Why do people give fraudsters a second chance?

Fire Festival was the biggest flop in the history of live music.

People paid thousands of dollars to attend a luxury music festival featuring rapper Ja Rule. Instead, they were served simple cheese sandwiches and the entertainment was cancelled.

Opinion is divided on whether the calamity on the island of Great Exuma was the result of incompetence, fraud, or a mixture of the two. Either way, its chief architect Billy McFarland spent almost four years in prison for fraud.

But now McFarland is out and promoting Fyre Festival II. He claims that he has already sold 100 tickets at the early bird price of £499. Now tickets cost anywhere from US$1,400 and $1.1 million (£1,050 and £824,000).

Nothing specific has been offered - just a private island location off the Caribbean coast of Mexico and an approximate date on April 2025. There will also be some activities including scuba diving with McFarland himself.

McFarland’s former business partner Andy King has said that Fyre Festival II raises “a lot of red flags.”. He lost $1 million on the original Fyre Festival.

Yet he still met McFarland to discuss Fyre Festival II before becoming wary. So, why would anyone give Fyre Festival a second chance?

Was Fyre Festival really a con?

Research shows that people’s mental shortcuts can give them confidence in someone who has let them down before.

The Big Con was written in 1940 by David Maurer, a professor of linguistics who dedicated his career to studying the language and culture of those leading a criminal lifestyle - including con artists.

The book was the inspiration for the 1973 Paul Newman movie The Sting. If you haven't seen it, be warned that the following paragraphs contain spoilers.

You may remember that Newman and Robert Redford fleece Robert Shaw by persuading him he can bet on horse races after they finish. They claim this is because there is a delay in messages received by a betting shop.

A central factor is ambiguity. In The Big Con, the grifters tried to leave their marks unsure whether they were really being scammed - even after the money changed hands.

In the Sting, Robert Shaw's character never learns that he has been conned. The same sense of ambiguity surrounds Fyre Festival.

It is hard to be certain whether McFarland set out to be a con man. Perhaps he is simply a persuasive person who took on more than he could handle. Maybe he has learned his lessons and will not make the same mistakes.

The victim of a complex con or bad luck?

Maurer documents many cases of marks coming back for more, convinced that the original failure was due to bad luck that won’t be repeated.

A typical example comes from a con artist named the Big Alabama Kid, who told Maurer about a mark they conned out of US$50,000 in Miami.

After the mark lost all his money in a gambling con, they offered him a chance to try again. But he did not return.

Three months later, “who should come in smiling but Mr. Bates with a lot of apologies for keeping me waiting so long.

"He said that his banker had tried to tell him that this deal was a swindle, and wouldn’t let him have his money.

"So he waited until things had cooled off at home and the banker had forgotten all about it. Then he went to the bank, drew out his money, and caught the first train for the south.”

Sometimes it is hard to persuade even the victims of a con that they are victims.

The confidence trick: why people trust fraudsters

Another factor is confidence, both on the part of the grifter and the mark.

People often follow the confidence heuristic (or mental shortcut) when judging whether to believe others. The confidence heuristic is that people are confident when they believe they are right, and this confidence makes them persuasive.

That ability to exude confidence is one of the key skills all con men must have.

The mark must also be confident. That is, to rely on their own ability to discern a good opportunity when they see it.

Maurer finds the mark is typically someone who has achieved high social status.

They see themselves as having “some inherent superiority, especially as regards matters of sound judgment in finance and investment."

They may even believe they are "a person of vision and even of genius”.

This could easily be a potential Fyre Festival attendee or investor. Someone who has money to spare and hopes to discover the new Burning Man or invest in it.

The fact that celebrities like Kendall Jenner and Bella Hadid promoted the festival on social media added it its appeal.

Motivated by the fear of missing out

Scarcity, time pressure, and the fear of missing out are also powerful psychological motivators likely to make people susceptible to being conned.

This is especially true if the essence of the con is that the opportunity is one time only. If we think something is difficult to get, we want it more. US psychologist Robert Cialdini describes it as the scarcity principle.

This motivation that emerges early in life. A 2018 study I co-authored found children as young as six preferred scarce goods compared to abundant ones.

Maurer’s studies of con artists showed that they carefully craft the set up so the mark has an exclusive, one time only opportunity to make his big score. Business leaders should remember this, and would do well to exercise caution when a deal is framed in this way.

For example, McFarland claims to have 5,000 unique requests for tickets, but only 3,000 slots available.

If you go to the Fyre Festival website you cannot buy tickets. Instead you receive the message, “Thank you for your application. If approved, the FYRE concierge will be in touch.”

I am currently in the queue for one of these tickets, and so far the concierge has not been in touch. Will I be lucky enough to be one of the chosen few?

This Core Insights article is adapted from a piece originally published by The Conversation.

Further reading:

The Consistency Trap: How to make better decisions

How to prevent profits from tainting behavioural nudges

Is bias causing business leaders to make mistakes?

How inequality may be fueling our obsession with luxury goods

Daniel Read is Professor of Behavioural Science at Warwick Business School. He teaches Behavioural Sciences for the Manager and Negotiation Theory and Practice on the Executive MBA and Global Online MBA.

Learn more about Behavioural Science for Ethical Leaders and Negotiators with a four-day Executive Education course at WBS London at The Shard.

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