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Why I Wrote “The Art of Fraud Detection”

NPR Ombudsman Elizabeth Jensen asked me a series of questions, including how much time I spent researching and writing my critique—that is, my article “The Art of Fraud Detection,” and why I wrote it. She included some of my emailed answers in a sidebar that appeared alongside her post “Fact-Checking A Fraud: The ‘First Lie’ Wasn’t Really The First.”

Later, a friend also asked me why I wrote my article. She had already read Jensen’s post, so I asked her and then others whether they had noticed the post’s sidebar. They had completely missed it. I think advertisers have trained us to overlook messages that appear alongside whatever we’re reading.

So I’m here separately posting the sidebar. It consists almost entirely of answers I provided to some of Jensen’s questions.

She wrote:

I don’t agree with all of Vanderveen’s conclusions, but I was curious about what led him to invest so much time and effort in this exercise.

He told me he heard of the story from a friend who “knew of my interest in fraud,” and he then listened to the podcast. “In May 2012, before I finished listening to and reading the news story, I knew that the tale of Toby’s first fraud was fiction. I also thought that I could find confirming evidence of that on the Internet. And indeed, it took me about 5 minutes right then to find the two main pieces of evidence (news reports and a court decision) that I cover in my article. How could NPR and seasoned journalists and editors not do their homework? What was going on? I began working on my critique right away. After I retired from paid employment, I made better progress researching and assembling my critique.”

About his interest in fraud, he told me: “All my adult life, I have been keenly interested in how we learn to think about our minds (given that each of us experiences only one). This led to my studying philosophy, working in human services and writing my 1993 article, Formation of the Concept of Mind. About 10 years ago, the housing crash and financial crisis naturally exposed many Ponzi schemes and other instances of fraud. The evidence was clear that many people had no clue how another person could be defrauding them. The sheer extent of the fraud started me focusing on how desperately people needed to learn to think realistically about people and what they were doing (including themselves). So I started tracking the fraud cases I came across in the news and learning what I could from them.”

He said he has no personal stake in the story and does not know anyone involved.

His motivation, he said, is “to help people understand why fraud happens and what we can do to limit it. I hope NPR and journalism schools will use my article to improve training and ethical behavior of journalists. I hope my article will help listeners and readers become better consumers of news. And beyond that, I hope the article will help all of us to think more realistically about ourselves and others.”

No Expiration Date for Correcting Errors

Short Answer

February 26, 2018 Leave a comment

Friends have asked me what I felt and thought about NPR’s response to The Art of Fraud Detection. IMediaEthics yesterday asked me if I had any comment on NPR’s corrections and on the post, Fact-Checking A Fraud: The ‘First Lie’ Wasn’t Really The First, by NPR’s public editor (or Ombudsman) and whether I am satisfied with NPR’s response to my complaints.

Here’s my short answer. I was pleased that NPR responded. I appreciated Ombudsman Elizabeth Jensen’s role. She came forth with information and asked good questions. I felt she helped NPR’s newsroom move things along. I actually talked with her about the role of narrative in journalism, which says a lot, and she included what I said in her post.

NPR published its Correction notice the day before Jensen and I spoke on the phone. I appreciated their timing on that. They didn’t leave me hanging.

In Jensen’s post, she quoted extensively from my initial email to NPR, my emailed responses to her questions and my article. She indicated in her post that she wasn’t laying out my entire argument or getting into a specific issue that I raised in conversation with her, thereby alerting her readers that there was more to my article. She was thorough. I felt she knew what she was doing and she was doing it right.

She asked about my interest in fraud and why I had written my article, and she included my response in a sidebar. She included my hope that my article will help all of us to think more realistically about others and ourselves, not just about fraud.

I was taken aback by a couple things she wrote and one element of NPR’s Correction notice, but as I think about these items, I realize they are not so important in the big picture. Nevertheless, I do plan to touch on them, as well as to write further about the following point, which is important.

The unethical journalism that I documented in my article (and mentioned in my initial email to NPR) is far more important than specific false claims in the NPR story. We all have the power to curtail unethical journalism and fraud in general by thinking about people instead of identifying with them.

Given all the information in Jensen’s report, as well as the claim in NPR’s correction that other details were “not in question,” which was false, I think that NPR will need more time to come fully to terms with what I’ve written.

NPR Responds

February 15, 2018 Leave a comment

NPR Still Misleading the Public

January 28, 2018 Leave a comment

On December 11th, I alerted NPR to my article “The Art of Fraud Detection,” available on this blog. I asked if NPR will correct Alix Spiegel and Chana Joffe-Walt’s news story, “Psychology of Fraud: Why Good People Do Bad Things.” I briefly described the false claims in the news story and noted that they involved journalistic ethical lapses. I referred NPR to my article for further details.

A person in NPR Audience Relations promptly replied that “NPR takes its responsibility to be accurate very seriously” and that my comments “have been forwarded to the staff that researches corrections.”

A person in NPR’s Office of the Ombudsman also replied to my email, writing that she had forwarded my message “to our Standards & Practices editor for further review.”

As of today, January 28th, none of the four versions of Spiegel and Joffe-Walt’s news story has an editor’s note or correction alerting listeners and readers to the unreliability of the story. NPR is still misleading the public, including students and faculty at Georgia State University.

In the Fall semester, GSU’s Andrew Young School of Policy Studies offered a graduate level course, PMAP 8431 Leadership and Organizational Behavior. The course is required in GSU’s Master of Public Administration program, and Joannie Tremblay-Boire taught the course. Spiegel and Joffe-Walt’s 2012 All Things Considered news story was required reading for the last class session on December 4th, less than two months ago.

In other developments, on January 3rd, I added an Author’s note near the end of section 8 of “The Art of Fraud Detection” to correct an error I had made. I had initially concluded that, in a 2015 Planet Money show, Spiegel and Joffe-Walt informally rehashed the news story that aired on All Things Considered in 2012. Actually, in that 2015 show, Planet Money just repeated a still earlier 2012 version of Spiegel and Joffe-Walt’s story.

Recently, having corrected the information about the 2015 Planet Money show, I removed my Author’s note from section 8, incorporated mostly minor edits in that and other sections and added an all-in-one PDF edition of “The Art of Fraud Detection” to this blog.

The Art of Fraud Detection

December 7, 2017 Leave a comment

1. Introduction

As a young man, Toby Groves believed that he was “fundamentally a good person” and “could never get involved in fraud,” said Chana Joffe-Walt. She and her NPR News colleague Alix Spiegel presented the story of Toby’s downfall, how he initially came to commit fraud in his late thirties to obtain a loan to save his business and how that led him to enlist others to help him commit a series of additional frauds to get millions of dollars more. Two years into his massive scheme, FBI agents showed up at his office, and “he says he quickly confessed,” said Spiegel.

Spiegel and Joffe-Walt used Toby’s initial fraud, lying about his income on a home equity loan application, to demonstrate a general point that a group of psychologists and economists have been making, that we have huge cognitive blind spots that make it difficult for us to see what we’re doing as unethical. The journalists used a second new research idea, that we are nice and like to help people, especially people we identify with, to explain more specifically why other people helped Toby carry out his subsequent frauds.

Their science news story, “Psychology of Fraud: Why Good People Do Bad Things,” aired on NPR five and a half years ago, on May 1, 2012.

Back then, as now, if we wondered about the journalists and what they were up to, and followed a hunch, we would have needed only five minutes to find news reports and a court decision confirming that the home equity loan fraud wasn’t actually Toby’s first fraud at all.

Toby wasn’t new to fraud. He had committed tax fraud before. He had also previously enlisted two co-conspirators to help him commit a series of frauds to obtain the house against which, the following year, he fraudulently obtained the home equity loan.

In the news story, the journalists had told a phony tale about Toby’s first fraud, apparently making no effort to verify what they reported. They appeared to have little use for the truth. If they had divulged Toby’s previous fraudulent activities, showing him to be an habitual offender, not a first-time one, most of us would have had difficulty relating to what he did.

The journalists told us a fraudulent story about fraud, doing a bad thing themselves while trying to demonstrate why we do bad things.

Evidently NPR editors and supervisors, and some researchers, didn’t notice the bad thing that the journalists had done, and if we can generalize from public responses to the story, most NPR listeners and readers, although not all, also missed that bad thing.

All of this presents us with an unusual educational opportunity. We can use this NPR news story to master the art of fraud detection, so that we can help ourselves and our communities actually escape the curse of fraud.

 

Next – 2. Public Responses

Copyright © 2017 Paul Vanderveen  All Rights Reserved

 

The Art of Fraud Detection (Section 2)

December 7, 2017 Leave a comment

2. Public Responses

Two hundred and ten users left 282 comments on NPR’s Web site about the news story.

“I wouldn’t believe a word this character, Toby, said,” wrote one commenter. “Of course, it wasn’t his first big lie,” wrote another. “You sure haven’t let the facts of this case get in the way of your story,” wrote a third commenter. A fourth read the accompanying Web story after hearing the on-air version. She figured that NPR had acted unethically by, among other things, withholding information from us and presenting a small bit of content in “a time consuming maze” for emotional impact. These users were among the very few, about 3%, whose impromptu comments touched directly upon the journalists’ unethical behavior. Their comments demonstrated the possibility of real-time perception of fraud.

About a third of commenters criticized the NPR story or the featured research ideas in other ways. Some of these commenters complained that the journalists or researchers were excusing unethical or criminal behavior, but most offered familiar ideas as to why we do bad things. More than half mentioned or alluded to greed, money, profit, selfishness, power or the like, and almost a quarter rationalization, self-justification, self-deception, failure to think or willful evasion. A few mentioned upbringing or family environment, opportunity to cheat or lack of consequences for cheating, our culture, corporations, capitalism or other explanations.

A few commenters echoed key elements of the journalists’ tale about Toby. “I truly believe he was not only trying to save his business, but save the livelihoods of his employees.” Toby’s intent “was to save a business and jobs,” not to “cheat people or take money” from them. This was “his first fraud.” “So here’s a guy that, for many years acted totally ethically—he even went the extra mile.”

This last commenter urged us to take the whole tale about Toby at face value so as to avoid implicitly accusing the journalists “of acting unethically.” Apparently the thought had crossed his mind that the journalists had done just that.

Fifteen commenters, about 7% overall, praised or applauded the story. “This piece makes great arguments,” “makes sense to me,” “perhaps one of the most thought provoking stories I have ever heard… fantastic work,” “excellent story… haven’t enjoyed a news story quite this much in awhile,” “fascinating piece,” “loved the article,” “thoroughly enjoyed” it, “thank you – I love NPR Folks,” “one of the best pieces of science reporting I’ve ever heard,” “most interesting news story I’ve yet read on fraud,” “a great article and introduction to Fraud,” “kudos to Joffe-Walt and Spiegel for this excellently reported story,” “it fosters understanding,” “a wonderful piece… went way beyond reporting the ‘facts’ of the case… delving into the whys of this particular tragedy,” “goes a long way to explain why people are not as ethical as they think they are.”

We can no longer read these and other user comments on NPR’s Web site because NPR disabled online commenting as of August 23, 2016 and removed links to comments that users had posted. (By then, I had already downloaded all comments about this story as part of my research.)

Some people with training in psychology, ethics or finance endorsed the NPR story on Web pages still accessible as of December 7, 2017 (this article’s original posting date). For instance, psychologist Sam Sommers mentioned the “great story” in a Psychology Today blog post, previewing a speech he himself was set to give on the same topic of the psychology of fraud and bad behavior. The National Center for Ethics in Health Care made the NPR story the centerpiece of structured group discussions at the Veterans Health Administration in an earnest, if misguided, effort to reduce healthcare fraud within the VHA, including at VA medical centers. The Finance Division of the Alaska Department of Administration added a link to the story as a resource on its Internal Controls page.

Ann Tenbrunsel of the University of Notre Dame, one of three featured researchers, and Max Bazerman of Harvard University added a straightforward link to the NPR story on a Web page at Ethical Systems, a nonprofit where they collaborated with other researchers under the motto “Business Integrity Through Research.” Tenbrunsel and Bazerman, who jointly oversaw (and still oversee) this page, gave Web visitors no hint that the NPR story was itself fraudulent. They apparently hadn’t noticed that the journalists had unethically presented a phony tale in a news story, even though the news story featured Tenbrunsel and her research about unethical behavior.

 

Next – 3. The Tale of Honest Toby’s First Fraud

Copyright © 2017 Paul Vanderveen  All Rights Reserved