Have you ever seen these ads online? There’s a guy (always seems to be a guy)
talking to the camera about how successful he is. The production value is low, but there’s
always some impressive swag on display, like a Lambo chillin in the garage or an 8 bedroom
mansion with an infinity pool. If you stick with the video, you’ll probably
hear an inspiring rags-to-riches story with a hint at some surefire secret to his success. Now, I’m a licensed financial professional
who knows there’s no magic pill to becoming wealthy...but even I found myself wondering:
Are these guys for real? Is this just slick marketing for boilerplate
financial advice? Or is this the old song and dance... of a
con-man? The “Con” in con-man is short for confidence. In 1849 The New York Herald ran a story about
a well-dressed gentleman by the name of William Thompson. He would approach a perfect stranger and ask
if they had “confidence in him” to trust their watch to him for the day. The novelty of the request combined with Williams
outward appearance of trustworthiness convinced dozens to play along. That was the last most of them ever saw of
their watch or Mr. Thompson. We may think of a “con-man” as being the
same thing as a thief or liar. But in her book “The Confidence Game”,
Maria Konnikova explains “The true con doesn’t force us to do anything. He doesn’t steal. We give.” In short, they’re master manipulators. And our culture is obsessed with them. We make movies, podcasts and documentaries
about their schemes, like Fyre festival’s Billy McFarland, Elizabeth Holmes of Theranos,
and of course Bernie Madoff. Konnikova explains that.”Transition is the
con’s greatest ally because transition breeds uncertainty.” I guess Littlefinger was right, Chaos really
is a ladder! And in our era of rapid technological innovation
and shifting online social norms, the conman’s hunting ground is more fertile than ever and
we are ripe for the taking. Thanks to intensely detailed consumer monitoring
(check out our video about companies stalking you online) it’s become easier than ever
to pinpoint an audience interested in a certain topic--for instance, someone who might be
curious about investing because they watch a YouTube show about financial literacy. Topics like money and real estate are especially
promising because they’re not widely understood. And that lack of knowledge--believe it or
not--actually makes people LESS cautious. This is because of something called the Dunning-Kreuger effect. Social psychologists David Dunning and Justin
Kruger conducted multiple studies where people were tested on subjects like logic & grammar
then asked to rank themselves on how well they thought they did. The participants who scored the lowest tended
to rank themselves the highest, and the students with high competence tended to underestimate
their performance. Basically, the less knowledge you have, the
more you’ll overestimate your abilities. So if you don’t know anything about investing,
you’re much more likely to believe someone who tells you you can beat the markets. That’s not to say there aren’t any honest-to-goodness
golden opportunities out there, but sadly they are vastly outnumbered. So how can you tell the difference? Well, most cons tend to follow a familiar
script. First, the con identifies their potential
victim, known as the mark. Your browser history and tracking cookies
on your computer and phone make this very very easy. The next step is to befriend them and earn
their trust. That’s where the wealthy selfie comes in. This conveys success, but also approachability. He’s not a slick marketer--just an average
bro, like me! Next they drop a hint about the reason behind
their success, usually some secret, easy-to-learn process that doesn’t require any intense
training or hard work. And they’re willing to share it with you! Then they provide social proof of their authenticity,
like hyperbolic testimonials or numbers of followers on Twitter and Instagram. Money finally changes hands. This might take the form of a special introductory
offer or easy minimum commitment. Which the mark is usually all too eager to
take part in, thinking that big profits are just on the horizon. Finally, we reach the sad conclusion. The money’s gone and the hoped-for profits
never materialized. If executed by a master, the mark won’t
even complain, blaming his own bad luck or lack of faith rather than the guy who took
him for a ride. In this day and age, it’s not likely that
you hand over your money and get absolutely nothing, unless you’re trying to help out
a Nigerian prince. But often the actual product or program you
get is sub-par, hard to execute or just boilerplate pump-you-up self help advice designed to boost
your confidence. All while maintaining the impression that
the pot of gold is just around the corner, to keep you moving through their highly curated
sales funnel into more and more expensive offerings. Now, is that a con? Depends on who you ask! But consider this, how much time, money, and
energy are going into the sales pitch, as compared to the product or service itself? Just because the video looks cheap doesn’t
mean they didn’t spend gobs of money plastering it everywhere. And does buying the initial product seem to
open you up to increasingly expensive programs? Those are all major red flags that you’re
being sold an empty promise. If you’re realizing you’ve fallen for
something like this in the past, don’t feel bad. The fact that we’re all a little gullible
is actually a positive thing. As Konnikova explains “The simple truth
is that most people aren’t out to get you...Trust... not adeptness at spotting deception, is the
more evolutionary beneficial path.” And while modern technology might be making
new opportunities for con-artists, it’s also never been easier for you to uncover
them. So do your research and ask yourself, if they
have all this money, why do they need yours? And that’s our two cents! Thanks to our patrons for keeping Two Cents financially healthy. Click the link in the description if you'd like to support us on Patreon. If you've ever fallen prey to one of these schemes what are some other red flags to look out for? Share them with us in the comments.
