Smart Business: Let the Buyer Beware
June 1, 2006
How is it that a species such as ours, one that can maneuver spacecraft on planets millions of miles away, that can probe the inside of atoms, that can mesmerize viewers/listeners/readers with artistic masterpieces, be so stupid as to fall for so much phony baloney?
The lowest of the lowbrows are people taken by the transparent Internet con games. By now, everyone with an e-mail address has been contacted by an African of supposedly royal heritage willing to cut you in on millions of ill-gotten dollars, if only you will assist in getting the moolah out of the country. A variation on the theme has an alleged lawyer searching for a living relative of someone with your last name who was tragically killed in a car accident, leaving lots of money behind. Or, you've been notified of winning a foreign lottery that you never knew existed. Respond in a positive way to these entreaties and you'll find that before transferring funds, your benefactors first need your bank account number and/or a service fee payment.
Then there are all those come-ons to enhance the best part of the male anatomy. You have to know all that stuff doesn't work, because the male mind being what it is, if it did work, word would spread and the hustlers would be the richest, most famous people on earth.
Ever meet anyone so gullible as to actually fall for these? I haven't either, but there must be a few of them out there, because otherwise, these scams wouldn't be so prolific. The economics of e-mail are such that the perpetrators of fraud need only find one sucker out of - who knows, maybe a million recipients - to make it worthwhile.
Snake Oil and BeyondDon't blame it all on the Internet, though. Grifters have been around throughout recorded history, and probably even before that. Nobody knows when speech first arose in our prehistoric ancestors, but I bet it was followed shortly by the first lies.
The Wild West was filled with snake-oil peddlers who moved from town to town hustling potions said to cure almost anything. By the time word got around that the foul-tasting brews didn't do much of anything except empty one's stomach, the medicine men were someplace else.
The Ponzi scheme got started by its namesake in 1920, and its pyramid strategy has lived on in endless variations. Some, like the multi-level marketing networks for various household goods, are not necessarily illegal but still a hustle. The real money is made not selling the items to end-users but by recruiting distributors and gaining a cut of their volume purchases. It works pretty well for a handful of people who get in on the action early, but the system ends up choking on middlemen. The folks at the bottom never find enough sales to make it worthwhile. Money-based chain letters work on the same principle.
Street scams are common in cities and towns around the country. The famous pigeon-drop trick has fleeced generations of naïve victims lured by the promise of money from nowhere. (Someone finds a bag supposedly filled with gobs of money and is willing to share it, but first wants the mark to put up a good faith deposit of hard cash.)
Hardly a week goes by when my community newspaper doesn't report on some elderly homeowner being preyed upon by a “contractor” masquerading as a city or utility official and showing up to make some unannounced emergency repair on the property. Often, two of them work in tandem. While one keeps the owner occupied discussing the project, the other makes off with household items.
One local contractor ran a home remodeling business that had been around for years and apparently did some legitimate work. He recently got thrown in jail - to much community applause - after walking away from a string of jobs with nothing more than demolition work completed. His lawyer cited good intentions amid financial difficulties. Victimized customers regarded him as lower than the aforementioned thieves, who at least left homes intact while stealing from them.
And how about all those low-tech work-from-home gambits you see advertised in cheesy classifieds and on flyers affixed to lampposts and bus stop benches. Who knew there was so much money to be made stuffing envelopes?
A couple of simple rules to live by: If it sounds too good to be true, rest assured that it is, indeed, too good to be true. And, people never win contests they don't enter.
Sophisticated Snake OilAh, but the characters mentioned thus far are bit players in the annals of swindle. Some of the biggest marketing hustles ever perpetrated on mankind are perfectly legal, yet manage to pull the wool over the eyes of millions of consumers day after day. Here are some of my nominees for the Marketing Chutzpah Hall of Fame.
- Cough syrup doesn't work. This news came out after generations of mothers spent billions of dollars forcing foul-tasting drugstore remedies down the throats of millions of youngsters. Then, in January 2006, an article in Chest, the American College of Chest Physicians' journal, said there is no evidence that any of the medications actually work. What I want to know is, why did it take them so long to tell us? The basic answer from the medical community is along the lines of “nobody asked us.” Sheesh. The interesting thing is, about the same amount of cough syrup is being sold as before this report came out. Habits are hard to break, and placebos can work wonders.
- Bottled water. Selling refrigerators to Eskimos is held to be the highest form of salesmanship. For my money, that honor goes to the bottled water industry, which manages to charge a buck and up for stuff that is readily available for free in every home and building in the country.
I understand that water quality isn't very good in some places. In those areas, I'm willing to cut some slack to people who decide to spend hard-earned bucks on bottled water. But I live in the Chicago area, whose Metropolitan Water District produces some of the purest, best-tasting aqua to be found anywhere on earth. You still find thousands upon thousands of consumers buying it by the case. One can only conclude these people have too much money.
Imagine the snickers when the first person in a marketing department suggested bottling water and selling it. Now they actually convince people to buy eight bottles a day of the stuff!
- Drink water 'til your kidneys burst. Drink eight glasses of water a day if you want to be healthy and fit. That's been the advice perpetrated by various health and fitness publications - egged on in no small way by the bottled water industry.
This is a ludicrous extension of a principle with a tiny kernel of truth at the core. Eight glasses a day approximates what the average human needs, but ideal water intake varies widely depending on individual metabolism, environment, weather and exercise. Much of the water we need gets absorbed with the foods we eat. Oranges are about 87 percent water, cucumbers 95 percent and so on. Also, coffee, milk, juice, soft drinks, beer and other commonly consumed liquids contain a high percentage of water to help satisfy daily needs. Drinking eight glasses' worth in addition to all this other consumption is senseless.
In extreme cases, people actually die from drinking too much water. A condition called hyponatremia results from increased sodium in the blood. I know someone who suffered a non-fatal case while participating in a fundraising walkathon. She was so concerned about dehydration she over-hydrated and had to drop out to get treated in an infirmary. This woman was a true believer in the eight-glasses-a-day religion and, defying all logic, still is.
There's been a fair amount of publicity refuting the eight-glasses-a-day myth, but nothing seems capable of stopping a false idea once it gains momentum. Recently, I chatted with an acquaintance at a fitness center. Her workout was interspersed with constant sips from an oversized bottle. She told me that each day she fills the container with eight glasses worth of water and sips throughout the day until the container is empty. This is easier than keeping track of eight servings, she explained. I started to talk about the mythology, but she just looked at me as if I were a visitor from outer space. E.T. took the hint and stopped trying to talk sense to earthlings with waterlogged brains.
Nonetheless, I cling to my otherworldly notion that if you are thirsty, you should drink water until such time as you are quenched. And if you are not thirsty, don't bother.
- Chocolate is good for you. This is a relatively new gambit I just read about a few days before writing this. Mars Inc., which makes Milky Way, Snickers and M&M's candies, is about to launch a new line of chocolate products called CocoaVia that they claim has health benefits. The new chocolates are supposedly made from a type of cocoa bean containing an antioxidant called flavanols that's thought to produce effects similar to aspirin in lowering blood pressure. Preliminary medical research suggests the substance might have potential health benefits, but the evidence is sketchy. Scientists not employed by the company think Mars is out of line touting this skimpy evidence amid all the well-documented medical risks from obesity and other ailments derived from eating too many sweets.
Sounds like a good time to buy Mars' stock.