Spot These Red Flags To Save Yourself From Money-Making Scams
Just what is “too good to be true”?
By June 2019, just under half of all Americans already had a side hustle.
That number has most likely skyrocketed during months of pandemic-related lockdowns. Whether scrambling to replace lost income or just trying to build something during extended time alone, bootstrapping side projects has never been more commonplace.
Or more online.
Thanks to the web’s endless scale and potentially huge profit margins (and inherent social distancing), practically all of us at least think about cooking up some of that tasty online side income.
But for every bunch of good apples, there are more than a few bad ones. You know whom I mean: the shrewd marketers who turn a juicy profit selling sizzle rather than steak. The fake gurus, in other words.
The thing is, many are very convincing, especially for the zillions of people with the right mix of newness to online business and eagerness for quick results. They exploit the irony that those who most need genuine guidance are least able to identify a good guide.
Rather than naming names or detailing their wily ways (which nobody exposes better than the Coffeezilla YouTube channel), let’s look at some general red flags that fly high above those questionable schemes.
This isn’t a comprehensive list. What’s more, the presence of these red flags doesn’t mean a scam, nor does their absence mean legitimacy. Do your own research, always.
Weak evidence of results
If you’ve ever read an investment prospectus, you’ll recall a sentence like, “Past performance does not guarantee future results.”
And that’s true…but past performance is all we have to go by. There’s a quantitative basis for this (see Bayes’ theorem), but it makes perfect intuitive sense as well.
That’s why the number-one thing any would-be instructor needs to demonstrate is a track record of repeated success.
Of course, there are countless ways to fake it. But as a discerning consumer, it’s worth learning how people in your field of interest actually go about faking it.
The inspect-element trick in the browser? Photoshop? Fundamentally unverifiable claims?
When you know what metrics indicate success and trustworthiness, you also know where scammers will try hardest to fool you.
Hints of secret knowledge
What’s the first thing you’d do if you held an actual secret to success? Broadcast it around the internet and charge admission? Or, you know, actually use it?
Proprietary information exists. It’s often hard-won, battle-tested, and well worth charging for. It also tends to come in the form of research and reports, not slickly produced courses, let alone ghost-written ebooks.
But consider the beginner’s conundrum: if you’re not yet able to discern good teachers from bad, what exactly could you do with such proprietary, state-of-the-art information?
That’s not to impugn the information. It may be worth its weight in gold. Rather, the point is that exclusive, proprietary information will only help you if you’ve got a rock-solid understanding of fundamentals — and ample practice applying them.
“Guaranteed” returns without hard work
Risk and reward go hand in hand.
To be sure, loopholes exist. The problem is that they also get exploited voraciously, then closed tight.
When anyone promises guaranteed results— not probable, not even overwhelmingly likely, but certain results — the most charitable assumption is that they’re seizing an ephemeral opportunity that nobody can count on in the future.
From another angle, this is just a special case of the next red flag…
Dismissal of luck
“You lucked out.”
Some successful individuals would sooner die than countenance the possibility that their own skills and systems constitute just a portion of their remarkable outcomes. Ego, and all that.
For instance, depending on the online circles you run in, you might have noticed cryptocurrency “experts” who just six or twelve months ago ridiculed investing and instead admonished us to drop-ship gizmos or “start an agency.”
I’m all for going with the flow, and it’s true that identifying trends takes some perspicacity. But catching a trend and riding its wave does not mean one has a repeatable, systematic approach that would ever work again — even for them, let alone you.
Many succeed through diligent, systematic work and then go on to each those steps. But if they can’t speak to the potential role of luck, or (worse yet) scoff at its mere mention, then they’re blissfully ignorant at the very least.
Blame of traditional school, etc.
It’s self-evident that college (or other objects of contempt du jour) isn’t for everyone, so pursuing it blindly is a poor life strategy.
But when someone twists that simple and obvious fact into a diatribe — while conveniently selling an alternative — the ploy should be obvious.
See, we’re suckers for the “you’ve been lied to!” message. In fact, we respond so strongly that it’s become staple of those horrifyingly effective “Doctors HATE Me!” sales letters with red headlines and LOTS OF CAPS.
It explains our shortcomings while conveniently negating our responsibility and positioning the speaker/writer as the clear-minded truth-teller. We want to believe it, and fake gurus wants us to believe it. Perversely, the incentives align.
You’ve no doubt been deceived in any number of things. I have, we all have. But what are the odds that random info-peddlers knows exactly why and how, and have a trustworthy alternative that makes personal sense? Smaller, I’d say, than the odds that they’re trying to push our psychological buttons.
Emphasis on affiliate opportunities
If you’re not already familiar with affiliate marketing, it’s simply an arrangement where the owner/creator of a product pays a commission to third parties (“affiliates”).
(When you think about it, it’s not so different from Medium paying writers for the eyeballs they keep on this site. We’re all products, folks. But that’s a topic for another day.)
Anyway, for physical goods, it’s usually some single-digit percentage of the sale price. For digital goods — like the courses and ebooks that dominate the make-money-online space — the payouts can be heftier. We’re talking 30%-70%(!) of three- and four-figure price tags, in many cases.
It’s totally normal and fine for teachers/creators to offer affiliate programs as an incentive to spread the word.
But when the affiliate program features prominently in the sales materials — right up there with the benefits of the actual product — then it’s worth questioning whether you’ll derive much value besides a tantalizing commission.
In other words, is the value mostly in the product or mostly in the resell opportunity?
…Not to mention the sports cars
We all know the flashy “Lam-bro” stereotypes, posing with ludicrous cars and houses and every other manner of ostentation. They’ve pervaded direct marketing for decades, in some form or another, and have infested Instagram and probably all the other platforms I’m too old to know or care about.
If you see that, then run away. Period. You might miss a legitimate learning opportunity, but you’ll definitely skip the scams, too.
The problem is that we want to believe: that fabulous wealth is one course away, that diligence and patience are for suckers without such privileged information, that someone else has a surefire path we can replicate.
And the glitz and glamor are crass symbols of something to believe in. Literal golden calves. These things shouldn’t work, but they do, and they speak of volumes of those who employ them.
This entire essay is common sense. The trouble is it’s so common as to slip from our conscious minds whenever prospects of easy opportunity sink their hooks into our easily hijacked unconscious minds.
The antidote is just figuring it out. With the help of Google (but not the ads!!!!!) and good old books, there’s an amazing amount of free or inexpensive information on virtually every business model, method, and tactic under the Sun.
I’d argue that simply figuring these things out — with common resources and heaps of trial and error — is the closest thing to an actual key to success. Resourcefulness, in other words, is everything.
And when all else fails, remember: fool me once, shame on you.
Fool me twice…you know the rest.
