How Financial Stress Contributes to Poor Decision Making and How to Avoid It

A viral social media trend exploited a loophole that allowed JP Morgan Chase customers to get free cash from the ATM — or so they thought. The glitch involved depositing counterfeit checks for large amounts and then removing the portion of available funds before the check cleared. While this so-called glitch is actually a form of check fraud, it highlights the damaging nature of viral activity combined with bad financial advice during times of financial stress or hardship.

The Reality Behind Viral ‘Free Money’ Trends

A Chase spokesperson said consumers should be skeptical and if something seems too good to be true, it probably is, according to an article from the NY Post. The spokesperson said, “We are aware of this incident and it has been addressed. Regardless of what you see online, depositing a fraudulent check and withdrawing the funds from your account is fraud, plain and simple.”

However, this is not the first time that viral social media has encouraged consumers to make bad financial decisions. Key examples include:

• Pyramid schemes such as the viral blessing looms/money circles;
• PPP loan fraud;
• Cash App Scams;
• Etc.

While these trends are often misleading at best and illegal at worst, ignorance is unfortunately no excuse to break the law, which can lead to increased stress related to financial trauma, fines or penalties, and even jail time. The long-term impact of some of these schemes, such as the Chase bank check fraud, can also result in disqualification from banking services and a negative impact on consumers’ credit reports.

The Impact of Financial Stress on Decision Making

47% of Americans say money negatively impacts their mental health, according to a survey conducted by Bankrate. Financial stress can trigger specific behaviors that regulate an individual’s exposure to that stressor. According to a study by PeerJ, stress causes a pattern of harm-avoidance behavior.

These findings may demonstrate the susceptibility of financially stressed populations to these trends due to their current financial status. That is, a lack of financial education about the negative impact of these trends may make the prospect of “free money” appealing, and thus engage in harm avoidance behavior by reducing the burden of their current financial stressor.

On the other hand, the potential consequences of engaging in financial fraud are a distant enough harm that the slight relief experienced from engaging in a potentially risky behavior, combined with demonstrations of success seen on social media, make it a viable choice for relief at the time. While these findings do not change the legal implications of the behavior, they do explain how the financial stress and the appearance of relief from that stress contribute to the virality of these trends.

Understanding the Red Flags of Viral Financial Trends

A good rule of thumb when it comes to these viral financial trends is to do your own research. If the solution to your financial problems is going viral on social media, or creating scarcity with a message of “act now before it’s too late,” it’s probably not a viable or legitimate solution.

• When in doubt, go to the source. If the offer or solution indicates that it comes from a well-known brand or entity, look for official statements from that brand or entity highlighting the offer.
• Do not provide sensitive information over the phone or online to unverified sources.
• If you are being pressured to recruit others to claim your reward, chances are you are participating in a pyramid scheme.
• Seek help from reputable financial advisors or financial therapists, emergency assistance programs, or other qualified financial professionals. Not all financial professionals are created equal, as some specialize in a particular area or function that may not be relevant to your specific question.
• Visit FINRA’s Professional Qualifications Database to learn more about the different types of qualifications available and how they can help you with your specific question or need.

Have you ever been seduced by a viral “get rich quick” trend? What are your thoughts on the dangers of these schemes, especially during times of financial stress? Share your experiences or questions in the comments below or hit me up on social media, and let’s discuss how we can protect ourselves and our communities from these harmful trends.