Tuesday, February 9, 2010

Too Good to be True

This morning Wendy and I were discussing scams.  Specifically we were discussing what sort of heuristics you could use to determine whether or not something was a scam rather than a legitimate offer.  This is one of those bizarre situations where it is fairly easy for a objective person to determine what is a scam or isn't given a short description but it is fairly challenging to write a simple heuristic to make that same decision.

The example we saw was a snippet of a newspaper ad from many, many years ago.  It was advertising a writer's group that would test you to see if you had substantial latent writing talent and invite you to learn by correspondence if  you passed the test.  The idea was that they had a staff of professional writers would would mentor you and provide feedback and advice on your assignments.  All for a very modest fee, of course.  It turns out that they passed everybody who wrote their 'exam' and were happy to ship completely generic advice to you that was not at all generated by the actual assignments completed.

More recently I had two different friends fall prey to two other scams.  The first is a 'modelling agency' which finds people at fairs and shows, tells them they stand out in a crowd and should be a model and then fleeces them for tons of money for 'portfolio fees' and whatever else they can get.  Needless to say the fleeceee never does any modelling.  The second is pretty much a straightforward pyramid scheme selling phone/tv/internet services where the fleeceee pays a substantial fee to join the system and then has to both sell and recruit like mad to try to make their money back.

So how can we differentiate these from real opportunities?  As far as schooling goes I suggested the 'They might turn me down' method, whereby if the school will take absolutely anybody then you must be suspicious that the only thing they care about is your money, rather than the quality of the applicant.  This works for universities and 'writer's groups' but fails for most colleges and many other real programs.  The only thing I was able to come up with that actually worked is 'I personally would hire someone who had that institution's name on their resume'.  If someone gets a degree in Medical Biophysics from the University of Toronto, I know it is something.  If they get a writer's certificate from the New York Newspaper Writer's group I would totally ignore it.  You could easily determine the worth of a learning opportunity by contacting recruiters in the industry in question and asking their opinions of an institution before enrolling.

As far as modelling agencies and pyramid scheme sales jobs go, the heuristic is actually extremely simple.  If you are looking at a job offer where the job pays you, it is probably legit.  If you are looking at a job offer where you pay the job, IT IS NOT LEGIT.  There is always good old reliable "If it seems too good to be true, it probably is" which certainly sorts out all kinds of different problems but is remarkably unspecific.  Perhaps the best possible solution is to make use of the fact that people make bad decisions individually but that large groups of people make much better decisions.  If an offer concerns you, ask the 10 smartest, most objective people you know.  If they mostly think it is a scam, it is.  If they don't, it isn't.


  1. One of the most interesting scams I've seen is a particular medical secrets book. I saw the infomercial on TV one day. The author actually advertises that he has been sued repeatedly by the FCC and the FDA to stop making false claims. He says this is a conspiracy to keep the big drug makers in business by preventing you from knowing cures to diseases when they want you to stay sick and keep taking their drugs. To top this off, he was *giving* his book away. You pay shipping and handling and he just sends you the book for nothing. Obviously I had to look this guy up to see what was going on.

    What is going on is two things. First, the book contains no information, but directs you to his paid subscription website where full articles with the miracle cures can be found. The reason for this, he explains, is that he can't publish these things and call them cures because he would be sued and his book would be removed from shelves. The second is that this guy has multiple convictions for credit card fraud. It's hard to imagine he is not currently building up a database of numbers from those shipping and handling payments.

    What is so clever and infuriating about this scam is that I think it is actually very reasonable for an intelligent person to believe that the FDA is either intentionally or unintentionally but systematically suppressing information that would keep us healthy to the financial benefit of big drug companies. Being repeatedly sued for making false claims should diminish your credibility, but this guy has totally turned it to his advantage. It's a shame that the reality of drug research is so dismal that he can pull this off.

  2. This makes me wonder what the exact scam is in those persistent internet ads to lose weight/gain muscle with supplements. They charge 1.95 shipping and send you several bottles of product for free, so I assume it is either credit card fraud or some other kind of crazy scam or both at the same time.

    I kind of doubt the FDA is really suppressing anything of significance. Big drug companies have some pretty heinous practices to be sure, but plenty of new health ideas come out on a regular basis so I can't believe some kind of giant conspiracy theory is at work. I would like to quote Tim Minchin on this particular topic though:

    "You know what they call alternative medicine that works? MEDICINE!"

  3. I don't think the FDA is part of a conspiracy to suppress cures, but I do think that drug system is set up in a way that puts the job of finding cures in the hands of people who don't want cures to be found. There is no law that says it is illegal for a person to figure out how to home brew a simple product that cures a significant disease, but if someone was able to do that it would be nearly impossible for that person to ever legally promote or market their product. Part of this is useful consumer protection, part of it is concentrating a great deal of political power in the hands of organizations that actually do make money by keeping people sick rather than helping them be healthy.

  4. Is it a scam? Google it!