Psychology of the Fraudster

1. Psychology of the Fraudster Nikki Grieve-Top Investigative Psychologist Health Risk Management, Bupa International 7th November 2013

2. Psychology of the Fraudster • Fraudster • Typologies • Motivations • Fraud Handler/Detector • Detection difficulties • Objective indicators

3. Attitude to Fraud • 69% of Britons would make a dishonest claim if they thought they could get away with it • 49% believe most people inflate the value of the claim one third or more • 76% agreed that fraud is common in making insurance claims • 48% would not rule out making a fraudulent insurance claim in the future. • (ABI, 2000; 2003) • This suggests that the main cause of fraud is policyholder attitude!

4. Typology

5. Opportunistic

6. Opportunistic

7. Repeat

8. Organised

9. Organised

10. Motivations and consequences • £4million a week is being made on fake claims by criminal gangs Rare prosecutions (but improving!)

11. Motivation • Historical views of ‘greedy, needy, troubled’ or ‘babes, booze and bets’. • Neutralisation • ‘there is no victim’ • ‘they’re insured’ • ‘no one will notice’ • ‘if you’re that gullible you deserve to be conned’ • ‘it’s a legal grey area’ • ‘I’ll pay it back once the crisis is over’ • ‘I did it for my kids’

12. Insurance Fraud • Not restricted to any one race, gender, profession or economic group and may offend in other areas of the financial sector. • Motivations of fraudsters extend beyond cost benefit analysis. • Morals, decision making, identity and opportunity all play a part. • Duffield & Grabowski (2001)

13. Detection of Fraud • Meta-analysis of lie detection • Mean accuracy rate 54% • Experts (Police, judges, psychiatrists, job interviewers and auditors etc) 55.5% • Students 54.2% • Experience and accuracy appear to have a negative correlation. • Studies have shown that in fact new recruits do better than experienced officers; But experienced officers were more confident (Depaulo & Pfeifer, 1986). • Training to detect deception can decrease accuracy of detection. • Bias judgements towards deception therefore increase false positives. • Participants may become more confident but wrong. • (Köhnken, 1987; Kassin & Fong, 1999; Masip, Alonso, Garrido & Herrero, 2009)

14. Pitfalls • People tend to underestimate their ability to lie and overestimate their ability to detect lies. • Examining the wrong cues • Because widespread faulty beliefs about cues to deception

15. Expressed by practitioners Liars are more gaze aversive Liars make more self-manipulations Liars make more head move movements/nods Liars make more arm/hand movements Liars make more leg/feet movements Liars fidget more Liars shift position more Liars make more body movements in general Subjective Non-verbal Cues

16. Expressed by laypersons Liars are more gaze aversive Liars shift position more often Liars make more illustrations Liars make more self-manipulations Liars make more arm/hand movements Liars make more leg/feet movements. Liars blink more often Liars have a higher-pitched voice Liars make more speech disturbances Liars take more and longer pauses Subjective Non-verbal Cues

17. Expressed by laypersons Liars are more gaze aversive Liars shift position more often Liars make more illustrations Liars make more self-manipulations Liars make more arm/hand movements Liars make more leg/feet movements Liars blink more often Liars have a higher-pitched voice Liars make more speech disturbances Liars take more and longer pauses Subjective Non-verbal Cues

18. Subjective Verbal Cues • Expressed by practitioners • Liars are less consistent. • Liars stories are less plausible. • Lies contain fewer details. • Liars speech is less fluent

19. Subjective Verbal Cues • Expressed by laypersons • Lies seem less plausible. • Lies are less consistent. • Liars give more indirect answers. • Liars make fewer self-references. • Lies are less detailed. • Lies are shorter. • Lies contain more negative statements. • Lies contain more irrelevant information.

20. Subjective Verbal Cues • Expressed by laypersons • Lies seem less plausible. • Lies are less consistent. • Liars give more indirect answers. • Liars make fewer self-references. • Lies are less detailed. • Lies are shorter. • Lies contain more negative statements. • Lies contain more irrelevant information.

21. Belief Perseverance Confirmation Bias Illusory Correlations Feedback Why Do These Beliefs Last?

22. Why don't we improve? • Lying is a fundamental part of society and social interactions • Altruistic lies (white lies) • Violation of social norms • (Köhnken, 1986; DePaulo & Pfeifer, 1986; Meissner & Kassin, 2002; Bond & DePaulo, 2006)

23. Objective Indicators to Detection • Meta analysis

24. Objective Non-verbal cues • Liars speak in a higher pitch. • Liars make fewer movements with arm/finger/hands. • Liars make fewer illustrations. • Liars take longer pauses. • Liars make fewer movements with legs and feet.

25. Objective Verbal Cues • Liars answers are less plausible and convincing. • Liars stories contain fewer details. • Liars give more indirect answers. • Liars provide shorter answers. • Liars make fewer self references. • Liars tell the story more chronologically correct. • Lies contain less temporal information. • Lies contain less spatial information. • Lies contain perceptual information.

26. Conclusions • Cues are not ‘all or nothing’. • Lie cues will also be found in truthful accounts and vice versa. • Cues need to be appropriate for the context (characteristics of the situation, liar and lie). • Benefits of training truth and deception indicators to even out bias effects and increase open-mindedness.

27. However… • Highly motivated fraudsters can effectively engage in behaviours designed to create honest impression • Liars who can adopt such countermeasures can fool even professional lie detectors • Even trained practitioners revert back to beliefs! • Never catch 100%

28. Thank you. Any questions? 28