The Fraudsters’ Playbook: Our Study of Enron Traders Shows How Easily the Language of Trust Can Be Abused

From election debates to job interviews, language shapes our perceptions of how trustworthy other people are. This power can be used to build healthy relationships, but it can also be used to manipulate and deceive.

To better understand this darker side of building trust, my colleagues and I turned to the corporate world – a domain that offers plenty of cautionary tales. Our case study was among the most notorious, involving one of the world’s largest energy companies of the 1980s and 90s: Enron.

This Texas-based company went bankrupt in 2001 after it emerged it had been systematically falsifying its financial records on a massive scale. Its West Power division manipulated California’s electricity markets by exploiting flaws in the state’s newly deregulated system, boosting profits while triggering one of the worst energy crises in US history by creating artificial power shortages.

To manipulate the markets, Enron traders had to win – then keep – the trust of partners, clients and regulators. Subsequent US federal investigations led to the release of more than 500 of their telephone calls in 2005.

These conversations have offered our team of linguistic experts a rich source for analysing the tactics traders used to build and retain confidence in their criminal strategies.

The trust playbook

Our research combined discourse analysis (a forensically detailed breakdown of the language used and how it was delivered) with behavioural science insights to establish the Enron traders’ “trust playbook”. This, we found, comprised four steps.

1. Foster ideological alignment

Among close business partners, the Enron traders relied heavily on verbal bonding to build emotional connections. This was all about intense, emotive language including frequent swearing – locker-room talk, essentially (most conversations involved male traders only).

Regulators were often dismissed as “stupid”, “crazy” and full of “bullshit” to help cement bonds between participants while reinforcing their shared ideological stance.

This kind of language can be a powerful trust-building tool because it fosters what psychologists call identification-based trust – the highest level of interpersonal trust, rooted in emotional attunement and shared purpose.

This bonded Enron traders and their accomplices into a tight in-group with its own moral logic of: “We understand the market; they just want to stifle business.”

Inside Enron, the overt flaunting and celebration of success may also have helped override any individual moral concerns, by recasting questionable actions as innovative and market leading.

2. Be competent, credible – and benevolent

For the Enron scandal to succeed at such scale, traders needed to persuade clients and partners that they would deliver on their promises and weren’t trying to take advantage of them. To do this, they leaned heavily on energy-trading jargon to showcase their expertise and credibility.

This elicited what psychologists call competence-based trust – the sense not only that they knew what they were doing, but that they knew valuable information their partners and clients did not.

This encouraged clients and partners who were unaware of the manipulation, but whose cooperation made it possible, to go along with market moves that were later ruled unlawful.

But another important part of the playbook was benevolence – emphasising the opportunity and mutual benefit for their partners and clients. “We don’t win unless you guys win. And that’s good for you guys too.”

According to an influential 1995 study, organisational trustworthiness comprises three essential qualities: ability, integrity and benevolence – the degree of care and positive intention the recipient feels. Our analysis shows these qualities can be constructed through language to mould relationships in your favour.

3. Confide in close partners

Of all the ways we use language to build trust, confiding is probably the most powerful. It requires someone to not only demonstrate trust by sharing a secret, but consolidate it by signalling they believe the other person will keep that secret.

In the Enron case, this was information that would damage reputations, or worse, expose traders to legal consequences. Each disclosure deepened the bond of secrecy between Enron traders and their accomplices, creating feelings of mutual vulnerability while quietly normalising the wrongdoing.

The traders even developed a set of playful nicknames for their unlawful tactics, including “Death Star”, “Fat Boy” and “Get Shorty”. Members of the inner circle spent a lot of time discussing these schemes, coordinating their next moves, and celebrating the millions they were raking in.

4. Repair trust to deflect suspicion

When trust was damaged or at risk, the traders showed interesting language techniques to try to repair it. For example, metapragmatic expressions – which comment on the speaker’s own words – were used to highlight transparency: phrases like “I’ll be honest with you” or “To tell you the truth”.

If that failed, traders went on the defensive: denying (“We didn’t do anything wrong – we weren’t going to manipulate anything”); shifting blame (“They changed the rules on us in the middle of the game”); and making excuses (“Well, guess what: your pricing mechanisms encourages people to take it out of the state”).

These strategies aimed to preserve trust by eliciting the benefit of the doubt. A favourite technique was reframing: recasting suspicious events as routine and unremarkable.

This is a powerful trust-repair tool because it lets the speaker concede the facts while disputing what they mean. By shifting the dispute on to technical ground, the traders moved it away from questions of honesty to questions of expertise, where they felt they still had more room to manoeuvre.

Of course, these kinds of techniques are not unique to the Enron traders. The same strategies run through all kinds of persuasive and manipulative discourse – from social media influencers to online scammers and AI advice chatbots.

Which makes learning to read the language of trust – and how it can be abused – more important than ever.

FraudAlert: Fake charities often emerge during crises, preying on people’s goodwill.

Read More at The Conversation