Legal Scams
Preface
Table of Contents
Chapter 1
Introduction
In the context of this book, the term “Scam” is used for short hand purposes only; it really encompasses scams, frauds and cons.
This book is about how to protect your life against “Legal Scams.” The term “Legal Scams” seems like an oxymoron since scams are normally associated with illegal activities. Many of the actions outlined come very close to the illegal line; some may even step over it a bit and are termed “Quasi-Legal.” The objectives of both types are the same; get your money, although there are some other reasons such as affecting interpersonal relationships. Even with the differences between the legal and quasi-legal, you can be placed in jeopardy for your health, prevent you from taken needed action, obtaining a poor product or not getting what was expected.
Illegal scams are usually run by single individuals or small groups of people that break existing laws or prey on the unsuspecting. They ultimately affect about 30% of the population. “Legal” scams are typically run by companies sometimes individuals and often by elected government officials in conjunction with companies. These types affect just about everyone.
Legal scams are designed to mislead someone through false statements, pictures or concealing pertinent information they are not legally required to provide. Their ultimate action, whether intentional or not is to take money or goods using existing laws or the lack of laws covering some particular action.
This might be done by a government passing a law where the function was previously considered illegal but the new law makes it legal. It could also be done by a company working within the law to mislead, persuade or exploit the characteristics of the human psyche such as honesty, vanity, compassion, credulity, irresponsibility, naïveté, or greed. Unfortunately, it all comes down to trust of a company or our own government causing a person to take some action they may not normally take.
Usually, the term “Fraud” has a very clear definition in the legal sense. For a “Legal Fraud," it might be something as simple as language in a contract’s terms & conditions. Although, it may be perfectly legal, it may not be in a person’s best interest. The company does it because they might be pretty sure no one will read it and thus can get away with it.
The term “Con” is synonymous with the term “Bamboozle” or “Snow Job.” This action may be done by a picture, video or any one of a number of other media. For example, it may be accomplished by twisting words around to fool you into thinking it’s something it’s not.
It should be noted even if the practice is considered legal; various government agencies have the ability to seek action to prevent deceptive and misleading claims. Companies wanting to stay out of their grasp are careful to come just up to the line to where government action might take place.
The Federal Trade Commission has jurisdiction over the advertising and marketing of foods, nonprescription drugs, medical devices, and health care services. The FTC can seek Federal court injunctions to halt fraudulent claims and obtain redress for injured consumers.
The Food and Drug Administration (FDA) has jurisdiction over the content and labeling of foods, drugs, and medical devices. They can take law enforcement action to seize and prohibit the sale of products that are falsely labeled.
Most State Attorneys Generals have authority under state consumer protection statutes to investigate and prosecute unfair or deceptive acts and practices. Many have the power to seek consumer restitution, civil fines, and revocation of a company’s authority to do business.
It’s unfortunate that many companies work in conjunction with governments to get at your money using legal scams. You may be able to side step non-governments scams. Unfortunately, those perpetrated by governments themselves may be impossible to avoid.
Think more of this book as a mystery novel, where you have to look for the clues to find the guilty. Some of the clues will pop-out at you or are self-evident, where others take investigation. This book looks at the “Characteristics” of Scams, which consequentially makes the clues easier to identify for a broader class of Scams.
Many of the chapters contain both Legal and the Quasi-Legal scam information, although the main focus is on legal scams. In some cases, there is a thin line, impractical to separate.
Each chapter explains what to look for and how to avoid being scammed. Many explain just the general characteristics of a particular class of scam since the solution is self-evident. Chances are you’re not familiar with Legal scams since they probably happen to you every day without your even knowing it. There is one very important factor that you should keep in mind, “The Supreme Court has ruled that lying is not illegal so long as one is not under oath.” This will form the basis of many of the legal scams.
Scams can be broadly classified as short-term and long-term. In the short term, they go after your money immediately. Long term scams take a while to evolve or set-up. They want your money in large chunks. Some years ago there was a popular movie called, “The Sting” with Robert Redford and Paul Newman. It was a “Con” job of how a “Mark” was setup to be taken for a lot of money. It was elaborate and required a lot of cooperating people to pull it off. The “Long Play” is made up of four parts: Setup, Demonstrate, Create a Demand and finally Run the Con.
There is an excellent example of this type “Con” which ended up taking in many sophisticated people. The Bernie Madoff Scam (A Ponzi scheme,) which was illegal.
This was the largest con ever pulled-off by an individual. Actually, there were a few other people involved. Before the government took him down, he had fleeced the public out of $65billion. About half of Madoff's investors were "net winners," earning more than their investment. After "claw back" (return of money from investors receiving more than they invested), liquidation of assets and other lawsuits, the net loss to investors was about $10billion. Let’s look at his technique:
The setup - Because of his position in the financial industry, Madoff could convince people he had a sure-fire method of making money. It took a while to setup and make the story convincing, but the “Back Story” was made believable.
Demonstrate – He selected a group of people, his friends, and professional associates. He took their money and started paying back exorbitant returns on their investment. For those investing early he made sure they got back their initial investment plus interest. This was the key part of the “Long Play.”
Create a Demand - Word got around; Madoff was for real. This became the Marketing aspect of the scheme and was critical to his success.
Run the Con – Once the hook was set, the barn doors flew open, money started to pour in.
There are many variations of this scam; however, they’re all based on the setup or bringing “Marks” into the scam as time progresses. They might be Investments, Mind Reading, Fortune Tellers, Penny Stock, Land Investment, and the list goes on.
There are also legal “Long Play” scams; I call them “Soft Scams.” The industries perpetrating them probably just call them good marketing. An excellent example is a government-run lottery. Up until a few years ago, it was called the “Numbers Racket” and was illegal. In both the legal and illegal case, a player is sucked in with the words, “Someone has to win.” While that’s true, the odds are millions to one. The main players are the poorer citizens hoping to get a better life for themselves.
You might ask, “Can people be taken in that easily.” Let me relate an experience. Recently, I had the opportunity to speak in front of a communications class at a University. It was to be a lecture on “Scams, Frauds and Cons.” Although the professor knew the subject, I asked her not to tell the class the subject. I started off the session telling a little of my background. Unbeknownst to even the professor I then described a totally “Con” background, a lie, of how I and five others were selected by the CIA from over 300 people to “read people.” What that really meant was to read someone’s mind, which I did to one of those students at the University. Although I can’t read someone’s mind, the technique I used was a straight-forward magic trick. Regardless of how I did the Con; it demonstrated how easy it was to fool people with even a process that would defy believability; this was an example the “Soft Play.”
In describing my lecture to some friends, they all said that it was just a lie and not a “Con," and therein lies why people can be easily taken-in. Those two words “Con” and “Lie” are synonymous. Every scam has as its’ basis, a lie of some sort, even the omission of information a lie.
Consider the simplest form of scam, the lottery. Even though the odds are millions to one, the term, “Someone’s Got to Win” draws in millions of people. While, true it’s very misleading. A direct lie, no, but it’s all implied by the very words used.
The first part of each chapter of this book looks at lying in general, just so its characteristics are more noticeable when you see someone, in person, on TV or in a meeting.
This book covers both legal and quasi-legal scams in both narrative and in bullet form to illustrate their characteristics. You will find many bullet lists in this book. Normally reading a novel, list would not be an accepted form of writing. Unfortunately, there are so many issues to look out for, lists of clues made for faster learning. It will also enable you to pick out the ones that may be affecting you.
This book may be purchased for $2.99 from many e-book publishes for your particular e-book reader or can be downloaded for your computer using the selection "Online Reader." One of the publishers, the popular Smashwords, can be accessed at https://www.smashwords.com/books/view/543765 where you can also review the first 20% of the book.