Rip-Offs, Swindles and Scams: Don't Be a Victim

It seems no matter how sophisticated or advanced we become as consumers, our emotions or cognitive biases still interfere with our ability to avoid rip-offs. In fact, a new piece in Psychology Today -- "5 Reasons We Get Suckered and Ripped Off" -- explores our top mental barriers and how to combat retailing scams.

I asked the author, Ronald E. Riggio -- the Henry R. Kravis Professor of Leadership and Organizational Psychology at Claremont McKenna College -- for some additional analysis. Here are some of the reasons why we continue to fall prey, followed by some tips on how to defend ourselves:

1. We're Too Darn Trustworthy
Even if the offer sounds too good to be true, "it's our default to trust people," says Riggio. "There's this idea that someone's watching over things, an idea that bad people will get their due [if they're lying]."

In deception studies, in which people are asked to guess whether someone is lying or telling the truth, participants tend to see more truths than lies, says Riggio.
2. We Feel Indebted
When consumer receive something for free -- whether it's a free pen from a credit card marketer or free money when we open a checking account -- we feel the need to reciprocate and make a deal, even if it's not in our best interest. Often, it isn't.

3. We Get Embarrassed
Even when a salesman at the car lot sounds like he's just making things up, chances are we'll just let him finish his pitch. "We don't want to challenge someone because we will be socially embarrassed," says Riggio. "We're just being socially polite. Calling him out would be embarrassing."

4. We Believe in a Fair World
You may have gotten ripped off before, so what are the odds that you'll be victimized again, you ponder? Our belief that the world is a just place can be misleading, says Riggo. "We figure someone will come to our rescue," he says -- but that's not necessarily the case. Just ask those who have been caught in the foreclosure crisis.

Here are some ways to combat these cognitive biases:

• Think about the motive: Engage your brain and be analytical, says Riggio. "If someone is trying to sell you something, think about the motive," he says. Also, ask the right questions like: Do you make a commission from this sale? What happens if I later change my mind or decide to return the product? What if this doesn't work out? What's the recourse?
• Arm yourself with facts: If you think you're being told a tall tale by a salesperson, respond with what you've learned prior to visiting the store -- whether it's a review from Consumer Reports, the store's return policy or a competing advertisement. Show evidence by bringing along printouts. Riggio says one of the reasons we don't speak up is that we have self-doubt: We're worried we may be proven wrong. But by bringing along your backup material, you can provide the evidence.
• Remember that giveaways are just marketing: Keep in mind that retailers have made a deliberate calculation to offer a freebie in hopes of getting you to spend more. They're not "losing" money by giving away something for nothing. It's part of their corporate marketing budget -- just like their fliers, banner ads and PR efforts.

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