Psychic Fraud: Do I See a Con Scheme in Your Future?

July 2014 By Laura Hymes, CFE If you met Theresa Caputo, the first thing you’d probably notice is her gravity-defying blonde hair, her distinctive voice or maybe her long nails if you shook hands. Whether you would notice a psychic energy surrounding her is a more subjective observation.

July 2014

By Laura Hymes, CFE

 

If you met Theresa Caputo, the first thing you’d probably notice is her gravity-defying blonde hair, her distinctive voice or maybe her long nails if you shook hands. Whether you would notice a psychic energy surrounding her is a more subjective observation. The self-styled Long Island Medium has a TV show by the same name on TLC, on which she speaks to deceased loved ones of paying clients and unsuspecting passersby alike. The show has earned her an earnest base of supportive fans along with vocal critics who claim that she is a charlatan.

 

Psychic Fraud

I’m not making any assertions regarding the authenticity of Caputo’s psychic gifts, but she is certainly not the first (nor will she be the last) to be accused of preying on people’s emotions for personal benefit. John Edward, Sylvia Browne, Miss Cleo — there have been many well-known psychics, mediums and mind readers who have been accused of perpetrating con schemes, both in court and in the media:

 

John Edward never faced criminal charges, but his career as a psychic has been shadowed by skepticism and claims of deceptive practices.

Miss Cleo’s parent company, Psychic Readers Network, was sued by multiple states in 2001 and faced FTC charges of deceptive advertising, billing, and collections in 2002. The owners settled and Miss Cleo was never indicted.

In 1992, Sylvia Browne was convicted of multiple charges of securities fraud and grand theft for bilking customers in a gold-mining venture. She was never convicted of crimes related to her psychic pursuits.

 

One of the more common accusations levied against purported psychics is the use of cold reading — a method of asking questions based on the client’s age, gender, race, clothing, speech patterns and other readily observable details, and then refining the “reading” based on verbal and nonverbal responses. Shotgunning is a related technique in which the reader rapidly asks a series of general questions, often to a large audience, and then focuses on positive respondents.

 

Emotional Appeal and High-Pressure Sales

Psychic fraud falls under the broader umbrella of investment and con schemes, which includes Ponzi schemes; entrepreneurial and work-at-home opportunities; credit, debt and money management offers; sweepstakes, promotions and get-rich-quick schemes; and personal development, among others.

 

The perpetrators of investment and con schemes rely on emotional appeal or high-pressure sales tactics to hoodwink their victims. Emotional appeal works well in affinity frauds (investment schemes directed at victims based on a shared belief or passion), psychic schemes (by taking advantage of the victim’s grief or insecurities) and personal development ploys. Individuals struggling with loss and grief can be especially tempting targets for con artists, while high-pressure sales are usually employed in Ponzi schemes, get-rich-quick ventures and other investment clubs. Both tactics exploit victims’ impaired judgment to extract money for supernatural services or to push through investments that the victim might find fault with if given more time to think about it. Con artists are most successful when they can limit the questions and natural skepticism of their targets.

 

Red Flags of Con Schemes

Certified Fraud Examiners (CFEs) should be aware of the red flags of con schemes, both for their career development and to protect themselves and loved ones from personally falling victim to such frauds. The red flags of con schemes include:

 

Reliance on emotional pressures or manipulation

Claims that the victim is “cursed” or needs to be psychically “cleansed”

Advance fees required by cash, credit card or bank account debit

A sense of urgency in response, insisting that the consumer must act immediately

Promises of substantial profits or returns on investments

Guarantees of little or no risk

Little or no effort or experience required

Refunds not available or difficult to obtain

 

Preventing and Detecting Con Schemes

One of the most insidious problems with con schemes is that the victims often cannot or will not admit that they were swindled because they are ashamed. Therefore, educating consumers of the dangers of these crimes is central to preventing them in the future, and removing the stigma of being a victim can help detect ongoing crimes and bring the perpetrators to justice. Victims should not be afraid to come forward with information, and an open dialog in the anti-fraud community about these types of schemes can help raise awareness in potential victims.

 

Conclusion

Caputo has not been charged with any criminal activity, and her skills as a medium continue to draw a crowd wherever she goes. Nevertheless, her detractors show no signs of halting their attacks on her credibility; this story could grow more interesting for fraud examiners in the near future. In the meantime, the best advice for anyone seeking the services of a psychic is “buyer beware.” It helps to do your own research and come to your own conclusions.

 

See Caputo give readings for “Anderson Live” audience members in this YouTube clip.