I’ve been watching a new TNT series called Leverage, a modern day Robin Hood-type story where a group of former criminals, led by an honest but troubled former insurance investigator; steal from criminals and give to the ordinary citizens that have been themselves wronged. It’s a fun little diversionary show and it’s introduced me to the names of several confidence tricks, or “cons.”

In the world of confidence tricks, there are short cons and long cons. Short cons are meant to take all the cash and valuables on your person. Long cons are more elaborate ruses designed to take more than what you have on you, they’re designed to take you for everything you have. In this article, we’ll just talk about the long cons because, well, they’re more interesting to talk about!

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I went to a conference of internet marketers a few weeks ago and spent some time learning from some of the best and the brightest in the industry. One of the things I came away with was the prevalence of “stimulus check” related scams that were floating around the web. I don’t think any of the people attending were involved in pushing these offers because the general consensus was that if you were involved, it was only a matter of time before the FTC dropped the hammer and penalized you heavily for your involvement.

Well, surprise surprise, the FTC released a consumer alert warning consumers about stimulus scams:
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Did you see the Cash4Gold commercial starring Ed McMahon and MC Hammer? Did anyone else get the funny feeling like you were watching an infomercial at 2AM and not Super Bowl commercial?

I hadn’t heard much about Cash4Gold until the commercial but I never liked the idea of pawning gold for cash. Maybe it’s because I’ve always seen those “We Buy Gold!” signs in rougher areas (Atlantic City is a mixture of gentlemen’s clubs, casinos, and “We Buy Gold!” stores) or maybe because the only piece of gold I own is my wedding ring, and I’d have to be in a pretty rough spot to pawn it. I have no similar feelings towards pawn shops though, just ones that exist solely to trade in gold.

Anyway, I started to do a little more digging about Cash4Gold, I even requested a refiner’s kit to learn more, and found a lot of reasons to avoid them.

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Mona Vie. One of my friend’s wife was targeted to join Mona Vie. I’ve seen a lot of references to both Mona Vie and one of the components in its mixture, açaí, but never really looked into it. I knew that it smelled fishy, in part because its a classic multi-level marketing program, and that alone gives me reason to pause. However, I wanted to take an objective look at it, since there are a lot of MLMs out there and they can’t all be bad right?

Multi-Level Marketing / Pyramid Schemes

Only two words are needed to describe Mona Vie, the brand name of the juice: pyramid scheme. Mona Vie is a “standard multi-level marketing program,” commonly referred to as a pyramid scheme, that relies on people marketing their products. Every time you make a sale, you earn a commission. The people who recruited you, and the people who recruited that person (your “upline”) into the program will also earn a commission. If you recruit someone into the program (your “downline”), you will earn a commission on their sales. The classic pyramid scheme.

There’s is nothing inherently illegal or disreputable about multi-level marketing programs. They aren’t illegal in the sense that Ponzi Schemes are illegal , it’s just that most implementations of MLM programs only really benefit the people at the top of the pyramid. This is because many of these programs have quotas that members need to sell and, when they can’t, members often find themselves buying the products themselves just to meet quota. Anyway, enough with the generalities, what’s specifically scammy about Mona Vie?

Mona Vie Scam?

What’s this Açaí berry juice product? It’s supposed to jump all over the antioxidant health craze people have been clamoring all over and Açaí berries are a very good source of antioxidants (most dark colored berries are, like blackberries, raspberries, etc.); that part is legitimate. The drink itself is 19 juices blended together.

There are two parts of Mona Vie that are suspect. First, many agree that antioxidants are beneficial for you but Mona Vie makes some big promises such as improving cardiovascular health, improving joint function, etc. It claims that it can cure many ailments because it contains components that have been shown to address some of them. Nothing they say is a flat-out lie but it’s like saying you can do laps in a kiddie pool. Possible? Yes. Probable? Not really.

The second part that’s suspect is the fact that the stuff is $30-$40 a ~26 oz. bottle and proponents say you have to drink 2 oz. in the morning and 1 oz. in the evening. Simple math shows that each month you’ll have to spend $120-$170 on the juice, or $1,500-$2,000 a year. If you want the benefits of these types of juices, you can get it for much much less. Oh, and any distributor has to buy 4 bottles a month. Sure you can sell them, but what if you don’t? You’re always on the hook.

Other red flags? Their CEO and founder, Dallin Larsen, is a 20 year veteran of the MLM industry and the FDA recently shut down a similar juice product operation, Dynamic Essentials distributed Royal Tongan Limu juice, for illegal business practices. Hmmm…

Finally, check out the MonaVie compensation plan, courtesy of The Fraud Files blog. There are all sorts of crazy exceptions and rules. For example, you have two legs on your “downline,” but are only paid on commissions based on the shorter of the two. It gets really complicated, really quickly, and that certainly doesn’t bode well for people who sell the stuff.

The bottom line is that you’re overpaying for a product and, if you’re a distributor, you have to buy 4 bottles a month. Do you think it’s a scam? (this site, Purple Horror, documents a lot of Mona Vie’s shenanigans)

(Photo: wmode)

It’s absolutely insulting that AIG spent $443,343 on a retreat just days after the Feds bailed out the company with a $85 billion infusion that sucked 80% of the firm away into the Federal abyss.

It’s my personal opinion that C-level executives are overpaid by the conventions of mere mortals but the reality is that their salaries and benefits are the result of what the market will and can bear. Goldman Sachs CEO earned $74M last year, Lehman Brothers chief Richard Fuld defended his $71.9M payday (it wasn’t as much as before the bankruptcy though!), and ex-CEO of Bear Stearns James Cayne earned $49.31M over the last two years. It’s an ungodly sum of money, especially for companies that are either dead or on life support, but that’s how the game is played. You take the heat with one hand and the cash with the other.

What AIG did? Spending nearly half a million on a retreat at the St. Regis Report in Monarch Beach? That’s like someone spitting in your face. If I had any business with AIG, I’d seriously reconsider it.

Rock Out With Your Bailout [The Smoking Gun]

Recently I’ve been getting a lot of strange unsolicited phone calls from 800 numbers claiming to be my cell phone company or my bank or my credit card. In many cases, the calls are legitimate. If it’s a credit card company, they’re confirming some card activity and offering all the sensitive information. However, I’ve also been getting some suspicious ones at all. This last week, I had a phone call from someone who worked for a timeshare. I wasn’t interested in flying down for a three day, two night getaway in Florida and when I asked where they got my name, I got the “oh reception is breaking up *click*” That really put me on edge.

Then, a few days later, I received another phone call from someone telling me I was eligible for a promotion related to my “credit card that ended in…” and then rattled off four numbers (that matched a credit card I actively used). Again, when I asked them for their company name or how they found me, I god the “reception is breaking up *click*” treatment.

Lesson of the Day

If a company calls you out of the blue, be on your toes. Phishing isn’t limited to email, people lose sensitive information all the time because of phone calls like the ones I’ve been receiving. If a company calls you and you’re on the National Do Not Call Registry, get their information and file a complaint.

Whatever you do, don’t give up any information. If it’s really important, you can call them back at a published corporate phone number. Have them annotate your record.

Search

Lastly, if you’re curious, do a search of the number. When I searched for 877-671-1851, I discovered, through 800Notes, that it was Sprint trying to sell me a promotion (which matched what the CSR was trying to do). While you can’t trust everything you see online (anyone can put up a website that says their phone number is legimate), it can give you a good idea.

(Photo by _М и р К о__)

The other day my friends, my wife (who is also friend but unless I give her a shout out I get shouted at), went to the 16th Annual Safeway BBQ Battle (official site) down in Washington D.C. and had a marvelous time. The annual event is a ton of fun, only $10, and part of the proceeds goes to benefit the Boys & Girls Clubs of Greater Washington’s Metropolitan Police Club Houses – so it’s a win-win-win. Besides gorging ourselves on free samples and celebrity chef demonstration food, one of the interesting things I saw was a table giving away a $500 Target gift card. I wish we had taken a picture since the sign was distinctly unprofessional and the table was even less so.

If you’ve ever gone to a mall and seen the tiny stands announcing a sweepstakes giveaway of a car or incredible vacation, then you’d recognize the tell-tale cardboard boxes with the pictures of the vacation or car. Instead of a picture of a fancy new Prius or a beach in Aruba, picture a Target gift card with a big $500 on it. That’s what the table consisted of, about a dozen of these with plenty of people signing up.

Despite the convincing sign, I bet there there is a 0% chance (ok ok, maybe a 0.0001% chance) that you’d win a $500 gift card to Target if you entered. Many of those sweepstakes contests are affordable techniques to capture your name, phone number, and address for a mailing list. The surprisingly thing is that they often tell you right on the box (they are required to). By entering, you are subscribing to the XYZ Product/Timeshare Mailing list and allow XYZ Product/Timeshare to contact you even if you are the Do Not Call list.

The chances of you winning that cardboard box giveaway: 0%.
The chances of you receiving annoying phone calls during dinner offering a fantastic timeshare vacation offer or test trial of some crazy new product: 100%.

There Ain’t No Such Thing As A Free Lunch.

Companies are getting more and more clever these days. Kim Palmer, who writes a US News & World Report money/business blog called Alpha Consumer, recently received (technically her husband received it ) a letter from the National Collegiate Lending Institute in which they were told they could receive a $300 debit card at no cost to them.

It turns out—surprise, surprise—that the offer is too good to be true. I called the number listed in the letter and learned that the “free service” is student loan consolidation. The $300 would be handed over only if we consolidated our student loans through the company and then provided a testimonial about it—hardly a 10-minute decision, especially when our student loans are already consolidated at decent interest rates. …

The lesson: Mail offering free money usually belongs in the trash.

What’s especially funny is the explanation and discussion that Kim has with David Tominus, sales manager and part owner of National Collegiate Lending Institute. Kim says its misleading (it is a litte), David says people should read the fine print (people don’t), and what it comes down to is that your average recent graduate is going to see $300 debit card, look at a relatively decent offer, and pull the trigger. NCLI is banking on that (and they do bank on it, 70-80 times a week).

Your recent grad won’t compare and contrast other offers as diligently because $300 right now is a lot of money (who can give a testimonial without actually using the service?). National Collegiate Lending Institute isn’t being misleading or doing anything disingenuous, they’re simply conducting business and consumers have to be smart enough to protect themselves (though if you do a search of National Collegiate Lending Institute in Google, the first few results are all about AG Cuomo’s investigation into their practices).

I’m all about keeping consumers as accountable for their actions as businesses are but why can’t businesses do business without this sort of chicanery?

I received an email today from Comcast about how they recently changed their policy regarding accounts:

Comcast takes the security of our customers personal and account information very seriously. As part of our ongoing effort to ensure the security of our customers information, we have recently enhanced the security of the Comcast.com account management system.

As a result of these recent enhancements, if a Comcast.com account is inactive for 180 days, it is removed from our system.

In order to keep your Comcast.com account active, please log in today with your user name and password: www.comcast.com/login.

First off, anytime someone emails me to log into my account, I never click any links in the email. Never ever. I don’t care if it’s some stupid account on some random free email account that you wouldn’t care gets stolen. The fact of the matter is that thieves know that people use the same username and password on multiple accounts so a free email account could yield a free bank account as well. Lastly, I can just go to Comcast.com directly and login there to confirm whatever.

Secondly, if this is legit, Comcast is ridiculously stupid because they should check to see if the account is connected to an active customer account (it is). If it is, then ignore this stupid little rule because they’re obviously “active” because they’re paying for service! If it’s not connected, then I suppose you can request that someone log in every 180 days (though the chances of a non-Comcast subscriber caring about their Comcast account is exactly zero).

Moral of the story – Companies may be stupid and make legitimate but dumb requests, but don’t be a dummy and get phished.

FYI, the email I received, according to the headers, was legitimately sent from a comcastonline.com’s server but…

• The email was “from” a comcastsupport.com email…
• The link in the email was to to comcast.com…
• And the link itself was to gothere2.comcastonline.com…

Seriously Comcast, you gave me 2034982304938 reasons to think it was a phishing email (all they missed was the link going to thisisacomcastphishingemail.com).

The human brain is notoriously good at sniffing out fraud, but every so often something comes along that, for whatever the reason, sneaks by our fraud detector and makes us do something we will later regret. That’s why you should do what NASA scientists to… build in redundancy for your fraud detector by getting another fraud detector: your friends. If something sounds too good to be true and you haven’t smelled fraud, get your friend to take a whiff and let you know what he or she thinks. If they think it’s okay, get a third, fourth, or even fifth opinion. If you have an especially cynical friend or one who is a domain expert (or more of an expert than you), make sure you get his or her opinion as one of the first five. If everyone says thumbs up, then go for it!

Let me give you a real life example of this situation. Back in college one of my friends was dreaming up schemes to make millions of dollars and fell upon a scheme where you could buy twelve XBoxes gaming systems off a seller on eBay and then flip them on the local school message boards for a handsome profit. He had convinced two of our friends to go in on the deal and was searching for a fourth when he asked me. I listened to his plan and everything sounded fine until he told me that the source of his XBoxes gaming systems off eBay and that he was getting a great deal. Immediately my fraud detector went off. It’s not suspicious to find a great deal on eBay, it’s suspicious to find a great deal on twelve $200 gaming systems. I told him that the auction sounded fraudulent and that I didn’t want to become involved financially but I’d do what I could to give them advice on how to protect themselves in case there was a problem. Well, eventually the whole scheme broke down as the three of them came to their senses but I was the fourth opinion (counting his own as one) and the first that sounded off the fraud alarm. Had the deal gone through with only three people (say, if the auction was for six XBoxes instead of twelve), it would’ve gone through and perhaps someone would’ve been defrauded (or not, there are plenty of legitimate bulk auctions on eBay).

There’s a reason why Ponzi schemes and the Nigerian scams are still alive and well today, they work well enough that the folks running them still turn a profit. Ponzi schemes are now called HYIP or High Yield Investment Plans (oh, 23049823094% return in one day? Sure!) and Nigerians are still getting people to cash fake million dollar checks and sending back legitimate ten thousand dollar checks. So, the next time you think something is way too good to be true, request all the way to a fifth opinion. If it ends up being a scam, you can at least rest with the psychological benefit of knowing four of your friends would’ve been duped too.

(Incidentally, some folks are turning the tables on the scammers in a hilarious way)