How to avoid scams? Every time a scam gets reported on broadcast media, it seems as if people just don’t learn from other people’s mistakes. Each company has its own set of advocates and “believers”. There will always be skeptics. But most of the skeptics only got skeptical of anything similarly offered to them is because they have been burned before.
But how did the next generation of investors still get scammed? Part of it has to do with inattentional blindness. Inattentional blindness was already discussed in this article, YayaDUB Collapsed. This website analyzed the part where she collapsed and everything else that the viewers missed through that article. Inattentional blindness was also the same theory that critically acclaimed journalist Diane Henriques applied in the scam that Bernard Madoff masterminded. Her analysis served as a good morality tale on how to avoid scams.
Bernard Madoff (or Bernie Madoff) was convicted for the massive Ponzi scheme that he operated for years. Henriques, in her speech delivered at the University of New England, did not use the term “inattentional blindness” though to get her point across. She used the Invisible Gorilla experiment as an analogy. How to avoid scams? Try passing the Invisible Gorilla test.
In the experiment, 3 players in black shirts and 3 players in white shirts passed around a basketball. The first audience with which this short video clip was shown was asked to count how many times the guys in white shirts passed around the ball. Most of them managed to get the number of times the ball got passed around correctly. But almost no one, according to Henriques, saw the gorilla that passed by. Almost because some of the viewers found the gorilla as a distraction. It affected the way they counted the number of basketball passes.
How to avoid scams when nobody likes distraction? That is actually the point. Distractions often serve as loopholes to certain things we see on proposals presented to us. Inattentional blindness took over when most of the motivational talk ended up focusing on the incentives. Or the big return of investment (ROI). Everyone gets to hear the full sales pitch. But “marketers” and “salespeople” would focus on the big ROI. Not on the hard work that comes with earning big. That is if there is any hard work demanded at all. It was once mentioned on American Greed that if it’s too good to be true. It’s too good to be legal.
Here you are trying to learn how to avoid scams. And soon inattentional blindness takes over before you even know it. They tell you to invest as much as you can. They pepper the rest of the sales pitch with big returns. Some go as far as repeating “Big returns! Big returns! Big returns!” until it gets stuck in your head. Then you become blind to the shady points of the investment pitch. You go figuratively blind on the big returns. You are so fixated on the money that you are made to believe that you will gain.
Learning how to avoid scams brings us back to Henriques’ speech. Did the investors get an idea that the money they invested to Bernard Madoff is lost? No. The signs are there. From the economic crisis to the complaints and other signs. They have always been there. It could have been staring them in the face. And they are inattentionally blind to the economic crisis creeping up to their investments.
How about the others that dodged the bullet? Learning how to avoid scams sounds easier than it seems. But it’s still worth mentioning. Some individuals managed to avoid certain scams not only because of intuition. It’s not always a guarantee because it’s still different when there is data to back up that hunch.
While money sounds good through the big returns, greed is the worst force behind inattentional blindness. If you apply inattentional blindness on how to avoid scams, you learn to ask questions. If an investment proposal or pitch does not hold enough proof of investment returns, it might be a scam. And no. That salesperson’s new sports car is not concrete proof of the big returns earned. Who knows if the new SUVs were bought using investments from the previous batch of investors?
How to avoid scams when you don’t know what a Peter to Paul scheme is? Most individuals are more familiar with the words “Ponzi” and “pyramid”. But the phrase Peter to Paul scheme made the explanation easier. It is a scheme where you rob Peter to pay Paul. Hence Peter to Paul. The first batch of investors (which may include the salesperson with the new SUV) earned their profits only because there is a new influx of investors to pay for their big returns. The only way for Paul to earn back his investment is if he gets to recruit two or more people into the “investment opportunity”. And as you can see, no products were mentioned. If the only way an “investment opportunity” can earn money is by recruiting more and not sell goods, it’s time to raise some questions.
This is not a generalization of all investment opportunities constantly thrown our way. Learning how to avoid scams made words like “networking” and “multi-level marketing” such dirty names due to the shady deals attached to them. Almost any business opportunity now is suspected of being a scam. Even the legit ones. And it’s not a bad thing. Being open-minded is okay as long as the unscrupulous individuals don’t prey on their “open-mindedness”. Their minds are so open that their brains fall off. That contributed further to the inattentional blindness. Add greed to the motivational factors that keep on duping investors and soon you’ll find more victims willingly directed to the slaughterhouse.
Skyline International Marketing is not the first investment opportunity to come along. How to avoid scams when you don’t know enough companies to use as barometer? ANC’s Salve Dulpito provides a list of the top 10 investment scams in the Philippines to stress her point about avoiding deals that are too good to be true. Hopefully her short clip would help everyone else from getting into a bad deal again.
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