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What is a scam that people should know about?
There are, sadly, far too many people and companies out there more than willing to take advantage of people. Fortunately, awareness is usually a good defense. What are some scams that we should all know about so that we don't fall for them?
I don't know the name of it, but I learned about a scam in an economics class that seems pretty interesting.
First you pick a well known stock and send a prediction of an increase to 1000 people, and a prediction of a decrease to 1000 people. Once the stock moves you send a second message to the people who received the correct prediction. So you predict the movement of another stock, again sending each prediction (up/down) to half of the remaining scamees. You do this enough times, halving your targets each time, until you've made a fairly convincing set of predictions to a small number of people. You then tell them that you can double or triple their money using your magic prediction algorithm. Once they send you their money you never interact with them again.
Obviously very illegal but I'm surprised it's not more common in the cryptocurrency world. There are plenty of suckers there who don't understand how any of it works but are ready to throw their money at something.
Derren Brown did a documentary on this concept called 'The System' where he convinced people he was able to predict the winner of any horse race, to the point where they were willing to borrow money to bet on the horse his system chose. One needs to be a little foolish to fall for such a con, but many such people exist!
Brilliant people fall for this every day in a subtler form.
Year 1 - 1000 hedge fund managers choose high-risk investments for their funds. 100 are wildly successful (purely by luck), doubling their investors' money, while 500 suffer hideous losses.
Year 2 - Investors withdraw from the 500 losers and deposit with the 100 winners. Of those, 10 are wildly successful two years in a row (again, purely by luck) and double their investors' money again.
Year 3 - Hundreds of millions of dollars flood in to the 10 lucky hedge fund managers out of 1000 because of their "proven performance". This is the year their luck runs out.
Imagine being in the luckiest hedge fund and realizing after some colossal failure that you had only been lucky this whole time. You have no better investment intuition than anyone else. I could see most people denying their failure for a long time.
Matt Levine had a good section about this in one of his newsletters from January (quoting the relevant part here):
(mention for @ascii too)
This should easily testable by comparing the data of first 5 year losses vs. gains against a gaussian distribution. If it looks gaussian it's all chance. If it's bimodal then there's skill involved.
This is the way it often appears to happen in venture capital as well, with a pernicious addition: at a certain level, you’ve gained sufficient notoriety that your investment actually does provide momentum for the company in question, and you’re more often successful in your investments as a result. Or at least, that’s a hypothesis I’ve heard.
Wow, that's actually a really clever trick. Obviously super unethical but all it takes is a few people to believe in it and you have a lot of cash in your hands. There's seriously no way that if you are being tricked to detect that you are.
I think enough people fall for the pose-as-vitalik scam that something more complex like this isn’t really necessary yet in crypto.
What's that one?
loads of fake accounts were generated on Twitter using Vitalik's profile picture & very vague differences in username. They would comment on his posts with stuff like "Send [x] amount of ETH to [ETH Address] and you'll receive double back!" Checking the addresses on a blockchain browser was depressing, the scams actually made TONS of money off of newbies to crypto.
Amway and MLMs are a big problem. They sucker people in with promises of being your own boss, pulling yourself up by your bootstraps, beating the system and all that crap. Really it's a pyramid scheme which is barely (if even) legal, and people lose thousands of dollars just for participating.
There's just not enough awareness of these very-common scams.
Promising something impossible isn't enough of a dead giveaway?
I don't see too much wrong with the concept of MLMs in principle, and I imagine there must be some that are viable, otherwise they'd be out of business. The problem is that when you indiscriminately involve large numbers of people in anything, it's gonna be messed up. See religion, the internet, etc.
MLMs are only viable because their business model is to screw people over. The employees are the customers. The idea is to get people to buy merchandise they can't ever resell.
Wait, didn't Trump just hold his campaign rally a few days ago at the "Amway center" I knew that name sounded familiar!
Also relevant: Betsy DeVos, his Secretary of Education, is the daughter-in-law of one of the founders of Amway.
It never ceases to amaze me how comically unethical and corrupt this entire administration is. And how half of this country simply could not care less.
Here in New York we have something called ESCO scams. (I'm not sure if this is specific to NY or if it happens in other states too.) It involves an energy reseller trying to get you to buy your electricity from them instead of Con Edison or whatever the local utility is. Often the person selling this will try to make it seem like they are affiliated with Con Ed in some way. They'll ask to look at your utility bill and claim they can lower your electricity bill. Spoiler: they don't. More info:
I can also think of a few street-level hustles that tourists need to be wary of here.
(By the way, there's a really interesting book about these and other scams called The Con Men: Hustling In New York City.)
And here's one I have only seen in New Orleans:
The CD one has a whole range of variants along the spectrum from unpleasantly high pressure sales to outright scams: flowers, music, beauty products, trinkets. They all play on the fact that we're socially conditioned to accept something as it's handed to us, and then not to "steal" it or throw it away when we're told it costs money - if they don't take it back, you're essentially anchored in place until you pay the money or go against a lifetime of training in how you should behave, and they know exactly that. Don't take anything that's handed your way unexpectedly!
I've seen a version of the CD scam where they ask you your name or something personal, then immediately write it on the CD. They will try to use the fact that it's "autographed" to pressure you to buy it. They'll claim that since your name is on it, they can't sell it to anyone else and you have to buy it, when in reality, they can just wipe it off with a wet towel.
I just had a guy try a variation on the broken glasses scam when I was in Nola for Pride: he asked me to buy him a glass of sweet tea while I was in the McDonald's on St. Charles, so I said sure. When I brought the tea back out to him, he told me he'd gotten 2 tickets for loitering while waiting for me and was trying to make me feel guilty about it. I knew that (a) it was a scam because it doesn't make sense to ticket loitering during a parade, and (b) that even if it were true, it's not my problem. So I said, "That sucks" and went on my way.
Someone might've tried to get me with the "where you got those shoes" trick a while ago, but my dad had told me that one years ago as a joke, so I lucked out of there too. Maybe the guy was just joking around, but he didn't try to get money out of me.
I hope you kept the sweet tea for yourself.
I actually bought my own, so I let him have it. But maybe next time, I'll cook up my own scam to scam the scammer!
"Hey man, I'll bet I can guess which state you were born in."
"Like, a state of innocence... man."
Some hippy chick on Haight.
Ahh, I miss New York. Don't forget to include all the people dressed as Spiderman, Big Bird, or anything else in Times Square. They'll goad you into taking a picture with them, and then claim you owe them money because they have copyright over it since it has their likeness or something like that. And if you refuse, they'll threaten legal action.
If you're in a public space, you don't have a say in what anyone does with our picture. These people prey on the fact that people don't know that. Nobody has any reasonable expectation of privacy in a place as public as Times Square.
I got hit with this once on campus. Oddly enough It was to raise money for some religious group. I'm not sure of the group but they had on robes kind of like Buddhist monks. He offered (handed) me a book then asked for a donation. I just handed it back and polity walked away. It's a weird thing for a religious organization to raise money in my opinion.
I've enjoyed reading through the Little Black Book of Scams. It's published by the Australian government, and has lots of nice concise descriptions of common cons. Plus, it's free as a PDF
EDIT: typo
This is an easy-to-read yet comprehensive resource. Thank you for sharing it!
The Australian Tax Office does not want you to pay your tax debt using gift cards of any sort.
And they are not going to phone you up out of the blue and immediately threaten to arrest you. Nor is a registered tax agent going to phone you up out of the blue and say that the ATO is threatening to arrest you.
The ATO will go through a long drawn-out process, involving lots of forms, letters, and confusing bureaucracy, before they even get close to deciding to arrest you for an unpaid debt. And, even then, they're much more likely to go to your bank or your employer and use their legal powers of garnishee to just take the money they believe they're entitled to, rather than throw you in jail.
And they want cold hard cash (or the electronic equivalent). They don't want to use your tax dollars to go shopping on iTunes.
Sadly common in Canada too. We're always getting calls from Canada Revenue telling us we're about to be arrested unless we call the number they provide.
It's always fascinated me that this isn't a red flag for some people. I can totally understand being panicked into compliance by a credible-sounding threat of arrest, I know how easy it is to act before stopping to think, but I can't imagine not tripping up on the idea that the government can only be paid in gift cards from a random private company.
Of course, if they manage to set up a legitimate looking destination bank account (by fraud, fake identification, or running a different scam on the account holder) I can see it being all too easy to fall for this one.
I think the only reason this works is there are a few credible facts and threats thrown in. Its quite plausible that maybe you do owe money to the the ATO, and its also within their power to take serious legal action against you. Still almost everyone will know its a scam but someone less informed or older may just fall for it.
This happens here in the US too. My dad actually fell for it once. Luckily, the store he bought the gift cards at was extremely helpful and even went so far as to give him the $150 he spent on the gift cards back in store credit.
The police came and took a report, but there's not much they could do since the cards were used immediately.
Tech Support scams targeted at tech illiterate people. I couldn't find the video at the moment but apparently there are dedicated divisions targeting Japanese as well and makes sizable returns ( 29k a day )
https://www.youtube.com/watch?v=hXUvN-ijm7c
https://www.youtube.com/watch?v=PQjZxBrcvkI
Edit: Found the Japanese clip https://youtu.be/0hi4HFPsURE?t=211
That's pretty hilarious.
I could imagine that it would also be somewhat entertaining to waste their time.
You really undersold those videos by posting them as naked links--they were fascinating!
For anyone interested, these videos involve a guy who calls scammers pretending to have an issue on his computer, lets them login to his computer, then uses a keylogger or other methods to gain access to their systems and get information about their operations and financials.
You get to see the methodology of the scam in action which uses basic Windows functions to further scare people (e.g. opening a terminal and typing the words "spyware detected" on the command line). He plays along until they've been entrapped, and then he uses the access he gained to reveal information about the scammers he was able to glean by getting into their systems. The amount of success they have is devastating.
These were very illuminating videos, and I'll be sharing them with some of my family members. I think they have a lot of instructive value. Thank you for linking them.
Yeah, I just subscribed to him. Very entertaining videos. I especially like this one because it gives some good tips (I kind of want to do some scambaiting now), and this one is also great, especially when he tells them that he Syskeyed their computer.
Don't just pay a bill because it shows up and has your name on it. Plenty of people will just pay a bill because it says they owe money, even when it's just a scam.
The bane towards the accounts payable department in larger businesses.
If you are significantly overpaid for something (eBay item, contracting work, whatever) and asked to send back the balance, or use the excess to cover expenses from a specific supplier, you're going to end up out of pocket. You've just made a legitimate payment from your own account to an account or company controlled by the scammer, and within a week or two you'll find out that the original incoming transaction was fraudulent. The bank pulls the fraudulent cash back out of your account, meanwhile the account you sent it on to has long since been emptied.
One I particularly dislike, because it casts mistrust on the majority of good honest people as well: if you're in a new city and you stop for a drink, you might strike up an interesting conversation with a friendly local. Very relaxed, you get on well, they aren't asking for anything - maybe they even buy you a beer or a coffee. They're meeting a friend somewhere just nearby, would you like to join? You and your new best mate head on to the next venue, have one or two more drinks, and then get handed a bill for $500 or more. They might even produce a menu with the prices on and swear that you were shown it when you ordered. If you refuse to pay, or don't have the money on you, the bouncers will step in with the threat of violence and march you to a cash machine; the police may well even back them up as "you were trying to leave without paying your bill".
Ah yes, there's a massage therapist version of the overpayment scam. Someone contacts you with a story about needing massage for their entire staff/crew after a big job, and asks you to quote a price. I've never responded, but I assume at some point they overpay or somehow finagle you into "refunding" them some money. For some reason there's often a driver involved to transport the staff. I wonder if that person collects the money in person?
If an SMS from your phone number shows up on your parents or grandparents phone asking urgently for money, because you are arrested or in trouble or something like that, or even if they recieved a call from your phone number with a voice similar to yours asking urgently for money, even in tears - tell them beforehand they should just hang up and call you back. Scammers learned to fake SIM card IDs, you can buy modded sim cards from the darknet to do this, so they can make ANY number show up as a caller/sms origin. Buut that trick doesn't work when you call back, your call is actually routed to the person owning a number instead of a scammer. They'll say anything - even cry, beg, call you at 3 in the morning because they want you scared and confused. Mostly they target the elderly.
This scam works without a sim swap.
My mom got a call that went something like this:
Old people are so gullible. My Mom totally fell for this, and went to several stores buying gift cards. She felt guilty about not telling me, so she gave me a call right before calling the "bondsman" with the gift card numbers.
She seems to be a sweatheart though
Yeah, they used to do this without any fake sim cards, but recently even old people got smarter thanks to some TV shows exposing the scam, and so the scammers got smarter. It's great that your mother gave you a call, my dad, even being in his mid 80s never got baited by such scam, and he used to prank them pretending to be just a bit too stupid to do exactly what they wanted infuriating them. It's still a good idea to just tell your elderly how to act.
My grandma was almost a victim of this. Claimed she got a call from "my cousin" saying he got into a car accident and needed a couple thousand dollars for medical bills. She said that the voice sounded exactly like him, and that the scammer knew all kinds of personal details. Luckily she hesitated and got a hold of the real cousin right before sending the money, but really freaked everyone out how convincing it was.
DHL or any other package deliver service will not call you out of the blue about failed delivery attempts. At least here in Canada they don't. If you really have a package, you'll get a note on your door or community box.
And the CRA will not call you or send anyone with handcuffs to your house. Everything in Canada is done through Canada post mail.
Here in Hungary, DHL (as well as most other delivery companies) will in fact call you if they are at your door and no one is answering the door bell. That said, most of the time they actually call you about 10 minutes before your delivery asking if you are at the address.
It would be so amazing if they did that here. I've literally sat next to my door waiting for deliveries just to get a failed attempt update on my phone and then find a note.
Generally the only time I've gotten a call is if you've requested it (and they have time) or if you've made an effort to know the person on your route and they happen to be nice.
When I went to india last month, I watched some videos on scams, and it's crazy how within literally the first day, people tried like all of them on us:
This is one of the videos I watched
https://www.youtube.com/watch?v=JntHFPotpxI
and (I actually fell for this one) in Istanbul:
A shoeshiner dropping his brush in front of you, and when you pick it up, they offer you a quick shine for free. I gave him like a dollar in the end, even tho he wanted more. I met some guy who lost like 50 bucks to one haha. The worst thing was: I saw a poster talking about common scams before, and I skipped reading the one about shoeshiners, because I thought I was clever enough not to fall for that one. On that part of the poster they literally described what had happened to me.
You live and you learn
Romance scams among the older generation. I've watched it happen twice to my mother in law, and once to my grandmother. I caught it early with my grandmother (or at least I thought I did) and tried everything I could think of and she wouldn't stop talking to the fucker and doing favors like moving money for him. I eventually just gave up.