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How Could You be so Gullible? Scams and Over-Trust in Organizations

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Abstract

Trust is a key ingredient of business activities. Scams are spectacular betrayals of trust. When the victim is a powerful organization that does not look vulnerable at first sight, we can suspect that this organization has developed an excessive trust, or over-trust. In this article, we take over-trust as the result of the intentional production of gullibility by the scammer. The analysis of a historically famous scam case, the Elf “Great Sniffer Hoax,” suggests that the victim is made gullible by the scammer through a range of seduction and protection maneuvers that prevent the victim from developing doubts and suspicions. An integrated framework of the production of gullibility in organizations is proposed in order to further our understanding of over-trust. We discuss how these insights might be extended, beyond the case of scams, to more ordinary contexts of business activities.

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Authors and Affiliations

  1. ESCP Europe, 79, avenue de la République, 75543, Paris Cedex 11, France

    Hervé Laroche

  2. i3 - CRG, Ecole Polytechnique, CNRS, 828 boulevard des Maréchaux, 91120, Palaiseau, France

    Véronique Steyer

  3. TSM-Research, Université Toulouse Capitole, CNRS, 2, rue du doyen Gabriel Marty, 31042, Toulouse Cedex 9, France

    Christelle Théron

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  1. Hervé Laroche
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Appendices

Appendix 1

See Table 3.

Table 3 Summary of the data collected
Full size table

Appendix 2: Chronology of the “Great Oil Sniffer Hoax” Affair (Adapted from Lascoumes 1999, pp. 133–134)

February 1976: an intermediary, Maître Violet, offers Elf-Aquitaine a process invented by a Belgian count, A. de Villegas, and an Italian engineer, A. Bonassoli. The “VDS process” allegedly allows the detection of substances like water, gas, oil, and some ores, up to several thousands of meters beneath the ground.

28 May 1976: a contract is signed in Zurich between Elf-Aquitaine and the Panamanian company FISALMA, which represents the interests of the inventors. Elf-Aquitaine has exclusive rights to the Delta and Omega processes for a 12-month period and pays 400 million francs.

June 1976: the first drilling operations are carried out. Sixteen Delta missions and fourteen Omega missions are launched.

February 1977: three drilling operations begin on specific sites spotted as promising, but turn out to be failures.

September 1977: a synthesis calls for caution about the device’s technology, but the conclusions remain optimistic.

24 June 1978: a new 500-million-franc contract is signed, setting the conditions for sharing and exploitation of the VDS process. Two commercial companies are created: one is Panamanian—IOMIC—and associated FISALMA and ERAP, and the other is French—SCIT—and aims at managing a laboratory in which researchers could work.

End of 1978: a report underlines problems with the functioning of the device and points out some contradictions.

October 1978–May 1979: three new more drilling operations begin. Results are also negative.

5 April 1979: a demonstration is organized in front of the persons in charge and the President of the Republic himself.

April–May 1979: Elf-Aquitaine seizes the device and asks for a significant amount of the funds received by FISALMA to be frozen. A mediator, A. Pinay, is appointed to determine the amount frozen.

24 May 1979: J. Horowitz, a physicist who does not belong to the company, organizes a basic experiment exposing the fraud.

22 July 1979: the association between Elf and FISALMA is dissolved. The majority of the funds released following the second 1978 contract are recovered. However, the funds related to the first contract and the internal subsidies given to ensure the follow-up of the inventors cannot be recovered.

1982: the administration serves notice to Elf-Aquitaine of a 547-million-franc tax reassessment for having exported funds in breach of exchange controls.

1983: P. Péan leaks the affair in the French journal Le Canard Enchaîné. A report written on this case by the Controller and Auditor General would seem to have disappeared. The affair is publicly exposed through a parliamentary question posed to the Secretary of State in charge of the Budget, who officially confirms what happened.

16 January 1984: the Ministry of Justice opens a legal investigation into fraud.

16 May 1984: a parliamentary inquiry committee is created.

15 November 1984: the report written by the committee is published.

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Laroche, H., Steyer, V. & Théron, C. How Could You be so Gullible? Scams and Over-Trust in Organizations. J Bus Ethics 160, 641–656 (2019). https://doi.org/10.1007/s10551-018-3941-z

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