Photo by Getty Images Evans  Stringer

Photo by Getty Images, Evans / Stringer

Emotions Play Key Role in Fraud Vulnerability of the Elderly

Older adults are more susceptible to fraud when their emotions are heightened, according to psychologists at Stanford University’s Center for Longevity. The recent Stanford study, funded by the AARP Fraud Watch Network and the FINRA Investor Education Foundation, found that older adults who were induced into states of excitement or anger were more likely to purchase falsely advertised items.   

“Persuasion is one of the key weapons that fraudsters use to get people to invest in their schemes,” said Gerri Walsh, president of the FINRA Investor Education Foundation. “They figure out the Achilles heel that an individual has, and it’s often emotional. They’ll find out whether someone has a family or whether they maybe lost a family member recently, and they’ll exploit the emotions that surround that fact to try to separate them from their money.”

To conduct the study, Stanford researchers examined emotional arousal in a group of 71 older adults (ages 65 to 85) and 68 younger adults (ages 30 to 40).

The researchers prompted different emotional reactions from the participants by administering a Monetary Incentive Delay task, where a participant views cues on a computer screen that indicate winning or losing money. To win or avoid losing money, the participant must hit the spacebar when a target comes up on the screen. They then receive feedback on whether they responded quickly enough.

But the feedback was rigged to elicit different emotional responses. To get participants excited, they lost a lot of money at the outset, but then gradually won money by the end of the exercise. To get participants angry, they initially won a lot of money, then gradually lost money. To get a more neutral response, participants won or lost only small amounts of money.

Participants were then showed one of eight advertisements deemed by the Federal Trade Commission as “misleading,” such as an ad for a diet pill that promises to remove fat content from food.

Among those induced to excitement or anger, older adults had a higher propensity to purchase the items than younger adults, who had no significant group differences in their intentions to buy. In addition, younger adults were more likely to purchase items if they felt the advertisement was credible. But among the older group, there was no link between credibility of the product and their intention to buy it.

“These findings suggest that older adults’ intention to purchase the advertised item was not based on perceived credibility, but rather on the high-arousal positive and negative emotional states that they were experiencing,” the report said.

Con artists will do whatever they have to do to elicit emotional responses, FINRA’s Walsh said. “They’ll dangle the prospect of great riches; they’ll assure you that everybody in the community is doing it. They’ll appeal to the desires that you have, and they’ll get you into this emotional state, and it’s that heightened emotional state that puts you in the danger zone.”

But advisors can help, she added.

“If a client comes in all excited about a new opportunity, taking the time to walk the client through the pros and the cons to delay the decision-making process is helpful because you want to get people out of that emotional state so that they’re making whatever choice while they’re in a neutral state,” Walsh said. 

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