You may or may not have heard USANA, but it's okay, it's not that important. They sell pills, lotions, and baby formulas. Yes, one of these items does not fit.
Any way, their high pressure tactics in China means they NEVER received a direct sales license in China, even though other companies like NuSkin and Amway have them.
So what do they do? They basically bought one... By buying out a company called BabyCare in China in 2010, and that company did get a direct sales license in China in 2011.
So by merging the product line a bit, USANA now sells baby formula... and gets a backdoor into China, mainly by making Chinese sellers pretending to be in Hong Kong.
Previously MLMSkeptic have pointed out that Hong Kong is often used by flaunt Mainland Chinese laws. Chinese citizens are encouraged to travel to Hong Kong to sign up for various pyramid selling schemes for outrageous promises of IPO riches. One such, Interush, was busted in Hong Kong last year.
Citron Research, which previously pointed out problems with NuSkin and China, has just dropped another bombshell... USANA may be next on the chopping block.
In the article referred to, USANA affiliates in China have been citing some very odd references... USANA founder Dr. Wentz's "Einstein Prize", and a "North American Nutritional Supplement Guide" by "MacWilliams.
Let us examine each one in a bit more detail.
a blog about Skepticism, MLM, Scams, and Critical Thinking
Showing posts with label Critical Thinking. Show all posts
Showing posts with label Critical Thinking. Show all posts
Thursday, July 17, 2014
Sunday, July 13, 2014
News Update 13-JUL-2014: International Schemes on the Rise; World Ventures threatens critic
Been busy last week, so this will have to be a big news update. Remember folks, I link to the actual news items, not just random blog posts.
International Suspect Schemes on the Rise
Recent scheme reviews on BehindMLM revealed that more and more schemes claim to be international, when most of the international presence are mere facades.
Mr. Link IT Solutions -- probable Ponzi investment scheme, claims to be IT exporter from Japan with office in China and Japan... AND Brazil (where it's really based in)
BrokerAds -- clone of BannerBroker ponzi scheme, with horrible broken English, and Alexa traffic pattern indicating it's probably ran out of Pakistan, even though the site's disclaimer seem to suggest a US connection.
LEO (Learn, Earn, Own) -- PO Box in Dubai UAE, Mail drop in Hong Kong, Regus Virtual office in Egypt and India, and more virtual office in other locations.
Beware when you run into one of these "international" companies. Do your due diligence.
International Suspect Schemes on the Rise
Recent scheme reviews on BehindMLM revealed that more and more schemes claim to be international, when most of the international presence are mere facades.
Mr. Link IT Solutions -- probable Ponzi investment scheme, claims to be IT exporter from Japan with office in China and Japan... AND Brazil (where it's really based in)
BrokerAds -- clone of BannerBroker ponzi scheme, with horrible broken English, and Alexa traffic pattern indicating it's probably ran out of Pakistan, even though the site's disclaimer seem to suggest a US connection.
LEO (Learn, Earn, Own) -- PO Box in Dubai UAE, Mail drop in Hong Kong, Regus Virtual office in Egypt and India, and more virtual office in other locations.
Beware when you run into one of these "international" companies. Do your due diligence.
Thursday, July 10, 2014
Anti-Scam: Rough Guide to Spotting Shady Opportunities, Part 2 of 3
This guide is an adaptation of "A Rough Guide to Spotting Bad Science" by "Compound Interest", converted for spotting "shady opportunities". For length reasons, this is presented in 3 parts. This is part 2 of 3.
A Rough Guide To Spotting Shady Opportunities (part 2 of 3)
Shady Opportunities are out there, waiting to take your money on promises of fabulous income... if you hand over your money first. There are twelve signs. Obviously a shady opportunity may not have all the signs, but the more signs you spot, the more shady the opportunity is.5) Speculative Language
Speculations are not facts, so if the statement contains "weasel words" like "may", "could", "might", and so on, then it's likely to be speculation, rather than conclusion.
You can often spot this when a "lotions and potions" company presents some study that "sort of" proves their product works. But this can also apply to income claims, which is usually frowned upon.
For example, a certain MLM nutritional supplement company's entire product line is based on this speculation published in "Medical Hypotheses (2002)"
You can often spot this when a "lotions and potions" company presents some study that "sort of" proves their product works. But this can also apply to income claims, which is usually frowned upon.
For example, a certain MLM nutritional supplement company's entire product line is based on this speculation published in "Medical Hypotheses (2002)"
...Based on a review of the literature we propose the hypothesis that in situ mobilization of stem cells from the bone marrow and their migration to various tissues is a normal physiological process of regeneration and repair and that therapeutic benefits can be generated with less invasive regimens than the removal and re-injection of stem cells, through the stimulation of normal stem cell migration. We further propose that effort should be made to identify natural compounds characterized by their ability to augment this normal process of mobilization and re-colonization of bone marrow stem cells for the potential treatment of various degenerative diseases.
If you can't read medical jargon, what it says is "Stem cells are cool. We think stem cells gets into the blood and travel around the body to where its needed to help healing. Maybe we can find a natural something that'll make the body produce more stem cells."
That's right, this is a HYPOTHESIS. There is no proof that having more "loose" stem cells in your body would improve your health (remember, HYPOTHESIS), much less any compound that can do so.
Doesn't stop this MLM company from making products with such claims, of course. In fact, some of the principals in this company where previously sued (under a different company name) in Texas and lost a false advertising suit... also involving stem cells. That company used blue-green algae, some of which are POISONOUS (see "microcystins") And it seems this particular company is still using similar formulas.
The company may sound confident in stating such things on their advertising materials. Look beyond the marketing material and look at the original research their products are based on. You may be surprised.
Conversely, if a company "guarantees" something, look for caveats and fine print.
Doesn't stop this MLM company from making products with such claims, of course. In fact, some of the principals in this company where previously sued (under a different company name) in Texas and lost a false advertising suit... also involving stem cells. That company used blue-green algae, some of which are POISONOUS (see "microcystins") And it seems this particular company is still using similar formulas.
The company may sound confident in stating such things on their advertising materials. Look beyond the marketing material and look at the original research their products are based on. You may be surprised.
Conversely, if a company "guarantees" something, look for caveats and fine print.
Tuesday, July 8, 2014
Anti-Scam: Rough Guide to Spotting Shady Opportunities, Part 1 of 3.
This guide is an adaptation of "A Rough Guide to Spotting Bad Science" by "Compound Interest", converted for spotting "shady opportunities". For length reasons, this is presented in 3 parts. This is part 1 of 3.
Headlines are often click bait or link bait, such as "everyone makes money" or "How to turn $289 into $1040 guaranteed"
As Carl Sagan said, "extraordinary claim requires extraordinary evidence". Don't believe the headlines, even if they are made/repeated by people you trust. Remember, they could have been duped. If they don't bother asking for extraordinary evidence, then you cannot trust their judgement on this specific matter.
Without the actual data, any interpretation is just that... an interpretation. You may look at the same data and reach a completely different conclusion. Much like these two gents used the same data and came to opposite conclusions.
A Rough Guide To Spotting Shady Opportunities (part 1 of 3)
Shady Opportunities are out there, waiting to take your money on promises of fabulous income... if you hand over your money first. There are twelve signs. Obviously a shady opportunity may not have all the signs, but the more signs you spot, the more shady the opportunity is.1) Sensationalized Headlines
Headlines are often click bait or link bait, such as "everyone makes money" or "How to turn $289 into $1040 guaranteed"
As Carl Sagan said, "extraordinary claim requires extraordinary evidence". Don't believe the headlines, even if they are made/repeated by people you trust. Remember, they could have been duped. If they don't bother asking for extraordinary evidence, then you cannot trust their judgement on this specific matter.
2) Misinterpreted results
Nothing beats DIRECT access to the data. If you listen to someone's pitch, you are listening to his or her version of what s/he is telling you, which may be just a sales pitch with certain amount of untruth... truth as s/he know it, or the actual truth. You don't know which one it is, or even how much of each.Without the actual data, any interpretation is just that... an interpretation. You may look at the same data and reach a completely different conclusion. Much like these two gents used the same data and came to opposite conclusions.
Saturday, June 14, 2014
Scam Psychology: Naive Realism / Anecdotal Fallacy / Argument from Illusion
 |
| Illustration of Naive realism or Direct realism. (Photo credit: Wikipedia) |
Let us assume that they are not outright scammers for the moment (i.e. liar, liar, pants on fire)
What they don't realize is they are operating from "naive realism", i.e. they assumed that everything they experienced is real, when it is quite possible they've been defrauded (magic trick), and they then extrapolated from their limited (but realistic) experience to conclude that the whole business must be "real". One version of such self-testimonial, and the most often used, is the "It paid me" argument, as in "this opportunity paid me, therefore it's not a scam".
Yet this is the most powerful of all arguments, even if it's false. TelexFree victims in and around Boston, Massachusetts told Boston Globe that pressure from friends and family, esp. when posing with new house, new car, new luxuries, etc. often prove to be impossible to resist, esp. by people with (naive) "unbridled enthusiasm". Quoting from the Boston Globe story:
...Fausto da Rocha said he probably lost $45,000, the proceeds of an insurance payment from an auto accident. He had initially resisted TelexFree, but after friends profited, he decided to join, hoping the investment would accelerate his recovery from bankruptcy a few years earlier and losing his house. Da Rocha, well known in the Brazilian community, said he recruited about 20 relatives and friends.
“I feel guilty,” da Rocha said as tears clouded his eyes. “My career is gone. I’m going to clean houses with my wife. Cleaning houses is a good business.”But the social cost is even greater. He had 20 relatives and friends he can never look in the eye again.
 |
| Sann Rodrigues, one of the "TelexFree 8" charged by SEC as part of a scam, showing off his Ferraris and MB and mansion in Florida in one of his videos (screencap from Vimeo) |
Wednesday, May 28, 2014
Scam Psychology: The Illusion of Asymmetric Insight
Ever heard of "illusion of asymmetric insight"? No? Me neither, at least not until about a week ago, when I heard it on the "You're not so smart" podcast.
The premise is quite simple: let's say A and B have a difference of opinion on a certain issue. However, A thinks that he understands B's position better than B understands A's position. Sometimes, A thinks he understands B's position than B understands his own position.
The reverse is also true: A believe he knows his own position far better than any one ever could, certainly more than B's understanding of A's position, at least in A's own mind.
The problem is more often than not, this is an illusion, not reality.
Lord of the Flies
In 1954, a group of psychologists, posing as camp counselors, got 11 and 12-year old boys into a camp... on separate ends of the camp. The two groups don't even know each other exists as they arrived on separate buses via separate routes. As psychologists predicted, a social order quickly emerged, with leaders taking charge and the rest will serve the order in whatever roles needed. The two groups are nearly identical... except they are on separate ends of the camp.
So what happened when they met? Well, you can read the short account by David McRaney of "You are not so smart". Let's just say, one of the things each group obsessed on is trying to find differences between the two groups... and used that difference to "prove" (to themselves) that their own way is superior and the other group is inferior, even though such differences are trivial.
And the experiment almost got out of hand when... let's just say... knives were involved.
http://youarenotsosmart.com/2011/08/21/the-illusion-of-asymmetric-insight/
The premise is quite simple: let's say A and B have a difference of opinion on a certain issue. However, A thinks that he understands B's position better than B understands A's position. Sometimes, A thinks he understands B's position than B understands his own position.
The reverse is also true: A believe he knows his own position far better than any one ever could, certainly more than B's understanding of A's position, at least in A's own mind.
The problem is more often than not, this is an illusion, not reality.
 |
| Cover of Lord of the Flies, Educational Edition |
In 1954, a group of psychologists, posing as camp counselors, got 11 and 12-year old boys into a camp... on separate ends of the camp. The two groups don't even know each other exists as they arrived on separate buses via separate routes. As psychologists predicted, a social order quickly emerged, with leaders taking charge and the rest will serve the order in whatever roles needed. The two groups are nearly identical... except they are on separate ends of the camp.
So what happened when they met? Well, you can read the short account by David McRaney of "You are not so smart". Let's just say, one of the things each group obsessed on is trying to find differences between the two groups... and used that difference to "prove" (to themselves) that their own way is superior and the other group is inferior, even though such differences are trivial.
And the experiment almost got out of hand when... let's just say... knives were involved.
http://youarenotsosmart.com/2011/08/21/the-illusion-of-asymmetric-insight/
Saturday, May 17, 2014
How Does a Scammer Identify Your Needs and Scam You with Them?
Scammers are excellent psychological manipulators who can identify your needs and scam you with them by exploiting your needs as weaknesses. But how do they do it?
Abraham Maslow, who's a famous pscychologist, created the Maslow Hierarchy of Needs in the 1940's. It can be roughly represented as the diagram below, starting from physiological needs at the bottom, go slowly up to group psychological needs, then finally to self-psychological needs. Self-actualization means you fully realize the power of yourself and reach your full potential.
Noticed any trends? That's right, scams don't want you to actually get to "self-actualization". They claim they will provide:
Abraham Maslow, who's a famous pscychologist, created the Maslow Hierarchy of Needs in the 1940's. It can be roughly represented as the diagram below, starting from physiological needs at the bottom, go slowly up to group psychological needs, then finally to self-psychological needs. Self-actualization means you fully realize the power of yourself and reach your full potential.
 |
| Maslow's Hierarchy of Needs (source: Wikipedia) |
Noticed any trends? That's right, scams don't want you to actually get to "self-actualization". They claim they will provide:
- Safety -- aka "financial independence", "fire your boss", JOB = "just over broke", etc.
- Love / belonging -- your sales group / team is what you want, not your family and friends
- Esteem -- if you follow the system, you can get $$$ and esteem! Look at our "winners"!
But what do they ACTUALLY provide?
Monday, May 12, 2014
NEWS UPDATE 13-MAY-2014: TelexFree believers spam judge; WCM777 "counsel" unlicensed?; Botafogo dumps TelexFree
Some news on this Tuesday the 13th (unlucky day to some Hispanics)...
TelexFree Believers Spam Judge with Doodle
According to court documents made public via PACER court system, many TelexFree believers have mailed doodles and letters of support to the judge presiding over TelexFree. As they have really nothing to do with the case (it's not considered evidence), it's basically spam. They are in English a Spanish, handwritten and typewritten, some even includes doodles. Many of the letters basically says "I trust TelexFree, I think this is all some sort of media understanding and a conspiracy to make the company look bad..." Which is, of course, hilarious.
You can see a sample of such at PatrickPretty.com
WCM777 "General Counsel" may be unlicensed ANYWHERE
Vincent Messina, who was a part of the SEC probe into the WCM777 ponzi scheme as he was listed as "counsel" for the company, has no license to practice anywhere, according to a new SEC complaint filed to the Federal Court. The scam's size has been revised upward to over $80 million dollars, and Vincent Messina, whom was highlighted before as having "lost" a 200K dollar check, has no licensed to practice law in California (WCM777 is based in Southern California). While Mr. Messina claimed that he's licensed in Florida, SEC has checked with Florida Bar association, and Mr. Messina's membership is listed as "inactive".
According to the same complaint, Messina is also running another suspect scheme called IMV which may have received several million from WC777 before SEC closed the scam in April 2014.
See PatrickPretty.com for details.
Botafogo Dumps TelexFree Sponsorship
On the team website, Botafogo announced that they have rescinded TelexFree sponsorship (in Portuguese). They will strip the TelexFree logo from their uniforms immediately. The announcement was barely 2 sentences.
Thanks to PatrickPretty.com for the lead story.
TelexFree Believers Spam Judge with Doodle
According to court documents made public via PACER court system, many TelexFree believers have mailed doodles and letters of support to the judge presiding over TelexFree. As they have really nothing to do with the case (it's not considered evidence), it's basically spam. They are in English a Spanish, handwritten and typewritten, some even includes doodles. Many of the letters basically says "I trust TelexFree, I think this is all some sort of media understanding and a conspiracy to make the company look bad..." Which is, of course, hilarious.
You can see a sample of such at PatrickPretty.com
WCM777 "General Counsel" may be unlicensed ANYWHERE
Vincent Messina, who was a part of the SEC probe into the WCM777 ponzi scheme as he was listed as "counsel" for the company, has no license to practice anywhere, according to a new SEC complaint filed to the Federal Court. The scam's size has been revised upward to over $80 million dollars, and Vincent Messina, whom was highlighted before as having "lost" a 200K dollar check, has no licensed to practice law in California (WCM777 is based in Southern California). While Mr. Messina claimed that he's licensed in Florida, SEC has checked with Florida Bar association, and Mr. Messina's membership is listed as "inactive".
According to the same complaint, Messina is also running another suspect scheme called IMV which may have received several million from WC777 before SEC closed the scam in April 2014.
See PatrickPretty.com for details.
Botafogo Dumps TelexFree Sponsorship
On the team website, Botafogo announced that they have rescinded TelexFree sponsorship (in Portuguese). They will strip the TelexFree logo from their uniforms immediately. The announcement was barely 2 sentences.
Thanks to PatrickPretty.com for the lead story.
Monday, May 5, 2014
Stop Believing Bull****; Follow This Guide! (Bonus "Food Babe" debunking)
The following guide was found on io9 via The Last Word on Nothing.
It is easy to stop believing in bull****. After all, bull**** doesn't spread by itself. Someone have to believe the bull**** to pass it on. I've slightly reworded the original
Congratulations. You now have something that may not be bull****.
----------
Remember: just because someone says something that "makes sense" doesn't mean it's true.
Let us take a recent example... Vani Hari, i.e. "Food Babe" rant about some chemical that she claims was used to make yoga mats. That's NOT TRUE. The chemical, which makes harmless bubbles, *can also be used* to make yoga matts, which is bubble foam. She knows nothing about science or food safety. She's selling her looks (calling herself "Food Babe", eh) and trying to parlay her followers into spreading misinformation. That is just plain STUPID.
Let's apply the test... Should you believe Food Babe's warning about azodicarbonimide in Subway's sandwich bread?
It is easy to stop believing in bull****. After all, bull**** doesn't spread by itself. Someone have to believe the bull**** to pass it on. I've slightly reworded the original
0. Assuming anything any one told you is bull**** unless disproven (by following)
1. Who is telling me "this"?
2. How does s/he know "this"?
3. Given #1 and #2, could s/he be wrong?
4. If yes, maybe, or "I dunno", find UNRELATED source that says the same thing, then apply the SAME TEST (Go to 1)
5. If you got here, answer to 3 must be "pretty f***ing unlikely".
Congratulations. You now have something that may not be bull****.
----------
Remember: just because someone says something that "makes sense" doesn't mean it's true.
Let us take a recent example... Vani Hari, i.e. "Food Babe" rant about some chemical that she claims was used to make yoga mats. That's NOT TRUE. The chemical, which makes harmless bubbles, *can also be used* to make yoga matts, which is bubble foam. She knows nothing about science or food safety. She's selling her looks (calling herself "Food Babe", eh) and trying to parlay her followers into spreading misinformation. That is just plain STUPID.
Let's apply the test... Should you believe Food Babe's warning about azodicarbonimide in Subway's sandwich bread?
Saturday, May 3, 2014
Scam Psychology: What is Survivorship Bias and How It Screws You Over (esp. in MLM)
Ever heard of "survivorship bias"? No? It means you gain a skewed view from examining only the "winners" (or survivors) of a particular process, and the skewed view is wrong. But to illustrate this, it's best to start with an example from the annals of history, namely, Mr. Abraham Wald, and Department of War Math.
Abraham Wald is a brilliant mathematician that lived in Hungary before World War II. Being a Jew, he was discriminated against, and when the Nazis took over, he emigrated to the US, and quickly joined the new "Department of War Math", where he and other scientists are asked to help solve math problems that is related to war. And one of them is about bomber survivability.
In World War II, the Allies launched huge bombing raids against the Axis territories, and suffered tremendous losses. Chances of a bomber crew surviving two dozen missions is very very small. On some early mass bombing missions Allies suffered as high as 25% (i.e. 1 out of 4 bombers sent out were shot down). And remember, HUNDREDS were sent out at a time. DAY AFTER DAY.
Obviously, one cannot armor the bomber enough to make it bullet proof, and make it still fly and carry bombs. So where should the armor be added? And how much? Where should the trade-off be done between bomb payload and armor? That's where Wald and his colleagues come in.
The story goes that the scientists and assistants flew to Washington, to be briefed by the US Army Air Corp generals and their staff, where they explained the problem, along with representatives from Boeing (the builder) who explains the structure of the airciraft and explains the problems. Then there's data from the USAAC where they present the data they gathered from the bombers that survived, where they are hit and patched, so on and so forth. And they tried armoring the parts that keep getting shot up, but it's not helping the aircrafts to come back safely.
Allegedly Wald listened to some more of this, then stood up, told the generals that they are looking at it ALL WRONG. The parts that got shot up on the bombers that came back are the parts that should NOT be armored.
Wait, what?!
Really! He's right! Think about it for a minute...
Abraham Wald is a brilliant mathematician that lived in Hungary before World War II. Being a Jew, he was discriminated against, and when the Nazis took over, he emigrated to the US, and quickly joined the new "Department of War Math", where he and other scientists are asked to help solve math problems that is related to war. And one of them is about bomber survivability.
 |
| English: Boeing Y1B-17 in flight (Photo credit: Wikipedia) |
Obviously, one cannot armor the bomber enough to make it bullet proof, and make it still fly and carry bombs. So where should the armor be added? And how much? Where should the trade-off be done between bomb payload and armor? That's where Wald and his colleagues come in.
The story goes that the scientists and assistants flew to Washington, to be briefed by the US Army Air Corp generals and their staff, where they explained the problem, along with representatives from Boeing (the builder) who explains the structure of the airciraft and explains the problems. Then there's data from the USAAC where they present the data they gathered from the bombers that survived, where they are hit and patched, so on and so forth. And they tried armoring the parts that keep getting shot up, but it's not helping the aircrafts to come back safely.
Allegedly Wald listened to some more of this, then stood up, told the generals that they are looking at it ALL WRONG. The parts that got shot up on the bombers that came back are the parts that should NOT be armored.
Wait, what?!
Really! He's right! Think about it for a minute...
Thursday, May 1, 2014
TelexFree News Update 4/30/2014: Sann Rodrigues invokes God, Santiago De La Rosa ordered to sell bling cars
Not too many news items, as everyone is waiting for the huge court date of May 2nd...
Sann Rodrigues invokes God, vows "I am never going to stop this [TelexFree?]"
According to the SEC, in court documents recently filed, they found Sann Rodrigues uploaded a video to Youtube on April 16th, the day of the SEC/ FBI / HSI / ICE / who knows what else raid on TelexFree. In the video, Sann Rodrigues announced:
So being a scammer is in his blood, hmmm? Please keep in mind this is NOT Sann Rodrigues's first time being investigated by SEC. Back in 2007 SEC busted him for operating "Universo FoneClub" that charged over 1000 dollars for an opportunity to sell phone cards, but people actually made money recruiting other people.
Back then, he claimed that God wanted Brazilians to prosper and Universo FoneClub was the way. Now he claimed God invented binary. It's clear that he's recycling his old recruiting talk and he really isn't going to change... Much like Kevin Trudeau (who recently got 10 years jail sentence).
Recall that the only one who really prospered is himself. He's the one showing off fancy Ferraris on TV and a mansion in Florida. And he's not shy showing it off. See for yourself:
Which brings us to one of his co-conspirators, also charged by the SEC, Santiago de la Rosa.
Sann Rodrigues invokes God, vows "I am never going to stop this [TelexFree?]"
According to the SEC, in court documents recently filed, they found Sann Rodrigues uploaded a video to Youtube on April 16th, the day of the SEC/ FBI / HSI / ICE / who knows what else raid on TelexFree. In the video, Sann Rodrigues announced:
I am never going to stop this. If I say to my network I will never stop this because it is in blood, DNA. And who started multi-level was God. If you want to learn, learn. If you want to frown, frown. God made binary, Adam and Eve, and told them to multiply. For me, it is given by God.It was pretty obvious that Sann Rodrigues was referring to TelexFree (that he will never stop doing TelexFree).
So being a scammer is in his blood, hmmm? Please keep in mind this is NOT Sann Rodrigues's first time being investigated by SEC. Back in 2007 SEC busted him for operating "Universo FoneClub" that charged over 1000 dollars for an opportunity to sell phone cards, but people actually made money recruiting other people.
Recall that the only one who really prospered is himself. He's the one showing off fancy Ferraris on TV and a mansion in Florida. And he's not shy showing it off. See for yourself:
|
| Sann Rodrigues on Vimeo, self-proclaimed millionaire through TelexFree, showing off his assets vows to never stop (what? cheating other people? first through Universo FoneClub, then TelexFree?) |
Tuesday, April 29, 2014
Scam Psychology: Do You Really Understand Your Odds? (i.e. What is Probability Neglect?)
Read and answer this simple question:
Answer this yourself, but keep it in the back of your mind, while you realize the truth...
Human beings SUCK at understanding probabilities... esp. if they are not educated (through no fault of their own).
Human beings are easily influenced into overestimating or underestimating certain probabilities, through time, newsworthiness, and misunderstanding about small possibilities, and outright lies. Here are some of the things psychologists have learned over the years:
Newsworthy Information Affects Perception of Statistics
Human brain have a cognitive bias called 'availability' bias, in that fresh information, esp. those that captures our attention, such as disaster, death, huge lottery winning, or whatever captures your interest, will cause you to remember the information, and thus, influence your perception of likelihood of future events.
After a natural disaster, demand for insurance goes up, even though probability of disaster had not. People simply are more worried after a widely reported natural disaster.
Similarly, report of a recent disease will raise vaccination rates. After a meningitis outbreak at a major university on the East Coast, vaccine was offered within a week, and 95% of eligible student chose to take the vaccine. On the West Coast, a similar outbreak happened 5 months ago. Due to FDA approval process, both East Coast and West Coast were given vaccines at the same time. Only 50% of students in the West Coast University chose to take the vaccine. The news is no longer fresh on their minds.
The more a particular risk or statistic is mentioned in recent news or dredged from memory, the more likely it will be weighed more prominently in one's decision process, even when they should not be.
Most scams rely on modern buzzwords to make sure they related to SOME terms in recent news, like "internet", "apps", "VOIP", "web ads", and so on. They want you to think that "tech" companies succeed because tech is mentioned all the time. And in turn, want you to believe their scam will be a 'success'.
Small Probabilities are Rarely Judged Correctly
Events of small, tiny, or negligible probabilities are downplayed or outright ignored, esp. when coupled with other biases.
Back in the 1980's when automobile seatbelt wearing became mandatory, many people still resisted wearing them. When questioned, they acknowledge that not wearing seatbelts is not a good idea, but most justified it by stating they don't get into accidents, or they haven't had an accident in many years. Their self-optimism bias made them believe that the small probability of getting into an auto accident is 'effectively zero'.
However, the small probabilities can also be over-weighed, esp. when the events are shocking. For example chances of disasters, such as nuclear reactor melt-downs, or Liquefied Natural Gas (LNG) transport explosions, airline disasters, or terrorist attacks... or even something like mass shootings, are often vastly over-weighed and perceived to be far more often they they actually are due to media attention. For example, how many nuclear reactor melt downs have been there? Most people can only name 3: Three Mile Island, Chernobyl, and Fukashima. There actually had been many more (give or take, about 20-30, depending on how you count the ones on-board Soviet submarines). But that's counting 60 years of nuclear reactors, over 400 plants currently in operation, and most of the problems had to do with the earliest (and thus, the less safe) models. Chances of a nuclear reactor melting down is exceedingly small, esp. given modern safeguards. Yet after Fukashima, many nations vowed to close their nuclear power plants and/or severely reduce plans to build them. In this case, news coverage has made the risk look that much larger than before.
Scams leverage this small probability misconception by emphasizing that everybody can be successful without mentioning the odds, usually stated as "if you work hard, you can be successful just like me." The definition of "success", the odds, and the definition of "work hard" are, of course, left vague. They simply neglect to mention that everybody has equal by miniscule odds. Then the scammer will emphasize that the potential victims are making the right choice, how it's a commitment to success, etc. Soon the participants will COMPLETELY ignore the odds that they may be participating in a scam, not a business.
Susan and Jennifer are arguing about whether they should wear seat belts when they ride in a car. Susan says that you should. Jennifer says you shouldn't... Jennifer says that she heard of an accident where a car fell into a lake and a woman was kept from getting out in time because of wearing her seat belt, and another accident where a seat belt kept someone from getting out of the car in time when there was a fire. What do you think about this?Perhaps it's not so simple now, is it?
Answer this yourself, but keep it in the back of your mind, while you realize the truth...
Human beings SUCK at understanding probabilities... esp. if they are not educated (through no fault of their own).
Human beings are easily influenced into overestimating or underestimating certain probabilities, through time, newsworthiness, and misunderstanding about small possibilities, and outright lies. Here are some of the things psychologists have learned over the years:
Newsworthy Information Affects Perception of Statistics
Human brain have a cognitive bias called 'availability' bias, in that fresh information, esp. those that captures our attention, such as disaster, death, huge lottery winning, or whatever captures your interest, will cause you to remember the information, and thus, influence your perception of likelihood of future events.
After a natural disaster, demand for insurance goes up, even though probability of disaster had not. People simply are more worried after a widely reported natural disaster.
Similarly, report of a recent disease will raise vaccination rates. After a meningitis outbreak at a major university on the East Coast, vaccine was offered within a week, and 95% of eligible student chose to take the vaccine. On the West Coast, a similar outbreak happened 5 months ago. Due to FDA approval process, both East Coast and West Coast were given vaccines at the same time. Only 50% of students in the West Coast University chose to take the vaccine. The news is no longer fresh on their minds.
The more a particular risk or statistic is mentioned in recent news or dredged from memory, the more likely it will be weighed more prominently in one's decision process, even when they should not be.
Most scams rely on modern buzzwords to make sure they related to SOME terms in recent news, like "internet", "apps", "VOIP", "web ads", and so on. They want you to think that "tech" companies succeed because tech is mentioned all the time. And in turn, want you to believe their scam will be a 'success'.
Small Probabilities are Rarely Judged Correctly
Events of small, tiny, or negligible probabilities are downplayed or outright ignored, esp. when coupled with other biases.
Back in the 1980's when automobile seatbelt wearing became mandatory, many people still resisted wearing them. When questioned, they acknowledge that not wearing seatbelts is not a good idea, but most justified it by stating they don't get into accidents, or they haven't had an accident in many years. Their self-optimism bias made them believe that the small probability of getting into an auto accident is 'effectively zero'.
However, the small probabilities can also be over-weighed, esp. when the events are shocking. For example chances of disasters, such as nuclear reactor melt-downs, or Liquefied Natural Gas (LNG) transport explosions, airline disasters, or terrorist attacks... or even something like mass shootings, are often vastly over-weighed and perceived to be far more often they they actually are due to media attention. For example, how many nuclear reactor melt downs have been there? Most people can only name 3: Three Mile Island, Chernobyl, and Fukashima. There actually had been many more (give or take, about 20-30, depending on how you count the ones on-board Soviet submarines). But that's counting 60 years of nuclear reactors, over 400 plants currently in operation, and most of the problems had to do with the earliest (and thus, the less safe) models. Chances of a nuclear reactor melting down is exceedingly small, esp. given modern safeguards. Yet after Fukashima, many nations vowed to close their nuclear power plants and/or severely reduce plans to build them. In this case, news coverage has made the risk look that much larger than before.
Scams leverage this small probability misconception by emphasizing that everybody can be successful without mentioning the odds, usually stated as "if you work hard, you can be successful just like me." The definition of "success", the odds, and the definition of "work hard" are, of course, left vague. They simply neglect to mention that everybody has equal by miniscule odds. Then the scammer will emphasize that the potential victims are making the right choice, how it's a commitment to success, etc. Soon the participants will COMPLETELY ignore the odds that they may be participating in a scam, not a business.
Sunday, April 27, 2014
Scam Psychology: What Are YOUR Communication Vulnerabilities?
Scammers are often very good communicators. They can tailor their message for a wide variety of audiences and they are quick in recognizing your particular communication vulnerabilities, and thus, exploit you using those vulnerabilities. To counteract this, you need to know what type of communication vulnerabilities do you have. These are four questions you need to ask. Are you:
Are you an Idea person or Evidence person?
Some people are caught up in ideas. As long as they like the idea they could care less about the evidence. It's much like ideology, or as Stephen Colbert put it "Truthiness". Others are more about the evidence, and refuse to commit to an idea until they see enough.
In general, scammers prefer "idea person" as they are much easier to sell to. Once they sell the "idea", the "idea person" will look for evidence to convince him- or herself.
Scams often involve a nebulous high concept (the "idea") that sounds logical and feasible, but in reality have tons of complexities that most people are not aware of or are impossible to research without being a professional. The evidence people would want more evidence, while idea people would just accept the idea without further proof.
If you're an "idea" person, add 1 to your score.
Are you a direct person or a diplomatic person?
Do you prefer cutting straight to the point, or do you prefer a bit more socialization?
Scammers prefer those of you who socialized, as they want to hit you with (real or fake) social proof and exploit various cognitive biases that all people have. They can also distract you with fancy displays and language, bandwagon effect, crowd hysteria, shilling, and other tricks.
Scammers also don't want any "direct" person to ask questions about more evidence. If you are too diplomatic you may never get any evidence, or just enough to convince yourself.
Scams often involve fancy events, elaborate presentations, exotic locations, and so on, where you mingle with people who were already convinced of the "idea" (see above).
If you're a diplomatic person, add 1.
- Idea or evidence?
- Direct or diplomatic?
- Think about it or go all in?
- Accept a map or blaze your own trail?
Each of these questions may indicate a communication vulnerability. If you have more than one, you need to beware. If you have 3 or 4 you may be especially vulnerable. You may want to keep score for yourself.
Are you an Idea person or Evidence person?
Some people are caught up in ideas. As long as they like the idea they could care less about the evidence. It's much like ideology, or as Stephen Colbert put it "Truthiness". Others are more about the evidence, and refuse to commit to an idea until they see enough.
In general, scammers prefer "idea person" as they are much easier to sell to. Once they sell the "idea", the "idea person" will look for evidence to convince him- or herself.
Scams often involve a nebulous high concept (the "idea") that sounds logical and feasible, but in reality have tons of complexities that most people are not aware of or are impossible to research without being a professional. The evidence people would want more evidence, while idea people would just accept the idea without further proof.
If you're an "idea" person, add 1 to your score.
Are you a direct person or a diplomatic person?
Do you prefer cutting straight to the point, or do you prefer a bit more socialization?
Scammers prefer those of you who socialized, as they want to hit you with (real or fake) social proof and exploit various cognitive biases that all people have. They can also distract you with fancy displays and language, bandwagon effect, crowd hysteria, shilling, and other tricks.
Scammers also don't want any "direct" person to ask questions about more evidence. If you are too diplomatic you may never get any evidence, or just enough to convince yourself.
Scams often involve fancy events, elaborate presentations, exotic locations, and so on, where you mingle with people who were already convinced of the "idea" (see above).
If you're a diplomatic person, add 1.
Thursday, April 3, 2014
Scam Psychology: Charlie Munger on How You Screw Up: Part 3 of 6
 |
| Charlie Munger (Photo credit: Wikipedia) |
----------
In the speech given at Harvard in 1995, Charlie Munger identified what he called "24 standard causes of human misjudgment." What he really meant is "24 reasons why you screw up". Here is 9 through 12
9) Failure to Recognize Contrast Bias
Contrast bias is simple to explain... If I give you one item and ask you to rate it, you will give your honest opinion. However, if I have you rate that item, plus an HORRIBLE item, that original item will be rated higher, on the average, because there's a contrasting item.
Here's a simple experiment by Professor Cialdini. Two buckets of water, one quite cold, one quite hot (neither will actually harm). Volunteers are asked to put one hand in hot water and one hand in cold water for 5-10 seconds. Then both are removed and placed in the same bucket of water. The hand what was in hot water now feels cold, and the hand what was in cold water now feels warm/hot, but they are feeling the SAME bucket of water. It's the contrast that makes the water feel hot or cold.
And this experience shows up everywhere. It's often recommended in some pickup artistry books that you bring along an ugly friend or two to make yourself look better. This is the same idea: contrast.
A somewhat anecdotal and apocryphal real estate sales technique if you want to get rid of a not-so-good property is you show the prospects two really awful properties, have them go tsk-tsk and shake their head, then you take them to this "better" property, and they'll probably bite.
On the flip side, without a contrast or a measure against a neutral background (control group), you may not be aware of creeping changes. This can be termed "anti-contrast bias".
Then there's the "boiled frog" urban legend, where the claim is if you put a frog in a pot of water, but you cook it VERY VERY slowly, the frog will never jump out. It's not true, but it's an interesting legend and illustrates this point. You can "creep" in changes and if the movement is small enough it may escape notice.
So beware of this being used on you... Either a special contrast example is used to make a position to look better or worse than it really is... this coercing a bias, or someone tried to "creep" in some changes and rely on your momentum bias to say nothing.
Tuesday, April 1, 2014
BREAKING NEWS: TelexFree Sheeple Turned Lion, "occupied" TelexFree until police showed up
According to various Youtube videos, all published today, a bunch of Telexfree sheeple apparently grew spines and decided to occupy Telexfree office, much like they did a few weeks ago, when Steve Labriola basically told them to leave, and back then they did. This time they won't take no for an answer, and Labriola apparently was not able to control the crowd. Police was called and there was no violence, but basically all TelexFree folks hid in the backoffice and left police, outside, who told people to get organized, and hire a lawyer, and complain to attorney general and state senators and reps and congresspeople.
Thanks for BehindMLM for the coverage, where you can also see the videos.
This is how sheeple no longer be sheeple, folks... by asking real questions and demand real answers, instead of PR fluff.
Thanks for BehindMLM for the coverage, where you can also see the videos.
This is how sheeple no longer be sheeple, folks... by asking real questions and demand real answers, instead of PR fluff.
Monday, March 31, 2014
Bad Propaganda: How TelexFree just made a liar out of itself... and all if its affiliates
Around March 18, 2014, Rwanda declared TelexFree to be a money laundering fraud cartel.
TelexFree's response: "That's not me!" Quoting from their own press release:
If TelexFree promoters around the world... say TelexFree is 14 year old, and the company itself says it's only 2-year old...
Clearly one side must be wrong. Given that TelexFree's locations are lies, and they are already delcared illegal in Brazil and under investigation elsewhere, clearly the press release is a total fabrication.
And the willingness of TelexFree to roll all of their affiliates under the bus (you are all liars!) is rather... appalling, even to a bystander.
And that's why you should NEVER believe anything published through PRNewswire.
TelexFree's response: "That's not me!" Quoting from their own press release:
TelexFREE says, "As far as we can tell, this has nothing to do with us other than the fact that somebody is making illegal use of our name. We have in the neighborhood of half a million customers worldwide, and 121 of them are in Rwanda. But we have no connection with P.L.I. Telexfree Rwanda Ltd., the company shutdown in Rwanda. That company allegedly has been in business for 14 years, whereas we just celebrated our second year in business. We've checked our records and find no evidence of the names of the persons associated with that company registered as either our customers or agents. Rwanda wasn't on our radar until this report hit the Internet."Well, what does Google say? If you search for "telexfree 14 year", you'll get... 444000 results. Some are just news, let's filter those out. What you are left with... Are the people selling TelexFree... and they ALL say "TelexFree company is a 14 year old American company"... with a few variations, but same thing.
If TelexFree promoters around the world... say TelexFree is 14 year old, and the company itself says it's only 2-year old...
Clearly one side must be wrong. Given that TelexFree's locations are lies, and they are already delcared illegal in Brazil and under investigation elsewhere, clearly the press release is a total fabrication.
And the willingness of TelexFree to roll all of their affiliates under the bus (you are all liars!) is rather... appalling, even to a bystander.
And that's why you should NEVER believe anything published through PRNewswire.
Wednesday, March 26, 2014
Scam Psychology: Can Your Spot Your Own Self-Delusions?
Huff-Post has a great short article on 5 self-delusions you need to spot in yourself.
Right there at #3 is "money for nothing". That is the heart of all money scams.
Read it. Learn from it.
Right there at #3 is "money for nothing". That is the heart of all money scams.
Read it. Learn from it.
Scam Absurdities: Non-US Scams Posing as American Businesses
It is not uncommon for a scammer to pretend to be what he's not, and the recent make of "The Great Gatsby" is one such tale. In the Scamworld, many such emerging players are from outside the US, and in order to look more legitimate, they will often pretending to be Americans or Europeans, or have fake company executives that have generic American or European names, and/or even hire an American or European "mercenary" COO as a figurehead. They will often appear in the company as themselves, albeit of a lower position than they actually are.
One such player is Tarun Trikha (aka Parun Trika) of TVI Express, arrested in India in April 2013, and have not been heard since. MLM Skeptic was one of the first in the West to identify Tarun Trikha as the *real* head of TVI Express, despite he claiming to be merely a top seller. TVI Express claims to have "admiral", "vice admiral" as top leaders with generic "white guy" names such as "Bill Cooper" or "Eric Taylor". You can find a profile of TVI Express here.
(TVI Express itself spawned many clones, most of which had already been shut down, or are under investigations around the world.)
One such player is Tarun Trikha (aka Parun Trika) of TVI Express, arrested in India in April 2013, and have not been heard since. MLM Skeptic was one of the first in the West to identify Tarun Trikha as the *real* head of TVI Express, despite he claiming to be merely a top seller. TVI Express claims to have "admiral", "vice admiral" as top leaders with generic "white guy" names such as "Bill Cooper" or "Eric Taylor". You can find a profile of TVI Express here.
(TVI Express itself spawned many clones, most of which had already been shut down, or are under investigations around the world.)
Tuesday, March 18, 2014
Bad Argument: I follow the leader who made lots of money in MLM (now with more Vemma busting)
One of the frequent arguments by followers of a particular MLM is s/he is following "leader X", who has already achieved rank Y and thus is a proven leader.
Actually by following a "leader" means your own chance of making decent money is WORSE, not better. The higher the leader is ranked, the lower your chance of success. This may sound counter-intuitive, but let me explain. And we'll use a real company's numbers as example.
Here is Vemma's 2013 income disclosure statement. PDF LINK And here's the graphs:
The graph is extremely misleading, because not only did they split the graph in half with very different scales, you should also note that the vertical axis in both graph is exponential, instead of linear. Which disguises the disparity between the bars.
Here's what it would look like if it were combined and using linear scale:
You're welcome to check out the spreadsheet yourself and compare it to the original linked above.
https://docs.google.com/spreadsheet/pub?key=0Ah3DLelonjNqdFpUWmNwNEJBcFdjYmZudHdTS21rMUE&output=pdf
What's interesting from the data and extrapolation shows...
Actually by following a "leader" means your own chance of making decent money is WORSE, not better. The higher the leader is ranked, the lower your chance of success. This may sound counter-intuitive, but let me explain. And we'll use a real company's numbers as example.
Here is Vemma's 2013 income disclosure statement. PDF LINK And here's the graphs:
The graph is extremely misleading, because not only did they split the graph in half with very different scales, you should also note that the vertical axis in both graph is exponential, instead of linear. Which disguises the disparity between the bars.
Here's what it would look like if it were combined and using linear scale:
You're welcome to check out the spreadsheet yourself and compare it to the original linked above.
https://docs.google.com/spreadsheet/pub?key=0Ah3DLelonjNqdFpUWmNwNEJBcFdjYmZudHdTS21rMUE&output=pdf
What's interesting from the data and extrapolation shows...
Monday, March 17, 2014
BREAKING NEWS: Kevin Trudeau gets 10 year sentence
Kevin Trudeau gets 10 year sentence for 6 separate contempt of court and stiffing the court 37 million in fines.
Kevin Trudeau had been scamming for DECADES with bogus books, bogus sales, bogus minerals, bogus nutrition, bogus diet, and various types of bogosity for decades. He claimed that last few months in jail changed him and he owned up to everything and he's very sorry and blah blah blah.
Judge didn't believe him. Please see related article below for story about his prior scams.
http://www.chicagotribune.com/business/breaking/chi-kevin-trudeau-sentenced-20140317,0,832577.story
Kevin Trudeau had been scamming for DECADES with bogus books, bogus sales, bogus minerals, bogus nutrition, bogus diet, and various types of bogosity for decades. He claimed that last few months in jail changed him and he owned up to everything and he's very sorry and blah blah blah.
Judge didn't believe him. Please see related article below for story about his prior scams.
http://www.chicagotribune.com/business/breaking/chi-kevin-trudeau-sentenced-20140317,0,832577.story
Subscribe to:
Posts (Atom)