Saturday, April 20, 2013

Oxytocin, Your Brain, and Your Gullibility

Spacefilling model of oxytocin. Created using ...
Spacefilling model of oxytocin. Created using ACD/ChemSketch 8.0, ACD/3D Viewer and The GIMP. (Photo credit: Wikipedia)
One way a conman gains your trust is to appear vulnerable, friendly, weak, grandfatherly or grandmotherly, preferably with gray or white hair, and older. Now here's something you don't know... Your body has a BIOLOGICAL function that reacts to weakness in order to give compassion. It's a racial survival tool, all for one and one for all and all that. It's called oxytocin. Social interactions cause your brain to release oxytocin, and that leads to trust-building, even with total strangers who only SEEM to have something in common. That's why lovers cuddle and friends and relatives hug. It's all oxytocin.

And scammers know exactly what button to push to get you to believe that they needed help from you... And somehow you'll gain something from it.  But you won't get anything back. Whatever help you offered is gone. That was the con.

In a "pigeon drop" con, the "mark" (intended victim) was convinced to give up an amount of money or valuable object in hopes of bigger amount of money, usually by claiming some sort of reward, time limit, and so on. A typical example goes like this... At a gas station, one guy comes up to the gas station attendant, claimed to have found this pearl necklace in the restroom, "must be worth a fortune!"  Then a call comes in... the guy's wife lost the necklace there did any one see it, and he's offering a $200 reward, and he'll be there in 30 minutes. The guy offers to "sell" the necklace to the attendant for $100, because he was running late.

As you can guess, there was no reward. The attendant was out $100 bucks, and the "pearl" necklace is a plastic fake worth a few dollars at best. The attendant (i.e. the "mark") was persuaded by two things: 1) the need to "help" the guy who want the necklace back, AND 2) the need to help the guy who "found" the necklace, but had to leave for work ASAP. Neither story can be verified, and time pressure prevents any verification. The oxytocin kicked in and made you trust the two conmen because they appear to be "vulnerable".

Friday, April 19, 2013

Bad Argument: Pixie-Dusting and "Cool Ingredient" as "evidence" of efficacy

Lingzhi or Reishi
Lingzhi or Reishi (Photo credit: Wikipedia)
One way the nutritional supplement industry attempt to talk up its efficacy is to claim its product(s) contain ingredients that is allegedly good for you. However, such suggestions are usually left very vague, leaving it up to you to convince yourself that taking their product will improve your health when they promised no such thing through weasel words like "support" or "enhance".

This is often now done by adding some magic ingredient derived from Eastern medicine (previously it's always some sort of Asian superfruit. We've done Noni juice, then Mangosteen Juice, then special FORMULATIONS of such...)  Some of the more recently hyped ingredients would include gandorama and cordyceps, both were exotic ingredients in "Chinese Medicine".

Gandorama Lucidem, which usually goes by its Chinese name, Lingzhi mushroom, or the Japanese name, Reishi mushroom, is indeed, a mushroom that is revered in Chinese medicine for almost magical qualities due to long stories in old Chinese literature. Modern science have slightly confirmed some of the qualities, but not that much. That doesn't stop companies from claiming their coffee or pills with Lingzhi are good for you, of course. Pharmacists believe a daily dose of Lingzhi should be 1250 to 2000 mg. So how much Lingzhi does a typical serving of whatever contains? Try 250 mg (and I had to really really dig for that number, as it's NOT advertised anywhere!)

Thursday, April 18, 2013

Psychology and Physiology of the Gullible

Vectorized recreation of Image:Gray726-Brodman...
Vectorized recreation of Image:Gray726-Brodman.png with highlighted prefrontal cortex. (Photo credit: Wikipedia)
Recent study have pinpointed the part of the brain that makes us gullible.

No, really. It's a part of the prefrontal cortex.

When you're told something, two parts of your mind go to work... The connection maker / interpreter, and the logic processor.

Your connection maker / interpreter  takes that "something", and tries to find connections between it and your existing knowledge ("my grandma told me something like that back when...") while your logic processor takes that something and start to analyze it for logical content (can this really be true based on what I already know/believe?)

For most of us, the brain balances out the two activities and come up with a consensus decision. It's "true" because it is "both trusted and verified".

The aforementioned study shows that in children and seniors, due to underdeveloped (or devolved) prefrontal cortex, the logic processor does not override the interpreter when it should have, leading to information classified as "true" even though it's really "trusted, no/insufficient verification".

In some people that logic center never quite developed, or the interpreter is OVERdeveloped, leading to an imbalance that makes them susceptible to superstitions, conspiracy theories and scams. They see connections everywhere (If I do this, that happens, even if this and that are unrelated), and believe everything they're told (unless it conflicts with something they already "know").

Those are the kind of people scammers love to find.

Wednesday, April 17, 2013

India rocked by emu Ponzi and sheep Ponzi

High sheeps
High sheeps (Photo credit: Bertoz)
Various farmers in rural India were cheated into invested in emu farms and sheep farms that promised return of 2% PER MONTH.

SHD (Sheep Husbandry Department) is believed to be a Ponzi, under investigation by Indian regulatory authority SEBI. It was only 4 months ago (November 2012) that SEBI warned people off Beetal, another sheep-husbandry scheme. The farmers will participate by buying a sheep for several thousand rupees, and once the sheep multiply (typically give birth to a litter of 4) that will give alleged high profits, and the company will "guarantee" buybacks.

Only a year ago SEBI warned farmers off emu farming by "Susi Emu Farms", that followed the same formula... they sell pairs of emus, you raise them have them lay eggs, hatch them, grow little emus, and sell them back. Soon there was a "VIP Program" where you don't even need to invest in the farm... just give them money and they'll do the "real" emu rearing, you just reap in the profits. It was all fake, and 50 million was believed lost.

Tuesday, April 16, 2013

BREAKING NEWS: SEC says Profitable Sunrise is a Ponzi scheme that sent its money to multiple nations worldwide

Got an update on According to documents filed, SEC has determined Profitable Sunrise, which purported to payout up to 2.5% a day through "bridge financing", to be an unregistered security promising returns to US citizens, in violation of US law. Furthermore, money tracking revealed that money was transfered to Czech Republic, Hungary, Panama, and more. SEC has already froze assets it can reach in the US, and with local police help, assets in Hungary. It is not known if anything can be done about assets in other countries.

Profitable Sunrise often uses religious figures and icons in its solicitations. Here is one such example:

Yep, that's no less than Jesus the Redeemer (that huge statue in Rio de Jainero, Brazil)

Monday, April 15, 2013

BREAKING NEWS: Another report of Tarun Trikha's Arrest in India, also from Bhaskar

Frankly, the Bhaskar is not a reliable source of information, so this will remain "suspicious" (thus far not contradicted), but here's the article

Original: (Google Translated)


28 thousand crore scam mastermind behind MLM, TVI Express CEO of arrest

Tarun Trikha arrested person's name is mentioned. Saturday brought him and Bhavani Bhavan Kolkata on transit remand were questioned at the CID headquarters.

On Sunday it was the West Medinipur district court. Vineet Goyal CID Special IG reported the matter. Tarun district police were looking for him since.

In February this year the case was assigned to CID. CID team laid a trap for catching juvenile and arrested last April 3 at Delhi airport.

Tarun has spread its tentacles in 160 countries. According to Tarun 28 thousand crore in India so far is a forgery.

Perception of Savings is More Important Than Real Savings

JCPenney in Frisco, TX
JCPenney in Frisco, TX (Photo credit: Wikipedia)
Human psychology is often counterintuitive. Perception of savings is often more important than real savings, as J.C. Penney found out to its chagrin.

In  NY Times article (link at the end) J.C. Penny had for several months rolled out a campaign that promised "everyday low prices" and cut its sales events. Instead of often holding sales, it will keep the prices permanently low, promising savings every day, instead of only at sales events. It tried to adopt more of a Walmart-like pricing policy. 

Shoppers, instead of enjoying the easier time to shop (i.e. Don't have to wait for sales), actually stopped coming. Sales dropped 25% from last year, and 5 days ago its CEO Ron Johnson was shown the door, and Penney is going back to the old model: lots of sales events, with normal prices on the high side. 

What's the difference between a shirt that's priced at $5 vs. a shirt that's $10 with 50% off tag? 

The answer has everything to do with psychology, not logic. 

Sunday, April 14, 2013

BREAKING NEWS: TVI Express Mastermind's Arrest Reported in India MLM News

Tarun Trikha's arrest was not widely covered, and it's quite strange. He is the head of billion dollar worldwide pyramid scheme "TVI Express", with members already convicted in multiple countries, and scheme outlawed in even more countries on multiple continents. However, the mastermind remains at large... until now.

Reports first appeared on Facebook about a week ago.

There was a short segment on Bengali local news, that got uploaded to Youtube, then that video got taken down for copyright complaints (Huh?)

Then the photos of "Tarun Justice" appeared, then disappeared on IMGUR image hosting. Though the same album quickly appeared on IMGUR under a different album.

There was a website on this, then that website disappeared and became some micro-work website.

There was a different video of the guy getting taken to local magistrate's office. That's still there.

But where's the news coverage? Turns out, the first to cover this was India's own MLM news, The Bhaskar: