Wednesday, March 11, 2015, AM | Leave Comment
Scammers are adopting a new business model for an old rip-off, collecting cash with bogus lotteries and nonexistent sweepstakes. These are tough times for everyone and most affected folks are vulnerable to make some money.
These are the folks who fall for such scams head over heels to rake in cash. But the scammers are the ones who do the raking and filling up their cash bags.
The bait in these scams is almost always targeting our older and supposedly more experienced citizens.
The promise to the consumers is for huge cash that they have won but in order to claim it, they must pay insurance, taxes, or other kinds of fees.
The reality is the prize never existed. The money you send is gone forever, down the toilet.
New Scam vs Old Scam Model
The old model used by scammers to bilk cash from you was for hundreds and sometimes thousands of dollars. Statistics show that fewer than 1% actually sent the money. The scammers were not making enough money.
Times have changed. Recession, unemployment, bear stock market and other such man-made “calamities” fell upon the consumers.
Almost overnight, they turned into paupers from being princes.
The scammers, like everyone else I reckon, watch the market, the general status of the rotten economy.
So instead of asking for hundreds or thousands of dollars, they give the future scammed consumers a discount.
In order to get more market share, they lowered their fees, hoping they would get a bigger response.
The new statistics are out that tell us that the new strategy seems to be working. In one such phony sweepstakes, letters mostly addressed to older Americans that the lucky recipients had won a new car or its cash equivalent of something like $15,000.
Before this particular scam was shut down by the good old USPS, at least 4,000 older Americans nationwide took the bait – about 10% of recipients – mailing back $39.95 “fee” to claim the nonexistent car or cash.
Some people paid $20 extra for supposed overnight delivery of their checks.
Their market share went from less than 1% to 10% with the new business model. Legitimate car dealers, in direct-mail business, a 5% response rate is considered very good.
If you remember, the Japanese car industries, in the 1970s, used to “dump” cars in the U.S. market by lowering prices in order to get a bigger market share.
However, in that case, consumers got better cars, more reliability, better handling, less gas consumption, and overall just plain simple decent cars for the money.
Detroit auto-makers never woke up and kept bringing into the market the same old boxes, the same old gas guzzlers for the next 20 years or so.
When recession finally struck the auto industry, GM and Chrysler were the first to get hit by consumers wrath.
Scammers were hit by recession as well. They are like small boats. It’s easy to turn them around. I, for one, gotta give it to them.
No business school can teach you how to make more money. If you want to make money, in any industry, follow the scammers strategy.
It seems that the scamming industry has the best business minds in any industry.
They are bound to rake in cash from the innocent and the not-so-innocent consumers of all ages, particularly our supposedly more experienced citizens.
How to avoid the scam
Legitimate contests never require you to send in upfront fees. Scam contests always do.
Sometimes consumers develop a mindset for “What can I lose?” That creates vulnerability and puts you on a sucker list that scammers share with one another. You keep getting hit by these scams for money til you give in. Never give them the impression that you are interested.
To make it look legitimate, scammers will sometimes send you a fake check with the letter saying it’s part of the prize. You are told to cash it right away. Needless to say it bounces and you are hit by banks with a fee. Never cash the check.
In a Nutshell
O! Businesses of the world! Learn from the strategies of the scammers and lower prices for your merchandise. The consumers can’t afford the exuberant prices that you guys charge.