2.0 Introduction Investment scams are no longer a topic to avoid from as it is increasing in numbers from year to year. In this chapter, we will discuss about various reviews of the type of investment scams, tactic used by the scammers and how do we prevent it. For future research, it would be beneficial if users could be categorized into various segments based on the individual financial literacy, behaviour and life quality. These segments could then be analyzed by the relative importance of the dimensions in influencing scams. In this manner, Malaysian would be able to target specific scams programs of these segments and monitor the success or failure of the program by surveying these respondents again.
2.1 Investment Scams Definition Scam is not a new issue or sentences for public when the technologies have been sufficiently used by human being. Unfortunately, there have some black heart "industry" used their talent to create scams, to make the other hard-earned money became theirs. Below show some of the advertising creates by scammers: "In my investing program there is absolutely NO RISK. In fact, it's such a SURE THING that we'll guarantee you cannot lose your investment. Thing is, if you want a part of the action, you'll have to send me $499.95 today. There are just too many other investors who want to get in on this..." ( Investorpedia) Even though scams are not a hot topic, but in reality, how many people know about scams? From the opined of Office of Fair Trading, there is no solitary universally accepted or legal definition of a scam. Generally, when you receive from an unsolicited or undesirable contact who asking a misleading or illusory investment activity, it can be conclude as a scam. This is because, in the end, they will break their promises and fail to pay back your money. "Fraud" is the most often terms come to public mind and both of them are the most nearest synonym. From the opined of Australian Institution of Criminology, fraud means obtaining something of values or avoiding an obligation by means of deception. Besides, from the Richard point of view, he defined fraud as the deliberate deception or intention of deception of an individual with the promise of goods, services or the other financial benefits that are actually nonexistent, were never intended to be provided, or were grossly misrepresented.( Karla & Doug , 2007) Figure 2.1 is an example of data reported to the NW3C's Internet Crime Complaint Centre. The types of frauds listed here are fairly representative of the numbers of perpetrators in the world. Malaysia were ranked in top6 with the percentage of 0.8 . Untitled2.jpg
Figure 2.1 ( NW3C, 2010)
2.2 Type of Investment Scams There are typical fraudulent investment schemes employed the scammers. Whenever there are different slogan or name by it scams, the basic theory are almost the same. Commonly are based on the theory of Pump and Dump, Pyramid, Risk-Free.
Pump & Dump Scams The growth of Internet becomes a working tool for the scammer. Most of the investors are using Internet to gathering investment information as it is easy and inexpensively. Besides, there is no information needs to be verified to obtain the user ID and password necessary to gain full access to the boards (Fried,BS& MS, 2003). Therefore, scammers just simply click on the keyboard in few minutes, they can posting their "message" to their audience. Unfortunately, it is moderately easy for people's target on perpetrating scams to send a plausible looking message to many potential investors (Baker, 1999). They separate false information on the online messages board and recommend investor to buy quickly or selling before the price goes down (Cacavias, Lugonja, Messa,& Zhanbekov, 2006). The rule for investing doesn't wrong, but the main problem is the information is false. Therefore, it is worthless for investors. The scams involved in face to face interaction and through the conversation, the scammers using some tactics to comprehend victim interest. The scammers always act as a insider as they know the latest information about the stock and ensure victim will be a gain rather than lost as the price of stock will just increase and increase. Victims looking for the quick money and in the end, victims believe the great advice, and grateful to have such wonderful opportunity (Dunham, 2007). The victims would never know the scammers hype up the price, to make the victims purchase the stock (Team Internet Security, 2006). Once the scammers sell their shares and stop hyping up the price, the investor will lose their money. One type of the pump and dump schemes that lead the trend in recent year are, stock spam. Stock spam promotes a company's stock transitory itself off as "hot" tip. From the research of Marshal (2006), stock spam represented 15 % of all spam in July 2006. The scammers take advance in provide "advice" on a exacting company's stock with it price and buying advice (Marshal, 2006) .Scammers buy stock and position themselves for a big win in advance by inflating the price of stock and then dumping all their shares for a massive profit.( Dunham, 2007) .
The Pyramid When we open newspaper, website, or even our mail, they will always have the opportunity to get the flyer or mail with the slogan of "Make $10,000 a week from home, No Supervision!"Or other similar slogan (Team Internet Security, 2006) Pyramid schemes are illegal moneymaking ventures for individuals, business, and small group of people. They are advertised through mailings, newspaper, the Internet, or recruitment meetings, or consumers might hear about them through a relative or friend (OFT, 2006). The pyramids schemes mostly work on recruit other participate to join their group and they promise to pay money to the exciting members (Hawaii Business Registration Division, 2011). Besides, the organization will forced their member to buy the material with a overpriced or attending training .Mostly , after they join the organization or group , they will not receive any payment and left with empty promise . Pyramid schemes have been around for at slightest a century and are promoted under a numeral of different names, but all are deceptive and as a result prohibited. A pyramid scheme is relatively simple to recognize because the information of the function are characteristically divulged to members. The question to ask is whether there is any exchange of goods or services in the process (Lisa, 2010). The pyramid schemes classified their member in different level, just like a pyramid. There are often the several levels of investor; normally the top level will receive profit or commissions. In order for everyone in pyramid will get the profit, there would have to be never ending supply of new members who a willing, ready and able to pay money into the schemes (Maryland, 2010). http://www.sec.gov/images/pyramid.gif (Source : U.S Securities and Exchange Commission) From the NCL (2007) , they informed public that , multilevel marketing is not a pyramid scheme. Multilevel marketing operated as earned reward when they sell real product or services to consumers whereas pyramid schemes disguised as multilevel marketing, any money earned from new recruited membership fees. Below the table show the different between pyramid schemes and multilevel marketing. Pyramid Schemes Multilevel Marketing Compensation based on recruiting Compensation based on sales Few or no sale to customers Sell legitimate products to established markets Substantial start-up costs Generally small start-up fee Potential to be stuck with large amounts of unsold goods Will buy back unsold goods if you decide to quit the business Make money from you Make money with you Table 2.2
Ponzi Schemes Ponzi Schemes are similar to pyramid schemes but they are different. According to CPA , if the operators make the bulk of participants' earnings dependent on recruiting , and emphasize levels and stage in their promotions, it's an illegal pyramid. Between, if operators claim they are offering an investment opportunity, but conduct little or no commercial activity, it is Ponzi schemes. Besides, Ponzi schemer will not ask for further action and claim to take care of the rest and give you returns later(Clark & McGrath, 2011). A Ponzi scheme is much trickier to identify because the deceptive activity is classically concealed from participants. It is a misleading investment business that pays financial returns to participants using money from newer investors, rather than from any actual earnings (Claycomb, 2010). Went back to the past, these schemes are named for Charles Ponzi, father of Ponzi schemes who born in 1882, Italy. In early 1900s, Charles promised a high return on short term investments and there are nearest 40,000 people invested approximately &15 million, with only one-third of that amount returned to the investors.( Toledo Business , 2008). By conveying more and more people reinvested their funds, he was able to postpone his financial obligations even longer and convince investors to exploit on the fluctuating currency prices by purchasing the coupons in a miserable country and selling them at higher prices (T.Wells, 2010). These schemes works as underlying investment are bogus, very few, if any, actual physical assets or financial investment exist. In 1920 , Ponzi's schemes was explore to public and he was served jail time in both Canada and New York before making his way back to Boston and , federal audit judge his operation was bankrupt, having defrauded investor of more than 4 million ( T.Wells,2010). At his bankruptcy assessment, it was discovered that Ponzi still had $7,000,000 outstanding bonds and about $2,000,000 total assets. Undeniably, the seemingly lucky investors who redeemed their bonds after July 26th had to return their premiums to the bankruptcy court to be distributed among Ponzi's larger circle of creditors. Ultimately, after about seven years of lawsuit, Ponzi's disenchanted investors got back 37 cents on the dollar of their principal, with, of course, no aroma of any profits from the nation's first and most disreputable Ponzi scheme (DeWitt, 2009) In 2009, SEC classified Ponzi Schemes as securities fraud as the scammers makes a false or misleading statement in resulting the shortfalls in funds for the remaining investors. There is a lack of transparency with their investment statement and trading strategy as they do not provide insight into the fund's underlying especially in light of the current environment (Evola & O'Grady, 2009). Thus, investor not clear with what actually they got from the investment and how actually their fund being traded. In reality, there were no actual investments and no returns. The one of the famous case are Madoff , which has been estimated to involved up to $50 billion in investor funds( Larsen & Hinton, 2009). Through elaborate, fabricated account statement and other documentation, investor received a consistent and steady annual return. The scammers are talent in making fraud on everything, so the statements are just exactly same with the legal statement and document. Unfortunately, investor will never realize that the returns that pay are from the new investors as they had received the money and statement. Therefore, the investors believe that their money had been placed in an actual investment (NASAA, 2009).
Bogus Investment These investment scams are usually share, mortgage or real estate with high return schemes, option trading or foreign currency trading. Scammers usually used convincing script and sound professional. They promise with high, quick returns on your investment for low or no risk. One of the example follow by this theory is "Bogus Investment". In the prior research, there are estimated 90,000 populations within United Kingdom fall to these scams in every year and with the mean loss of $ 5,660. (OFT, 2006). The scammers are targeted to those who are exploiting background knowledge and overconfidence and triggering visceral processing by emphasising high rewards( OFT ,2009) . Victim are contacted by letter, telephone or email and offered the opportunity to invest money into things likes shares, fine wine, gemstones, art or other rare high value items(OFT , 2006).Scammers usually use boiler rooms as their working places to communicate with the victim. They using sophisticated script and a range of sales techniques to convincing victim invest in their profile. (ASIC, 2002) Scammers often claim to operate out of finance centres and operate in Asian country.
2.3How they work Based on the survey done by OFT (2006), they found that almost half of the 11,200 adults in United Kingdom had been targeted by a scam at some stage in the past. Large numbers of unsolicited mailings, e-mails or telephone calls can be disseminated to individuals whose details are obtained from purchased mailing lists or via automated calling systems or harvested email addresses. A recent study done in the UK analyzed the psychological tactics used in various scams, and in particular raised important questions about the role of emotion in defrauding consumers (OFT, 2009). Additionally, some studies have shown that phishing scams often use social networks and context-setting strategies to gain victim's trust and defraud them (Jagatic , 2005). Consumer may be victimized by fraud in different way, it may involved on consumer goods or services, financial advice like personal financial management, wealth management or business plans( Titus & Gover, 2001). Scammers always promote by there is a scarcity chances to get it. From the psychology view, human being always believes that whenever the things that is limited, there must be rare and valuable. When the salesmen convince you that the item is already belong to you, you may falls to the tactic of the scammers as people will not easily get off the prizes and will try to do everything to keep it . Pak and Shadel states that, "people would be lucky to own the item; that they must act now to get it before it is too late; and that if they don't act, someone else is going to get their item" (2007).From the opined in SCAMwatch, some people have found themselves in horrible financial situations because they rushed into agreements or purchases in the fear of missing out.Â Moreover, friendship role are also the one of the tactic present by the scammers. The scammers will try to make an individual feel associated to him in some way, in order to treat them like a friends (Pak & Shadel , 2007). This is because , when people felt discomfortable , it is hard to persue victim and built the trust on the investment.. Therefore people are likely to go along with what they are suggesting and do a similar or related behaviour. For example, when the victim could not make the investment decision, they will always depend to their friends or family by given suggestion to them. Therefore, if the victim could not differentiate which decision are the best, they will easily fell to the investment scams. From the psychologically view, this tactic does not force people to take the opportunity but, it is just by influences them to do so .( Pak& Shadel , 2007) Besides, with the advance of Internet, many investor seeking information by visiting online bulletin board, online investment newsletters or, boiler-room. Therefore, it is easier to let scammers create "information" to the investor. According to the U.S Department of Justice, they stated that the boiler room operation typically have six stages. In stage 1, Telemarketer identify new scenario through either incoming mail or calls. After that, the scammers classified 3 different "room" to categorized the victims. First is front room, which categorised the victim that is less-experienced. If the victim did not answer or decline their offer, they will categorise in no sale room. The scammers also target on their past victim by using an assortment of bogus promises to let them believe again, and categorised in reload room (Johnson, 2003)After the sales are complete, the scammers will contact the customer, reviews the sales terms, and arrange for payment. To prevent buyer's regret, the scammers will ask the victim pay by overnight. Whatever we paid, there always something to payback or get to us. Therefore, the scammers use the "10 to 1" principle, awarding a prize valued at approximately one-tenth of the fee paid. When getting complaint by the victims, the scammers will always use the delay tactics and empty promises to frustrate them into giving up the pursuit of recovery (Johnson, 2003). Cold calling are the one of the approach used by the scammers. Cold calling is the practice whereby a person approaches another person they do not know, either over the phone or face-to-face, to promote or sell a product or service the person has not asked for (ASIC, 2002).Scammers will asking some basic question to better understanding the victim financial situation, needs or habits, and offer an investment opportunity. The operators of the scam use phone and mail technology to pretence their true size, location and identity. Therefore, when the victim realizes the scams, they are unable to contact the scammers.
2.4 Research in Malaysia Malaysia's capital market performance broadly reflected global trends in the quarter, and was supported by further liberalised measures in the financial sector in an effort to boost and enhance the competitive o domestic economy and capital market. Besides, Malaysia is rigid in law regulation. Therefore, according to the world Bank's Doing Business 2010 Report, Malaysia retains its 4th position for investor protection for the fourth consecutive year (SEC, 2009). Even though there are rigid law regulation, the scammers still remain survive in Malaysia. This is because, whenever you are, the scammers will always be around you. The most famous cases within Malaysia are the Red Island Café. It is not only Malaysian involved in, our neighbour country, Singaporean also be their target. Island Red Cafe collects members RM6, 000 each and promised 5% return every month and even give you a name in the ROC as a shareholder. The scammers promote that if you become the shareholders, u may having their benefits. The fixed return per clot for each month is RM 300 for the first and second year. In third and fourth year , you will get RM 5400 per annual with the 2.5 percent of the investment . During shareholders birthday, shareholder will be offer 30 % of discount on their meals. Besides, RM100 per slot of food voucher will be given per month and given for five years which equivalent to their investing amount, RM6, 000. Even though the café is really existing, but such condition or the agreement that the victim have does not exist. What they got, is the fake agreement prepared by the scammer (the star, 2010). These scams are exactly work like Maddof Scam, the famous Ponzi Schemes case. It works on the same mechanical on this investment plan. The architect of Island Red Cafe is looking presumptuous to gain money from the public by sharing the franchise business to them and promising returns to the shareholders. This can happen if there are continuous members joining into the business. Money generated from new clients will be used to pay the earlier clients. This process continues on and on. If there is no more new members joining into the business, Island Red Cafe wouldn't have the money to pay the earlier members and the whole system crumbles. In 2010 , the Island Red Café Franchise Sdn Bhd director, Teow Wooi Huat and his son , Chee Chow , both was claimed trial to 3 counts of cheating and misleading investors of over RM1 millions with committing the offence under the company's premises in Pandan Indah between Jan 1 , 2008 and Feb 28, 2009 ( The Star, 2010). All the charges were under the Companies Act 1965. The first charge carries a maximum RM30, 000 fines or seven years jail, or both, while the other two carry a maximum RM250, 000 fines or 10 years jail, on conviction.
Variable that influence investment scams
Life Quality (financial situation)-household Life Quality factors are important to address in terms of fraud victimization because so much of the time, the things that are happening in a person's life impact how they cope with other things in their life (Cialdini, 2001).The life quality refer to the life events, particularly negative life events, may contribute to consumers. Susceptibility to fraud by using valuable cognitive capacity which otherwise might have allowed them to secured against fraud. According to the Batch, who is the senior vice president for Marsh's with focus on Management liability, he states that "Any instability or volatility in a person's life or personal circumstances can increase the motivation for committing scams". The lifestyle just as powerful a motivation as the need to fund them indulges in scams activity. From the Pratkanis, Shadel, Kleinman and Pak study, they conclude that all investment victims had a total of 549 negative life events with a total of 71 victims. According to Johnson, victim especially elderly victim, they feel that their life become meaningless as they are retired from the work and always refer to their children or another government authority organization to maintain their life. Therefore, elderly people will try to use their hard -earned or retirement money to invest in financial market, to show they still can take care of them, no need place in a nursing home or long term care facility. Besides, scammers will always target those who are poorly informed or socially isolated individuals. Those are socially isolated may also be vulnerable because they are less likely to seek advice before invest, and because the sales pitch itself address an unmet need for social interaction , resulting in their feeling obligated to be friendly or compliant in return( Lee & Geistfeld , 2001) When the life quality of an individual is poor, they will invest all their hard-earned money to generate more money to improve their life quality. From the NASD study, the victims who seemed to complain consistently about not having enough money and having had a spouse die or similar event. An economic downturn is often the root-cause of behaviour that ultimately leads an individual to turn to scams (Batch, 2010). Therefore, the scammers start to such some tactic to earn those who dreamed to have fast money, for example, the get rich quick scams. Victims will ask to pay to become a member and are promised large commission earning if they recruit others to the schemes. The scammers used the liking and similarity tactic to show they are in same situation with the victims (OFT, 2009) For example, the scammers describe themselves as, 'Ã¢â‚¬Â¦ I literally did not have a penny to my nameÃ¢â‚¬Â¦ my life was a mess'.
Investor's Behaviour (optimism) A good financial knowledge might not save people from falling victim to scams (Wakeford, 2009). The more knowledge people have about a specific area, the more they feel competent in this area. As a result, they overestimate their abilities to make good decisions in this area. They are always thinking that, there are smart, clever than other. So, they are overconfident and will not be cheated by others (Barber, 1999). In 2004 , Muhammad states that " investor mislead by extremes of emotion , subjective thinking and the whims of the crowd, consistently form irrational expectation for the future performance of companies and overall economy such as stock prices swing above or below fundamental values and follow a somewhat predictable , wave-like path". From the study by Nik Muhammad in 2004, he found that people make systematic errors in the way they think when they make decision easier, overconfidence, pay too much weight on recent experience and mental counting. The overconfident investor mostly rely on their knowledge and the information they got to make the decision .This is because they believe more strongly in their own valuations, and concern themselves less about the beliefs of others( Barber, 1999). Unfortunately, the overconfidence will make investor to pay a huge of money to get the lesson. This is because investor would seek the information through online but, they never know whether the website is create by who, or the trueness of the information. Scammers always create a website that often looks much like yesterday's fraud schemes, just slicker (Barnard, 2006). Shadel and Schweitzer-Pak (2007) found that people with high amounts of background knowledge in the area of the scam content are more prone to fall into the trap of responding to the scam than people who have less background knowledge. The phenomenon identified by Dutton and Shepherd (2004), whereby people with more experience of the internet may be more vulnerable to internet scams, similarly strongly suggests an overconfidence effect. Participants spoke about processes such as greed, vulnerability or desperation which led them to respond to the scam communications. This is exactly what is meant by visceral processes, appeals to strong motivational forces which reduce the depth at which people process a message, so they grab at the superficially attractive even when a little careful thought would have exposed it as the scam it was. For the most part people talked about strong money motivation, though whether they described it in self condemning terms or in a way that gave them more self-justification varied, "I think I was tempted with the large amount of money, which was rather foolish, looking back, but I was tempted with that, and that was really what drew me, probably my greed" (OFT ,2009).
Financial literacy ( risk management, retirement manag) Financial literacy is a basic knowledge that people need in order to survive in a modern society. It show the ability to manage personal finances and people have to plan for long-term investment for their future and how investor made a decision ( Rooiji, Lusardi & Alessie , 2007). Lack of personal financial knowledge limits personal financial management and may cause financial problems, resulting in lower financial well-being. From the Rooiji, Lusard and Alessie study, they states that "who are not financially literate are less likely to plan for retirement and to accumulate wealth and more likely to take up high interest mortgages. Therefore, when in emergency situation, they are dispread and prefer to earn fast money. Thus, it creates chances to take in investment scams. Agarwal, Driscoll, Gabai and Laibson(2007) show that , the investment scams are prevalent among the young and elderly, who are those displaying the lowest amount of financial knowledge. This is because, most of them have difficulty doing basic financial calculations, and they also lack knowledge of fundamental financial market concepts such as risk diversification, how the stock market works, and asset pricing. Besides, they also do not know about the stocks and bonds and are not familiar with the working of financial markets (Rooiji , Lusardi & Alessie , 2007). Therefore, when the scammers persuade, introduce with high return, low risk investment, investor are being their target, invest to their "stock" .Financial illiteracy may result in being a victim of investment fraud, mismanagement of credit, bankruptcy, and a lack of preparation for retirement. Another interesting study that sought to measure financial literacy in the context of fraud victimization was the WSU study. Moore and her colleagues developed a survey that included a battery of 12 financial literacy questions that they administered to both victims and a randomly-selected group from the general population. They were testing the hypothesis that victims of predatory lending would score lower on financial literacy questions than the general population. Overall, this hypothesis was supported. Participants in the general population scored higher than the victims; 30.9% of the general population scored 10 or more out of 12 while only 21.9% of the victims scored this well (Moore, 2003). With the low level of financial literacy, consumers will seeking advice from their friends or family members when participate in investment activity ( Rooiji, Lusardi,& Alessie, 2007). Therefore, the scammers aim for this factor, they using the friendship role to conveying consumers believe in their investment. They involve multiple conversations over time with their "friend to seek more about the personal life of the victim.
Age The narrative is mixed on the enquiry whether younger or elder people are more likely to be victimized by scams. In 1995, Titus realizes that the elderly generation who are aged 65 and older were less likely to report being fraud victim. This is because there are less likely to report the scams when they being the victim, they felt that is a shame in their life. From the Johnson study (2003) , he found that the elder people are more likely to be targeted by scam, with 25percent of those targeted being over the age of 65 , and 24 percent between 55 to 64 years old with the average age of 53 years. This stems from a perception that they have declining mental abilities and a dependence upon others due to their physical fragility or mental deterioration. They are also seen as being isolated, often having few friends or family to rely upon, making them vulnerable to those who seek to establish relationships merely in order to steal their money (Smith, 1999). From the research done by OFT(2006) , they conclude that the victim is likely occur in elderly consumers with the average age of target was 53 years and they are likely lose twice as much per scam compared to another generation. Research that has analyzed victims by scam type has found that crimes such as telemarketing, investment, and lottery fraud seem to target seniors and have disproportionately high numbers of them in their victim populations (NFIC, 2005). Although many elder people live in poverty, home ownership is high among this group, and many have savings, pensions, and security income (Johnson, 2003). Because they are retired from their work, therefore they are almost be home during the day, and available to interact by the scammers.
Gender According to International Crime Victims Survey found a slight difference between male victims of fraud (52.57% of all victims) versus men in the general sample (48.31%) across all 15 countries. In United Kingdom, they found that health scams , clairvoyant mailing scams and career opportunity scams are more target on women generation which over than 70% in the population. Besides , high risk investment scams, property scams, advances fees are mostly suffer by male consumers ( OFT ,2006). Specifically, gender has been claimed to be a significant variable affecting the level of being the target by scammers. Some research findings have suggested that women are more risk-averse than men; less confident when making financial decisions (Chen and Volpe, 2002). This is because, women have less confidence than men and that this may explain why men are more financially knowledgeable than women. By deduction, a lack of financial knowledge, confidence and a reluctance to take risk are factors likely to being the victim of investment scams. A study of predatory lending victims found that the victim pool contained slightly more women (56%) than the general population pool (52%), but the difference was not found to be statistically significant (Moore, 2003).
Education Level The FTC study found no significant differences among fraud victims based on educational attainment (Anderson, 2004). The Titus study found those with a master degree or higher and those who had dropped out of high school were less likely to be fraud victims than those with some college or a college degree (Titus et al., 1995). A study by AARP found that victims of fraud had a higher level of educational attainment than the general population (AARP, 1996a). Another study found that predatory lending fraud victims had a lower level of educational attainment than the general population (Moore, 2003). Specifically, 38% of the victims of predatory lending fraud had an associate's degree, a college degree or higher, while 51% of the non-victim control group had the same level of education. Finally, the role of education is clearer when it comes to specific types of scam victims, such as lottery and investment fraud. An AARP study found that investment fraud victims had a higher educational attainment than a sample non-victim population, yet lottery fraud victims had a lower level of educational attainment than a sample non-victim population (AARP, 2003a).
Marital Status FTC study found no statistically-significant difference between married people and single people in terms of their fraud victim status (Anderson, 2004). From the International Crime Victim Survey found no difference between victims and those surveyed overall: 64.91% of all victims were married or living together and exactly 64.91% of those surveyed were married or living together (Pak & Shadel, 2006). The pattern as it relates to the role of marital status becomes much clearer when specific victims are analyzed by type of scam. Predatory lending victims were found to be more likely to be married (71%) compared to the general population (63%), (Moore, 2003); investment fraud victims were more likely to be married and lottery fraud victims were more likely to be widowed or divorced than the general population (AARP, 2003a).
2.6 Summary Overall, the exact prevalence of fraud in any given area at any given time is virtually impossible to determine. Issues of embarrassment, privacy and psychological pressures make victims reluctant to come forward (Pratkanis & Shadel, 2005). Furthermore, methodological problems associated with the wording of survey questions make the accuracy of responses difficult to sort out. Trust is the key work when people being a victim of scams. Investment fraud depends on trust while also obliterate trust. Most victims are introduced to an investment fraud through an existing relationship of trust. The first injured person of fraud is the victims' trust in other people, investments and financial markets. Look over, scammers are just playing with the human mind psychology and challenge with the social ethical issues.