Not too long ago, a friend of mine was walking (running) through midtown Manhattan on her way to catch a train. Waiting at the corner for the "walk" signal, she looked around, and saw a tourist – complete with camera, pocket map, and knapsack – looking distraught. "I just had my wallet stolen," the tourist said to an inquiring New Yorker, "and need to get back to my sister's house, and don't have the money for a train ticket."

It's a story we've all heard before – and standing on this street corner, she saw a few people stop to hand this woman a couple of dollars to get to her sister's house. After that, she admits that she didn't think twice about it. Until two days later, that is, when she was again running to catch a train – and did a double-take when she saw the same tourist on another midtown corner. Seems this was one unlucky tourist – she'd had her wallet stolen, and really needed to get to her sister's house.

"I have to say, she had me on Tuesday," my friend says, "but her Thursday performance suddenly had me questioning my ability to tell an unlucky tourist from a fraud." A recent article in Kiplinger's magazine tells me she's not alone -- due to a phenomenon called the halo effect, we tend to take one attribute of a person, often appearance or attractiveness, and assume that because they look good, they're also honest and intelligent (or vice versa).

"We make assessments about people within the first three or four seconds of seeing them," says Joe Navarro, nonverbal behavior expert and author of Louder Than Words. "If there's no information that counters that initial assessment, we're automatically more trusting."

So since this woman looked like any other tourist -- pulled together, and only recognizable because of her camera and pocket map – it's easy to fall prey to tricks like this one.

This becomes a real problem, however, when we attribute things like trustworthiness and intelligence to a good-looking financial advisor, or credit counselor, or debt settlement agent that might actually be out to cheat you.

We need to be wary of this in nearly any circumstance, but particularly those where we could be risking our financial security.

"Financial predators will mimic many of the behaviors of trustworthy lawyers, advisors or consultants," says Navarro, "so it's important to pay attention and find negative cues that may suggest dishonesty." Below are a few tips that should set off your fraud-detection radar.

  • If it sounds too good to be true, it is. If what they promise you sounds better than you could imagine – your $100k in credit card debt can be settled for $5k, for example – that should be a red flag. "If what they say can't reasonably be delivered, that should trigger doubt," says Navarro.
  • "This offer is only good for the next five minutes." Feeling pressured to make a big decision in a short period of time is another sign that something could be fishy. "Predators use time as pressure to compel you to make a quick choice," says Navarro. "You shouldn't be forced to make a decision on the spot.
  • "You can't tell anyone about this." Similar to forcing you to make a quick decision, scammers will also often say you can't consult anyone about the offer. "They'll create a trip wire," says Navarro, "where if you want to check before you make the choice, the offer loses its value." Knowing that further discussion makes it more likely a friend or family member will talk you out of making a decision, they'll tell you it's now or never.
  • Beware the close-talker. "In a setting where it's one-on-one, they might invade your space, and by doing so, they physically induce a sense of pressure on you." There are certain distances that are acceptable in different situations – just like it's disconcerting when a stranger stands too close to you in line, it's a red flag when you feel the same about someone you want to trust with your finances. "Once you sign a paper or turn over money, they'll back off, and you'll feel relief," says Navarro, "but that relief is only due to you gaining back your personal space."
  • Watch for verbal pauses. You should feel comfortable asking someone questions about your money – so if you hear lots of "umm"s "uhh"s or "ahh"s, when they answer, or they can't give you an answer in a way that you understand, you should be wary.
But how can we use this effect to our advantage?

"People are drawn to and think higher of those who are dressed well," says Navarro. Job seeker? Cover up old tattoos before an interview, and make sure you don't have coffee stains on your tie. Asking for a raise? Stand up straight and remember to shave. Meeting your significant others' parents? Be sure to dress for the occasion - that's sure to impress them more than wearing a business suit to the family barbecue.

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