Are Scammers Sociopaths or Psychopaths?

Psychopaths Rule Our World (Photo credit: Adam Crowe)

A reader asked: how can a scammer justify scamming people causing others to lose while he gains? Are they psychopaths or sociopaths?

The answer is not that simple. If the alleged scammer was NOT AWARE that he is scamming people, then the question would NOT apply. However, this then becomes a problem when such an ignorant scammer is then informed that s/he is actually scamming people. However, that's a completely different problem.

For the purpose of this article, let's assume that the scammer knows perfectly well that they perpetuating a scam.

First, let us define what is a sociopath, and what is a psychopath.

A sociopath is commonly defined as someone who has "a pervasive pattern of disregard for, and violation of, the rights of others that begins in childhood or early adolescence and continues into adulthood."

The clinical term is "anti-social personality disorder", or ASPD , or just APD. There are five subtypes, but the one we are focusing on today is "covetous antisocial". A person who has the covetous APD believes that the world owns him what he's due, and because he feels that way, he will do ANYTHING, including cheat / lie into getting what's due him.

A psychopath, on the other hand, is described as someone who lacks empathy, and thus, have no regard for the pain he is inflicting on others. Psychopaths are often described as heartless killers, and frequently appear in horror movies. However, psychopathy can appear in far subtler forms.

While the two are different, they are very similar, which leads to frequent confusion between the two. Basically, sociopath is a term used to describe frequently the "social cause" of the disorder, while "psychopath" is a term used to describe the "internal / psychological cause" of the disorder. However, this difference may be wrong.

The Six Types of MLMers

There are six types of MLMers

The insiders

• MLM grunts  -- the 99%, most will lose money

  

  Multilevel Marketing... Which type are you?
  (Photo credit: Wikipedia)

• MLM stars -- the 0.5% who graduated the grunt stage
• MLM coaches -- the other 0.5% who thought they did graduate
• MLM supporters -- the lawyers, consultants, comp plan writers, and such

And the outsiders

• MLM opponents -- all MLMs are scams and should be shut down
• MLM critics --  MLMs have many weaknesses that needs to be addressed

[ Read about all six types here ]

MLM Basic: What is Inventory Loading?

If you have been in MLM for a while, you may have ran into the term "inventory loading". So what is it?

In a product-based MLM, where you are supposed to sell products, and help your downline sell products. If you "encourage" your downline to stock up on products, beyond what s/he can normally sell, you may be guilty of "inventory loading".

DSA Logo (Photo credit: Wikipedia)

DSA, the direct selling association, defines inventory loading as follows:

The plan or operation requires or encourages its independent salespeople to purchase inventory in an amount, which exceeds that which the salesperson can expect to resell for ultimate consumption or to consume in a reasonable time period, or both.

While MLMWatch has a slightly different definition

Stocking up on products to meet sales goals, a practice that is promoted with claims that it will push the new distributor to higher bonus and/or leadership levels quickly. In reality, it increases the risk of significant financial loss if sales do not occur.

Why is this done, and what can you do about it?

Reader Question: Are you anti-MLM?

Ban Pyramid schemes, but not all MLMs are pyramid schemes (though many are)
 (Photo credit: Wikipedia)

Some readers have asked

"Are you anti-MLM? Everything you write seem to be anti-MLM."

This particular question has multiple levels of meaning depending on what else accompanies this question. Very often, this is accompanied by Ad Hominem attacks such as "sour grapes" (i.e. "you must have failed in MLM").

As sour grapes have been handled in a different post, I'll consider the question without any connotations, and answer it very clearly:

I am NOT anti-MLM. 

I am anti-pseudo-MLM scams

I am anti-badly-designed-MLM that is virtually indistinguishable from scams.

I am anti-recruiter-MLM Stars who abuse the MLM they join and turn it INTO a pyramid scheme instead of a proper MLM business. 

Scam Study: Pigeon King

EDITOR'S NOTE: Scam Study is a quick summary of the various proven Ponzi or pyramid schemes. It is meant to be a summary, with relevant scam factor analysis. 


Introduction

Arlan Galbraith, head of Pigeon King
International, a Ponzi scheme that
victimized 1000+ farmers of over 20
million dollars. (credits: CTV)

Pigeon King International is owned and run by Arlan Galbraith, who resides in Cochrane, Ontario, Canada. It started in 2006 when Mr. Galbraith started offering "breeding pairs" of pigeons for up to $500 per pair, with guaranteed buyback of the pigeons for the next TEN YEARS at up to $50 each. With slick video ads, radio ads,  and appearance on talk shows, and farming meets and conventions, and prompt payment every week for all the bred pigeons for the initial enrollees, PKI quickly took on new breeders in multiple US states as well as several Canadian provinces.

Initially Galbraith claimed that the pigeons are to be sent to the Middle East as racing pigeons. And millions of dollars had already been invested with Galbraith's operation. Many of those recruited were Amish farmers.

Individual investors not only paid Galbraith for the "breeding stock" (for hundreds of thousands of dollars), they also spent large amounts of money, 100K or more building the barns to house the pigeons being bred. It is believed that over 1000 breeders have dealt with Galbraith, and the largest investor put in over 1 million dollars. Total money invested is believed to be about 20 million.

Dave Thronton of CrimeBustersNow started raising the alarm in September 2007, calling PKI a Ponzi scheme. His warning was not heeded, and he was in return, accused of operating "extortion front".

The "legitimacy through association" fallacy

One way a suspect opportunity can appear to be more legit is by plastering name brands all over itself.

Recently, a suspect opportunity called Wazzub launched a "portal" called PerfectInternet. I and others has long suspected the legitimacy of Wazzub, and I have written a long analysis about it.

On May 31st, I found one Wazzub defender's 'fervor' to be rather surprising, as he thought every brand name on this Perfect Internet is some sort of a legitimate "partnership". Before we go on, I'll show you a screenshot of the Perfect Internet with a few bits highlighted.

Corelation is not causation: danger of magical thinking

I spotted this Dilbert toon the other day:

This is a perfect example to illustrate the danger of equating correlation to causation, or in other words, just because the two events occur near in space or time does NOT mean one caused the other.

In the comic strip above, the event "PHB gets nasty anon email" and the event "PHB leaves Dilbert's cubicle" does NOT imply any sort of causation between them, when we saw Wally sending the nasty anon email at the end.

So why do so many MLMers and other "true believers" believe correlation IS causation?