How To Spot a Scam

Girl Following Sales ScriptBeing that I write sales scripts for numerous corporations, I thought I’d teach you how to spot a potential scam. I specifically will focus on two groups in this article being Gold and Real Estate Investing.

I’ve recently contacted both by phone to analyze what sales techniques they are using and they are both using sales techniques that are normally used by scam artists.

Any time a sales person tries to sell you through emotions rather than facts you know you’re probably being scammed. These are the techniques used to sell using emotions!

Do These Techniques Work?

They are the same techniques that have been used to do the following:

  • Convince U.S. Troops to Commit Treason During the Korean War
  • Helped Bernie Madoff Steal Billions of Dollars
  • Convinced Normal Citizens that it is Right to Torture People with Repeated Electric Shocks
  • Convince People to Commit Suicide
  • Most Politicians are Elected Using these Techniques

The Yes Set

If someone starts out a sales call by asking you to answer in the affirmative you are witnessing the yes set. Psychology researchers have found that if you get a person to answer affirmatively to topics that relate, 7 to 8 time’s, you are almost guaranteed to get another yes!

In fact, every successful sales script I have ever written starts out with the Yes Set! So, make sure you watch out for this common trick used by scammers.

The Scarcity Principle

People are much more motivated by the thought of losing something, than by the thought of gaining something of equal value.

This is where the Scarcity Principle comes in. When a sales person uses phrases like:

  • Now is the time to make a move!
  • Real estate prices have bottomed out!
  • Prices on real estate can only go up!
  • This is a limited time offer!
  • We only have 10 left!

They are trying to throw you into a stressful situation with these words, because they know if you’re under stress you will stop thinking logically.

They also know that human beings associate value to items that are scarce. Why is a baseball card worth a penny 60 years ago now worth millions? Scarcity!

Competitive Scarcity

Corporate stores love to create a powerful enticement to buy, by creating what is called Competitive Scarcity. In turns out that we want an item most when we are in competition for it.

People every year trample others, to get the special deal at Walmart. Why? Because they are left to stew for hours surrounded by competitors. Once the door is opened they have claimed that they were so caught up in the moment that nothing would keep them from that $20 DVD player.

The Authority Principle

Can someone explain to me why it is a great time to buy gold when it is at all time highs? The sales lady I posed that question to hit me with this response: (Which I believe is a lie by the way)

  • Her: “Have you ever heard of Warren Buffett?”
  • Me: “Yes” (The Yes Set)
  • Her: “The next man is also a billionaire, but you may not know of him. Have you ever heard of George Soros?”
  • Me: “Yes”
  • Her: “Would you say that these men know more about investing than yourself?”
  • Me: “Yes” (I’m still playing the game)
  • Her: “Well they and numerous other billionaires recently invested heavily in gold!”

In times in which there is a great deal of uncertainty, people tend to follow those whom they consider successful. This is what is known as the Authority Principle.

If someone starts stating that very successful people are acting in a certain way get them to prove it beyond a shadow of a doubt. If they can’t, disregard that information.

Did you ever wonder why so many people ignored the warning signs with Bernie Madoff? He sat on a governing commission that was responsible for the policing of the financial system. People assumed he would never do anything wrong since he was on this board!

People Like People Like Themselves

There are numerous scammers looking to take advantage of those that they sit with at church. People again assume that Bob from church wouldn’t rip me off.

The same is being done within ethnic groups. The reason scammers gather their is because they assume they will have an easier time selling to people that look like them and they are right.

Most of Bernie Madoff’s investors were Jewish just like himself.

Also understand that just because a friend tells you to trust someone doesn’t mean that you shouldn’t do your homework! Maybe your friend fell for a scam? Your friend may never knowingly hurt you, but never count out the fact that they can be mislead.

Never Invest With Someone Just Because You Like Them Personally!!!

So How Do You Avoid Scams?

When you are making any decision that requires you to invest a large amount of money:

  • Get opinions from numerous people
  • If you are pushed to make a decision leave immediately
  • Check on the credentials of those people you meet
  • Ask for many referrals
  • If they steer you away from the facts leave

Why Do People Fall For Scams?

Because we live in an extremely complicated environment we use short cuts to make nearly every decision. Our mind flashes back to previous events instantly when a decision is to be made and we act accordingly based off of previous results.

Like I wrote in previous articles on Indirect Hypnosis, familiarity in the presentation of information speaks more truth, than the facts presented. If you present information using a persons chosen meta-program they will be much more inclined to believe it, because it falls inline with their level of thinking. Here are my articles on Meta-Programs if you are unaware of that term.

Think of it this way. We can easily fall into the habit of going to the same restaurant or store, because it is familiar and you know what you will get there.

We develop these habits because our brain likes to have access to shortcut solutions to problems. Hence, you feel hungry so go to McDonald’s. What many people don’t know is that we have numerous habits that we are unaware of.

Are There Other Things to Look Out For?

I made a series of sales videos that go over almost every trick imaginable. Don’t worry it’s free and if your interested you can see it here Advanced Sales Techniques

If you’d like to read more about the principles above check out this article I wrote Theory Negotiation. You can also find out more in one of the best books I have ever read Influence: The Psychology of Persuasion.

Leave any questions or comments below.

Till Next Time

Think Tank

2 Responses to “How To Spot a Scam”

  1. Pete says:

    You mentioned above about a video series called Advanced Sales Techniques. Would you mind linking it to the video?
    Thank you

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