EWJ Dec 2023 - Journal - Page 68
Understanding the
Psychology of a Fraudster
The world of fraud is a complex one, with fraudsters coming from diverse backgrounds and
holding a range of motivations. Crowe’s recent research, the Annual Fraud Indicator 20231, which
has been carried out in collaboration with the University of Portsmouth’s Centre for Cybercrime and
Economic Crime and Peters and Peters LLP, now suggests the UK loses £219 billion to fraud
annually. To many, the sheer size of the problem will feel like we’re fighting an unwinnable battle.
However, understanding the psychology of a fraudster can provide us with important insights
which are invaluable if we are to fight back and reduce this monumental figure.
In this article we will explore the known motives,
characteristics, and psychological mechanisms that
drive individuals to engage in fraudulent behaviour.
We’ll then discuss some key measures to help to
prevent fraud.
teristics. Understanding these traits can help in
identifying potential fraudsters and preventing their
activities:
Many fraudsters rationalise their actions, believing
that they have a valid reason or excuse for their fraudulent behaviour. This rationalisation helps them alleviate guilt and maintain their self-image as morally
upright individuals. When perpetrating a fraud
against a large corporation a fraudster often rationalises the fraud under the premise of ‘they can
afford it’.
The motives behind fraud
Fraudsters come in all shapes and sizes, and their
motivations are as diverse as the schemes they concoct. The most common and obvious motive for fraud
is the desire for financial gain. Fraudsters may be motivated by the prospect of easy money, whether it's
through misappropriation of funds, embezzlement,
identity theft, Ponzi schemes, or other means. The allure of life-changing financial gain can be a powerful
incentive for individuals to engage in fraudulent activities. Conversely, some fraudsters turn to deception
out of desperation. When facing mounting debts or
financial difficulties, individuals may resort to fraud as
a way to alleviate their financial woes. The fear of losing everything can push individuals to take drastic
measures.
The most obvious trait is the ability to deceive
convincingly. Fraudsters are skilled at concealing their
true intentions and creating a facade of honesty and
trustworthiness. However, fraudsters are also often
opportunistic, seizing chances to commit fraud when
they arise. They may be constantly on the lookout for
weaknesses in systems, loopholes, or unsuspecting
victims.
A key trait of a fraudster is their ability to manipulate
others to achieve their goals. They can be charming,
persuasive, and skilled at exploiting trust and emotions. Coupled with a lack of empathy, they can be
known to harm others without remorse or understanding of the emotional and financial consequences
their actions have on victims.
For some, the motive behind fraud is not purely
financial but stems from a desire to boost their self-esteem and self-image. Fraudsters may engage in deceitful activities to appear successful, sophisticated, or
influential to others. This psychological need for recognition and self-worth can be a powerful motivator.
Fraudsters are often willing to take substantial risks to
achieve their objectives. Their greed can often be the
downfall as they may believe they can outsmart authorities or evade detection, even when the odds are
against them.
Personal vendettas, grudges, or a desire for revenge
can drive some individuals to commit fraud. These
fraudsters may target specific individuals or organisations to exact revenge or settle personal scores. This
motive can be particularly difficult to detect, as it may
not always align with traditional financial motives.
The psychological mechanisms
Understanding the psychological mechanisms that
underlie fraudulent behaviour is crucial for detecting
and preventing fraud. These mechanisms shed light
on the thought processes and decision-making of
fraudsters.
Just as some individuals can be forced to dishonestly
gain additional funds to pay off a gambling debt or
substance addiction, others become addicted to fraudulent activities. The thrill of deceiving others, coupled
with the rush of evading detection, can become an obsession for some fraudsters. This motive is rooted in
the psychology of addiction and compulsion.
The perceived anonymity of committing fraud can
reduce inhibitions and lead individuals to engage in
behaviour they would avoid in face-to-face situations.
Online fraud, for example, provides a sense of
detachment that makes it easier for individuals to
commit deceptive acts.
The characteristics of a fraudster
While fraudsters vary in their motives, they tend to
share certain psychological and behavioural characEXPERT WITNESS JOURNAL
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DECEMBER 2023