Sunday, May 22, 2016

Scam Psychology: Luck Blindness, or why lucky people see it as skill, not luck

Success is dependent on many different factors, but it can usually be summarized as
...be at the right place, at the right time, with the right training to spot the opportunity, and have enough resources to call upon to take advantage of the opportunity. 
It should be readily obvious that rich people have a better chance at success because they started out with better starting positions. Donald Trump was practically born with a silver spoon (his father was a real estate tycoon). Conversely, poor people can't succeed if they don't find the right connections to make their talent known, no matter how hard working they are.

Outliers (book)
Outliers (book) (Photo credit: Wikipedia)
In the book "Outliers", Malcolm Gladwell reported that a good portion of professional hockey players found success due to their birthmonth, not solely via their talent. Why? If they were born in January, an arbitrary line used by the youth hockey leagues to divide up the years, they would enjoy physical advantage over the other kids who were born later in the year (generally speaking, of course) but still in the same league. And this physical advantage would lead to success, which would lead to them developing a taste for hockey, and eventually, into a pro career. Of course they trained hard, and they got some physical skills, but luck of having been born in month of January played a part in their success... They may not be aware of it, but that doesn't mean it didn't affect them.

Yet when you ask successful people how did they succeed, they will rarely if EVER mention luck. And in fact, some get downright offended if you try to bring up the role of luck in their success. This known as the "luck blindness" cognitive bias.

A few years ago Cornell economist Robert Frank wrote an opinion column for New York Times about luck and fairness, and for that he was invited on the air by Fox Business host Stuart Varney to talk about it. Varney opened the show by introducing Frank, then immediately jumped down Frank's throat: "Do you know how insulting that was, when I read that? I came to America with nothing 35 year sago. I've made something of myself, I think through hard work, talent, and risk-taking, and you're going to write in the New York Times that this is luck."  As you can imagine, it didn't go well for the rest of the interview.

Many people can look past their luck blindness though. Warren Buffet readily admits that he had won the 'genetic lottery' to have been born in the US to a loving family. And in a way, "gratefulness" (thanking God and the universe) is a way to acknowledge luck played a role.

How Luck Blindness Can Mislead You


Scammers know luck blindness is a button they can push to make you behave, along with sunk cost fallacy, hindsight bias, IKEA effect, and so on. By making you believe you are on your way to success, scammers will continue to take money from you, and you'll be happy doing so, because you believe you have learned skills, when it was either luck, or "arranged" success.


Friday, May 20, 2016

Bad Argument: MLM Strawman Arguments Labelled as Mythbusting

A lot of so-called MLM "coaches" write articles to drum up business and recruit downlines, and they have to deal with, what they perceive as "undue criticism" of MLM. However, what they often ended up doing is defeat strawman arguments.

Recently I came across a certain article titled "6 Biggest Myths about MLM -- A Must Read" by Nathan Sloan posted on Network Marketing HQ dot co dot uk.  (Interesting, the URL says 7, so he seem to have lost one in the edit), and it served as a prime example of how MLMers argue... broad insinuations, strawman, this guy used them all.

His myth #1: Pyramid structures are bad


Pyramid SCHEMES are bad. Pyramid structure or pyramid-shaped organizations are not necessarily bad. If a MLMer, even a noob, can't explain the difference between a pyramid structure and a pyramid SCHEME, s/he is uneducated in the MLM fundamentals and his/her upline should be ashamed.

However, instead of explaining this fundamental difference, Mr. Sloan instead pointed out that pyramid structures surrounds us. Basically, he failed to identify the real problem, and instead, went to equivocation fallacy instead. Indeed, this is a common "MLM defense" tactic, present a strawman equivocation with "safe" structures.

Verdict: strawman myth

Solution: Mr. Sloan should concentrate on differentiating pyramid SCHEME vs. pyramid organization. Pyramid scheme is fraud. Pyramid organization is just a shape.

His myth #2: MLM is a Scam


Is MLM a scam? Sloan's explanation is that pyramid schemes are illegal, MLM is not. However, instead of explaining the difference between MLM and pyramid scheme, he simply quoted an OUTDATED definition he copied from "Ultimate Guide to Network Marketing" without attribution. And yes, I have this book on my bookshelf. That's how I recognized it. It was published more than 10 years ago (2005).

For the record, MLM in its current form was created in 1979 when Amway settled with American Federal Trade Commission to institute several reforms (today known as the "Amway Safeguard Rules") in order to keep on operating. The short of it is, the difference between MLM and pyramid scheme is MLM NEVER pays on recruitment (but there are ways to disguise the payment). This is what Sloan failed to address.

However, Sloan then went on to knock down another strawman. He claimed that any one who said MLM is a scam are lying to cover up their laziness and failure. This is in clear contrast of several pyramid schemes that presented themselves as MLM that were shut down. FHTM (shut down 2013) and Vemma (shut down 2015) are just some recent examples. By ignoring a prime example where a scam MLM did operate, Sloan is guilty of lying by omission AND a strawman, not to mention victim-blaming.

Verdict: strawman fallacy, lying by omission (or ignorance), plagiarism, unsupported argument (did not explain difference between pyramid scheme and MLM)

Solution: Sloan should acknowledge that many MLMs are done fraudulently, and attempt to explain the real LEGAL differences why MLM is not a pyramid scheme. Simply quoting a definition is not defense without explaining how that applies to your defense.

Wednesday, May 18, 2016

Another article of how WCM got smashed in China (AGAIN), translated

Previously #MLMskeptic translated the article from LegalDaily.com.cn about how WCM got smashed. This time we're translating a different article of the same event, with additional details.

http://tech.ifeng.com/a/20160514/41608055_0.shtml

海归硕士开空壳公司 以“虚拟货币”连环套诈骗数亿

Master Degree Open Shell Companies, "Cryptocurrency" Scammed Hundreds of Millions


来源:澎湃新闻 
2015年5月,广东肇庆市公安局鼎湖分局经侦大队接群众谢某报案称:其听信嫌疑人梁某花之言,以26000元的价格购买了万通奇迹社交资本云计算平台(以下简称“万通奇迹”)套装产品。开通万通卡成为会员后申请提现,原本每天可分红32美元,但至今未收到分红款项,本金也无法退回。

In May 2015, Zhaoqing City, Dinghu Branch, Economic Investigation Unit (EIU from now on), in Guangdong province received report from citizen Xie, who claimed that he was fooled into believe a Ms. Liang and purchased several Wantong Miracle  (WM from now on) Suites for 26000 RMB, received the WM card, and was supposed to receive daily profit of 32 USD, but so far received nothing, and there's no sign of his original investment.

经广东省公安厅经侦总队组织广州、深圳、肇庆三市警方同时开展行动,一起未经有关部门批准,假借投资原始股权理财、电子商务等新概念,以承诺还本付息来吸引公众投资的特大非法吸收公众存款案由此揭开。

With economic investigation unit of three cities: Guangzhou, Shenzhen, and Zhaoqing cooperating, they revealed a huge illegal securities crime, that never was approved or licensed by authorities, and uses buzzwords such as protoshare investment product, e-commerce, and so on, with promises of huge profits.

近日,深圳市公安局经侦支队向澎湃新闻透露,这起案件涉及全国28个省147个县市区5800多名投资人,涉案金额数亿元。目前该案在进一步侦办中。

Recently, Shenzhen EIU told Penpai News that this scam has victims in 28 provinces, 147 jurisdictions, and over 5800 victims, with amount of scam in the hundreds of millions of RMB. Investigation is ongoing.

办案民警介绍,2013年5月,万通奇迹系列融资产品由所谓某投资银行控股集团董事长徐某、CEO刘某及执行董事徐某忠、“金融学家”孙某等人策划成立。
Police investigator said in May 2013, WM series of securities was established by Mr. Xu, president of some investment bank holding group, a Mr. Liu, CEO, an executive director Mr. Xu something Zhong, and a "financial scholar" Mr. Sun

轻信万通奇迹投资收益高被套牢
Belief in WM Investment Profit, Ensnared in Trap


湖南长沙的陈女士是万通奇迹的投资者之一。2013年9月,好友陈某芬告知她称,有一个叫万通的公司发布了万通奇迹系列产品,投资收益高,让她了解一下。

Ms. Chen of Changsha, Hunan province, was an investment in WM. In September 2013, a friend Chen (something) Fang told her that this Wantong (WT from now on) company released a series of WM products, promised huge profits if invested. Asked her to look into it.

随后,陈女士在网上查询了有关万通公司老总徐某的资料。“网上的徐某是天使投资人,作为投资银行的董事,曾帮助7家中国公司在国外上市。”

Later, Ms. Chen searched the boss of Wantong, a Mr. Xu online. "Xu, online, is an angel investor, CEO of an investment bank, helped 7 Chinese companies get listed in foreign exchanges."

陈女士信以为真,加入了一个万通奇迹的QQ群,看到有消息称万通公司将于2013年11月在深圳举行招商会,禁不住诱惑的她从长沙赶到深圳参会。

Ms. Chen believed all these to be true, and joined a WM related QQ Chat group, and learned of a recruiting meeting held by Wantong in Shenzhen coming in November 2013. Unable to resist, she went to Shenzhen to attend the meeting.

据其回忆,当天有几百人参会,万通公司的执行董事周某口若悬河,描绘了一番美好前景,并回答了参会人员的提问。

Based on memory, there were hundreds of people there. Wantong's executive direct, Mr. Zhou, promised the sun and the moon, described a bright future, and answered all of the questions from the attendants.

“投资13000元,每天收益近100元,收益挺高。”会后不久,陈女士即出资39000元买了三套万通奇迹WCM705(每份1999美元)产品。

"If I invest 13000, I can profit 100 per day, that's very high profit." Not long after the meet, Ms. Chen bought in with 39000 RMB and bought three of the WM suite called "WCM705", at $1999 USD each.

陈女士介绍,万通奇迹系列套餐有5种投资金额,分别为399美元、799美元、1999美元、1599美元和1999美元,金额不同每日分红也不同。如购买一套1999美元产品,每日可分红16个电子币,相当于16美元。

Ms. Chen explained that WM suite has 5 amounts: $399, $799, $999, $1599, and $1999. Daily profit is dependent on the amount invested. For the $1999 suite, daily share is 16 E-points, worth 16 USD.

购买万通奇迹产品后,陈女士还在万通公司网站注册成为会员,登陆后可浏览个人资料及账户上的电子币。最初她还能正常提现,不料没几日,提现就出了问题。

After the purchase of these suites, Ms. Chen registered in WM website, and can view her account and accumulated e-points, and even cash out at the beginning, but soon, cashing out became a problem.

“先是被拖延,后来干脆就不能提现了,2014年4月,连网站都打不开了。”陈女士遂询问好友陈某芬的上线王某波,但对方也没说出个所以然来。

"First it was delays, then later all cashing out was stopped. By April 2014, the entire website is gone." Ms. Chen asked her friend's upline, a Mr. Wang (something) Po, but he had no explanation.

2015年5月,陈女士获悉徐某在深圳新开了万怡通国际投资发展(深圳)有限公司(下称“万怡通公司”),而且还将在一五星级酒店召开投资宣传会,她又赶了过去。

In May 2015, Ms. Chen hard that Mr. Xu has established a new company in Shenzhen called WanYiTong (WYT from now on), and will do a promo event at a 5-star hotel. She went to check it out.

Tuesday, May 17, 2016

BREAKING NEWS: WCM777 smashed AGAIN in China, is Phil Ming Xu in custody?

PatrickPretty.com spotted a news in ShanghaiDaily that a Mr. Xu of "World Capital Market" was arrested by Chinese police for pyramid scheme in China. It appears that Phil Ming Xu of WCM777 has moved back to China and restarted his scam which collapsed in 2014 in the US. Below is a bilingual version of the news, with English version provided by me.


http://www.legaldaily.com.cn/index/content/2016-05/15/content_6626584.htm?node=20908

会员遍布28省 涉案金额数亿
Members spread across 28 provinces, amount into hundreds of millions

“万通奇迹”涉嫌非法吸存被查
Wantong Miracle suspected of illegal securities, being investigated

发布时间:2016-05-15 20:42 星期日   来源:法制日报——法制网
Posted: May 15 2016 Sunday 20:42     Source: LegalDaily.com,cn

法制网记者 李想  Reporting for LegalDaily Xiang Li


2015年5月27日,广东省肇庆市鼎湖区居民周华(化名)走进当地经侦大队报案。情绪激动的周华告诉警方,自己听信他人投资了万通奇迹社交资本云计算平台。孰料,不仅没有收到一分钱分红,连2.6万元本金也“打了水漂”。


On May 27, 2015, Ms. Zhou Hua (pseudonym) who resided in Guandong, reported to the local Police Economic Crime Detachment to report that she had been defrauded. The frustrated Ms. Zhou told police that she trusted others and invested in "Wantong Miracle Social Capital Cloud Computing Platform", and not only did not get any promised profit, the 26000 investment is "gone with the wind".

    警方顺藤摸瓜,一个披着投资原始股权理财、电子商务等新概念外衣的特大非法吸收公众存款犯罪团伙浮出水面。据调查,此案涉及万通卡会员5800余人,分布于全国28省,涉案金额达数亿元人民币。

Police followed the leads, and revealed this humongous illegal securities crime syndicate that used various new concepts such as "protoshare money management", "e-commerce" to disguise itself. Based on investigation, this crime involved over 5800 Wantong Card members, spread across 28 different provinces (in China), involving hundreds of millions in RMB

    精心包装欺骗群众
A exquisite facade to deceive the masses

    据警方介绍,2014年1月,周华听信犯罪嫌疑人梁某、陈某的话,投资购买两份“万通奇迹”WCM705套装,价值1999美元,按照“万通奇迹”公布的人民币和美元6.5:1的汇率,折合人民币13000元,对应1999个电子积分。对方向周华承诺,她可以获取每天16美元的分红,可累计100次分红。

According to police, in January 2014, Ms. Zhou believed suspects Mr. Liang and Mr. Chen, and purchased two of the Wantong Miracle "WCM705" suite at cost of $1999 each. Based on the then published rate of 6.5 RMB to 1 dollar that's about 13000 RMB. This would give the investor 1999 "points". According to the then promises, she can get 16 USD every day as profit share, and can do it 100 times. 

    《法制日报》记者登录网页搜索“万通奇迹”,发现有不少人在网上询问投资“万通奇迹”是否靠谱。那么,“万通奇迹”到底是怎样的一家公司呢?

Legal Daily reporter searched the Internet about "Wantong Miracle", and found there were many people asking online is Wantong Miracle" legal. So what sort of company is Wantong Miracle? 

    5月6日,在深圳市第二看守所,记者见到了在押犯罪嫌疑人徐某。据徐某称,大学毕业后他曾在媒体做过编辑,后来转行到金融领域工作。

May 6th (2016), in Shenzhen 2nd detention center, reporter met the suspect Mr. Xu, who had been arrested. Mr. Xu claimed, after graduating from university he worked as producer in media, then transferred to finance. 

    据肇庆市公安局经侦支队副大队长张朝晖介绍,2013年5月,“万通奇迹”系列融资产品由某投资银行控股集团董事长徐某等人策划成立。徐某等人宣称,“万通奇迹”进行的是社交资本革命,利用互联网云服务、云计算和全球零售折扣系统,为全球客户提供资本放大。

According to Zhang Zhaohui, deputy chief, economic investigation detachment, Zhaoqing Public Security, Wantong Miracle's various products was introduced to China in May 2013, by a Mr. Xu (supposedly some "investment bank holding group CEO") and others. Xu, et al, claimed that "Wantong Miracle" is a social capital revolution, using Internet, cloud computing, and world retail discount system, to provide "capital magnification" to global customers. 

Saturday, May 14, 2016

Scam Spotting: too-good job offer, fake website, and Bitcoins

A redditor recently posted on /r/scams about a too-good-to-be-true job offer:
Hi all, I was hoping you could help me figure if this job offer is a scam. So I received an email saying that I had applied for customer service representative at another company, that was an agency they work with (note I did apply to this), and that they believe me to be better suited for a better job. The HR rep who contacted me said she's confident I stand a chance, and so she wants to forward my application to the hiring manager. The company is currently based on switzerland, and they are opening an office in my area (Toronto Canada) on May 30th. All she requested was that I fill out the employment application. There was nothing weird about the application, it asked for my usual contact info and two work references. No sin number or anything private, or that they couldn't get off my resume. The reason I'm weirded out is because the pay is substantial (for reference it's +20/hr and i'm still in school) and they mentioned the company works with bitcoin. The company name is Trimension Capital Holding. Does anybody have any experience that they'd be willing to share on if this is a scam or not?
This already has a couple red flags

  • Based in Switzerland, but opening an office in Toronto
  • Over $20 per hour for someone not yet out of school
  • Encouraged to apply even if not certain qualified (to do what, exactly?)
  • It involves "Bitcoins"
But let's track this down all the way. If you search for "Trimension Capital" on Google, you will get back a Trimension Capital GmbH at Baarerstrasse 135, 6301 Zug, Switzerland. So far, it matches. 

My first link took me to moneyhouse.ch profile fo the company, and we larned that company was founded in 2012 as "Pinewood Capital GmbH", changed name to "Trimension Capital GmbH" in 2013, and changed to "Trimension Capital Holding GmbH" in 2014. It's headed by Thomas Bieri. Under "contact" it shows website as trimension-capital.com

MoneyHouse.ch says the website should be trimension-capital.com

Next couple links goes to trimensioncapital.com   NO DASH!!!!!!!


Something is very fishy here. Let's check DNS at WHO.IS

Friday, May 13, 2016

Scam Tactics: False citing of legislation or certification authority

Scams, in order to claim false legitimacy, will cite laws, regulations, and licenses to sound official, when they are grossly exaggerating the truth, or are outright lying.

Below we will discuss four example of such outrageous fraudulent behavior, and how you can see through such deception with just Google and some sense of skepticism.

Gemcoin, USFIA, and AB129

USFIA was an alleged 32 million ponzi scheme shut down by SEC on September 29, 2015, having been previously chased out of China in 2014 by Chinese authorities. Two of the perps were arrested in Thailand in 2014 through China's Operation Foxhunt extradition program and extradited with other perps back to China, only to see the scheme restart in the US under the same US leader Steve Chen.

When it was running at full steam their marketing material claimed that Gemcoin, their supposed altcoin was the first cryptocurrency authorized by California bill AB129.

Gemcoin believers repeating claims that Gemcoin was first cryptocurrency authorized by
California bill AB129 (2014). It was complete bull****, of course. Every bit of Steve Chen's assets
had been counted and it came out to only 20 or so million. "50 billion"? Hilarious. 
The problem is AB129 said no such thing. The full text of AB129 is easily Google-able.It is only a single sentence.  It simply says that from here on California's restriction (that all transactions must be done with US dollars) is rescinded.  Gemcoin was not mentioned or referenced.

Yet the Gemcoin believers did not question the claim. They simply accepted the extraordinary claim as true. And they put in money for something "backed by amber".

There was no amber or amber mine. And now their money is lost or tied up in an international ponzi scheme. At least report, the receiver that took over the company can only locate about 20 million of the 32+ million believed to be involved. A big amount was sent overseas to China and Singapore.

But at least USFIA scam referenced a real law. The next scammer simply made up an agency that doesn't exist.


Thursday, May 5, 2016

How to be an online marketing idiot: arbitrary DMCA takedown notices and SLAPP

English: Very poor sketch of a desired icon fo...
English: Very poor sketch of a desired icon for DMCA takedown notices on articles, emphasizing Wikimedia's submission... created for conversation at Commons:Village pump#DMCA takedown templates and material. (Photo credit: Wikipedia)
It seems some people have NO concept of copyright, and think that issue random threats to sue is somehow a valid tactic in "reputation management". Such idiots should never be allowed to do marketing online, but this is a democracy, with freedom to do all sorts of things, including making a total fool of oneself.

Recently, Techdirt, a tech news website, highlighted a particular idiotic DMCA takedown notice. The story basically goes like this. in 2015, Techdirt writer Tim Cushing put together a list of "stupid DMCA takedown requests" because, well, they are stupid, like DMCA takedown notice to Google... about images cached on Bing (which belongs to Microsoft, not Google), or DMCA takedown on news coverage about one's crimes by self-publishing a book about it, and so on and so forth.

One of these... online marketing idiots, instead of acknowledging mea culpa, doubled down and issued a DMCA request to Techdirt claiming their copyright were violated because Techdirt used a couple of the images offered by the company, called Andromedical, as example, complete with Andromedical's prominent watermark. Oh, and the same copy apparently posted random comments online claiming Techdirt is owned by some company nobody ever heard of, is a patent troll, claiming various bogus misdeeds by the writer, and more. It's a basic slander campaign... all because they can't admit they were idiots.

The idea that TechDirt, a news website, can be liable for copyright violation for "covering" Andromedical (whose product is a penis pump, named... AndroPenis (tm), really imaginative, guy) as a news item is simply hilarious. It's even MORE hilarious that Andromedical's complaint also claimed that Techdirt is a "counterfeiting operation" and the violation is being reported "to INTERPOL".

The bottom line is actually quite clear: "we don't like what you say about us, STFU!"

But the world doesn't work like that. There are exceptions to copyright called "fair use", and using the company logo and publicly available photos provided as promotional material by the company to illustrate the company, and in no way asserts being the company, is obviously fair use.  If you put info out in the public, you can't control what people do with it, be it positive or negative.

Yet some scams and suspect schemes are quite fond of using these bogus copyright and/or trademark claims as well as threat to sue or outright lawsuits in hopes of silencing critics as a part of their "reputation management" strategy.