Don't Fall For It

CHAPTER 7When Fraud Flourishes

When the cash value of promises goes up, when tomorrows are being sold early, swindlers are among the first to profit.

–Jonathan Kwity

If you’ve been paying attention so far, you’ll notice a lot of similarities among the hustlers, scammers, and environments in which frauds tend to occur. Every fraud is unique in its own right because the circumstances are always different, but there are themes we can point to that show the conditions that tend to be present when fraud truly flourishes.

When There’s an ‘Expert’ with a Good Story

Jerry Seinfeld once observed, “It’s amazing that the amount of news that happens in the world every day always just exactly fits the newspaper.” Author Michael Crichton once said in a speech that the media often carries a credibility it doesn’t deserve. He called this the Gell-Mann Amnesia effect, named for Nobel Prize-winning physicist Murray Gell-Mann, with whom he discussed this idea. Crichton explains this effect as follows:

Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward – reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.

In any case, you read with exasperation ...