Monday, June 9, 2008

How To Tell When You're Being Lied To

If you've ever watched more than 30 seconds of a late-night infomercial for a real estate selling "system" you've seen some version of the exact same pitch. "Do what I tell you on the tapes and you'll be rich." But the only people making money are the ones selling the tapes. No one ever gets rich actually following the advice on the tapes.

It doesn't matter what the tapes are about: real estate, home cleaning products, debt consolidation. They're all a scam, because the real money is in selling the system, not in using the system.

The new wrinkle in this is that the scammers have gone "meta". The system they're selling now is the infomercial. Instead of claiming their system will tell you how to sell real estate, they claim their system will tell you how to make your own infomercial. Which can be about real estate, or it can be about ... well, making more infomercials. And making them on the web. See, it's different!

You would think that eventually someone has to get something of value out of the whole arrangement. With the real estate scam someone allegedly gets a house out of it. But with the new racket the only thing that ever comes out of it is a "business" of selling more ads.

If you're too young to know about it, they have a name for this arrangement: Ponzi Scheme. The only people who make money are the people who know that's what they're doing.

So here's how to tell when you're being lied to. If what you're doing is a Ponzi Scheme, are you the one doing it on purpose? If not, then you're being lied to.

2 comments:

Tim Harding said...

Hi Drew,

found your site through your post on the Business of Software forum.

Enjoyed your post about real estate and took a snap shot of the page:

http://skitch.com/timharding/pwr9/drew-kime

The advertising is delightfully ironic :)

-Tim

Drew Kime said...

That's absolutely hilarious! Thanks for posting it.