Fraudsters Draw Their Energy from Greed

At first glance this sentence may seem a harsh judgement. It is also highly susceptible to misinterpretation, for such a statement can easily be turned into an outlook that blames the victim. Yet what I draw from this proposition is not a reduction of the fraudster’s responsibility, but an attempt to understand which human weaknesses feed fraud.

As a finance professor I have for years explained to students the relationship between return and risk. One of the most basic principles of finance is perfectly clear: a high expected return, as a rule, carries high risk. A promise of risk-free, guaranteed, and extraordinarily high profit runs counter to the natural flow of financial life. Yet people believe such promises again and again.

Why? Because the fraudster’s greatest strength is not the perfection of the lie told. The real strength lies in discovering the story the other person wishes to believe. If someone wants to become rich quickly, a large profit is promised. If they wish to recover what they have lost, one last opportunity is offered. If they feel they are late, they are told they must decide immediately. If they wish to feel chosen, it is implied that this opportunity is not available to everyone…

Fraud often begins not with a lie but with a story tailored to desire. In financial markets we see this frequently. High interest promises, investment funds that do not in fact exist, pyramid schemes, fake crypto projects, unlicensed investment advisory services, and “guaranteed profit systems” marketed through social media may use different instruments, yet they rest on the same psychology. The messages may change; the basic promise remains the same: great gain with little effort, in a short time, at low risk. Finance makes no such promise. Finance does not call people to easy wealth; it calls them to measure, compare, and question.

In an investment decision one does not ask only “How much can I gain?” Alongside it one must also ask: “How much can I lose?”, “What is the source of this return?”, “Who bears this risk?”, “Why is this profit being offered to me?”, and “What will happen when I need access to my money again?”

What truly disturbs the fraudster is not information but the question. For fraud demands haste. It leaves no time for scrutiny. Phrases such as “this opportunity ends today”, “you must decide immediately”, “do not tell others”, and “the system is still very new” are no accident. Time pressure weakens the power of judgement. When a person stops thinking, the fraudster’s task becomes easier.

The concept of greed must also be understood correctly. Greed is not merely wanting more money. Sometimes greed is the wish to reach an outcome without respecting time. It is the desire to enlarge gain by belittling labour, knowledge, patience, and risk. When a person begins to treat extraordinary profit as an ordinary right, common sense may be lost.

Yet not every person who is defrauded is greedy. People are sometimes deceived through ignorance, helplessness, old age, psychological illness, loneliness, trust, or economic pressure. Some turn to a wrong system not to gain more but to preserve what they already have. Some decide in the hope of securing their family’s future. The victim’s weakness therefore does not remove the fraudster’s guilt. An unlocked door does not legitimise theft.

For this reason the proposition should be read not as a legal or moral allocation of responsibility but as a behavioural observation. The fraudster is guilty; yet producing solutions based on punishment alone, without understanding the environment that enables the fraudster to succeed, is not enough.

Here the importance of financial literacy emerges. Financial literacy is not only calculating interest or reading a balance sheet. It is also recognising persuasion techniques, questioning unrealistic promises, and knowing one’s own psychological tendencies. A person sometimes cannot detect the fraudster outside because the desire for gain within speaks too loudly.

Behavioural finance shows us that people do not always make rational decisions. Overconfidence, herd behaviour, loss aversion, confirmation bias, and fear of missing out affect investment choices. Fraudsters may not know these tendencies scientifically, yet they use them skilfully in practice.

For example, when an investor earns money once, they begin to believe the system is reliable. The first small payment is often made to build trust. Larger amounts are then requested. Because the person does not wish to admit that their earlier decision was wrong, they may invest again. Thus the fraudster exploits not only the desire for gain but also the tendency to defend one’s own decision.

Another important matter is social values. In a society where wealth is greatly admired but how it was acquired is not questioned, fertile ground for fraud arises. When people ask “How much did they earn?” more often than “How did they earn it?”, display begins to overtake labour. As those who became rich by shortcuts are held up as examples, the number of those seeking shortcuts grows.

Not only individual greed but also social admiration fuels the energy of fraudsters. For this reason it is not enough to teach young people only how to earn money. They must also be taught how money is earned, with what risks it is obtained, and within what moral boundaries it should be managed. Finance education should speak of moderation as much as it speaks of the techniques of acquiring wealth.

I often remind my students of this truth: finance teaches not only how to increase return but also how to assess risk correctly and to protect capital against loss. A good investor is not one who chases every opportunity that appears, but one who can distinguish a genuine investment opportunity from a skilfully prepared trap. Caution in the face of extraordinarily high, easy, guaranteed returns whose source cannot be explained transparently is often more valuable than the pursuit of gain.

The saying “fraudsters draw their energy from greed” is important for this reason. It shows us that the fraudster’s success does not stem from intelligence alone. Sometimes a person’s excessive expectations make an unrealistic promise believable. Sometimes the desire to win makes the possibility of loss invisible. Sometimes a person surrenders to their own hope before surrendering to another’s lie.

The fraudster’s guilt is their own; yet the energy that feeds fraud often arises from a person’s immoderate expectations. The strongest defence against fraud is therefore not law, supervision, and punishment alone. It is also financial knowledge, healthy scepticism, patience, and the human capacity to govern one’s own desires.