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UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF CREATIVE INDUSTRY (FCI)

BACHELOR OF CORPORATE COMMUNICATION (CC)

UJMG2114 - MEDIA AND COMMUNICATION THEORIES

Lecturer/Tutor
Dr Sharon Wilson
Tutorial Group T3
Assignment Assignment 1
Year/Sem Y2S1 Y2S1
Student Name
Jessica Soo Jhia Yi Kong Rui Qing

Student ID
2002982

Work - Summary of the journals - Background

Contribution - Journals critique - Summary of the journals
- Theoretical framework - Journals critique
- Theoretical framework
- Overall summary
Chosen Theory
Social Learning Theory

Submission Date
30 July 2022
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Table of Content

No Subject Page
1.0 Background 3

2.0 Journals summary

2.1 Of Ponzi schemes and investment scams: A case study of 3

enforcement actions in Malaysia

2.2 Ponzi Schemes and its Prevention: Insights from Malaysia 3–4

2.3 Understanding a Ponzi Scheme: Victims’ Perspectives 4

2.4 The Never-Ending Attraction of The Ponzi Scheme 5

3.0 Theoretical Framework

4.0 Journals Critique

5.0 Overall Summary

6.0 References

7.0 Marking Rubric

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1.0 Background
Based on bank of China’s security tips, it listed that investment scams are the fraudsters will
claim to be a financial planner or financial adviser and provide investment project to persuade
the victims to join them. They will usually lure the victims by the minimum risk and highest
return rate. However, investment scam includes pyramid scam, Ponzi scam, advance fee
fraud, forex scam and offshore investment scam. Also, the Ponzi scam is the most popular
scam nowadays as it unlike pyramid scam, fraudster just needed to collect monies from the
new investors instead of recruit new members into the organization. Besides that, the bank
negara Malaysia also publish a notice of financial fraud alert regarding the illegal internet
investment scheme. It stated that internet investment schemes are an activity of illegal
collecting deposit which uses internet social media as their first channel to approach the
victims. However, the authorities also utilize the new media to disseminate the messages to
investment scams as stated in the journals at the following section.
2.0 Journals summary
2.1 Of Ponzi schemes and investment scams: A case study of enforcement actions in
Malaysia
Based on the case study conducted by Aiman, Azza& Sharon (2014), they had evaluated the
actions taken by Malaysian regulatory authorities to react on the investment scams among
Malaysians. Ponzi schemes and investment scams are well known as a pyramid scheme as
many people wanted to get rich quicker. Moreover, investment schemes usually occurs online
that they will induce their financial community to send they money to the accounts and enjoy
an extremely high profits in a very short period. However Malaysian regulatory authorities –
Securities Commission have come out certain modus operandi and legal enforcement to
reduce the illegal schemes. They successfully freeze 22 Malaysian bank accounts that
involved in illegal investment scams. Besides that, Securities Commission also create a
compensation fund to utilize for eligible investors who suffer from the investment scam. Not
only that, the Genneva gold futures scams also break the legal rule by occurring illegal
deposit taking, money laundering and tac evasion without license. Although the Securities
Commission had taken several actions on controlling the scams, public still had not risen
their awareness on this kind of issue as the researcher found that still many people trapped in
investment scams. So, the Securities Commission Malaysia decided to cooperate with
Malaysia Communications and Multimedia Commission and Cyber Security Malaysia to
block illegal investment websites and educate netizens in order to lower the investment scams
rate. Lastly, the researchers mentioned that the continuity of newspapers reporting on
investment scam had causes people are numb on those issues thus, white collar crime rate
remains a higher rate.
2.2 Ponzi Schemes and its Prevention: Insights from Malaysia
Following journal article is a scam review from management and accounting perspective.
This journal is to study the influencing factors of investors fall in Ponzi scams and the
prevention way. Eley, Norlaila, Hazlina & Normah (2020) stated that investors usually lure
by the abnormal high return rate and minimum risk investment project. Besides that, Ponzi
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schemes, Madoff schemes and Swisscash Mutual Fund scheme had successfully caused
people with more than total RM200 million and above. Also, Ponzi schemes are going to new
media to catch new investor victims. However, the study concluded that the scam victims are
often found lack of knowledge in investment matter and adopt a middle-class financial status.
Still, the researchers found Malaysia had no specific rules and regulations to deal with
investment scams thus, it is hard to destroy the Ponzi scheme system. Nevertheless, the
online media continuously warn and educate the public to be aware of investment fraud, yet
the number of victims keep increasing each year. Thus, the author believes that public still
vigilant enough on investment scam problem. Therefore, the authors listed several prevention
steps to assist the audiences on investment scams problem. Firstly, the authors critique that
government regulations should focus on Ponzi schemes also since the number of cases keep
increasing the government. Other than that, author emphasized that education play an
essential role in preventing Ponzi business occur. Hence, the federal regulators should
allocate resources equally in preventing investment scams. In addition, MyTabung promote a
mobile application guide to encourage people to make rational decision on investment
projects. Although many warning have given by Royal Malaysia Police on traditional media
and new media but the audiences just easily ignore those type of messages on media
platforms. Researchers also encourage the social media group to use interactive media to
promote “active education” to raise the public awareness on this issue. This is because new
media rapid message dissemination of warnings could constantly remind of public to not trap
by the Ponzi investment scams. However, the authors also conclude that education is on the
highest priority to break the Ponzi scam fraud and Malaysian government should acquire a
specify legislation to penalise the people who involved in investment scams.
2.3 Understanding a Ponzi Scheme: Victims’ Perspectives
This journal article is from the view of forensic and investigative accounting in the United
States. This journal aims to study the Ponzi scheme victim’s perspective as the investors to
the scam. Wilkins, Acuff & Hermanson (2012) stated that the Ponzi Scheme scammers
usually uses methods with characteristics such as older educated victims, a plausible story
which is travelled by word of mouth amongst a group of people who know each other well,
demonstrated returns over several months, low pressure where they do not have an urgency to
invest and the “good guy” promoter who did charitable works to successfully trick potential
victims. Moreover, as Ponzi scheme scammers seem to have much credibility, the victim’s
decision-making process are affected and tend to fall into their trap. Furthermore, the authors
states that because of its high anticipation people are easily drawn to the Ponzi Schemes
without any “hard sell”, if the perpetrator can create the impression of credibility which is
often through personality and charisma people are likely to fall for it although the fraud
scheme have already received significant media coverage. On the other hand, it is said by the
authors that the investors in a Ponzi Scheme doesn’t only lose the invested principle when the
scheme is discovered but may also have to repay amounts received from the investment
before discovery that the investment was a fraud, and if the investor wishes to recover any of
the lost funds a formal public claim of loss is required to be filed with the bankruptcy court.
In a nutshell, the authors identified that individuals model their actions, especially under
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conditions of uncertainty, to behaviours of others in their social network. As the saying goes
“if it’s too good to be true, it probably is”.
2.4 The Never-Ending Attraction of the Ponzi Scheme
Jacobs, P.& Schain, L.(2011) identifies from a comprehensive research perspective that
individuals are drawn to Ponzi Schemes by the theory of gullibility, the principles of
influence and affinity fraud. The author quotes from Greenspan,2009:22 that those who fall
for Ponzi Schemes acquire a sub-type of foolishness in which “one where someone goes
ahead with a socially or physically risky behavior in spite of danger signs, or unresolved
questions which should have been a source of concern for the actor”. Based on this theory the
author found that the victim is more likely to fall for the scam if they are presented with a
challenge to consider. It is mentioned that the individual is more likely to engage in gullible
behavior if the social and situational pressures are strong and less likely to occur if the social
and situational pressures are weak. Furthermore, Robert Cialdini (2001) quoted extensively
on how influence and persuasion factors can affect an individual’s behavior, he defines it as
the principles of influence. Reciprocation, commitment and consistency, social proof and
liking explains to why a victim exhibits almost blind obedience to the schemer. The authors
also quoted Benson (2009) on a series of red flags individuals should possess in order to
protect themselves from Ponzi Schemes, such as investors should not accept vague
explanations from advisors, beware of secrecy and more. Basically, all of us live in a time of
information overload, hence, bombarded with enormous amounts of information available
over the Internet. So, it makes us feel that any available information is more convenient than
facts that need to be researched for accuracy which leads to us believe in investments such as
these as long as we see respected individuals trusting the same source too. Because of the
current generation’s mindset Ponzi schemes scammers can succeed more easily due to the
endless networking that has blurred the lines between acquaintance and true friends. The
researchers also reminds that it is better to do your own research and not assume that the
investment broker has done diligence.
5.0 Theoretical Framework
Throughout the 4 journals that explains on investment scams, it focuses on social learning
theory despite it did not exactly mention and stated the theory in the journals. But the journals
emphasize the usage of media on influencing the mass audience thoughts in preventing
investing scams. Also, the journals also mentioned the process of people making decision
before occurring a certain action. The definition of social learning theory is a person’s
behaviour is learned via observing and imitating the behaviour of others. But social learning
theory in media is that people interpret and observe the media content and eventually
influenced by the messages displayed on the social media platforms. Based on Cherry (2021),
environmental reinforcement was not the only factor that will affect people learning and
behaviour, but it does always influence by the outside factors. People mindset will identify
whether they wanted to learn or not. Also, social learning theory not only restrict to watching
another person to behaviour but also involve of reading content online.
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From the first journal – Of Ponzi schemes and investment by Aiman, Azza & Sharon
(2014), it stated Securities Commission cooperate with Malaysian Communications and
Multimedia Commission and Cyber Security Malaysia to block certain investment websites
as people will easily lured by the websites which promote an attractive return rate.
Investment scams nowadays are starting using online system as the fraudulent found people
usually trust whatever online, thus they could easily induce Malaysian to send in money to
their account. Thus, the investment rate nowadays remain at a high rate as people will
influenced by the advertisement on social media. In this context explained that how the
influential factor – media changing people’s mindset and fall in the investment scams which
related to the social learning theory.
From the second journal, Ponzi Schemes and its Prevention by Eley, Norlaila, Halina &
Normah (2020), it mentioned according to Purple Notice of Interpol (2019) in the journal it
found that Ponzi schemes in these few years are conducting using online media platforms as
it is easier to persuade people to involve in the scam. Also, the authors conclude that the
victims are mostly lacking knowledge in investment skills. Therefore, when the victims
receive advertisements and promotions on social media, they will simply follow any
investment ideas are portraying online. Even though the enforcement agencies provide
various warning and education programmes to increase the public awareness on investment
scams, yet people still involve in fake projects. Thus, this situation proven that the social
media content such as investment scams give the most impact to influence the people believe
in fake investment projects.
From the third journal, Understanding a Ponzi Scheme: Victims’ Perspectives by
M.Wilkins, W.Acuff, & R.Hermanson (2012), it mentioned on the way social learning theory
is built on how one gets influenced by others, therefore, the victims learn from the behavior
of those that they trust and admire which gets involve in the Ponzi Scheme and also falls into
the fraud, which is why the Ponzi Scheme scammers can draw victims in without any “Hard
Sell”. For example, an individual who admires an instafamous like SoImJenn comes about an
advertisement of hers which promotes the Ponzi Scheme investment on social media, so later
on when a scammer on social media approaches that individual, he would think that it is
actually a good investment as SoImJenn also promoted it on her social media platforms.
Basically, social media is a huge platform where the line between black and white has been
blurred so from a victim’s perspective they can’t sense the danger beyond the lines and can
be easily manipulated into the scam.
From the fourth journal, The Never Ending Attraction of the Ponzi Scheme by Jacobs, P. &
Schain, L. (2011) it mentioned how even intelligent people can be persuaded into having
almost blind obedience to the schemer and also how most have the believe that someone from
the same background wouldn’t cheat them. Therefore, since social learning theory explains
that people learn by observing others whom they believe are credible and knowledgeable so
the victims of this scam are often influenced by the people around them and their decision
making process is affected to blinding believing instead of doing research on it first. This is
also why even intelligent people like lawyer, doctors or politicians also fall victim to the
scams. Although this journal does not state clearly, but the media has also a big influence on
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this as intelligent people as mentioned earlier are usually too busy to do more research so
sometimes they tend to blindly believe what they see and hear from the media too especially
from someone who they think has strong credibility.
4.0 Journals Critique
From the journal of enforcement actions in Malaysia and Journal article of Ponzi schemes
and its prevention, both studies strongly emphasized that Malaysian authorities have the
highest responsibility on taking action to control the illegal scams. Both journals mentioned
that law enforcement is the most useful tool to decrease the illegal investment scams. Thus, in
the Ponzi schemes prevention journal it listed that government law and regulations to educate
the public on this issue as people are still paid low attention on investment scams topic.
Based on social learning theory, public will learn information from new media platforms and
practise those action which ever have shown to them. Therefore, the journal also encourages
enforcement agencies take various preventive action by stick to the latest technologies to
spread warnings to the fraudulent. They believe that digital platforms could give a better
influential effect to the audiences as the public figures provide higher credibility to the
audience and they could reach the mass audience. The journals applied the social learning
theory where it emphasized the usage of media in disseminating warning messages and
educational massages to the audiences. However, both studies claimed that although
respective agencies and bodies have continuously disseminated warnings and information to
educate the public, yet people still low awareness in investment scams issue nowadays.
However, the case study conducted by Aiman, Azza and Sharon (2014) only focus on legal
enforcement to governance the Ponzi scams among the investors. Unlike the Ponzi schemes
and its prevention from management and accounting review perspective journal, it not only
emphasized the usage of legal enforcement, but it promotes alternative of using new media
platforms to educate the investors to be rational to decline promotion of extraordinary high
return rate investment planning. As interactive education using online platforms give a better
impact to the audiences as stated in social learning theory. However, the result of the research
doesn’t prove that social learning theory in media successfully reduces the investment scams.
On the other hand, from the journal articles of understanding a Ponzi Scheme through a
victim’s perspective and the never-ending attraction of the Ponzi Scheme we can see that
both journals mention on how the victims of the Ponzi Scheme get tricked into investing into
the Scheme. Both studies were conducted in the United States of America. Wilkins, Acuff &
Hermanson (2012) cited that the way the preparator approaches their potential victims
strongly influences their decision-making process into trusting the person and getting
involved in the scam. The researcher interviewed 17 individuals to gain this outcome and
found that most got influenced by the “word of mouth” in which they observed their
neighbors, friends and relatives getting involved in the scam and did not realize it until later
on, hence, believed in the scam. Furthermore, Jacobs, P.& Schain, L (2011) cited that the
individuals were most likely to be influenced when people they trust or highly respects get
involved in the scam as people can easily be persuaded by people they like.
The researchers believed that the Ponzi Scheme has been covered by the media lately, but
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the total exposure is not enough to educate the public about the new tactics about the Ponzi
Schemes. For example, even educated and respectable people like doctors and lawyers are
tricked into investing in the scheme. Furthermore, the journal only highlighted the use of
media vaguely and did not elaborate thoroughly on it which could misdirect readers as too
little information is provided on it.
Jacobs. & Schain, L. (2011) who conducted their research in the United States of America
found that people portrayed some of the principles of influence while making their decision.
Principles such as social proof and Liking were some of the factors mentioned that affected
an individual’s behavior in falling for the Ponzi Scheme as the factors mentioned that people
tend to follow the lead of others they trust and people can be persuaded by individuals the
like, hence, social media platforms today serve as a good example. This is said as people
today are easily influenced by their favorite KOL’s or celebrities that are on social media,
anything these influences wear, use or eat will get famous immediately as all their followers
will follow in their footsteps. So, the way individuals get conned into this scam is the same
way as the example mentioned as people will try getting involved in the Ponzi Scheme when
they see people they admire, and trust do it. They believe that if such people can do it and be
successful, they too will be able to achieve the same outcome.
5.0 Overall Summary
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6.0 References

Aiman N., Azza I. & Sharon D., (2014). Of Ponzi Schemes and Investment scams. A case

study of enforcement actions in Malaysia. Retrieved from

https://doi.org/10.1108/JFC-05-2014-0021

Bank Negara Malaysia Financial Fraud Alert, (n.d.). Illegal Internet Investment Scheme.

Retrieved from https://www.bnm.gov.my/web/financial-fraud-alert/illegal-internet-

investment-scheme

Bank of China, (n.d.). Investment Scam. Retrieved from

https://www.bankofchina.com.my/en-my/segment/personal-banking/security-tips/

investment-scam.html#:~:text=Fraudsters%20claim%20to%20be%20a,within%20a

%20short%20time%20period

Eley S., Norlaila M., Hazlina M. & Normah O., (2020). Management & Accounting Review.

Ponzi Schemes and its Prevention: Insights from Malaysia. Retrieved from

http://dx.doi.org/10.24191/mar.v19i3.1381

Kendra Cherry, (2021). How Social Learning Theory Works. Retrieved from

https://www.verywellmind.com/social-learning-theory-2795074

Laura Brooks, (2009). Social learning by design: the role of social media. Retrieved from

https://go.gale.com/ps/i.do?id=GALE

%7CA201673378&sid=googleScholar&v=2.1&it=r&linkaccess=abs&issn=10949046

&p=AONE&sw=w&userGroupName=tacoma_comm

OER services, (n.d.). 2.2 Media Effects Theories. Retrieved from

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https://courses.lumenlearning.com/suny-massmedia/chapter/2-2-media-effects-

theories/

Online MSW Programs, (2022). Introduction to Social Learning Theory in Social Work.

Retrieved from https://www.onlinemswprograms.com/social-work/theories/social-

learning-theory/

Saul McLeod, (2016). Albert Bandura’s Social Learning Theory. Retrieved from

https://www.simplypsychology.org/bandura.html#:~:text=Social%20learning

%20theory%2C%20proposed%20by,influence%20human%20learning%20and

%20behavior