Prevention: Evidence-Based
Programs that Work
Melodye Kleinman, National Telemarketing Victim Call Center Gerri Walsh, FINRA Investor Education Foundation
Challenges to Preventing Investment Fraud
Psychological Barriers
►Illusion of invulnerability (I can’t be taken.) ►Reactance (You’re not the boss of me.) ►Threats to self-esteem (I am not stupid.)
►Too much information (I can’t remember what you taught me.)
Systemic Barriers
►Scams everywhere (how do you warn against so many different frauds?) ►Scale (how do you reach a critical mass of consumers?)
►Proving a negative (how do you show when something doesn’t happen?) ►Persistence (if you can show a preventative effect, does it last?)
Major Research
►Off the Hook (2003) USDOJ/AARP. A survey of 502 general population and 132 investment fraud victims.
►Investor Fraud Study (2006) FINRA/WISE Senior Services. A survey of 499 general population and 71 investment fraud victims.
►Stolen Futures (2007) AARP Washington. A survey of 258 general population and 125 investment fraud victims.
►National Investor Risk Behavior Study (2007) FINRA and AARP. A survey of 371 general population and 101 investment fraud victims.
►Call Center Research (2010) Stanford Center on Longevity and AARP Foundation.
The Call Center Peer Counseling Model
• One volunteer fraud fighter talking on the phonewith an at-risk older person to warn them about fraud.
• Those contacted are consumers whose names and telephone numbers are found on lists seized by law enforcement.
• Peer counseling messages are customized to meet what we know about this population.
• The NTVCC: Call victims whose names have been seized in law enforcement raids and warn them.
• Does it work?
• If so, what works best and why?
• Develop interventions scripts for use at other centers
Findings
• First demonstration of an effective deterrent to this crime.
• Some messages worked better than others – Forewarned is Forearmed and Forewarned about a specific fraud.
• Offering incentives or placing the potential victim in the role of a fraud fighter were ineffective.
• The use of vivid appeal was not only ineffective but increased levels of participation in the sting.
AARP Fraud Fighter Call Centers
• Seven centers across the U.S. funded by a
multi-million dollar, multi-state NAAG settlement. • The single largest fraud prevention effort in the
U.S.; involved over 500 volunteers; 3 million seniors received a peer delivered message.
• The model was volunteers providing one-on-one fraud prevention counseling to victims and
Stanford Research on the Call Centers
Methods:
• Step 1 - Identify 1,500 chronic lottery victims and divide them into two groups. Group A receives fraud counseling and Group B does not.
• Step 2 - After a short and long delay, a former con man calls both groups with a fake pitch. (You are entitled to an $8,000 Federal grant for a $250 processing fee.) • Step 3 – Analyze data to see if there was a difference
Stanford Research on the Call Centers
47.1 32.4 0 5 10 15 20 25 30 35 40 45 50Control - No Counseling Experimental - Received Counseling
Percent of Lottery Victims Responding to a Fraud Pitch – All Conditions
AARP Call Centers Make a Difference
• Peer counseling reduces responsiveness to
fraud by almost 33% even after a 4 week delay. • Scam-specific warnings are effective in
preventing other types of fraud (i.e. RX scam warning reduced responsiveness to federal stimulus grant pitch).
National Telemarketing Victim
Call Center
►Provided fraud prevention messaging to one million older consumers in the last 6 years.
►Broad customizable reach
►Proven behavior changes
►When dealing with consumers on lead sheets used by con artists, you find a lot of victims.
National Telemarketing Victim Call Center
• Meet John Doctorow
• He invested $30,000 in Global Bullion
Exchange…his statements said his investment grew to $200,000. Until he tried to cash out.
National Telemarketing Victim Call Center
• Counsel the consumer about lulling (cooling the victim) techniques used by con artists.
• Provide simple tools and tricks for doing due diligence.
• Gather offering materials.
• Shop victim complaints, guide and help them in filing a complaint.
• Keep the consumer informed about civil and criminal processes.
Ask and Check: Using Social Influence to Combat Investment Fraud
FINRA Foundation
Moving Beyond Warning Campaigns
Educating Campaigns Warning Campaigns Specific Generic Reactive Proactive Short-term Long-term Information-based Skills-basedSource: OECD,Examining Consumer Policy: A Report On Consumer Information Campaigns Concerning Scams (2005)
Investor Protection Strategy
Teach Investors to:
►Know they could be vulnerable
►Recognize persuasion techniques
►Take simple, highly protective steps
– Ask questions – Check answers
Outsmarting Investment Fraud Curriculum
►Outsmarting Investment Fraud
– Understanding Fraud Risk
– Recognizing Persuasion Tactics used in Fraud – Preventing Investment Fraud
►Incorporates moderated presentation,
videos, and learning activities & exercises
►Full version runs 60 minutes; adapted to range from 20-60 minutes in different settings with varying
audio-visual capacity
Accepting Vulnerability – Risk Meter
Are you a high-risk candidate for fraud?
►12 Simple Questions
►Research-based
►Identifies Areas of Concern for You
►Provides Detailed Explanations and Resources
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Resisting Influence – Spotting Persuasion
Most Frequently Used Tactics
►Phantom Riches: dangling the prospect of wealth
►Source Credibility: better to deal with an “expert”
►Social Consensus: “everybody wants it so it’s good”
►Reciprocity: returning a small favor with a big one
►Those who counter-argue and actively question a communication are less persuaded
►Interviews of cons reveal that they do not like to be questioned
►Ask and check the registration status of the professional and investment.
►ASK if they are licensed to sell the investment and if the product is registered
►CHECK that they are licensed and the product is
registered – SaveAndInvest.org or (888) 295-7422
Curriculum Changed Behavior
Those who had been to the OIF seminar responded positively to the fraud appeal 50% less frequently than those who had not.
