Do you know the common tactics of scammers, thieves, and used car salesmen?

A woman sits at a table with her son looking at a laptop where they are encountering a scammer using loss aversion to influencer them to fall for a scam.

Do you know what loss aversion is? Scammers do, and so do those shady salespeople that make you feel ick.

You know that feeling when you’re being pressured to do something you’re not sure you want to do? 

It’s like a discomforting mélange of an elevated heart rate mixed with the hairs standing up on the back of your neck. Someone is urging you to take action, but there’s something nagging at you—and you’re not empowered to address your misgivings because it feels like someone is in your ear with a megaphone telling you to push the red button.

That unease is something that others are sometimes hoping for. It’s a category of social engineering, and thieves, scammers, and shady salespeople have been known to actively induce and play on these kinds of feelings to get what they want.

You have to take action now, or you lose! 

One of the biggest pressures you might feel is the threat of a bad outcome. And you’re not alone—most everyone feels the same way. That particular flavor of anxiety has been studied and researched extensively by several big brains—the term was actually coined by Nobel Prize winner Daniel Kahneman and Amos Tversky. What they’ve observed is that most humans feel the impact of loss more intently and emotionally than how we feel when we win.  

In psychology circles, this is called loss aversion. It’s a complex theory that boils down to this: when we’re faced with a decision where one outcome promises what we perceive to be a negative result, we’re more likely to respond emotionally, or even irrationally, to avoid that outcome. Our irrational decision is often spurred on when the choice comes loaded with a sense of urgency.  

Now, picture yourself sitting at the desk in front of a shady used car salesperson (Not to say all salespeople are shady, but you know the type.) You’ve done your research online, you’ve read the safety reports, and you’ve completed a test drive. As the two of you start to discuss the numbers, they slide a piece of paper in front of you—with a price that’s well over what you’re ready to spend.

You’re sensible. You were ready for this. You consider that you can go home and sleep on it, try to get an auto loan to cover the difference, or you can go to another dealership and see if they’ll make a competitive offer.

This is where a dealer plays on your aversion to loss, mixed in with a sense of urgency. They tell you that they only have two of those cars left, they’re selling out every few days, and all dealerships have the same problem. If you don’t act right now, you’re going to lose the car you just drove around the block. They are hoping you’ll give in and pay more than what you want rather than lose the opportunity.

Don’t fall for it. And, don’t fall for it when cybercriminals put you in the same position.

You have to take action now, or you’re going to jail!

Scammers employ loss aversion in their setups the same way salespeople do, but in a far more overtly threatening way. If you’ve ever seen this email supposedly sent by the IRS or a debt collector:

“If you do not transfer the past due amount of $580 at the time of receiving this, you will automatically be declared in default, and a warrant will be issued for your arrest.”

Loss aversion: check. Sense of urgency: check. Nobody wants to have their credit damaged, much less be arrested. Faced with the decision of being arrested and not being arrested, the choice seems obvious: Yes, the not-going-to-jail option, let’s do that. But maybe this makes those hairs on the back of your neck stand up. 

Does the IRS send emails? Can a credit lender declare an account in default after a single warning? It’s a little bit of money, but maybe you can put that together and avoid all this messiness. And, unfortunately, you might be playing into the scammers' setup by following a link to a phony website that steals your banking information.

When someone tells you in an email, a social media DM, or a text message that you must pay immediately or suffer, they’re playing on your loss aversion. Don’t fall for it. Find the contact number for the lending agency online (if they exist) and call the main line yourself. Check your credit report to see if there are any accounts that are out of date. And remember, the IRS doesn’t send emails.

You have to take action now, or … else!

 A demand, urgency, and the threat of negative consequences can come in a wide array of formats. Learn to spot the plot. 

For instance, a member of our team once received this note as part of a longer DM conversation with a friend on social media. The friend was on vacation overseas at the time:

“I am so sorry to be asking this, but our daughter has gotten really sick, and they don’t take our insurance here, and we need to get her in today. Can you help me transfer some money so we can pay, and I’ll get you back when we get home?”

Look closely, and the same formula is there, this time with an appeal to emotion added to the consequences. We have to act: someone is sick. We have to act with urgency: they need a doctor right away. We will lose if we don’t act: the friend’s daughter could suffer, and we’re a horrible person to say no.

Our team member did not fall for it, but the scammer had them on the hook for a while.

But now that you know the pattern, you can start to see through the tactic when people employ loss aversion to get you to do something you would normally think twice about.

“We have detected a virus on your computer, you must call us immediately to avoid loss of data.”

“Your payment is past due, please visit this website immediately to arrange payment and avoid closure of your account.”

“These rates are only good for 24 hours, confirm your purchase before prices go back to normal!” 

In reality, when someone contacts you about any financial transaction, needs to connect with you about an account, or has something for sale that you want, you likely have more time and freedom than they’re letting on. Understand loss aversion. When you’re presented with an online threat, evaluate its nature, consider your options for how to respond, then take action on your own terms.

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Clare Stouffer
  • Clare Stouffer
  • Gen employee
Clare Stouffer, a Gen employee, is a writer and editor for the company’s blogs. She covers various topics in cybersecurity.

Editorial note: Our articles provide educational information for you. Our offerings may not cover or protect against every type of crime, fraud, or threat we write about. Our goal is to increase awareness about Cyber Safety. Please review complete Terms during enrollment or setup. Remember that no one can prevent all identity theft or cybercrime, and that LifeLock does not monitor all transactions at all businesses. The Norton and LifeLock brands are part of Gen Digital Inc. 


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