Dissecting The Fraud Triangle

Have you wondered what moves scammers? Is the answer as simple as “money?”

In these days, technology gives us more power than ever. You can either use those tools to create value or deceive people. For others, scamming feels like the only viable option.

Even if you chose to scam, it takes effort and practice. You can use those same resources to create something beneficial.

If so, why are fraud cases increasing? The fraud triangle may give us some insight.

fraud triangle

The Fraud Triangle: The Difference Between Honesty & Deceit

The Difference Between Honesty Deceit

Everybody wants to make money, but nobody grows up dreaming of becoming a scammer. Perhaps you see yourself in an unfair position while others misuse the plenty of resources they have. So you look for opportunities to take advantage.

  • “They deserve it.”
  • “Nobody has to know about it!”
  • “They won’t care / They’ll forgive me for it.”
  • “They understand it. They’d do the same in my situation!”
  • “I can use that money better than them. I’ll return it later.”
  • “We have the same goals, so it’s okay to step on others to get ahead. The end justifies the means.”
  • “If there’re no consequences, there’s no reason not to do it.”
  • “I told them the story in my version, and they agreed. Therefore, they’ll also agree that I take advantage, although they don’t know what I know.”

You may have used yourself some of these. The difference is, scammers use these excuses for everything. One scam leads to another; they promised to do it “one last time,” but they never stopped.

Our brains try to avoid pain and seek pleasure. The fraud triangle explains that whenever there’s enough opportunity, the person will act regardless of morality.

By opportunity, we refer to the risk-reward balance. How much money can you make? How easy is it to get caught or face bad consequences? 

Imagine you find a wallet full of cash as you walk down the street. Unless you’ve built a strong moral code, you’d likely take it. Why?

Nobody is watching you. The reward is big enough to get your attention. If you take it, nothing bad will happen to you.

Then, what’s wrong about it?

In legit opportunities, both people get to a mutual agreement and get the best from each other. In a scam, if you want to win, the other person must lose. 

And if you lose, the only way to win is to make someone else lose. 

Just as mathematics manifests everywhere in nature, the fraud triangle is present in every scheme. 

How Does The Fraud Triangle Work?

How Does The Fraud Triangle Work

Pressure and opportunity, followed by rationalization, create the fraud triangle. 

Think of a person who has an urgent need for money. How does the brain work? It leads you through the path of least resistance. You take the fastest best opportunity (high reward, low risk), even if it means harming others.

As the one negotiates with oneself, the person is aware of the opportunity and the need. The problem and the solution. Without the right values, it’s only a matter of time the person chooses to scam.


Two people can find the same opportunity and make the same arguments. Yet one of them says Yes and the other doesn’t. 

  • “What if you can’t find another source of income?”
  • “What if that’s your last chance to get easy money?”
  • “What if you need the money more than the other person, who won’t care about losing it?”

Fear motivates many con men, the fear of missing out the opportunity, or not making enough money to survive, like the case of disadvantaged countries.

Hope can also lead the scam. The fraudster who robs a bank may believe that they’ll earn enough money to solve their problems. They get excited about the idea, even hoping to pay back those you “helped” them. They look at the scam like an exception, one thing they won’t do ever again.

Lastly, greed motivates those who will scam again and again. You know the saying: if it works, don’t change anything!

Aside from emotions, scammers believe their situation is somehow unfair, or that others are unfairly better than them.

  • “They don’t give me enough credit.”
  • “I work too many hours for a job nobody cares about.”
  • “I am better than X. Therefore, I deserve Y. If I take it away from them and they don’t realize it, that’s their mistake.”

Lastly, an extreme bad event can lead to extreme decisions: accidents, ill relatives, addictions, drugs, bad relationships, or unfair demotions.


“With great power comes great responsibility.” 

We often see scammers as a problem. You can blame them for being dishonest, but notice that we created the opportunity in the first place. If our security doesn’t increase as we make more money, con men will feel motivated to take it away.

That’s, at the same time, the good and bad news. You can’t always avoid every single scam, but you can make scammers avoid you by becoming a difficult target.

It’s easier to avoid scams if you prevent them first. But falling for one makes it easier to fall for the next one. Mind that con men may sell your information to other scammers who will attack you with different schemes.

Not all scams can be detected right on the reach-out message. But the best you can do to remove that opportunity is ignoring it.


Don’t you think scammers are aware of the consequences? Once you discover a scammer’s intentions, it’s normal to be mad at them. “How dare you?”

But perpetrators have gone through countless internal dialogs already. Nothing you say will make them feel bad or regret their actions. Rationalization reinforces the triangle, making the end of a scam the beginning of another one.

Here is how a scammer’s mind looks like:

  • If your intention is good, it’s okay to step on others (Robinhood-like)
  • The pain of deceiving people is lower than the pain of Pressure. The Opportunity amplifies that pressure.
  • Other people’s losses don’t matter. If it works for you, you repeat it until it doesn’t.
  • Scamming pays well if you find the right person.

Here are some examples of how the triangle applies:

a. Money Laundering. Criminals sacrifice some money to give all the risk to innocent people. “If you’re careful, you don’t need to harm anybody.”

b. IRS Fraud. An employee steals tax returns from citizens. “The government misuses the tax money anyway.”

c. Refund Scams. You fake a receipt or switch an item to get free products. “The retail store has thousands of these. Losing a dozen won’t affect the business.”

d. Accounting Fraud. A company fakes the revenue so investors trust them more money. “If we get more money, we may get out of debt and succeed. Fake it until you make it.”

e. Rogue Trading. A trader uses someone else’s funds for high-risk investments. “Others will cover my risk. I can always make it back and share the benefits. Clients will thank me for it.”

f. Counterfeit Sellers. You alter a product or make it look real to make others pay an inflated price. “Nobody will know the difference. People do it all the time!”

How Do You Stop The Fraud Triangle?

How Do You Stop The Fraud Triangle

You don’t need to have the answers to the three sides of the triangle. If you can solve one of them— like pressure or opportunity— you won’t get scammed.

How do you become a tough target?

Scammers don’t like to waste their time. They go with the easiest victim. If you care about security and educate about potential scams, that puts you on the minority of people who stay protected.

But no system is infallible, which means you should update your security often. What passwords do you keep? How do you store your files? How can you trust your data? Do you have a plan in case things go wrong?

You need to want something from someone in order for him to scam you. They can use what you want as a hook to get you into their scheme; if you know the red flags, you won’t fall for it.

Organizations can also prevent fraud by following simple principles.

  • Accept mistakes, but don’t tolerate fraud. Mistakes happen all the time. If we threaten people for causing problems, that will only motivate them to hide them, which leads to major problems.
  • Peer Accountability. Don’t rely on work controls; create a culture where people see themselves as part of the team. What’s best for everyone is best for oneself.

Wrapping Up

Although opportunities play a big role, values govern people’s decisions. Scammers use pressure to rationalize the opportunities that we allow to happen.

Remember: if the trick works, scammers won’t stop. One successful scam gives the confidence to take more risks on the next one. You keep scaling until you get caught or face a loss.

Are fraud triangles the only reason scams exist?


Con men have their motivations, which we can’t change. What we do control is the opportunity. If we learn to prevent it, scammers will have to give up and look for better (legit) ways to make a living.

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