Purpose This study investigates how individuals who have fallen victim to investment scams perceive and interpret their financial decision-making, with a focus on the psychological and social mechanisms contributing to their vulnerability. It challenges the assumption that financial literacy alone mitigates fraud risk by examining the role of cognitive biases, emotional states and social influence. Design/methodology/approach Adopting a qualitative design, the study employed Interpretative Phenomenological Analysis (IPA) to explore the subjective experiences of twelve scam victims (N = 12) in the Philippines. Data were collected through in-depth semi-structured interviews and analyzed thematically, guided by core constructs of behavioral finance theory. Findings Cognitive biases – overconfidence, anchoring and confirmation bias – along with emotional responses such as hopefulness, excitement and regret, impaired risk judgment. Social mechanisms, including affinity bias and herd behavior, further reduced skepticism. Post-scam responses varied, with participants reporting either financial withdrawal or increased vigilance. Financial literacy was recognized but insufficient without behavioral awareness. Research limitations/implications Findings are context-specific and drawn from a small, purposively selected sample, limiting generalizability. Future research may compare victim experiences across cultures and scam types. Social implications The study supports policy reforms emphasizing behavioral training, critical thinking and social influence resistance to strengthen financial resilience in vulnerable communities. Originality/value This study integrates behavioral finance theory with phenomenological inquiry, providing empirical evidence of how heuristic reasoning, affective states and relational trust intersect in scam victimization. It advances fraud prevention research by prioritizing experiential insight over purely rationalist models.
Cuadra et al. (Fri,) studied this question.