Ron’s Financial Lab · Based on Chung, Sinnappan & Periyayya (2026), Journal of Financial Crime
Malaysia lost approximately RM54.02 billion to scams in a single year — roughly 3% of GDP. Investment scams are the costliest type of fraud, with victims losing an average of RM11,360 each. Only 2% of victims ever recovered their money.
A new peer-reviewed study published in the Journal of Financial Crime analysed 511 young adults in the Klang Valley and arrived at a finding that should give every financially literate person pause:
Knowing more does not protect you.
What the Researchers Found
The study by Chung Suet Ching, Santhidran Sinnappan, and Thinavan Periyayya from Universiti Tunku Abdul Rahman tested three factors against scam susceptibility:
• Financial literacy — your ability to understand and evaluate financial information
• Trusting behaviour — your tendency to trust others without critical evaluation
• Visceral influences — emotional and physiological states like greed, urgency, and fear of missing out (FOMO)
Using Structural Equation Modelling (SEM), the results were striking.
Financial literacy had no direct effect on scam susceptibility (β = 0.06, p = 0.36). Neither did trusting behaviour (β = 0.06, p = 0.23). Both were statistically insignificant on their own.
Visceral influences, on the other hand, had a massive direct effect (β = 0.82, p < 0.001). The model explained 77.9% of the variance in scam susceptibility — an exceptionally high figure for social science research.
The conclusion is clear: emotions, not ignorance, are the primary driver.
Why Emotions Override Logic
The study uses the Elaboration Likelihood Model (ELM) by Petty & Cacioppo to explain this. The model describes two ways people process information when making decisions:
The Central Route — you slow down, think critically, check licences, read the prospectus, and verify the scheme with the Securities Commission Malaysia. This is rational and deliberate.
The Peripheral Route — you rely on surface cues: “guaranteed 24% returns,” urgent deadlines, testimonials from “successful” investors, and a promoter who seems trustworthy. This is fast and emotional.
Scammers are deliberate engineers of the peripheral route. They trigger greed, urgency, and FOMO to push you away from critical thinking. Once that emotional state is activated, your financial knowledge sits unused — even if you have a degree in finance.
What Visceral Influences Actually Look Like
The researchers measured visceral influences using real survey items adapted from Lea et al. (2009):
• “The size of the investment offers really attracted me.”
• Emotional pull towards “quick return” propositions
• Temptation from promises of high rewards with minimal effort
These are not abstract psychological concepts. They are the exact sensations that make someone click “Invest Now” before checking whether the scheme is registered with SC Malaysia.
What This Means for You
Financial knowledge is necessary, but not enough. Knowing about compound interest and diversification gives you the tools to evaluate an offer. But those tools stay unused when greed takes over.
Trust becomes dangerous in combination. Being a trusting person alone does not make you a scam victim. The pattern is more specific: scammers build trust first, then introduce the emotional hook. That sequence is what works.
A cooling-off period is one of your best defences. A mandatory 24 to 48-hour pause before acting on any unsolicited investment offer gives your rational mind time to catch up. Scammers hate this — which is why they always create urgency.
Verify through SC Malaysia directly, not through the promoter. Check the Securities Commission Malaysia’s register at sc.com.my independently, every time. Do not rely on documents or links provided by the promoter themselves.
The Bottom Line
The fight against investment scams is not just about knowing more. It is about managing how you feel when confronted with an offer. Financial literacy gives you the tools to evaluate — visceral influences determine whether you actually use them.
Reference Chung, S. C., Sinnappan, S., & Periyayya, T. (2026). The relationship between risk factors and susceptibility to investment scams among Malaysian young adults. Journal of Financial Crime, 33(1-2), 37–60. https://doi.org/10.1108/JFC-07-2025-0228