Hacker News new | comments | show | ask | jobs | submit login
Why nobody ever wins the car at the mall (thehustle.co)
1104 points by sxv 24 days ago | hide | past | web | favorite | 447 comments



About 30 years ago in Australia There was a competition at the local shopping centre. Spend $20 at any shop in the centre, show your receipt and you get a chance to win the displayed car.

The chance involved folding a paper plane, and then trying to get it into the car through the sunroof. Which was only open a small crack.

A friend of the family tried about 5 times over the day and never got close.

They came back quite drunk at the end of the day to have one last go. Threw the plane and instead of going over the top of the car, it accidentally slammed directly into the front windscreen. It then rebounded straight up in the air and then dropped straight down through the sunroof.

They walked away with the car.


There are companies that specialize in insuring risks like that. It is a whole sub industry of insuring unlikely to win contests.

https://www.holeinoneinsurance.com/how-much-does-it-cost.htm...


Way back in the day, I had a reinsurance company as a client. For those unfamiliar, reinsurance companies insure insurance companies.

For example, they might insure a standard insurance company for automobile accidents, with a $1,000,000 deductible. So the retail insurance company handles payouts up to a million dollars, but when there's a really wild claim, the reinsurance company pays the insurance company for anything over a million.

They end up specializing in rare events that involve large payouts, so they also did things like the hole-in-one insurance you mention above, very common with charity gold tournaments.

They had many stories to tell, including the fellow who played a lot of golf and collected three hole-in-one payouts, and another story about a truck that went off a mountain road, slid down and blocked train tracks, causing a train derailment, with a town below the train that needed to be evacuated.


Who insures the reinsurance company?


Berkshire Hathaway.

Per https://www.reuters.com/article/us-berkshire-buffett-insuran..., they are planning for handling a potential $400 billion catastrophe.


'Berkshire would lose only about $12 billion' aka they expect to be able to cover their share of such a catastrophe.

Hurricane Katrina (2005) was up at 160 Billion and Harvey (2017) hit 125 billion. So 400 Billion is just at the upper end of the expected range.



> insure the payout for a US$10 million premium.

wouldn't actually giving out the $11mi to the consumer, or picking 10 consumers, create more brand awareness than promising $1bi that nobody can get?


What makes you think that nobody can get the billion?

Insurance policies require you to pay a certain amount guaranteed, then pay back a much larger amount if something unlikely happens. So Pepsi had to pay $10 million. If the right thing happened during the game then Berkshire Hathaway would have paid a billion, and some lucky consumer would have walked away a newly minted billionaire.


reinsurance is also a nice way to reduce a company's taxes, and to hold money offshore. Many reinsurance companies are owned by another company; but the "re" is incorporated in a low or no tax jurisdiction such as Cayman Islands or Bermuda.


The article sort of implies but is unclear.

Berkshire's General Re does reinsurance, not re-"reinsurance". Is there a recursive step -- Could General Re face a claim that it needs to leans on the rest of Berkshire to pay?

The article says its insurance companies face a 2 percent chance of being "$12 billion" insolvent, which Berkshire could cover from non-insurance profits. But would that still be true if the claims came in, or would the non-insurance companies also have correlated down years? I suppose Berkshire Hathaway is big enough that if it came down to it, it could liquidate equity ($500B minus devaluation due to whatever catastrophe) to make good on claims.


No way that Berkshire pays a $500b claim. They would find a way to stick the US taxpayer with the bill as many smaller companies have done before them.


Lloyds of London also do this.


Bizarrely it’s sometimes another division of the same reinsurance company.

I work for an insurer and got talking with one of our pricing guys who told me about a case where one of the big multinationals had one division which was way under it’s predicted claims volume for the year, and another that was over. To rebalance the risk the US division ended up insuring the EU division.

Another story that night was about a reinsurer that through several departments taking on different risks ended up on the hook for a dockyard which caught fire catastrophically. And all the goods in that dockyard. And the boat which started the fire.

That evening led to my drunken catchphrase: “fucking insurance”, said ever more enthusiastically.


It’s reinsurance companies all the way down.


Their names eventually converge toward variants of "Turtle Insurance".


...and "Department Of The Treasury"


... the US taxpayer


actually ...our grandkids. since baby boomers keep voting for deficit-financed tax cuts.


Turtles all the way into the future? :-/


It eventually ends on a reinsurance company that can shoulder insane amounts of risk, e.g. Munich Re, Berkshire Hathaway, Swiss Re etc.


They are doing it wrong - socialise that risk. Here in New Zealand when a big insurer has something bad happen (eg an earthquake flattens a big city) you get bailed out by the government. Departing staff still got big payouts in that era too, so it doesn’t seem to impose any stringent criteria on companies too. AMI specifically. Sarcasm aplenty in this comment.


Even reinsurance has limits, and large earthquakes on major metropolitan centres are basically the one thing that will exceed them (floods can be bad too, but the risks are more predictable, and are often excluded from policies in high-risk areas).

The only alternative to the "government backstop" is that insurers will refuse to write policies or will exclude earthquake risk (in which case the government may need to set up it's own scheme, e.g. in CEA insurance in California).


NZ does have the EQC.

https://www.eqc.govt.nz/


Reinsurance funds typically market themselves as a source of alpha for large institutional investors. The reinsurance company sells bonds that promise a relatively high rate of return, with the caveat that in the event that the fund needs to pay out a large claim, the value of the bond may be nullified.


Wow I'd love to hear some of those stories. What a largely unknown, esoteric and hugely interesting industry.


They used to talk about anti-selection (a/k/a "adverse selection"). For example, if a retail insurer has no reinsurance, it has to incorporate both the probability of claims and the distribution of payout sizes.

But if they have reinsurance, the payouts are 'clipped' at their deductible. This means that they have an incentive to take on clients that are less likely to have any sort of accident, even if when they do have an accident, it has catastrophic consequences.

This means that a reinsurance company cannot rely on the overall statistics for claims, because the insurance companies that buy reinsurance price their products with reinsurance in mind. The people unlikely to run into massive claims will end up in pools where the retail insurance company doesn't buy reinsurance.

So they have to carefully price the reinsurance to account for the fact that the insurance company is packaging their most reinsurance-sensitive pool of customers together.


That was not the kind of story I was expecting but was far more interesting. Thanks for sharing.


You just described the finance industry as well.

You can save yourself a lot of adjectives by saying "dirty".


A few years ago I was in charge of monitoring a hole in one contest for a golf tournament.

Anyone who got a hole in one was to receive $10,000. All I had to do was hang out in the shade and not get killed from golf balls while watching everyone's attempts.

I asked the tournament official where that 10k comes from, and he said from an insurance agency. They paid $200 insurance. No one ended up getting a hole in one that day.


Apparently some golf players even carry hole-in-one insurance against themselves, to cover the unexpected cost of the traditional celebratory round of drinks for everyone in the club afterwards.

https://priceonomics.com/why-golfers-buy-hole-in-one-insuran...


If I recall, there was a basketball one where the insurance company didn’t want to pay because the shooter had paid college ball. The team wound up paying to avoid the PR disaster.


YES! This was at a Chicago Bulls game in the late 90's iirc. I watched the game on TV. The shot was from the free-throw line to the basket on the opposite end of the court. The guy shot one handed, wheeling his arm around wide to throw the ball with a great arc.

It took a few seconds to travel through the air, and from the moment he released the ball the crowd was silent - we could all see it was looking on-target. It went through the hoop! It barely nicked the rim on its way down, so after it went through it ricocheted hard to one side, in my memory it was a near 90-degree turn.

The crowd went wild. Everyone was thrilled to finally see someone win that prize. I don't remember how much it was, but I do remember it was a very large cash prize.

And then, like you said, the next day the prize company said they wouldn't pay because there was some stipulation that participants could not have played any pro or college basketball. Public sentiment turned harshly on the team - you see, to take away his prize would be to invalidate the joyful moment we all shared watching that shot. If he didn't win, what the heck did we just see?

I don't know if the insurance company changed their minds or if the team just ate the cost of the prize, but it didn't take long for the Bulls to realize what was the right thing to do, and do it.

Thanks for bringing back these fun memories.


Here's a video of the shot: https://youtu.be/Q_k1qg6_9f4?t=1m10s


Thank You! I was pretty sure it was the Bulls but I couldn’t find it after 3 or 4 Google searches, and chalked it up to too much drinking in college.


I found a story about it, if anyone is curious

https://www.upi.com/Archives/1993/04/18/Chicago-Bulls-Millio...


It is interesting. It took me a while to find an article that described his "near disqualification" [1]. Am I imagining things, or is it like all the top results, even for an event so long ago, are tilted towards "of course he'll get the money, who said otherwise?" But clearly it was said. Maybe it was a risky play by the prize company to rope in the team & some partners into chipping in to pay for the loss, which might have crippled them [2]. And then a lot of spin after the fact by the team to save face. They were forced to legitimize a shady move by a business partner, who threatened their reputation. Some rough lines to FB/CA?

"It takes time to make up a hit like this . . . but I know this will generate enough business to cover the loss."

[1] https://www.highbeam.com/doc/1P2-4165888.html

[2] http://articles.chicagotribune.com/1993-04-16/news/930518041...


For $1m, the Bulls could avoid to pay it, and should, since they violated the terms of their insurance contract, and they are a huge profitable professional business, not a rube.


> Calhoun said he would not be quitting his job as a sales associate at the Reliable Office Superstore in Bloomington

Anyone that thought he could quit his job needs some math lessons and financial education. $1M isn't enough to retire if you're under 30, especially when taxes come out.


"quitting your job" is not "retiring", and $1M in 1993 generates a decent enough amount of long term interest for a low cost of living area.


^ it would also solidly cover educational expenses and income loss, etc, in the event one wanted to change careers. One could move to the industry of one's choosing with that kind of cushion.


The prize was paid out at $50k/year for 20 years. After taxes, that could cover a modest living in many parts of the country, but I'd agree that is not "quit your job/retire" money, even in the 90's.


The story calls him a "A $5-an-hour office supply store salesman", so at 2,000 hours a year it's $10,000. That makes the gross prize money five times his salary.

He could easily have paid for someone to attend Harvard on the prize money (https://www.thecrimson.com/article/1990/3/20/ivy-tuition-rat...).



There's a furniture salesman here in Houston who makes heavy use of that sort of promotion. His latest if you spend $3,000 on a mattress and the Astros win the "2018 baseball final championship series" you'll be refunded the purchase price.

Not sure why it's worded so formally; must be a legal thing.


Last year, a window company in Cleveland ran a special where if the Indians had a 15-game winning any time after August 1st, anyone who used the company in July would have their money refunded.

The Indians ended up with a 22-game winning streak during that period, resulting in around $2 million in refunds. The insurance for that was $75,000. I remember calculating the probability of winning 15 games in a row any time over a ~55 game period and the insurance company seemed like they were getting a great deal!


Terms like “Super Bowl” and “World Series” are trademarked, so advertisers use phrases like “the Big Game” or “baseball final championship series”, in this case, to avoid a lawsuit.


I wonder why it wouldn't be nominative fair use.

https://en.wikipedia.org/wiki/Nominative_use

Maybe I have to learn more about this doctrine.


The NFL has aggressively litigated uses of their trademarks, to the point where you might technically be allowed to do something, but realistically it isn’t worth the trouble.

https://www.thedsmgroup.com/super-bowl-trademark-copyright-2...


You can also run a really superb, owl themed event.

https://www.reddit.com/r/Superbowl/


This is awesome! Thanks for sharing. I’m sure to reference this next season.


The Olympics are down right evil when it comes to selecting cities. They will require long standing businesses to change their names of it is related to certain terms.


I'm trying to recall the Mancini Mattress (Bay Area) ad -- something like "If we can't beat the price, the mattress is free!" I'm thinking ... ohhh... I bet they always somehow manage to beat the price!


Many stores will have custom SKU or model IDs, so a mattress that is physically identical and cheaper somewhere else is actually a different product per the paperwork...


Even if they didn't (and they do!), I'm pretty sure they'd sell it for a penny cheaper rather than make it free. The claim in the ad was nonsensical..


Yes, the way they do that is having specific mattresses that are only produced for them. So for example, let's call it Dreamliner XL 2000, this mattress isn't manufactured by anyone else, even if there are Dreamliners sold by other vendors it isn't that model, hence the bold claim. Whee!


well, if 2 people need a mattress it's easy:

person A buys mattress. sells it to person B for 1 cent

person B (or A, not disclosed in ad) gets mattress for less then 1c

A&B split total cost


$3000 on a mattress? WTF? How is that even possible for such a highly commoditized good?


Freakonomics podcast did an episode on it: http://freakonomics.com/podcast/mattress-store-bubble/

That's also exactly why Casper and a half dozen other upstarts have come out with the memory-foam mailed-to-you-in-a-vacuum-tube online mattress sales.


The conclusion of the podcast was "If you spend $800 you're probably safe, below that it's hard to know if it's good or awful. Above $1500 is too much."


Considering Marriott/Hilton/IHG requires their hotels to use a 10 year warrantied mattress that only costs $250-$300 each, I'd say even $800 is too high. Even though that's wholesale price, doubling should be enough to get a single unit price.

People would be better off investing in some HIIT cardio excercise if they're looking for a good night's sleep. And eating less / more nutritious food.


Exercising and eating right aren't 100% fungible with money. That's not even close to the blocking factor for most people.


The extra $300 is what you pay for going with a reputable brand, because unlike Marriott, you don't have the time to figure out which off-brand mattresses are crap and which aren't.


Book a room at the Marriott, go in, rip the sheets off the bed, check the manufacturer on the mattress tag, go buy your mattress from them.

(And enjoy the rest of your night in the hotel)


They're not off brand, they're Temper-Sealy or Simmons.


In that case, your assertion that "doubling should be sufficient to get single unit price" was wrong, cause you aren't going to get a queen from either of those companies for $500.


My current mattress is a $900 kingsize Casper.

It replaced a 10-year-old Tempurpedic that cost around $4K.

The Casper is a better mattress in EVERY WAY so far (had it since 2015).


I do agree.

Mattress sellers love the value based sales pitch: how much would you pay for 1 hour extra sleep per night? Maybe paying $10/hour for extra sleep for one year is a bargain in some contexts, then you have a payback period of < 1 year, even for a ridiculously overpriced mattress.


The difference between a $200 mattress and the best in the world is way less than 1h per night.


Not to mention that I have taken some pretty rockin' naps in hammocks of various sizes, the cheapest of which was $4.99, and packed down into a twist of netting smaller than my fist. But to be fair, the two appropriately-spaced trees required for that one were not included.

The mattress is by no means the only way to get a complete and restful night of sleep, and past a certain materials threshold, you can't get longer or better quality sleep with any amount of upgrades to your mattress. The marginal cost is likely better spent by buying light bulbs that phase out blue light in your evenings, or by taking melatonin supplements, or with a therapy device for sleep apnea, or blackout curtains, or any number of other supposedly sleep-improving products. At a certain cost point, you might as well climb into a spa-grade float tank, or dangle from your back-piercings, or sleep in a bounce castle.

I think that there is probably a bigger difference in sleep quality between a $300 mattress and a $500 mattress than between the $500 mattress and a $3000 mattress. Once the specific concerns that typically interrupt sleep are addressed, the returns diminish fast. There is no way I am losing an hour of sleep every night just because my mattress isn't good enough.


I think that there is probably a bigger difference in sleep quality between a $300 mattress and a $500 mattress than between the $500 mattress and a $3000 mattress.

That seems awfully likely to me, too. I paid around $650 for a full-sized Sealy pillowtop something-or-other, apparently aimed at the hotel market, from an online mattress store some years ago, and it's been fine -- at least as comfortable as the ($800 in the early 1990s) Stearns & Foster it replaced. It's possible the Sealy won't last as long as the S&F did -- at least back then, the latter had a reputation for top-notch build quality -- but I have a lot of trouble envisioning any mattress in that size class being worth over $1000, let alone $3000.


I get a just fine sleep on the ground with nothing more than a 100$ air pad, and I've done better in the sand sometimes.

Not for everyone though, but I bet if I could get them sleeping similarly from a young age, it would be.

1.3billion Chinese sleep on essentially padded wood just fine, for example.

Sex is a big plus for a mattress, though. On a padded wood Chinese "bed" it's just fucking horrible for whoever's on top's knees/elbows/wrists/contact points.


You can get IKEA mattresses for a couple hundred bucks and they’re OK, but having upgraded to a really nice cal king latex foam mattress a few years ago, it’s now hard to sleep anywhere else ( https://www.flobeds.com for those curious — arrived at this after tons of research, easy to move since it comes apart into pieces that fit into contractor trash bags and ships in vacuum sealed bags — no box spring either )


I love my IKEA Hesstun. 2 separate sets of coils (I prefer springs to memory foam), a comparable design from the major brands was about twice the price. IKEA offers a transparent profile view (i.e. the inside of the mattress) for every mattress they sell, and you can lie on every one for hours without a single salesperson bothering you. 365-day exchange policy, longer than any of the stores I visited was offering (IKEA allows exchanges, but not refunds on mattresses). People knock IKEA but I do not believe my mattress is inferior in build quality to an assembly-line mattress from Sealy, Simmons, etc.

I know my mattress has low ratings online -- this is meaningless, all the review sites are just commissioned salespeople for the online brands (Casper, Purple, etc), so of course those sites discourage you from buying from IKEA.


Because it's worth spending money on any product that your spends a third of its life on and which can directly affect your health.


I have the same philosophy about office chairs.


Mattresses (Casper), office chairs (Steelcase LEAP), keyboards (something with Cherry MX Brown switches).

I spend the majority of my life using these bits so I buy quality.


Do you have any arguments to convince an employer to buy Cherry MX Brown (style) keyboards, instead of <15$ flimsy, flat membrane ones?


I feel like it's much less effort to just bring your own. If you're into mechanical keyboards I'm willing to bet you have an old one lying around. Especially since the preference for keys is so personal.


Yeah, I wish, though the only nice full-size keyboard I have laying around is a Sidewinder X4, which is out of production and about half as tactile as the Chinese-made MX brown clones in the AnnePro.

The value proposition for me doesn't really exist enough to spend out-of-pocket though. Mostly due to not reaping the benefits from increased efficiency.


I usually brought my own keyboards (you can get one with MX browns or mx brown clones for $35-75 on amazon) to whatever job.. but at this one they saw my keyboard, said "Budget of $100, spec out whatever you want, and we'll order it."

The guy said "$150 for a keyboard and mouse of someone's choice, amortized over a year or two, is a tiny price to pay to keep our people happy."

I ended up with a Das 4C board at work (with browns) and a custom double-shot keycap set (bought out of my own pocket).


That's the type of company I prefer to work for. Given how much they are spending on salary, quibbling over a decent quality keyboard & mouse raises red flags.


Im worried about the health of the company if it can't afford a slightly more expensive keyboard that will last years and make me more productive.

If that is a big ticket item I would wonder if they are in serious trouble or it's just a shitty place to work for. A managers response to a request like that should be "here's the corporate card" or "submit the receipt for reimbursement"


No, it's more related to the manager/boss not understanding the value of a good keyboard. I asked about how to convince the employer of the value. The employer can certainly afford it, but he needs to understand why it's a good investment.


My father used to tell me: "Don't skimp on your bed, your chair and your car tires."


I've heard it as basically: anything that seperates you from the ground.


That theory worked for me for everything

Motorcycle gear

Tires

Boots

Climbing gear

And then I got into hammocking, and nothing seems to beat my first, a Bear Butt I got for 50$. Seems the more expensive they get, they lose out on just being big nice expansive hammocks with silky smooth material. So not a hard rule I guess!


The mattress world—like just about every other, I imagine—is crazy: https://www.gimletmedia.com/surprisingly-awesome/12-mattress...


>$3000 on a mattress? WTF? How is that even possible for such a highly commoditized good?

I paid close to $3000 for a sleep number matress with adjustable firmness for each side. Still use it every day fifteen years later and think it was well worth the money.


In India, my family spent Rs. 500 (about $8) for a custom-made mattress, that's filled with high-quality cotton tightly stuffed into it. No foam whatsoever. 30 years later, it's still rocking.

Almost everyone here in India uses custom-made mattresses. Foam-based products are of recent launches and not many people use that. Only younger generations.


Not just the mattress; the bed furniture counts towards the $3,000 too. So $2k for the tempurpedic & you can hit $3k easily.


Something like that was happening in New England this spring

"Buy anything at Jordan’s Furniture starting today and it will all be FREE, if the Red Sox pitch a No Hitter, home or away, after July 17th during the regular season. That is 64 games! There is an average of 3 ½ No Hitters pitched each year."[0]

[0] http://www.furnituretoday.com/article/551925-if-red-sox-pitc...


Jordans Furniture does those promotions every year. They are different events though every year. The insurance company paid out $30 million in furniture when the Red Sox won the World Series in 2007.

https://abcnews.go.com/Business/PersonalFinance/story?id=377...

Funny enough, Jordans Furniture is owned by Berkshire Hathaway.

Last year Cleveland was treated to $1.7 million in free windows from Universal Windows Direct when the Cleveland Indians went on a 15 game winning streak.

http://www.espn.com/mlb/story/_/id/20623379/local-window-com...

If you're wondering about premiums, the first article quotes a guy in the business who say the premiums are usually around 30% of the value of the prize. That means the $75,000 premium paid by Universal Windows Direct was a steal. Of course, the odds of a 15 game winning steak in baseball are very small.


Seems that it would violate the "no purchase necessary" rule most (all?) states require to avoid it being an illegal lottery.


Since winners aren't drawn at random and it takes skill to win the World Series, it's not a "lottery", it's a "contest."

https://gleam.io/guides/no-purchase-necessary

>A contest is a type of promotion you can run in which an element of skill is involved. For a promotion to be considered a contest, entries must be skill-based and winners must be chosen based on merit. Meaning they cannot be drawn randomly.

>Examples of contests include:

>"Best Photo" Competition

>Voting Contest

>Sports-Based Contest

>Essay Competition

>"Tell us in less than 20 words..." Competition

>When you run a skill-based contest, winners are not randomly drawn, hence removing one of the three defining features of a lottery. As a result, contests are not impeded by No Purchase Necessary laws.


Thanks. Having created contests for my business, I am familiar with the skills exclusion, but always understood the skill in question was required to be that of the contest participants. This is somewhat implied by your citation:

>...entries must be skill-based and winners must be chosen based on merit.

In the scenario above, it takes skill but not the participants' skill, so it is essentially as out of the control of the participants as which number is drawn by a ball machine.

Now, if the skill in question is that of picking a winning sports team, then were talking about gambling which, of course, has its own set of rules and would be a stretch to apply here in any case.

Overall, it seems this contest would be on shaky legal ground one way or another.


It appears that since there are no "winners and losers" -- either everyone wins or every one loses an equivalent amount, these giveaways are not in scope for sweepstakes/contest laws.


>everyone wins or every one loses an equivalent amount

That's not a factor WRT the law in question.

The law states that if you take money or some financial consideration for a chance (that is not based on your skill) of receiving something of value, then it is effectively an illegal lottery. It doesn't matter whether everyone wins or loses.

This is usually addressed by allowing people to enter without making a purchase (entry form, postcard, etc). But, here, that obviously would be an insane offer, so doesn't really apply.


Mattress Mack?


OT but worth mentioning.. He is one of the finest human beings to ever come out of Houston. A class act. He flew a bunch of vets on a private jet to the World Series just because. He also does a massive amount of charity that doesn’t make the headlines. During Harvey, as you know, he opened his furniture store as a shelter. A real gem of a person. He is also in his store, open to close, every day. (“I-45 North between Tidwell and Parker..”) Startups could learn a lot from the story of how he built that company.


He did the "oil price above 75$ barrel by end of 2015 = all purchases for the year refunded" deal as well.

Which meant as an oil and gas recruiter, not only was I juggling a shitload of candidates whose rent payments depended on us finding them employment (which depended on prices getting above 75$), they also had huge credit card debts that they'd have to keep paying off of the price didn't go up.

Great fun.


Is there a decent write up? Sounds, from what you say, like a lucrative business with someone who has a decent set of ethics. It's always useful to read people's stories like that.


I’m actually calling him tomorrow to ask about that. I was wondering the same thing. He does a lot of local talks and such


Yup!

And as others have posted, he's fairly beloved here in Houston due to his charity work. Heck one of the local rappers remixed his commercials Houston style: https://www.youtube.com/watch?v=P74UnjzKJOU


In Dublin we have Mattress Mick.


> They came back quite drunk

> They walked away with the car.

Hopefully they did walk.


I believe the contest rules require you to floor it straight out of the mall (the "Left4Dead 2 clause").


Any joke that revolves around driving cars inside of a mall needs a mandatory reference to the Blues Brothers mall chase scene.

https://www.youtube.com/watch?v=0l3CGibsWT8


LOL!

"this place has got everything!"

Thanks for linking to that -- I've always gotten a kick out that scene.

:-D


What is the L4D2 clause? Google didn't return anything.


One of the 'campaigns' in Left 4 Dead 2 involves driving a car that is on display in a mall through the doors. At speed.

http://left4dead.wikia.com/wiki/Dead_Center


In the rare case you win (there are legitimate win a car contests that are not trying to get your private information) there is a lot of paperwork to fill out. In the best case you would be sober before the paperwork is done.


Technically, that is a different type of competition. That is an event at least partially based on skill rather than a pure-chance lottery. In places like Canada, and I suspect Australia too, such rules draw lines between competitions for prizes and a lottery subject to gambling rules.

I'd bet that a suburban mall couldn't got a gambling license, but a paper airplane throwing competition is something else. It may seem silly but that small requirement does negate many of the evils associated with gambling. You aren't going to see someone dropping thousands on lotto tickets if they have to throw a paper airplane each time.


I suspect 2 things.

1) Being Australia, the laws required it to be actually a competition and not a "chance for a chance for a chance".

2) Being 30 years ago, there is a less of a chance that people were simply trying to rip you off.


Crumple paper and throw? Or do they have to approve your paper plane design?


Since this is a California on-site thing, California sweepstakes law applies.[1]

- "The exact nature and approximate value of the prizes must be disclosed clearly and conspicuously when they are offered."

- "The law prohibits the company from misrepresenting the odds of receiving any item offered."

- Prohibited: "Failing to award and distribute all prizes of the value and type represented."

Online complaint form here.[2]

[1] http://consumerwiki.dca.ca.gov/wiki/index.php/CONTESTS/SWEEP... [2] https://oag.ca.gov/contact/consumer-complaint-against-busine...


The car is surrounded by posters that read "Enter to win" above a picture of a white vehicle otherwise similar to the blue car physically present.

There is absolutely no doubt that ideogram promises a chance to win the car in exchange for the registration.


I seem to remember there was a similar case prosecuted at some point where the advertiser claimed that the car was only for illustrative purposes and even drew an analogy with having a model display some goods, saying you wouldn't expect to be buying the model along with the goods.

I might have just dreamt all that up though because I can't find anything online.


there was a case of a hooters employee, she expected to win a toyota but manager supposedly said “toy yoda”



Apparently true: https://www.snopes.com/fact-check/hummer-bummer/

Interestingly, the family that started Toyota is named "Toyoda" (with a d, or rather a だ).

https://en.wikipedia.org/wiki/Sakichi_Toyoda


My memory is 50/50 on whether this is from real life or The Office.


> The car is surrounded by posters that read "Enter to win"

I just have to enter the car? Hold my beer!


> There is absolutely no doubt that ideogram promises a chance to win the car in exchange for the registration.

While a naive person may make that inference, a rational person may understand that 'ideogram' does not constitute an assertion that the picture depicts the prize to be won.

I sure don't mean to defend such predatory scammers, but I'm pretty sure they are legally safe on that part.

I had a friend last year who got very excited when she "won a car" and I had to talk her down when she said all she had to do was make an inconveniently long drive to a shopping mall to claim it / have her prize "verified."


> While a naive person may make that inference, a rational person may understand that 'ideogram' does not constitute an assertion that the picture depicts the prize to be won.

The law isn't based on a "rational" person, but a "reasonable" one, that is the judgement of an ordinary person with typical life experiences. That's why you're tried by a jury of your peers, not of logicians, lawyers or ethicists.


I don't think it's particularly "naive" to believe that retailers or advertising companies could make enough off of a contest promotion to justify the cost of a car. Most of the cost models of contests are opaque and, in most of North America at least, there is probably a general perception that regulations would be in place for something that so prominently implies that it is a contest for a car. The "trick" here is to set up the appearance of a contest while evading the legal controls for an actual contest. The very trick of disambiguating this in the more-or-less fine print is probably only allowed in things that aren't sweepstakes or contests.

Yes, in hindsight, it may seem that only "naive" people could believe this, and that "rational" people see through it. But this strategy probably represents something like the endpoint of a search strategy that found a successful meme, precisely because it mimics authentic, regulated contests.


In a world full of multi-million-dollar marketing budgets, where cars actually are given away to get attention, it's definitely not obvious at a glance that this isn't one of those sweepstakes.


I’m pretty sure you’re actually defending such predatory scammers here.


> a rational person may understand that 'ideogram' does not constitute an assertion

I'm sorry to see you were downvoted for presenting the other side even if you don't support these schemes.

But I have to ask, what constitutes "an assertion" after all? Written text is just one form of fixing and transmitting ideas; alphabets usually originate in actual ideograms with original meanings that were long lost and were reduced to a sound or syllable.

Transmitting an idea with a text-image combo is just as valid for a contract as any other medium as long as the meaning is clear and unambiguous. And there is no debate here that it's exactly the intention of the organizers to transmit the idea "you can win a car" - and in fact that's what most people understand, with a tiny exception of an educated and naturally suspicious minority. The only debate is if it's legal for the organizers to claim an ideogram that literally reads "Enter to win A CAR" does not imply the car is a prize.

I don't know how a judge would rule, but from a political preference - philosophical point of view I would strongly incline to deny them that right; we get a much nicer society with less scammers, without losing anything of substance.


Why on earth should we sacrifice people who may not have had exposure to financial literacy to allow these scammers to keep going?


I'm frankly surprised these aren't being blown out of the water by litigation. One might even be able to make the argument that the mall operator, timeshare commission payers, et cetera are complicit.


Mall operator, really? They're renting space in the mall out, that's it.


It's illegal to rent space to businesses you know to be conducting illegal activities. The mall operator can't rent space to a drug dealer or arms dealer, they can't rent a brothel, they can't rent space to human traffickers. Mall operators are not common carriers.


[flagged]


Selling nukes and biological/chemical warfare agents and other things that "arms dealers" provide is not legal in the US. Gun shop owners are not commonly referred to as "arms dealers".

But thanks for shoehorning your political views into an unrelated conversation.


Has there ever actually been a confirmed case of a nuclear warhead being sold by an arms dealer?


> Has there ever actually been a confirmed case of a nuclear warhead being sold by an arms dealer?

Of a warhead I don't know, but North Korea is rumored to have bought critical nuclear expertise from Iran.


What would constitute confirmation for you?


Has the BBC ever reported on it happening, as more than just a potential?


I'm with you, but it does seem like he's referring to "Lord of War" more than "Gun Shop Owner." The guy selling RPGs to known criminals isn't the same as the guy who sells me my AR15s


Read up on accessory laws in the US. Not saying it’s an open and shut case, but there is enough grey area that a DA wanting to make a name for themself for political gain could easily justify trying.


If they rented that space out to a brothel, would they be liable?


[flagged]


> Prosecutors' offices have other incentives

Litigation, not prosecution. This is probably too low a priority for public prosecution, particularly criminal prosecution. But civil litigation? Would appear to be low-hanging fruit, particularly if one can entangle the timeshare promoter’s assets.


Why haven't they all been shutdown if they are clearly illegal? Also, I've seen these across the country.


There's generally no one doing the work basically. A gym I went to had notoriously bad competitions and advertising. It was never the "last memberships available" and there wasn't actually "10 days left" the counter just changed back on the final day. No one ever got the prizes either, they just never announced a winner, and a new competition started the same day. People still signed up by the hundreds.

Hundereds of formal complaints by people from the gym to the ombudsman and consumer affairs over more than five years amounted to literally nothing. They still do everything they used to.

Even more seriously, they didn't pay their employees superannuation, and it took years to even start the process of sorting that out.

As these car competitions are run by private businesses and not the car manufacturers my guess is they are simply too small of a fish to go after.

Now, just last week that same gym was implicated in a drug trafficking ring. But that's a different department of law enforcement...


[flagged]


I suspect the parent comment or is from Australia.


ehnto mentions the ombudsman. I don't think they have this position in the U.S


Various locales in the US have Ombudsman positions. It's definitely not universal, though.


for an alternative viewpoint, I'm from the UK and I see these car sweepstake scams all over the place. I think the region you're in has a strong impact on what the police's priorities are, due to different leadership.


> I'm from the UK[..] I think the region you're in has a strong impact on what the police's priorities are, due to different leadership.

Totally agree! The few times I compare ads on television from Netherlands vs England the difference is huge. There's a huge amount of gambling advertisement in England. Advertising regarding something that's addicting is often quickly restricted in The Netherlands. Secondly the loan advertisements. In Netherlands the advertisements have to mention that it costs money (seems super obvious) plus there are restrictions on the interest rate. Seems in England companies can do whatever they want.

If a lot of people get into money problems it'll affect everyone (stealing might go up, or they'll not pay back loans, etc). It is so strange that this is allowed.


> If a lot of people get into money problems it'll affect everyone

This is called "negative externality". Another example is junk food. It does affect everyone when people are unhealthy (health care costs for instance).

> It is so strange that this is allowed.

I think the US have ruled that advertisement is protected by freedom of speech. Actually some people get extremely defensive when talking about restricting advertisement (nanny state argument...).


Advertising is indeed covered by the first amendment. However, various US Supreme Court decisions have also confirmed that the government can make restrictions on misleading commercial speech and that, in general, commercial speech is less protected than speech more broadly.

http://www.lawpublish.com/amend1.html


It’s not just the UK in Europe though. Sweden is worse for gambling advertising than the UK ever has been, at least 2/3rds of evening TV adverts here are for online casinos.


In Sweden I was surprised at the the gambling games aimed at kids at fairs/theme parks. Roulette/wheel of fortune gambling to win big bags of sweets and chocolates. In the UK I think you'd at least have to introduce an element of skill into the game. (Also I've never seen so much candy for sale as in Sweden! It's amazing Swedes have any teeth left.).


Swedish kids are in general only allowed sweets on Saturdays which helps. That actually leads on to a pretty dark story too long to write in this margin, but Wikipedia has a good summary: https://en.wikipedia.org/wiki/Vipeholm_experiments


> I see these car sweepstake scams all over the place

Are you sure it's the same scam? A car sweepstake is a real thing outside of the particular scam mentioned.


I haven't checked the T&Cs, but it has all the same traits - set up in an outlet village, car being presented with "you could win" banners, aggressive salespeople pestering passers-by to sign up with their personal details. The aggressive sales tactics especially are a bad omen in my eyes.


I've seen something like this in shopping centre in Ireland.

But the car manufacturers logo was all over it, which makes me think it's legit.. but it is always there.. which is suspect.


It is incredibly frustrating that police don’t seem to actively enforce the majority of the laws. My local police seem anemic. There sure are a lot of them, though. Patrol cars are always visible. And, (right-wing) politicians seem to always want to be hiring more and upgrading their gear. For instance, recently they asked for a $30M shooting range. But, if the local newspapers are a good record, it seems that all they seem to do is give out speeding tickets, enforce drug laws, and and bust minorities and immigrants (for whatever). I’m not being facetious.

Anyone in the US have tips on how to get involved to help oversee and direct them? I’m pretty naive and don’t have much time, but I do have motivation, at least. I have tried calling them in the past to get a better understanding of what they do, but it was difficult to find the right person to talk to. I’ve considered doing independent research and reporting (via FOIA), but I also fear repercussions.


>It is incredibly frustrating that police don’t seem to actively enforce the majority of the laws

It's not just the police. It's the DA and judges too. Also, weirdly enough, the defense attorneys and public have a very large burden of fault here.

A court clerk I know realized while filing records that our county had been in violation of state law for over 7 years in handling one type of case. Hundreds, if not thousands of cases have been prosecuted in that time. Yet, there was exactly 0 formal complaints about the counties violation of the statutes.

The clerk in question had to point that out to an attorney quietly, who then finally made a complaint on a case they were handling. After that the country dropped a few hundred pending cases on its books. But why did it take 7 years? Why hasn't anyone went "wow, the county violated people's rights for years, should someone be prosecuted"

Nope, just more revenue collection for all involved.


It depends on the structure of the municipality. You may have a civilian oversight board which has some level of control, and this could be an elected or appointed position. The other option being to become mayor, city manager, or whatever chief executive your area has with oversight over the police force.


In many counties, Sheriff is an elected position.


> Why haven't they all been shutdown if they are clearly illegal?

Is anyone seriously complaining? This is the first I've heard about this scam in years.


The local DA and the DOJ have limited resources, probably. Popehat often talks about this.


Because after decades of capitalists whining about the large and bloated state and trying to cut down from every possible angle, there is probably noone left to do these jobs.

This is the market sorting itself out.


I bet a nice $1500 small claims case would be ideal to fight these people. Put them right on the threshold of not paying for a lawyer.


California has tens of thousands of local businesses, and yet only one official office to police them?

Lets say I get ripped off by a restaurant, store, or local company (and I find out later after looking at my CC bill), what recourse do I have? Call the police? What are they going to do? Do they even handle financial fraud? File with the attorney general of California? Is his office really going to look into my issue? Do we just assume all companies are law-abiding? This doesn't make sense to me.

(I know you can call your CC company and dispute the charge, but that doesn't punish the company doing it, except maybe not crediting them that one charge, that is not a deterrent to overcharge your customers, there should be some form of punishment by a government authority)


>Prohibited: "Failing to award and distribute all prizes of the value and type represented."

They can't mock-award it to someone of their own?


I'm fairly sure there's federal laws that forbid that. Of course, it's not a crime if you don't get caught. Plus there's a small sub-story in the article about someone that did win a Tesla, but couldn't afford the taxes they had to pay to actually get it.

You can win a car but you have to be able to pay taxes and insurance for it, too.


In my experience, it's quite common to have raffles and similar events rigged.

I've heard of lots of companies that have booths at conferences where they scan your badge for a """chance""" to win some prize. Then they look up each person's credentials, and if someone is high up in a company that they wish to establish communications with, they give that person a prize to get their foot in the door.


This is just a modern version of the fishbowl of business cards. You put out the bowl and say drop in your card to win “x”. Then when it’s time to do the drawing you look through the cards to see who’s the most advantageous person to establish contact with.


Huh. I never realized that's what those were for.


The whole point of badge scans/fishbowls is to collect leads. That said, especially at larger companies, legal departments are likely to be unhappy if they learn that trade show contests are being rigged.


Perhaps it's time to test that theory and chum the fishbowl waters with a doctored business card too advantageous to pass over.


Pretty clever


The sub-story about the Tesla is an example of one of the "other types of car giveaways" that is actually legitimate—not the telemarketing scam.


That sub story also takes place in a location where the local authorities are very active in finding and squashing scams (Vegas).


Sorry but seeing comments like this about topics I know about, make me question what other falsehoods and inaccuracies I am reading on HN.

The story about the Tesla took place at Four Winds Casino New Buffalo, which is in Michigan, not Las Vegas. Legally speaking, it is a sovereign nation so I would not put much trust in "local authorities" to protect consumers. Further, although Nevada does have a gaming commission, there are still plenty of "scams" and questionable promotional tactics used by companies both inside and outside of the casinos. Time-share sales, for example, are big business in Las Vegas.


The fine print where there actually is a car awarded generally says something like taxes are the responsibility of the winner. In the ones I've seen if you cannot pay the taxes you will be awarded the cash value instead. (I suspect there is a state law in place)

The real contests are generally run by a third party firm that has no interest in the winners. They are payed to pick someone at random and deliver the prize and paperwork.


Kind of like stock options at a startup that actually makes it.


Some of these promotion companies pay a lot of money just to have their cars as part of promotions (and the sweepstakes companies can get into big trouble if their systems are not setup to give away x cars. Most of them are time seeded so someone is guaranteed to win one a week).

If your already investing that much money, can't the company also cover the taxes, or do most states have laws forbidding that? It seems like bad publicity if your "winners" have to pay several thousand in sales tax to get their "prize car."


You're paying income tax, not sales tax, because winnings are income. (Think about professional gamblers...)

Income taxes are progressive, of course, and then there are a mess of deductions. But they could still make an estimate by just assuming the person is in the $37K to $92K bracket. So that's 25% [1].

> It seems like bad publicity if your "winners" have to pay several thousand in sales tax to get their "prize car."

I think they make the judgement that offering a prize that is 3/4ths as expensive would be less good publicity vs. the largely unknown bad publicity that is mostly oriented towards the government anyway.

[1] ... and yeah, there's 25% on that, and 25% on that, etc.; for tax rates < 1 it's convergent, if the tax_paid = rate * (original_value + tax_paid), just solve for tax_paid.


> You're paying income tax, not sales tax, because winnings are income. (Think about professional gamblers...)

Think about them why? Gambling income is in a completely different category from a prize you won for free. There's no reason they have to be taxed the same.


> Gambling income is in a completely different category from a prize you won for free.

The only difference is that as a professional, you're filing your taxes as a business. It's still "income"[1], it's just the entity filing is a business rather than a specific person.

Regardless, a prize you win is not taxed as a sale.

> There's no reason they have to be taxed the same.

To the extent they're treated inconsistently, people will use the discrepancy to game the system. Politicians do that deliberately, of course, since it's an opportunity for graft.

[1]: https://www.investopedia.com/terms/i/income.asp


> The only difference is that as a professional, you're filing your taxes as a business.

In gambling, you're putting money into the system, possibly applying skill, and getting money back out.

With free prizes, you're just being given things with nothing in return.

That's a big difference. And not one that you can effectively game. It's very clear whether you're inputting money or not.


For legit contests, there is usually a small cash prize in addition that covers the cost of sales/gift tax. This was the case back in the 90s through at least Oprah's car giveaway in the early 2000s. Maybe they dont do it anymore?

It never covered income tax though; thats on you.


That example was in Vegas were in casinos they do have legit give aways of cars. I use the term legit a bit loosely, you really can win, but the odds are highly unlikely.


Ah, the old prize soap racket: https://en.m.wikipedia.org/wiki/Soapy_Smith#Prize_package_so...

A classic!


My experience is that there needs to be a special attorney that oversees the selection of the winner.


Independent companies that conduct drawings do exist. Random.org does them, for example: https://www.random.org/draws/


I was about to say that I can't believe this isn't illegal, but I guess I shouldn't take things that companies do as an indicator of what's legal.


On the flipside, I worked on promotions game systems in the brand promotions space with instant win and giveaways after the user played a game. If they won we had to contact them to verify and get info to send them the prize.

When someone won the prize we had to get the social security number of the person that won for gift tracking as many were over 15k, their contact info and location to send the prize, you'd be surprised at how many people pass that up or think it is a scam and/or never get back. We had to pick the next person if they passed it up or didn't get back and sometimes it would go through dozens of people before they would accept it. Lots of game systems, trips and even motorcycles were passed up.

I myself would have probably done the same thing, hard to believe you won and if you do win it is hard to not think it is a scam due to systems like mentioned in the article.


As an individual authenticating callers is difficult.

I recently had someone claiming to be from the ATO (Australian Taxation Office) call and ask me to identify myself. Not surprising, my tax filing is overdue. I advised them as a security policy I do not give out PII to unauthenticated callers, asked for a reference number and a return phone number. The number I was given is not listed on the ATO website so I did not return the call. Found some forum posts claiming the number is for return callers who have a reference number. Still, if I can’t find the number listed on offical media I don’t call back.

I’m trying to think of a way the average person could authenticate a caller. I’m not security or technology expert so my knowledge in this area is limited.

Any ideas?


I've had my bank call me at work because I forgot to pay my credit card off the day after it was due. No callerid info, just a number. The woman on the phone didn't say who she was, who she was calling from, she just immediately asked me if this was blahblah. My work has been the subject of a bunch of scammers calling about financial services lately so I wasn't too keen on saying who I was. I kept asking her who she was calling from and she just kept asking me who I was. Finally she said she was from my bank. I told her I'd call her back. Called up my bank and had to wait through several people for someone to tell me what was up. Not only does there need to be some etiquette when cold calling someone (like using callerid and stating upfront who you are and who you are calling from!) but callerid need an update so you can't spoof it so we can trust it again.


Etiquette from a bank is like water from a stone. Consider moving your accounts to a credit union.


Funny cause on email this is a solved problem (from a technical standpoint not a social one); encryption and digital signatures are easy. And it would be so useful to those industries too.


I think just call back on one of their listed numbers and explain.


It seems so obvious now you've pointed it out. I do like to over complicate things.


This is the advice given by banks and anti-fraud agencies. NB in some countries landlines can remain on a call for several minutes after the call receiver has hung up. A phisher will play a dial tone etc to make it seem realistic. The advice is to either wait 10 minutes (longer?) or preferably call back on another line if you receive a suspicious call.


> NB in some countries landlines can remain on a call for several minutes after the call receiver has hung up.

Source for this? I find it highly suspect from a technical perspective (1-3 seconds, maybe, but not several minutes) and nothing I can find online even remotely seems legitimate / real.


Telecoms + networking software engineer here:

'tis true - the caller has call release control on the PSTN i.e. the call doesn't end until the caller puts down the phone. There's special handling for e.g. 911 calls so that call release control is given to the callee i.e. the PSAP.

This doesn't work for e.g. SIP because the SIP client is not a dumb slave to the network. If I click end call, even if the network doesn't 'want' to end the call, my phone thinks the call has ended.


This used to be true but I really doubt it’s the case anymore.

Most of the “PSTN” nowadays has a bunch of SIP or other digital stuff in the middle, so this breaks down. Not to mention, this was never possible for mobiles to begin with.


It really is the case. VOIP in the middle isn't a problem. MGCs can translate between the callee's phone being on-hook to a SIP re-INVITE with inactive media. In fact, I've worked on projects in the last few years to do just this.

Telcos move slowly.

You're right about mobile networks though - that's a different kettle of fish.


Just wondering, why is that? It seems like a lot of effort instead of just sending a BYE when the phone is hanged up. I don’t see any legitimate reason for this “feature” to exist - if anything it makes scams & eavesdropping by a malicious remote caller easier.


Per one of the articles I found on it, British Telecom apparently set the delay to 3min. The rational (if article is to be trusted) is that customers wanted the ability to hang up one phone and pick up another phone in the same home without disconnecting the call.


It is how the old copper PSTN network worked, and if you are lucky enough to still have an actual copper PSTN phone line it is still true.


My argument was that even if you did have an “actual” copper line it would eventually be terminated at a device that speaks analog phone line on one end and spits out SIP on the other end.

This specific hanging-up behaviour was an artifact of older analog switches and I didn’t think they would emulate it in the software-based SIP switches but according to the comment above it’s still the case.


I definitely knew this was the case back when analog COs were the norm, but didn't realize this was still true. Seems it is very dependent on PSTN provider (I know SWBell didn't do this for normal lines when I worked there) as some do, some don't.


I’ve personally experienced this, probably 30 years ago, in Canada.

I’d call a friend, we’d finish talking, then I’d hang up and as a joke he’d leave his phone off the hook. I couldn’t make another phone call until he hung up or some timeout of unknown length passed.


When I was younger in the US the situation was similar, but I thought it was up to the originator of the call to disconnect. Been too long to be certain of my recollection.

I never determined the timeout, and I haven't had a land line in at least 15 years to experiment with.


You could be right, I can’t remember if the times that happened were when I originated the call or my friend did. I know it didn’t work all the time, and I think it stopped working at some point too.

This was back in the days when you could tell roughly where someone lived by their phone number - 43x—xxxx was south Edmonton (but not Mill Woods or Riverbend), 2xx-xxxx was Calgary, area codes didn’t matter because the whole province was 403, etc. The phone system is a lot different now - you can port a landline to a cell phone (and vice-versa). The original phone number where that happened has been ported to the cable company and now goes through coax (the equipment that handles it is basically a cable modem with a phone jack).


Actually, I’m coming around to your point of view. I think it was the recipient who controlled the “transaction”.

The world was so very different. Waiting for that 0 to finally work its way around the dial, good grief. Especially since as a kid I was perpetually afraid any phone number that included a 0 might lead me to somehow get connected to a phone operator, so I wanted to dial the following number as quickly as possible.


One of the things that radio hosts here joke about is how kids with a zero in their phone number had fewer friends. “Oh, I don’t want to call Bobby, he’s got two zeroes in his phone number, it takes so long to dial”. Between that and risking talking to An Adult and getting In Trouble, I wonder how true that is.


True in the UK; https://security.stackexchange.com/questions/100268/does-han... has a decent description of the history and includes a note that BT changed in 2014 from a several-minute timeout to 10 seconds, because of fraud issues. The link to the BT announcement of that change has bitrotted, but it is at https://www.openreach.co.uk/orpg/home/updates/briefings/down...


Or try calling somebody else you know. If you land back on the same caller, you know they're playing you. =)


I just had the exact opposite experience! I was discussing scams with my regular painter. He said he got one recently, and showed it to me on his phone. It was an SMS that said, "Dear <FORENAME>, we have been trying to contact you without success. Please ring BlergCo on 99999 about your outstanding ATO debt". I thought, easy enough to check. I went to the ATO website; clicked the link about what we do if you don't pay; clicked the link about which collection agencies they use; checked for green padlocks throughout; and voila - BlergCo, 99999! Since the number on the SMS exactly matched the number on the verified ATO website, I couldn't see how the scam would work. So I told my painter I'd changed my mind, it was probably legitimate, and he should ask his tax agent to follow it up. Which he did. Then paid the overdue provisional tax that he'd completely forgotten about! It made me think, legitimate SMSs (like that one) should probably have extra words to tell the recipient how they can check that it's legitimate. For example, "NOTE: to verify our company name and contact number, please go to the ATO website at xxx.yyy.zzz (and remember to check the green padlock!)", or somesuch.


Same thing is happening here in Canada, got 2 calls recently. Geez what is going on?


The whole POTS system is archaic and ripe for abuse (which we see with telemarketers able to spoof their numbers).

IMHO the solution would be a calling system where spoofing is difficult/not allowed.


I was one of the very first developers with an app published on Google Play store, and as a "thank you" for having one of the first apps with 10k+ downloads(which wasn't difficult when number of apps on the store was measured in hundreds), Google wanted to send me the Nexus One phone - which was great, except that the email I got from them looked like scam, it was basically "hey you won a phone, click on this link and fill out this google spreadsheet with your details!" - no official google logo, it was just plain text email and the spreadsheet looked dodgy as hell. So I ignored it, until I read about the giveaway on a reputable site few days later - and yeah, I filled out the sheet and the phone arrived few weeks later. But it was very very easy to ignore it.


This seems like an easy problem to solve.

Make the winner fill out the tax forms and send them directly to the IRS. The IRS informs the promotion they've received the tax forms, and verifies names, addresses, amount match. The promotion releases the prize to the winner.


Might not be so easy -- it is like paying payroll -- you, not only the recipient, need to report the tax ID of the person/entity that you paid.


Right, so you provide that information to the winner to put on their form. No big deal.


Nope, you need to put the payee info on the forms that you submit as well as the recipient.

If you are paying someone more than $600, you need to cut a 1099 form, which tells the category, such as interst, rent, misc, etc. (1099-Int, 1099-Misc, etc.).

On the 1099, you must put the Tax Id of the recipient, which for a person is their SSN, and for another entity is typically their EIN.

You submit your copy of the 1099, and they submit theirs. They need to match or the IRS see a red flag.

So, no, you can't simply say "here's the form, you submit it".

Source: I'm not a Tax Attny, but I live with one, and have co-owned several businesses that needed to cut and/or receive W-2s, 1099,s etc.



Why did you even need the SSN?


As mentioned by others, sweepstakes sponsors are required to report prizes awarded to US residents to the IRS if the value is $600 or more. For tax purposes some also choose report prizes of lower values especially if they are giving away lots of them that equal substantial value businesses expense out.

I thought it was only the 15k prizes above gift tax but it was actually any prize for tax tracking. Lots of people balked when the SSN question came up and understandably so. In a few cases the prizes were motorcycles and ATVs and I felt bad for the people that passed them up.

The promotions systems were brand focused and most of them really did want to give away the prizes but sometimes it was tasking due to the fear of a scam.

The entries were mainly for brand focused games and brand focused gear/prizes mostly marketing focused. The system also only asked for email and the opt-in for the company/brand loot running it was un-selected. Though the brand companies did want to collect emails of people interested in the brand, they had to opt-in for that. We mainly needed emails for contacting if the user won. After winning, names/SSN/location would be asked for but lots of people weren't having it.


Wouldn't it be easier to exempt prizes from income tax and instead have a sweepstakes tax paid by the sponsor instead?


It would be easier but it is law and the IRS wouldn't like that. Part of this process of getting the info allows it to be a gift if the sponsor does include paying the taxes, they still need the info to do that.

Basically any transfer of value is tracked and the company that gives it away needs proof to write off the amount and/or declare it a gift.

The SSN and affidavit are the scary part where people think it is a scam.

Anytime you win prizes this happens even if you are on a gameshow. [1]

[1] https://www.nerdwallet.com/blog/taxes/pay-taxes-game-show-wi...


Well this is solved by asking the SSN to redeem the prize, but not before the draw.


As mentioned, this is only asked of winners to collect their prize, after the draw.

If they won they must be contacted to verify and get info to send them the prize.

Since it is a transfer of value, the SSN has to be known for the 1099 form that is required by the IRS after $600 in value being transferred. It is also required if the sponsor gives it as a gift, pays the tax portion and for the sponsor to expense it out on the business' taxes.

Same thing happens on gameshows or any giveaway.

It is probably easier to trust after you were on a physical gameshow though, if you just won a prize online it seemed scammy to many eventhough we took all precautions to make it legit including no opt-in when they entered the email or phone. Only their email/phone was required to enter after they won the minigame or played the ticket. Everything else was asked later if they won the prize.

It is harder than you'd think to give away the actual prize to people that won it due to all the scams out there taking the fun out of things.


The solution I came up with is to have the winner come into a store location to claim their prize. They can see their brand new motorcycle, be told that to drive this away we need to report the gift to the IRS so they can collect their cut.

I think most people will give up the digits then.


Good solution if local, most of the winners were all over the US.

Lots of people just didn't believe it and thought it to be a scam or maybe denied it due to the taxes, or maybe they were trying to stay on the down low due to collections or something who knows. For whatever reason, they didn't want the prize or didn't believe it.

Since it wasn't a cash prize in most cases, people would have to pay some taxes on it so maybe they didn't think it was worth it. Cash prizes are always easier as the person can just pay the taxes out of the prize, a product like a motorcycle or something fairly big, they would have to sell to pay taxes maybe.


I wonder if it would be worth starting a business brokering access to bricks and mortar for your industry. I'm sure you could find some national chains that have retail traffic that could take delivery of a prize and collect the relevant details.

Then it becomes a problem where you need assurance that the customer is going to actually show up at the store and claim his prize before you go to the trouble of shipping it out. Not a big deal.


Thanks for clarifying


The solution is probably a two-part form where the winner can fill in their SSN and seal it in an envelope, then the contest operator would take that envelope and enclose it with the operator's part of the form, and mail it.

That way the contest operator need not ever see the winner's SSN.

The amusing thing is the apparent widespread assumption that contest operators are shady as f.


"Here is a code. Please go onto the IRS website and enter this code and the relevant information, then tell me the code you get in response."


Sure, if you want to be modern.


What the...the problem is the contest winner not trusting the operator with their information. How does giving the operator an envelope containing their SIN solve this problem?!


Okay I didn't think that through.


Only if you win a prize larger than a certain amount (I think it's somewhere around $600) the promoter of the sweepstakes must issue an IRS 1099-MISC form as such prizes are taxable income.


Not parent but presumably the bit about requiring it for gifts over $15k is a regulatory requirement?


To report it to the IRS so the IRS knows where to send the tax bill.


I wonder how many were social security, retirees, or welfare recipients? I think those people will lose their benefits if they declare earnings. And perhaps they just don't think about it before they enter?


I remember a few years back walking on the beach with my dad and some similar time share scam people asked us if we wanted to enter a competition. We were handed two scratch cards with various prizes; cash, a holiday or the grand prize of a car.

Obviously all the scratch cards were winners for the holiday.

My dad scratched his card and said "Oh great, I won the car!"

The scam guys eyes opened wide and he had a confused look on his face and asked my dad to show him the scratch card. Obviously it was actually for a holiday, but it was great seeing the confusion in the guys face since he knew there was no car.


> The scam guys eyes opened wide and he had a confused look on his face and asked my dad to show him the scratch card. Obviously it was actually for a holiday, but it was great seeing the confusion in the guys face since he knew there was no car.

As a lark, it would've been super funny to create a realistic winning "ticket" for the car and substitute that in place to see the reaction.

Obviously it would require some prep work... but for kicks it would appeal to some. ;)


Well, now I know what my next side project is going to be


Just be careful it doesn't turn into felony document freud :)


Now that's what I call a Freudian slip


What the scam? "Free flight" if you buy the timeshare or something?


Roping the unsuspecting into an incredibly expensive time-share using hard-sell boiler-room tactics without ever being up-front about the true costs.

I sat through one of these once, curious about how it was going to go, and with the intent going in of not ever buying anything anyway. They present the timeshare as if it costs only pennies a day, and never admit to the true cost unless pressed very hard (and even then they never quote a final figure). What they are really selling is a loan package for the purchase of the timeshare (where the timeshare company is themselves loan originator) with an attached interest rate of something like 12 or 13% APR (bank mortgages at the time I sat through the one I sat through were running about 3.5-4% APR). The timeshare, if you can squeeze a dollar figure out of them comes out to be about $40,000 for which they finance it for you at their 12-13% APR (so a gold mine for them, but bad for you).

I ended up getting the double-team effort (two trying to convince me to jump in) to try to sell me on the value of the scam before I had finally had enough and cut off the sales pitch. Meanwhile, all around me (they did the pitch in a large room with small tables where everyone was in view of everyone else) I was watching the gullible filling out their "loan applications" and setting themselves up for $500/month for the next ten to twenty years before they could pay off the 'loan'.

The cost, plus the interest, was setup such that one would be hard put to actually be able to go on enough vacations at the timeshare to actually make the timeshare profitable for the new owner. If one went on the number of vacations that are typical, one was setting oneself up for each vacation ultimately costing $25K+ (for what should have cost only about $2-3K). This, of course, was the intent of the group running the timeshare, hide the true cost enough that the gullible don't realize they are paying $25K for what should have cost them $3K, and pocket the difference as pure profit.


I went to one to satisfy the same sort of morbid fascination as well. I really have to hand it to the sales people, it was one of the most incredible sales pitches I've ever seen.

They shuttled us to one of their premier properties where they took us to a sales room and served us breakfast. After a few moments they had everybody gather around a large presentation screen and a salesman who spent the next hour not just going over all the "benefits" of buying a timeshare, but tying that to a scripted and intensely acted "deeply personal", tear jerking story that ranged through decades of his life. The delivery was world class small stage acting -- it was that impressive. After that they paired us all off with a secondary sales guy who took us to a model room and start on the normal high pressure sales tactics.

Our only escape was that we simply lied about our income and looked to be too poor to ever afford anything they had on offer and told them we were only interested in vacationing to places they didn't have a presence. It was quite an intense experience. We left, got our free tickets to a show and were shuttled back to where it all started about 3 hours earlier.

It was absolutely bizarre and I kind of can't believe the entire operation is legal.


I did one of these also, and I absolutely don't regret it. I think I learned more about (ruthless) sales tactics in two hours than I ever have from books or classes.

It was a timeshare tied to a big-name hotel chain, and as far as I could tell they were selling some hotel rooms as timeshare units to finance construction and maintenance. So the deal wasn't good, but it was substantially less of a scam than the stereotype because they had a non-scam business to protect. That, or the guy was so sharp that he really did persuade me quite effectively, and I was only saved by having a a prior of "this is the worst deal imaginable". (Well, that and the Odysseus bit - I decided in advance to refuse no matter how good the offer looked.)

The funniest part of the slightly-less-bad scam was that it enabled them to spend a while talking about how it's "not your parent's timeshare" and "not like those shady offers from the 80s". Which was true I guess, you got nice rooms in many places instead of one rundown house - they were just charging rates that were steep even before the multi-thousand-dollar "maintenance fees" kicked it.

Oh well, the free travel and event tickets were actually a great dollars-per-hour value - as long as you said no.


It's always intriguing to see these things, and how some prey on basic math skills.

My girlfriend's mother dragged us to see a presentation associated with one of the "Flipping" TV shows.

They, of course, wanted to invite you into their program. It was "hugely successful". How successful?

"We've funded $100MM of house purchases for our members! We have nearly 8,000 members across the country!"

Well, $100MM in support sounds awesome for most things. Then you think about it more. And let's be generous to them, say the average house they buy costs $100K. That's 1,000 homes they've funded.

But hang on, they have 8,000 members. And they boast that some of those members have flipped 20+ homes each! That means, wait, less than 1 in 10 of the people who "joined their ($4,995) program" ever flipped a house through them...

That's not the kind of math they like you breaking down at those seminars for the other members during the meal break...


Just curious, but what happens when you prove you can do math? What happens when you start helping others there do math?


Maybe a little hyperbolic, but I noticed a couple of people talking with the staff, and I got a dirty look or two from them, and then, apparently (since I'd left), they "wanted to address concerns", and that those people were only suffering "insufficient motivation".

I don't know, selling 8,000 people $5,000 weekend seminars seems a better way to make $40M than trying to flip $100M of houses...


This sounds a bit like Marriott Vacation Club, which is notably not affiliated with Marriott International (anymore).


I went to a similar presentation in Hawaii for educational purposes and was able to convince my wife and daughter to come along.

It was less impressive than we hoped it would be, but we had a good time by replying leading questions with undesired answers. (“How much do you pay per night for a hotel?” “$150 for our excellent Airbnb!”)

I almost felt bad (but not really) for the sales woman who was obviously wasting her time.

When her boss joined in to take it to the next level, I simply asked him: “we’re going to France this summer, 6 months from now, in the Nice area. Show me which offers I could book today through your timeshare plan.” There was nothing reasonable. He gave up soon after that and we received our $300 tour tickets for free.

All in all not a bad deal, but we won’t do it again.


This was a big scam on the Gold Coast in Australia in the 80s and 90s, and my parents milked it.

First thing you need to know is that any major contract in Australia had a "72 hour cooling off period" in which you could cancel it with no redress or regress.

Want a cheap holiday? Bring your kids to the Gold Coast, look up the best time share resort, Friday morning,sit through the spiel, sign on the line that is dotted.

Through the weekend you have access to all the resort amenities, kayaks, jet skis, pools, etc. All comped.

Monday morning, when you were about to head to the airport? Drop off a letter at the front desk with the contract, canceling it.

Ethical? Probably no less so than they were, so hard to find sympathy.


My parents did the mini-version, just taking advantage for the day.

We went to several in southern England. We kids could play in the pool or whatever, while our parents sat through a presentation for a couple of hours. Then we spent the rest of the day together, before heading home.

Though more recently, "The EU has ruled that any new timeshares or long-term holiday products with contracts of more than a year must be sold with a 14-day cooling-off period and written information – in the buyer's first language – detailing their right to cancel within this period must be provided.", so your scheme would work especially well now.


I’m unfamiliar with Australian contract law, but damn that would be risky in the US (assuming you could even find a jurisdiction with a 72 hour cooling off period).


I went to one of the Wyndham presentations a couple years back, partially for the free (albeit shitty) breakfast, free tickets to a local attraction (actually somewhat valuable) and to observe the sales pitch. I came away similarly impressed.

They used a lot of tactics like personal vacation stories, highly suspect financial calculations and so forth. But the one I was most impressed by was getting people in the habit of saying "yes!" a lot. They'd ask a bunch of really dumb stuff like "Do you like to go on vacation?!", "Do you like to have FUN?!", "Do you like to SAVE MONEY?!" etc to get people all hyped up. Then they'd ask them if they want a timeshare, and people are primed to say yes. There's some actual psychological studies on that effect. It worked really well.

They also had our credit card info already because we were staying in another Wyndham property, and kept saying that we'd have to sign some form or else they'd charge our card for the tickets. Of course they made it difficult to get that form. You can get it after we tour one of the model units. You can get it after we look at another one. You can have it after we watch this video. Sure, you can have it now, but first let's look at this financial worksheet. Always being super nice to make it hard to be assertive with them. I finally had to basically curse at the sweet young lady to get the form out of them, but they managed to tack on 45 minutes of high pressure sales time over and above the minimum we had to spend.

It's all quite impressive in a "dark patterns" sort of way.


Unless you signed something stating that you agreed to pay for the tickets, why wouldn't you just walk way and do a charge back?


There was a bunch of crap to sign. I suspect there was some agreement, otherwise people would just not show up to the presentation at all. But TBH I didn't read it all or seriously consider doing a chargeback.


> I was watching the gullible filling out their "loan applications" and setting themselves up for $500/month for the next ten to twenty years before they could pay off the 'loan'.

I presume that quite a few of these are actually timeshare employees playing the role of "conspicuously convinced punter"


That is quite possible. I presumed the 'open plan sales room' was exactly to play on 'follow the herd' mentality. These guys were slick enough that they very well may have filled half or more of the room with plants to further fuel 'herd' mentality.


Interesting - the presentation I saw was careful to pitch each family separately and not even walk them past one another. I assume it was partly for the feeling of exclusivity, and partly to avoid letting any awkward questions like "don't those fees turn this into a total ripoff?" pollute multiple buyers.

I wonder which approach works best? (Though I guess if there are enough plants, you could get both effects going at once.)


Perhaps they were A/B testing the approaches?


let's hope.


The real scam is the ongoing, monthly, maintenance fees on your 'timeshare'. Worldmark wanted $100 per month, per week of ownership, in a presentation I saw in Vegas. Which means that 52 weeks x $100 x 12 months = $62,400 per year in 'maintenance' on each unit. So even if you paid cash, they still get $62K per year in addition. This was Worldmark Vegas, buying a 'week' in a townhouse complex of $150,000 units.

The movie "Queen of Versailles" was fascinating. Timeshare mogul builds USA largest house https://www.imdb.com/title/tt2125666/videoplayer/vi191341081...


I get the sense that the days of "take out a huge loan to be locked into vacationing at a crummy house in Boca" are over, probably because the reputation got too bad. Now it's reasonable prices, flexible travel dates, luxury properties around the world - all yours, for the low price of bank-breaking fees for life.


52 weeks x $100 x 12 months = $62,400 is wrong. The 52 weeks means the 12 months should not be there. 52 weeks x $100 = $52,00


He means in aggregate of the people.

52 people each buy a week share.

Each person gets charged $100 / month.

So 52 people each pay $1200 / year, which is the $62,400. Which I'm guessing is a bit more than the cost of maintenance


The maintenance fee is $100 a month for each week of timeshare you own. So if you want to use the time share 4 weeks a year you pay $400 a month. After selling all 52 weeks the company is collecting $62,400 a year.


If the unit has been chopped up such that all 52 weeks of the share have been sold, then a combination of people will be paying $100 per week of ownership, every month. Your share of the monthly maintenance is allocated by the number of weeks you "own".

You aren't just paying maintenance for the week that belongs to you. Original calculation of $62400 is correct. Part of the scam is obfuscating from you the true costs of the deal.

If the 52 week-owners knew each other, and could all afford the costs of the share in the first place, they could conceivably form their own LLC, cut out the timeshare company middleman, pay $10k each up front for week-length shares in a $520000 property, and cut their maintenance fee in half, to $50 per share per month (assuming 5% upkeep/utilities/taxes per year). They could even rent out any unused weeks on AirBnB to cut the maintenance charges, or even pay out distributions.

The timeshare people are making bank on the fact that getting up to 52 people to spontaneously come together in a common cause is extremely unlikely. You need a prime mover organizing the whole thing, who is ideally positioned to profit from information asymmetry.


As much as I hate all the block chain hype, I could see smart contacts facilitating this kind of coordination.

I guess there would still be a discoverability problem, not to mention the very significant risk of putting your money into a scam.


I'm not up to speed on the mathematics, but a matchmaking algorithm that keeps preference data secret until all participants in a trade web commit to a deal that satisfies at least one of those preferences could drive a lot of middlemen and scam-like businesses out of the market.

For instance, you might find an algorithmic pickle agent in the network, and tell it that you could eat one big jar of crisp dill cucumber pickles every two weeks if it costs less than 8 money units, delivered to your door, or one per week if it costs less than 3 money units, committing some number of money units greater than 8 to back a promise to buy at those prices. A small-time pickle-making farmer might tell the agent that they can ship at most 500 jars a week, as long as they get at least 2 money units per jar, or as many as 800 if they can get 4 per jar (cost of hiring a dedicated packer, perhaps). The pickle agent consults with a commodity shipping agent, calculates a billion different ways to move pickles from suppliers to consumers, and then starts moving money and pickles around. Everyone who promised to buy at a certain price is guaranteed to get the goods at that or a lower price, and everyone who promised to sell at a certain price is guaranteed to ship the goods at that or a higher price. The shippers get their fee for moving a package from point A to point B. The agents take their cut to pay for their computation, and for insurance against failed shipments or bad pickles. The system would also need to include distributor/importer/resellers, because some trades just aren't possible unless you pack a whole pallet of pickles, or a whole truckload/shipping container, and break that out for individual orders closer to the consumers.

That's all technically possible with smart contracts, as far as I know, but it would require a huge amount of programming effort to even get the basics correct. And Wal-Mart already has their supply chain, inventory, and distribution software in place.


You would be making monthly payments of $5200


52 weeks x 12 months?


It's $1200 per year for every week of timeshare you own split evenly into $100 monthly payments.


I'm not sure if this is a complete "scam." I think it mostly works out as similar to the costs of typical hotels.

- I would assume the timeshare companies often have more supply of rooms than they have paying "owners." For example certain destinations are only desirable during part of the year when the weather is favorable. So they may not be making this full amount in the math above.

- They have regular expenses beyond the room maintenance itself: overall building maintenance, resort amenities, staffing, utilities, cable/tv, etc.

- For comparison: a simple $150 hotel room for example would be $150 x 365 = $54,750. Similar to the timeshare, this one may not be 100% booked, though I don't know what booking/ownership rates are for timeshares vs. hotel rooms. In any case many timeshare units may have one or multiple bedrooms, a kitchen, a living area, etc. whereas the $150 hotel room is probably just a sleeping area. So you are likely getting "more space" with the timeshare.

Admittedly, many timeshares are scams, I won't deny that. But the evidence you provided for this one is not completely indicative of that. It still may not be a "good deal" based on how you prefer to travel, and if it's not certainly don't partake in it.

To me spending $100 x 12 = $1200 per year for your housing on vacation is not completely unreasonable compared to $150 x 7 = $1050, considering the extra amenities and opportunity to save money by cooking in the unit. It doesn't make the timeshare a "steal of a deal" (like some of the presentations make it out to be) but rather more of a "prepaid vacation" which may make sense in some situations. It seems like a "legitimate business" in this case to me, assuming the up-front costs to buy in are not too crazy. Country Clubs have been using a similar structure of "buying in" + recurring fees since before the timeshare industry even existed, and presumably these country clubs are legitimate businesses as well. There are good and bad players in the timeshare industry, like is the case in so many other industries as well.

My parents are Worldmark owners, so I've done some analysis on that one in particular. There is a decent amount of flexibility (destination) and the units have seemed pretty well-equipped. In the math I've done it seems to work out to not necessarily make your vacation "cheaper" but it doesn't make it "more expensive" either. They like it because they get more space and a kitchen to cook some of their own meals, and they use it as encouragement to take vacations to destinations they otherwise would not have thought about (and have very much enjoyed).

The timeshare company in the article though is clearly a major scam though! I trust that most people on HN can take a look at the math to weigh what may be a good deal for their personal situation.


I'm assuming that the figures parent laid out as an example don't include the cost of the timeshare itself. So you're mortgaging the cost of the time share at a high interest rate, then it's $1200/yr./week on top of that for "maintenance".


My wife and I had a lot of trouble having children, and went to Mexico for IVF. Although we were staying in Cancun, we basically had no money. We had planned on just lounging on the beach for a week, but several different groups were offering free little day trips to different destinations if you set through a timeshare presentation.

We ended up doing that three times, and even knowing what I was getting into ahead of time I found their "hard sell" tactics both persuasive and exhausting. I didn't get roped into anything, but I can definitely see how it happens.


> Roping the unsuspecting into an incredibly expensive time-share using hard-sell boiler-room tactics without ever being up-front about the true costs.

The hack is to attend, tell them you go once a year, sometimes twice, to some ethnic ancestral home town, and you'll buy on the spot if they have a timeshare there. Pick out some two-stop-light town in some out of the way country, that doesn't even have AirBnB rooms, and you can see the sales people visibly deflate as they vainly look for a listing in Borat-istan. Put on a show of being all sad, and explain that you can't imagine paying for their fantastic deal for only 15% of your annual travel budget, but to put you down in the wait list as the first to buy when they expand to your home town.

You are in-and-out in the allotted time, with the freebies, usually three hours max. I actually like inspecting the actual buildings to try to spot whether or not they took shortcuts, as how these scams work fascinates me, and some of these places have genuinely good ideas I scrapbook for my homebuilding notes, so I don't mind the lead up to the real sales pitch where I deflate them, but I'm sure you can modify the hack so you open with your counter-pitch and are in and out in minutes. I've seen people report they tell the salespeople up front they only came for the freebies, they're never buying, and if both sides agree to discreetly walk early so the sales manager doesn't notice, they'll rate the sales effort A++++ (there are always surveys afterwards), and are out in minutes.

I'm curious with groups like 419 Eaters why there aren't more organized scambaiters for timeshare scams. The freebies are legit, and if you're planning to be in a particular area anyways, three hours for a 1-2 day stay, especially if you like seeing how others solve various housing-related challenges, is a good trade.


A couple of years ago my wife and I rented a condo in Hawaii, and ended up going to one of those one morning. Coincidentally, it turned out to be at the same complex we were renting from and the example unit we toured was identical to our own. We walked out when I did the math and found that the time share would have actually cost more than just renting the place.


I always thought it would be kinda fun to get a group of people together (maybe a Meetup) who would attend timeshare pitches for fun. The goal would be to pack the room with people who had no intention of buying in.

Time is money, and I suspect the best way to cost them money is to waste their time.


yes, but you would be wasting your time - unless you all enjoy it.


Right, in order for you not to be wasting your time, you'd have to get some value from attending. I think you could argue for any of the following: (a) educational, (b) entertainment, (c) charity work, or (d) none of the above. Depends on the person...


(e) Free tickets for some event (which is very often the hook to get you into the door)


That's why you attend the ones that serve free drinks.


And bring some empty water bottles to fillup.


As a thought, you might find Robert Cialdini's book "Influence" useful:

https://www.amazon.com/Influence-Psychology-Persuasion-Rober...

He gave a talk covering the same subject matter too, which is faster to grok if that's your kind of thing.

After reading/watching this stuff, these kind of scams become incredibly transparent. And it's fairly ugh to see fellow humans subsequently get sucked in by them.


Thanks. I'll check it out. I'm quite immune to the tactics myself due to watching my father fall for way too many of them growing up. As a result of seeing that at an early age I've become quite immune to the tactics. But I could easily see how the less immune could readily be drawn in to something they likely could not afford.


Paul Wilson gave a talk at DEF CON 20[1] - he said something that stuck with me (which I'm paraphrasing now):

"The way you spot a mark is to look for the person who thinks they can't be taken. They're the greenest grass to a con man."

I'm sure it's in the video somewhere :-)

[1]: https://www.youtube.com/watch?v=rkz1ItKLAvk



I went to one of these many years ago just after finishing my degree. I explained to the guy laying on the sales pitch that I understood how interest rates worked and I had a masters degree in Computer Science. He said "you aren't the kind of person we're interested in, you can leave."

Thanks for the free Vegas trip! I actually won some money that trip, so technically I walked away from the scam with a profit!


you got off easy. My wife and I made it abundantly clear that we we're falling for it (Software engineer and data analyst). They still spent another 2 hours making us feel as horrible as possible.


In exchange for sitting through a timeshare presentation, a friend and I received a free trip to Orlando, FL. Instead of going to Disneyland we went to the Kennedy Space Center and the Air Force Missile Museum.

Lesson: Don't just settle for free tickets for a show, find out if they have any other incentives.

http://afspacemuseum.org/visit/


Yeah. I thought we could just go there to listen to it. they didn't say anything about a timeshare, they just said go there to listen to them talk about some apartments. I sounded pretty harmless.

Things started off politely enough. Then about 30 minutes in they get really mean, really fast. this was wyndham by the way - if you check online, looks like they have nothing but 1 star reviews, from those that did sign up.

It starts with manipulation, then insults on your intelligence, then move onto insults on your personality, followed by countless bullying tactics. Then, once that doesn't work, they call over some ruthless thug boss lady, to really intimidate and bully you. These guys are world class jerks. i don't know how they sleep at night.

Once they realize that they can't get you, they'll just keep beating you up, just for kicks.

Boy, that's got to be a stressful job.


What sort of things would they say?


Hint if you ever attend one: turn to your partner after the introduction and say "I don't know honey, we would have to sell the RV". They know that people with a RV rarely buy so they are much more willing to stop wasting their time.

The other option is go on vacation, send your parents to the presentation, and you take the freebies. This worked for a friend of mine- his parents old/disabled enough that they couldn't enjoy scuba diving and the like anyway, they were mentally competent enough to not sign anything, and they enjoyed the presentation better than the other tourist traps in the area.


I'm not sure how anyone can enjoy the presentation. Our presentation quickly devolved into insinuation, badgering, bullying, intimidation and finally: outright insults.

It doesn't make economic sense, but once they find out your not going to buy it, they spend the rest of the time making you'r experience as horrible and stressful as possible. Perhaps to dissuade others from doing what you just mentioned.


I'm all for capitalism, but I feel like this should be illegal.

Yes, I know, "the consumers shouldn't be so dumb". But there is always the group of a society that will bite. The seller may make a good buck, but these tactics have many downstream effects that just get compounded for the people buying this garbage.

There should be some kind of protection for the consumers in this case.

I know it would be hard to define the line, but in this specific case, it's clear that it shouldn't be allowed.


The biggest problem here is information asymmetry. The market for these time share schemes is very inefficient because the sales people have more information on both the value and cost than the customers. This is why people commenting here who have out of band information about this were unpersuaded despite finding the pitch emotionally compelling / exhausting. Regulations to require earlier and less subtle cost disclosure would help. But this is right in the zone where it's difficult to take political action: most people don't care very much about this so you can't win an election or build a career on fighting this, and the sales companies care a lot, so they'll organize a dedicated opposition to you if you try.


> The biggest problem here is information asymmetry.

This gets to the heart of a question I've always had about unfettered markets, and never seen answered.

It's widely acknowledged that markets don't just satisfy demand, they also transfer information. If you know something other people don't, you can make money, but in doing so you'll gradually disperse your unique knowledge until it's no longer valuable. (Either directly, by selling it, or indirectly, as people see that you're consistently willing to make transactions other people wouldn't.) At best, this is a payout for the productive activity of spreading knowledge (the argument for arbitrage). At worst, it's a short-term scam that's self-negating.

This is all true. Timeshares spread information because people noticed "if this is such a great deal, why do you have to pay people to listen to the pitch?" And so timeshares got a horrible reputation with most people. When I talk to hard libertarians, anarcho-capitalists, and so on, this is their argument - it took some time, but the marked worked even with asymmetric information.

But... new information can be created, at least in economic terms. Timeshare pitches now have segments on why this timeshare isn't a scam like the old ones. There are new names for things that basically amount to timeshares. The focus of the scam has moved from high interest to high fees.

And so the scammers constantly 'make' new information that disadvantages everyone who lacks it, and get money spreading that information to the populace. Is the pure-markets system supposed to not have this problem, maybe by correcting too fast to reward the scam? Or is it just accepted that there will be some large and stable amount of scamming at all times?


Markets are just a tool. Entirely unregulated markets exhibit some undesirable properties. Society, through government, has every right to aim to diminish the ill effects of these undesired properties. But it also behooves society to be careful in how it regulates, in order to avoid diminishing the usefulness of this tool. It's a balance. This is not as sexy or simple in principle as either extreme, but it's the right answer.

This is one of those cases where regulation makes sense. I think regulations aimed at improving information symmetry are some of the best. They are fairly low impact; maybe they stomp on an arbitrage opportunity, but they don't limit the solution space nearly as much as regulations that simply proscribe what you can and can't do, for instance.

Basically: the "hard libertarians and anarcho-capitalists" are just wrong. But if they were to rebut with a take down of state controlled economies, I would definitely agree with them about that. The trick is to strike a good balance.


That's also how evolution works.


One of the main reasons I can't buy the "The consumers shouldn't be so dumb" argument is that there's usually a concentrated push back every time the idea of teaching basic financial literacy in high school comes up. I could understand it if people were taught basic personal finance, but most people are not taught these things.


How would you even regulated that? This is the sort of detailed complex gray-zone law that is hard to define and harder to enforce.

A more general increase in the power of contract and what the need to include to make them valid.


You could start by making it illegal to offer prizes to attend real estate sales seminars — decapitating their primary hook. Next, you could require interest rates to be in gigantic letters, and a whole host of other info to be required. You could also make it illegal for real estate developers to also be loan providers.


Force them to, up front, present a very clear, very basic, and in very legible print the exact terms, and exactly how much this will cost per month, per year, and how much interest will have been paid over that time. Including the addition of all fees.

Something similar to the nutrition label.


Require the sort of sheet you get with credit cards. Total annual fee, breakdown, interest rate calculated in a standard way.


I have vague memories of Father dragging us along to timeshare presentations each holiday or so, purely so we could get a family ticket to the local water park or whatever.

I don't think I've thought about his for years, so thanks. I think. I didn't recall how cheap Pa was.. :)


These are all through Bali. The scam is that you appear to win something, but really it is just to get you into a high pressure sales environment. So you go back to their office (where everyone is amazed that you won!) and then realise the prize is a tour of some holiday destination they want you to invest in etc.


They make it seem like they want to give you something free, but their only intention is to get money from you i guess


They do give you stuff for free. I got two free tickets to Disney. I just had to convince them that I was interested in buying a timeshare for 90 minutes. Once I got past that mark, they were obligated to give me the tickets - a fact that I promptly reminded them about. Two aggressive sales people and one super pissed off sales manager later, and I was off to Disney. I would never do it again - it was sheer agony.


I would have taken the magic box.

More

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: