Monday, July 13, 2015

Scam Psychology: How does a scam encourage people to adopt a lost cause?

When one questions scams and suspect schemes for as long as the MLMSkeptic did, one'd seen a lot of things, such as people claiming that they forgive ZeekRewards Ponzi even before we knew the full extent of damage (just under a billion dollars), how Paul "ZeekRewards" Burks told newspaper "don't blame me, I never told them to invest more than they can afford", and so on.

Jael Phelps picketing Trinity Episcopal Church...
Jael Phelps of Westboro Baptist Church picketing Trinity Episcopal Church in Tulsa, Oklahoma
(Photo credit: Wikipedia)
However, some time the... fanaticism of certain fans of particular schemes rival that of the pro-life-crazies (who had assassinated doctors that performed abortions, for example, try reconciling that!), or perhaps those of Westboro Baptist Church (well-known crazies of the US). Others appear to be willing to "go down with the ship".

A recent example is Emgoldex, which just rebranded itself as Global InterGold, and some "diehard" Emgoldex fans, eager to defend their own stance on the scam, engaged in conspiracy theory with zero regard to logic.

I won't bore you with long history of Emgoldex. Suffice to say this European based Ponzi scheme had spread via help of the Internet, and nobody really knows where it's being ran out of (may have been Russia) but it was denounced as illegal all over the world, including the US (both state and Federal level), Malaysia, Philippines, even Dubai UAE where it allegedly was based out of.

Yet there are still backers who claimed that "you just don't understand Emgoldex", "you just don't understand MLM", "you are prejudiced against MLM", and so on and so forth. You can find many of them in the comments on this topic.  Some of them are certain of their righteous cause, others are somewhat doubtful but "hopeful" that they had made the right choices, even when facts started to stack against them.

First, just to explain, a "precious metal MLM" makes no sense economically. Precious metals such as gold and silver have well known world "spot" market prices that you can look up much like stock prices. Thus, nobody would agree to pay a large premium over the spot price. Yet for MLM to exist, one generally have to include enough margin, 35-40% according to on top of the cost of the item to pay commissions. That means for a precious metal MLM to exist for real, and assuming the members are willing to tolerate a 10% surcharge (i.e. pay 10% ABOVE market rates) the company still have to somehow find gold at 25% BELOW MARKET RATE to pay out commission at a typical comp plan. That is clearly impossible. Which is why precious metal MLM makes no sense. It must be a scam. And we know that Emgoldex was already accused of being a scam in multiple countries.

Yet here's a TL;DR version of the various "arguments" from the Emgoldex fans:
  1. Visit a PO Box to determine whether the company's legitimate or not (yes, PO Box)
  2. Refuse to accept that the PO Box is a company registrar / maildrop, not a real office
  3. I got paid so it can't be a scam (to me, and me alone, and I insist that you take my word for it)
  4. You don't know how it works (you can't, since what you say is clearly NOT what I believe)
  5. You don't know how MLM works (at a website called "") 
  6. It's not the "real" Emgoldex. There's an evil doppleganger out there ruining its good name! (I really have no proof of such, but I refuse to accept my scheme is evil, so it must be evil twin!)
  7. You are prejudiced against MLM (and I insist we're MLM, not pyramid or Ponzi scheme!)
1 and 2 are idiotic

4 and 5 are variations of "you don't know the real story"  and covered here as well
6 is a variation of "no true Scotsman" argument  

7 is a standard sour grapes argument with a touch of Dunning-Kruger effect.

English: Willet on the beach.
English: Willet on the beach. (Photo credit: Wikipedia)
All in all, these affiliates are just... delusional, as they shift from one excuse to another, sometime abandoning the field altogether, probably to "get away from the negativity" and so on and so forth.

Bird's occasionally bury their head in mud, but only because they need to dig at a fish hidden in the mud. They don't do it all the time. (And the story that ostrich bury their heads? Completely false.)

People who avoid reality will bury their head against the truth, except truth is like air... you can't avoid it. You can occasionally escape into your private fantasy, but you can't live long-term like that, except in "looney houses" (i.e. mental institutions).

But that's what scammers WANT you to do... isolate you from the truth, making you believe that the real world is false, that they hold the truth (and you need to PAY for it). Much like cult leaders do their their sheeple, so do scammers.

But that requires you to GIVE UP your reality, and accept theirs.

Why should you? 


  1. Great post. I guess the ones who are dillusional though can maintain a slightly higher moral highground than the ones who flat out realize they screwed up but continue to promote these scams in the hopes of getting their money back.

    On a side note, I wish that people who refer to anti-abortionists would stop calling them "pro-lifers". To do so implies that those who are pro-choice are also "anti-life" or "pro-death" which is not the case. A woman's right to choose is just that - a choice to maintain control over the decisions of one's own body.

    1. Interesting point. So you're saying anti-abortionists hijacked the term to mean something OTHER than its obvious meaning. Yes, it does make sense. However, discussion of that topic would be way off topic here. :)