
When Is A Good Business Model A Scam? - ironkeith
http://www.shoemoney.com/2009/09/09/when-is-a-good-business-model-a-scam/
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thetrumanshow
Perhaps its anecdotal, but overall, I am hearing a lot more about these types
of ideas. Maybe there is a trend to feel a bit of urgency to make money, so
people are trying silly things like this.

For me, having a history of never monetizing anything but my time, I can
identify with a general sense of urgency. Still, I would probably never do
something like this. But, if I did, I would certainly never tell anyone.

Edit: I changed my mind. I'll see you at the Kansas State Fair... look for the
booth titled "Will your startup ever be profitable? Two questions will tell
the answer. 'Free'"

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byoung2
For the baby gender business idea, why not offer a 100% money back guarantee
for all wrong predictions, no questions asked. You would be right half the
time, and that should be more than enough profit considering it costs nothing
to run.

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RiderOfGiraffes
That is illegal. What would be more interesting would be to offer to return
twice the money, less an admin fee of 10%. While on the surface that appears
to break even(ish), you can rely on inertia for people not actually to ask for
their money back.

With the 200% guarantee, that might not even be illegal.

EDIT: Finally got to read the actual article and realised that this is already
covered. Sorry - /mea culpa./

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byoung2
What law does that break? It seems the same as any other infomercial product's
claims: "If this product isn't the best widget you've ever bought, or you're
not completely satisfied for any reason, we'll refund your money"

In this case, if the prediction is wrong (not the best widget/customer not
satisfied), they can get their money back.

Come to think of it, the prediction claim isn't much different from most test
prep higher score guarantees.

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RiderOfGiraffes
In conversation with a UK lawyer it would be deemed illegal as you are
misrepresenting the "product" for which you are taking money. It's effectively
the same law as covers items sold where they are clearly intended for a
particular purpose, but then try to claim no guarantee that they are, in fact,
fit for that purpose.

UK law is very broad in its protection of consumers against "products" that
are presented in a deceptive manner.

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jhancock
"covers items sold where they are clearly intended for a particular purpose,
but then try to claim no guarantee that they are, in fact, fit for that
purpose."

You mean like just about every software license agreement in the world? ;)

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GrandMasterBirt
So basically... If there is no "insurance" so that mail a notarized copy of
the birth certificate is enough to get a refund, you will never hit the law
because the failure to provide an accurate prediction warrants the full
refund.

If people get really rowdy, refund anyways. Shoot even if it's late refund.
I'd be super lenient with it, you will make plenty of money.

~~~
jhancock
For the U.S., I doubt there are criminal laws to worry about in this case. You
can always get sued for "fraud" (not-criminal), but who sues for $50?

About the only criminal area you need to worry about is mail fraud. Which
would be fraud while using the U.S. postal service. But that's not a real
concern either, as your only using mail to process refunds, not to solicit.
You also don't need to use the mail, as you can require faxing or email of
birth info. btw, IANAL.

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calcnerd256
I really like the idea of refining the questions and their mapping to the
answers. If the results increase in accuracy, we may find statistical
predictors for how the meiosis and sperm-race play out. Macro-level predictors
for micro-level behaviors help us come up with new hypotheses to refine our
models.

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mseebach
My attempt at defining scams would be something like "when you're actively
using an information/knowledge gap between you and your customer for your
advantage".

By that definition, casinos aren't scams: they are quite honest with the
"house always wins (but we'll make sure you're having fun)" business model.
The gender prediction would be, because this guy knows he's as good as
flipping a coin, while anyone paying him to do so will be believing that he
can actually do something (otherwise they'll just flip the coin themselves and
save the $50).

The "are you going to heaven" guy might actually, honest to god, believe in
what he's saying = no scam. (Although if he was, he'd probably be more likely
to be explaining how joining his religion will secure admittance to heaven)

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mattm
Except in this case, he would have a 50% success rate. When you compare that
to investment newsletters, fortune tellers, economists or anyone else who
tries to predict the future, this guy would probably come out at the top of
the list.

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mseebach
Most investment newsletters I've come across showcases a significant better
than 50% buy/sell recommendation success rate, that's how they get people to
listen to them.

All those other guys predict non-binary scenarios. If I try to predict the
result of a dice-throw by throwing a dice myself, I'll get a success-rate of
exactly 1/6, but when factoring in the number of outcome scenarios, I'm doing
exactly as well as the coin-tosser.

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imgabe
I would consider a business a scam when you are knowingly misrepresenting your
product. In the baby prediction business, part of the plan involves putting
the user through a survey of irrelevant questions, to give the impression that
you are somehow using this information to provide an informed prediction about
the gender of the baby.

If, on the other hand, you simply said "Pay me $50 and I'll guess if your baby
is a boy or a girl" It wouldn't be a scam, nor would anyone pay for it.

To put it more simply, if the customer handing over money depends on them
believing something that isn't true, it's a scam.

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run4yourlives
A prosecutor though would have to prove that the questions were irrelevant,
which would be hard to do, unless you blogged about how the questions would be
completely irrelevant on your high-traffic website.

All you need to do is link the questions to something. As in:

How many brothers/sisters do you have? More brothers = +1 girl, and vice
versa. There is no requirement to have any sort of science behind the
reasoning of whether or not your +1 assertion is correct.

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davelightman
Nobody else finds it ironic that this is posted on an SEO blog?

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ironkeith
... it's not really an SEO blog. He's was an affiliate marketer who made a lot
of money and is now trying to make more by pimping his own brand. He's
actually quite controversial in the SEO/SEM/SEWhatever community because of
stuff like this: <http://www.shoemoney.com/2008/05/07/seo-has-no-future/>

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iron_ball
I'm surprised the salvation seller is making any money. The most basic tenets
of Christianity specify that regardless of the sin, acceptance of Jesus
guarantees salvation. How can someone not know this, yet still care enough
about the state of their soul to pay $50 for a readout from an explicitly
Christian source?

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run4yourlives
I'd just like to point out that at one time, the Roman Catholic church sold
"get into heaven bonds".

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redorb
if domain name includes _ shoemoney then the business is probably a
scam/parasite. Yes I put those in the same category

