What is “Too Good to be True?”

Let it be noted that there are a lot of scams on the internet. I mean, there are a lot of scams everywhere, but the internet is a favorite medium due to its anonymity and relative novelty. So I guarantee you that you can, with little effort, find a website dedicated to separating people from their money without providing any value in return.

Almost as prevalent are sites dedicated to helping people spot and avoid those scams. Some are better than others, but almost every single one includes the line “Remember: if it sounds too good to be true, it probably is.”

What is “Too Good to be True”?

Am I the only person who doesn’t find that terribly helpful? I mean, yes, I agree that many con artists will try to lure you in with a deal that’s unsustainable. But it’s also true that a lot of weird $*!& goes on in the world. Who am I to say what’s realistic? I’m well-educated enough to know that (to a first approximation) I know essentially nothing at all. I’m also young enough to have seen dozens of rounds of

    It’s not Possible! ->
    Well, it’s possible but stupid ->
    Well, OK, sometimes it’s alright ->
    What are you talking about? Everybody does that.

So I just don’t feel like asking my gut to make a decision is the best heuristic. I mean, in most cases I have literally no data on the topic being discussed, and that’s what your gut uses to make its judgments. So I’d be just as well off flipping a coin.

Asking my social network is even worse: my friends’ guts are equally uninformed, and it only takes one loud idiot to make a bad group judgement.

The World is Changing

A lot of things are possible now that weren’t possible when I was born.

  • A store can make money — and drive competitors to bankruptcy — without any storefront at all.
  • An author can make more than $1,000,000 a year without any help from a publisher and without selling any paper books.
  • An advertising agency can get better results by not hiring any employees at all, and instead using only freelancers.
  • Jobs that used to require a commute and fixed hours are now done from your own house whenever you have time.

So there are a lot of opportunities out there that could only have been scams 30 years ago — it was simply technologically impossible to make them work — that are becoming commonplace now. “Too good to be true” has become not only a lot fuzzier, but a lot harder to judge.

How Does That Work?

So how about some new heuristics?

Ask When someone proposes an “opportunity” that you think might be a scam, ask them for more information. How does that work? Where do you get customers? Products? Funding? How do you get paid? What’s in it for me? What’s in it for you? What’s in it for them? Whether it’s a scam or not, you should never proceed until you truly understand what’s going on.

Research Of course, any con artist worth their salt can spin a line of BS that sounds convincing, so you should also research independently. Google is good for this, as is your local Business Bureau. Research the concept: are other people trying this? How long has this company been around? Does the technology work the way they said it does? Have other people tried this and liked it? Google “[Company name] scam” and see what comes up (do read whatever comes up — anyone can post a website saying that so-and-so is a scam, whether so-and-so is Bernie Madoff or the Red Cross. You have to judge for yourself whether either party consists of kooks, honest people, or some mixture of both).

Ask people in the industry Hollywood is forever creating tech-based plots that even fairly un-techie geeks like me can tell are flat-out impossible. Our guts don’t have enough data to make good judgement calls on most things, but there’s someone out there who can make a good judgement call on anything. So find someone who knows business to ask about this “investment opportunity”, or someone who knows tech to ask about this new “polarization regulator”.

Perform a Risk Analysis Still not sure? What do you have to lose? No, really, what do you have to lose? Knowing what you’re risking is a huge part of determining the best course of action. Plus, you get a nifty free download. :)

Let’s start making assessments on the basis of facts instead of fear.