Understanding Fraud Better: A Psychological Want Approach to Assessing Who Gets Conned and Why
Daryl Koehn, Wicklander Chair of Business Ethics and Managing Director of the Institute for Business and Professional Ethics (IBPE), DePaul University in Chicago
About the Seminar
While much has been written about the checks and balances needed to curtail fraud and about the mechanics of discerning it, far less has been written about what might be termed the psychological logic of specific frauds. Why do fraudsters get involved in particular forms of deceit? And why do people become victims of some frauds and not others? The question is important because not every fraud involves a desire to obtain money on the part of the victimizer or victim. Other possible motivations include a quest for status, an attempt to preserve one’s self-image or to ratify an impulse to harm others, a desire to avoid being scapegoated, a wish to avoid shame, and so on (Zukoff 2005). Perhaps the best way to understand fraud victims is as “people who want something” (Heydenberg 2015, 31). If so, the question becomes: What do the defrauded individuals want in some specific case, and how does that particular fraud fulfill that particular desire? This paper argues that, at least in some cases, the best way to understand the fraud is through the details of the narrative accompanying the fraud. This narrative, I will argue, fulfills a very specific psychological want of the fraudster. Since frauds involve conning one or more other parties, a particular fraud’s narrative must also be such that it appeals not only to the con artist but also to the “mark” or the conned party. Close analysis of a fraud’s narrative reveals that the motivating need or want of both sides of the fraudulent transaction is remarkably similar in at least some cases.
After a literature review showing that current approaches to studying fraud victimization have not yielded much in the way of significant results, I take up three frauds as case studies: a Holocaust fraud involving a quasi-feral child narrative, Bernie Madoff’s Ponzi scheme, and the LuLaRoe multi-level marketing pyramid scheme. I argue that these frauds were successful in conning specific groups of people because the explicit and implicit logic of their narratives resonated with beliefs and wants shared by fraudster and defrauded alike. While this highly specific congruent linkage may not be establish able in every case of fraud, the proof of this approach would be in the pudding. Unless and until we take seriously these congruent resonances, we will not know to what extent this psychological want-narrative approach can yield unsuspected insights into the mechanics or dynamics of fraud. This paper opens up a sizable new area for further research.
About the Speaker
Daryl Koehn is the Wicklander Chair of Business Ethics and Managing Director of the Institute for Business and Professional Ethics (IBPE) at DePaul University in Chicago. She has published widely in the fields of ethics, political theory, and corporate governance. Her monographs include The Ground of Professional Ethics; The Nature of Evil; Rethinking Feminist Ethics; Local Insights, Global Ethics; Living with the Dragon: Thinking and Acting Ethically in a World of Unintended Consequences; and Toward a New (Old) Theory of Responsibility. Edited volumes include Corporate Governance: Ethics across the Board and Ethics and Aesthetics in Business Ethics. Her new book Ethics Without Dilemmas is slated to be out in 2022.
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