Thursday, July 12, 2012

Bad Argument: The "Caveat Emptor" disclaimer

Does disclaimer prove you know all the risks going in?
One of the responses by believers in the scheme against perceived "criticism" was caveat emptor, which is Latin for "let the buyer beware". It usually goes like this:
A: Acme XYZ is a scam because of ____, ____, and ____.
B: Acme XYZ is not a scam because it has various disclaimers like "may lose value", "not an investment", "you join of your own free will", etc.
This is also a multi-level fallacy as it incorporates multiple fallacies into a single response.

Usually, you argue an issue by 1) you defeat your opponent's premise, or 2) you advance your COUNTER-premise, the opposite of the opponent's premise. As B's response is unrelated to A's premise, it's clear that it's using 2, arguing the counter-premise. 

Red Herring

Does having disclaimers *prove* somehow it's NOT a scam? 

The answer is no. Both legal and illegal ventures have disclaimers. Disclaimers, in itself, neither prove nor disprove the scheme is a scam. Thus, the entire argument is irrelevant red herring. 

However, there is more. 

"No True Scotsman" / "Shifting Goalpost"

A disclaimer is also a form of "shifting goalpost" or "no true Scotsman" fallacy. They present you one thing, then they hit you with a disclaimer that says "we didn't mean *that* part (in the disclaimer)".


The idea merely having disclaimers makes the scheme not a scam is also over-generalization, as it failes to recognize the possibility that there could have been fraud, by concealing potential flaws / risks. The wikipedia entry on caveat emptor specifically said: "The only exception was if the seller actively concealed latent defects or otherwise made material misrepresentations amounting to fraud."

Concealing information is fraud, no matter what amount of disclaimers you put in. Merely having a disclaimer does NOT prove (or disprove) it's not a scam.

ILLEGAL disclaimers

If you operate a restaurant, and you have a disclaimer over the door that says "you eat here of your own free will, if you caught food poisoning, too bad for you, I am not responsible", does that really absolve you of any responsibility? The answer is "of course not". You can't take away people's rights and/or absolve your own responsibility just with a disclaimer.

If you perpetrate a fraud, and put in a disclaimer that says, in essence, "by joining my scam you admit you handed over your money to me willingly and it belongs to me now", is that legal? No!. A fraud is still a fraud. No amount of disclaimer would make a fraud legal. 

When the same scammer tries the argument in court, it's even more hilarious.

EXAMPLE: Dennis Bolze Ponzi in Tennessee

Dennis Bolze, until 2008, was believed to be an outstanding businessman in Tennessee, with a mansion, plenty of luxury goods like cars and such, but he fled in December 2008 when his Ponzi scheme collapsed. FBI and IRS agents nabbed him 3 months later, extradited him back to Tennessee for trail, and he was convicted and got a 21 year sentence, with a special sentencing enhancement because he deceived seniors, deemed "especially vulnerable victims".

At the trial, Bolze argued that his victims deserve part of the blame and it wasn't all his fault. As reported by local news:
In his sentencing appeal, Bolze argued that the people he solicited portrayed themselves as "successful, engaged, articulate, had their wits about them, knew what they were doing."
He also said they claimed to be investing discretionary income.
Which roughly translates to: it's their fault. It's a standard "blame the victim" ploy.

It is also interesting that Ad Surf Daily and many other Ponzi schemes tried the same sort of disclaimers. You join of your own free will, don't blame any one, may lose money... etc.

When you start to see disclaimers from a scheme, and/or affiliates started to use disclaimers to defend the scheme, it may be time to run. 
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