Why do people believe in urban legends?

It is a myth, hoax or misinformation. Urban means "city", and a legend is "a story coming down from the past." It's a story that goes from mouth to ear and becomes popular but cannot be verified, most people start to believe it's true because everyone knows the story. Such stories often become distorted or exaggerated with time. Nowadays, many urban legends circulate by email as well as by Word of mouth.

One example of an Urban Legend is some kid ate the candy called Pop Rox and drank pop, and his throat exploded and he died. Even though this particular one is fake, many others haven't been verified yet.

If you want to learn more about it then go to sites like Snopes and Wikipedia.

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Urban legends are a type of modern folklore (although some of the stories have origins in much older stories). The stories are 99.999% false (OK - I made up that statistic, but the point being you shouldn't believe them). On rare occasions the stories are based on true events but even then they tend to be embellished to make them more impressive or transmogrified to put them in an environment more familiar to the teller or listener. Often they will be focused on weird or supernatural events. They tend to be enmeshed in local culture but with the homogenizing forces of fast modern communication, the lines are becoming more blurred with more shared world culture. Even when cultures do not overlap that much the same basic story often shows up in multiple areas with tweaks to make it fit the local culture better. While Urban Legends can be used for entertainment purposes, they are usually used as cautionary tales or to make the teller sound more "in-the-know" well as for semi-serious explanations for random events such as disappearances and strange objects.