Friday, 20 August 2010

We're not stupid

Why do people fall for scams? Are they stupid? Are they just naïve? Are they just greedy?

I don’t actually think people are stupid, I honestly don’t. Well, OK, not all of them. Let’s face it, some are. I’ve written before about the filling station manager up north who a couple of years ago was conned out of P70,000 by a couple of enterprising con-men who promised him that their magic box would double any money placed inside it. Rather than engage his brain and demonstrate even the slightest hint of skepticism he placed the filling station’s takings in the box and an amazing thing happened. The box, the money and the con-men disappeared, as if by magic.

That’s pretty stupid but his complete stupidity was demonstrated the following day when he fell for exactly the same trick again. He placed another P14,000 into the magic box, this time offered to him by two friends of the original crooks.

So yes, there are some people who are just catastrophically stupid.

Others are just naïve, which isn’t the same things as stupidity. My dictionary defines naïve as “showing a lack of experience, wisdom or judgment”. We’re all naïve at times, before we learn things. The most obvious example I have right now is those people who fall for “advance fee”, dual-location conference scams. These scams involve a victim receiving an email out of the blue inviting them to attend a conference that will be held in two locations. The email offers to pay for their flights, food, drink and their hotel bill. However, as always, there’s a catch. The scheme only pays ONE of the hotel bills, the victim is asked to pay the other. Needless to say, the victim thinks this is a small price to pay to attend such a prestigious conference in a far-flung exotic place at someone else’s expense. They don’t think too much about paying that single hotel bill. However their naïveté shows itself when they do what the scammers ask – they pay the hotel bill up front.

Nobody ever pays hotel bills up front. I have stayed in countless hotels across four continents in my career and I have NEVER paid a hotel bill up front. Not once. But here’s the thing. I’m not the target of this scam. The real targets are people who have NOT stayed in hotels before and who are understandably naïve about hotels and travel. They willingly pay up front because they believe the scammer who tells them that this is normal practice.

They are also naïve enough to think that you should pay a hotel bill up front using Western Union.

OK, they’re also naïve enough to think that there are organisations that have nothing better to do than pay total strangers to go to a conference.

Pyramid schemes also rely on naïveté. They rely on most of us not understanding basic arithmetic. Pyramid schemes, and their not very distant relatives, multi-level and network marketing companies work because most of us don’t understand exponential growth. Few of us can instantly see in our heads that any system that relies on each victim recruiting more victims, who each recruit more victims and so on quickly exhausts the available pool of potential victims. They also don’t understand that the money doesn’t add up either. Almost all people recruited by multi-level marketing companies end up achieving their targets by buying products themselves, not because of the success of the business beneath them in the pyramid. On the few occasions big MLM companies have been forced to disclose their data, it has shown that less than 1% of recruits ever make any profit at all.

It’s general naivete that allows them to continue. Well, that and secrecy, lies and threats against their critics.

Unfortunately there is another element to it. One that is not so easy to accept and excuse. Greed.

Traditional “419” scams rely entirely on greed. You all know the story by now. An email arrives from a total stranger, this time offering you a share in an illegally obtained fortune if you help the person who emailed you extract it from their country. Almost always it is either made perfectly clear or obviously implied that the money has been dubiously obtained. They rely on our greed to tempt us to cooperate in their pretended plan. Of course sooner or later the “advance fee” emerges, either a legal bill, a bribe or a transaction fee, and all you need to do is pay it and the fortune is yours. The victim’s greed is their undoing.

So perhaps we should be unsympathetic to the victims of scams? I don’t think so, I’m not that heartless but we do need to understand the various reasons why people fall for them. What’s more, while we can’t do much about stupidity and greed I still think we can do a lot to address naïveté. The solution is, of course, a mixture of education and protection.

At Consumer Watchdog we do our bit to spread some education but the key area where we need action is consumer protection. It can happen, I know.

In May this year the Australian Competition and Consumer Commission obtained restraining orders against three people who were trying to recruit victims into the ridiculous TVI Express pyramid scheme. This, by the way, is a scheme that operates in Botswana as well. I admire the Ozzies for taking action but the effect is just to move the scammers onto another platform. TVI is being overtaken by an almost identical pyramid scheme called Pyxism, also available here and also a pyramid scheme.

So maybe education IS the only answer?

This week’s stars

  • Bantle and Nkemetse from Orange for helping a customer “tirelessly” and for knowing their jobs extremely well.

No comments: