industrial economy. And the story of the development of the modern economy is in large part the story of the invention and improvement of technologies and institutions for managing that trust.

And as industrial society develops, it becomes easier to be a victim. In The Wealth of Nations, Adam Smith described how prosperity derived from the division of labour — the 18 distinct operations that went into the manufacture of a pin, for example. While this was going on, the modern world also saw a growing division of trust. The more a society benefits from the division of labour in checking up on things, the further you can go into a con game before you realise that you’re in one.

[…]

Libor teaches us a valuable lesson about commercial fraud — that unlike other crimes, it has a problem of denial as well as one of detection. There are very few other criminal acts where the victim not only consents to the criminal act, but voluntarily transfers the money or valuable goods to the criminal. And the hierarchies, status distinctions and networks that make up a modern economy also create powerful psychological barriers against seeing fraud when it is happening. White-collar crime is partly defined by the kind of person who commits it: a person of high status in the community, the kind of person who is always given the benefit of the doubt.

[…]

Fraudsters don’t play on moral weaknesses, greed or fear; they play on weaknesses in the system of checks and balances — the audit processes that are meant to supplement an overall environment of trust. One point that comes up again and again when looking at famous and large-scale frauds is that, in many cases, everything could have been brought to a halt at a very early stage if anyone had taken care to confirm all the facts. But nobody does confirm all the facts. There are just too bloody many of them. Even after the financial rubble has settled and the arrests been made, this is a huge problem.

Posted on July 25, 2018 at 6:29 AMView Comments

"How Stories Deceive"

Fascinating New Yorker article about Samantha Azzopardi, serial con artist and deceiver.

The article is really about how our brains allow stories to deceive us:

Stories bring us together. We can talk about them and bond over them. They are shared knowledge, shared legend, and shared history; often, they shape our shared future. Stories are so natural that we don’t notice how much they permeate our lives. And stories are on our side: they are meant to delight us, not deceive us — an ever-present form of entertainment.

That’s precisely why they can be such a powerful tool of deception. When we’re immersed in a story, we let down our guard. We focus in a way we wouldn’t if someone were just trying to catch us with a random phrase or picture or interaction. (“He has a secret” makes for a far more intriguing proposition than “He has a bicycle.”) In those moments of fully immersed attention, we may absorb things, under the radar, that would normally pass us by or put us on high alert. Later, we may find ourselves thinking that some idea or concept is coming from our own brilliant, fertile minds, when, in reality, it was planted there by the story we just heard or read.

Posted on January 8, 2016 at 12:54 PMView Comments

These Pickpocket Secrets Will Make You Cry

Pickpocket tricks explained by neuroscience.

So while sleight of hand helps, it’s as much about capturing all of somebody’s attention with other movements. Street pickpockets also use this effect to their advantage by manufacturing a situation that can’t help but overload your attention system. A classic trick is the ‘stall’, used by pickpocketing gangs all over the world. First, a ‘blocker’, walks in front of the victim (or ‘mark’) and suddenly stops so that the mark bumps into them. Another gang member will be close behind and will bump into both of them and then start a staged argument with the blocker. Amid the confusion one or both of them steal what they can and pass it to a third member of the gang, who quickly makes off with the loot.

I’ve seen Apollo Robbins in action. He’s very good.

Posted on July 8, 2014 at 6:22 AMView Comments

Really Clever Bank Card Fraud

This is a really clever social engineering attack against a bank-card holder:

It all started, according to the police, on the Saturday night where one of this gang will have watched me take money from the cash point. That’s the details of my last transaction taken care of. Sinister enough, the thought of being spied on while you’re trying to enjoy yourself at a garage night at the Buffalo Bar, but not the worst of it.

The police then believe I was followed home, which is how they got my address.

As for the call: well, credit where it’s due, it’s pretty clever. If you call a landline it’s up to you to end the call. If the other person, the person who receives the call, puts down the receiver, it doesn’t hang up, meaning that when I attempted to hang up to go and find my bank card, the fraudster was still on the other end, waiting for me to pick up the phone and call “the bank”. As I did this, he played a dial tone down the line, and then a ring tone, making me think it was a normal call.

I thought this phone trick doesn’t work any more. It doesn’t work at my house — I just tried it. Maybe it still works in much of the UK.

Posted on July 30, 2013 at 7:33 AMView Comments

F2P Monetization Tricks

This is a really interesting article about something I never even thought about before: how games (“F2P” means “free to play”) trick players into paying for stuff.

For example:

This is my favorite coercive monetization technique, because it is just so powerful. The technique involves giving the player some really huge reward, that makes them really happy, and then threatening to take it away if they do not spend. Research has shown that humans like getting rewards, but they hate losing what they already have much more than they value the same item as a reward. To be effective with this technique, you have to tell the player they have earned something, and then later tell them that they did not. The longer you allow the player to have the reward before you take it away, the more powerful is the effect.

This technique is used masterfully in Puzzle and Dragons. In that game the play primarily centers around completing “dungeons.” To the consumer, a dungeon appears to be a skill challenge, and initially it is. Of course once the customer has had enough time to get comfortable with the idea that this is a skill game the difficulty goes way up and it becomes a money game. What is particularly effective here is that the player has to go through several waves of battles in a dungeon, with rewards given after each wave. The last wave is a “boss battle” where the difficulty becomes massive and if the player is in the recommended dungeon for them then they typically fail here. They are then told that all of the rewards from the previous waves are going to be lost, in addition to the stamina used to enter the dungeon (this can be 4 or more real hours of time worth of stamina).

At this point the user must choose to either spend about $1 or lose their rewards, lose their stamina (which they could get back for another $1), and lose their progress. To the brain this is not just a loss of time. If I spend an hour writing a paper and then something happens and my writing gets erased, this is much more painful to me than the loss of an hour. The same type of achievement loss is in effect here. Note that in this model the player could be defeated multiple times in the boss battle and in getting to the boss battle, thus spending several dollars per dungeon.

This technique alone is effective enough to make consumers of any developmental level spend. Just to be safe, PaD uses the same technique at the end of each dungeon again in the form of an inventory cap. The player is given a number of “eggs” as rewards, the contents of which have to be held in inventory. If your small inventory space is exceeded, again those eggs are taken from you unless you spend to increase your inventory space. Brilliant!

It really is a piece about security. These games use all sorts of mental tricks to coerce money from people who would not have spent it otherwise. Tricks include misdirection, sunk costs, withholding information, cognitive dissonance, and prospect theory.

I am reminded of the cognitive tricks scammers use. And, of course, much of the psychology of security.

Posted on July 12, 2013 at 6:37 AMView Comments

Security Risks of Too Much Security

All of the anti-counterfeiting features of the new Canadian $100 bill are resulting in people not bothering to verify them.

The fanfare about the security features on the bills, may be part of the problem, said RCMP Sgt. Duncan Pound.

“Because the polymer series’ notes are so secure … there’s almost an overconfidence among retailers and the public in terms of when you sort of see the strip, the polymer looking materials, everybody says ‘oh, this one’s going to be good because you know it’s impossible to counterfeit,'” he said.

“So people don’t actually check it.”

Posted on May 20, 2013 at 6:34 AMView Comments

Details of a Cyberheist

Really interesting article detailing how criminals steal from a company’s accounts over the Internet.

The costly cyberheist was carried out with the help of nearly 100 different accomplices in the United States who were hired through work-at-home job scams run by a crime gang that has been fleecing businesses for the past five years.

Basically, the criminals break into the bank account, move money into a bunch of other bank accounts, and use unwitting accomplices to launder the money.

The publication said the attack occurred on Apr. 19, and moved an estimated $1.03 million out of the hospital’s payroll account into 96 different bank accounts, mostly at banks in the Midwest and East Coast.

Posted on May 1, 2013 at 10:26 AMView Comments

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Sidebar photo of Bruce Schneier by Joe MacInnis.