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10 Steps to a Perfect Scam: How cults and pyramid schemes work the same

Updated on July 2, 2008

The List

Multi-level marketers aren't all greedy slavering jackals nipping at your checkbook's heels. And not all of their minions are as dumb as the henchmen in Hollywood movies are. The fact of the matter is effective marketers are way too savvy to allow their image to manifest in such an unsavory way. The truth is clever marketing works in much the same way as does a purposefully launched cult and the believers are often kind, well-meaning people who have been meticulously led astray.

Here's the list of the 10 things required to start a cult or a multi-level marking scam:

  • 1. Charismatic leader
  • 2. A good story
  • 3. A good show
  • 4. That first sucker
  • 5. Bring on the testimonials
  • 6. Swell the ranks
  • 7. Give praise and succor to the believers
  • 8. Defend assaults from outside with ambiguity, sweet talk and open arms.
  • 9. Take checks to bank.
  • 10. Laugh silently when no one else is around.

1 and 2 – (a charismatic leader and a good story)

All you need to start a cult is a charismatic leader with a good story to sell. Someone who has some decent insights into some great or even not-so-great human need. For the cult leader, it's spiritual access to some secret universal sphere, or communication with the aliens following the meteor around, or access to some savior figure in some magic place... whatever. Just something mysterious and that needful people might find easy to want to believe, something they couldn't do before they met this person and his or her wonderful idea. Something they would like to be able to feel or do or know.

A good, charismatic marketer does the same thing, promising access to a different type of mystery, the mystery of getting rich or powerful through special learning whether it's about wealth building or amazing fuel efficiency, maybe a cure for baldness or how to make money online. Who knows what it is; it's usually their creativity that gets the whole thing off the ground. They have a business plan or program that if you learn it you too will be an amazing financial success (or something), or at least well on your way - (That's the line I always love. If I take one step to my left I'm well on my way to France too even though I'm in California right now.)

3 and 4 – (the show and that first sucker)

Outside of charisma and some "essential insight" the key component for people who want to start a cult or be at the tip of a pyramid scheme is that their story needs a grain of truth; they need something genuine to weave together the web of lies and lunacy, and whatever is being promised, it has to seem easy. Not like stupid easy, either. The leader has to create the illusion of some effort going in for the sake of reality, but ultimately, rewards have to seem attainable easily and without believers having to take the conventionally gradual steps that credible and proven institutions like universities or time-honored religions are endlessly putting forth. Cults and scams usually present something that is "gradual" too, but amazingly, it's always a much faster form of gradual than those other old fashioned ways.

This is where "the show" comes in, and how they get "that first sucker" to buy in. For a cult leader, this often involves the type of trickery seen at fairs and fortune telling demonstrations or even at magic shows, although that is not always how it is done. Done right, actual truths can be revealed and hyper-interpreted to give meaning to the core idea, or at least certainly seem to be. It's mostly smoke and mirrors (in premise or in fact) with some basic psychology... mix in a good show delivered enigmatically by an artful and charismatic leader, and with an audience's need for answers that aren't otherwise easily to be had, and BAM a cult is born.

For scammy marketers, the situation works much the same. Some razzle dazzle numbers presented well, and especially in areas of technology like the Internet where most people who buy into this stuff have no idea what illusions a clever operator can perpetrate, and the next thing you know they have believers buying in. They just need enough truth to make the idea plausible and initially verifiable and the optimists start pouring in. I would call them hopeful and naïve but behind closed doors these kind of scammers have been calling them "suckers" for many, many years. "There's one born every second," is how their old saying goes.

The leader just needs to continue administering the right dosages of this plausible reality while all the time stroking the ego and optimism of the members, particularly the new recruits and eventually he or she can grow the flock big enough to launch to the next phase. You just can't give them NOTHING, however, so it's very important that there at least be some scrap of truth to bait them deeply onto the hook. For the most part though, if someone needs or wants the big promise bad enough, a leader really doesn't have to give them very much. Any morsel will do, and hope will fill in the rest.

5 , 6 and 7 – (bring on the testimonials and swell the ranks, then give praise and succor to the believers)

Once it's underway, a successful cult will thrive and develop a sense of community if the leadership consistently pours praise and positivity onto the flock along with these tiny seeds of truth (sometimes fear is used, but let's not get too far off track). The leadership must constantly lavish approval and a sense of well-being on them, just as one might do to a child or a pet one wants to train, until he can finally get them to believe. Pavlov's dog studies underscore this behavioral element of what's at work. Dogs learn that the sound of a can opener is akin to food and they begin to drool automatically. People can be trained in the same way if they are fed positive stimuli upon performing a given behavior or task.

In the case of a marketing scheme, pointing out how well progress is coming in learning the materials or techniques of passing along the scheme, or rewards for how many new recruits have been brought in is rewarded with recognition, often publicly for other cult members to see so as to enhance the neurochemistry. Whatever the rewarded behavior is, it's always in keeping with the program being pushed and the behavior (in a marketing scheme for sure) is never rewarded with any actual wealth. If there is a monetary reward, it's always a pittance that seems to teeter on the brink of some imminent cash cascade if the follower can just get to that next big step, a taste but never a feast. The big rewards are always at the end of that infernal stick.

The Mastery of Praise

It helps a charismatic leader if the people he or she is working on are honest and trusting folks who are willing to work very hard and who can't help but try to see the best on others constantly. Trusting people are by far the easiest to take advantage of by the very nature of who they are. Many are quite intelligent, and because of this often feel that they are safe. But they aren't, because the root device being used is recognition and praise, which as Maslow pointed out, is a very important human need. So don't be fooled into thinking that adults are past wanting to be praised. It happens little enough in our older years, and most are far hungrier for it than they will ever say out loud.

The real art of this love lavishing, however, is in doing this with extreme subtlety, particularly in a marketing scam or pyramid scheme. Leadership has to be delicate enough to not go about it too obviously, but this is not hard for certain personality types naturally attuned to this type of thing. In fact for some people this kind of manipulative subtlety comes quite naturally, even intuitively - often it's the thing that makes them charismatic to begin. And if they have any depth of study in psychology, theology, anthropology, sociology, marketing, or, heck, even literature and art, one of these personality types can really get their cult or multi-level project off the ground.

Once the community is formed, it becomes easier to keep the snowball rolling if the original idea has any plausibility. Done right, with a large enough core of supporters, even the smallest success or piece of evidence can be trumpeted loudly for everyone to see. And the tight knit community becomes a thing of glue. Once people are accepted in a bond of mutual belief and acceptance, and are made to feel empowered by it, not only are they no longer able look at it objectively, they will fight ferociously for the collective pride. It becomes normalized and any attempts to point out flaws in it will be taken as personal attacks.

8 – (Defend assaults from outside with ambiguity, sweet talk and open arms)

This is where the real genius of the founder comes in, and it's an insidious thing in the workings of a cult or rip-off enterprise. Done properly, the members of these schemes will not allow any kind of attack on the foundation of the system they have bought into, for to let such accusations fly implicates those very followers themselves. Recognizing or admitting that the core idea is false or even flawed insinuates that they are dumb or gullible. And while this may not be the case in actuality - they've merely been exploited through the avenues of their own faith in the good nature of others and their own kind humanity - at this point it is probably too late.

The cult leader has locked them down by their own psychology and they won't admit that they've been duped even if they wanted to, even if their minds were actually open to see. The thought becomes too humiliating to even entertain. Denial comes into play. There is essentially no chance for them to have an honest look. The logic and reasoning of their leader and the social network that keeps them buoyed emotionally will sustain them far beyond genuine reasoning, it has to because there is simply too much invested and at stake. It becomes faith based and no longer subject to logic or perspicacity.

9 – (take the checks to the bank)

In many ways it is difficult to see what could possibly be wrong with this hugely powerful communal bond. If something makes someone happy and fulfills some inner need that they might have, even if it's only just the hope of salvation or gaining Internet wealth some day, how is that a bad thing?

Well, that is exactly the foundation of the cult leader or marketer's defense. Plausible deniability. A clever leader of one of these operations can spin attacks on his methods like no White House press secretary ever could. These guys pretend to have the moral or personal interests of their followers at the forefront of anything they do, and that's certainly what they say out loud. Everyone knows the standard felon's attitude towards the lie: Stick to your story and deny, deny, deny.

But these guys aren't "standard felons" at all. They are clever, intelligent and insightful; they understand people in all their emotional and biological simplicity (complex as we are, we are still pretty predictable in many ways). All they have to do is speak softly and with love and compassion and patience, emulate people that society has learned to trust, even offering sympathy for the lack of understanding their critics suffer from. They pity naysayers politely behind falsely smiling teeth. They grin and nod and maintain their angelic outward calm. Soon their followers will surge to the forefront on their behalf as emotions sweep any chance of reason from the field. Their minions fight the battles while these charlatans take their money to the bank.

And that's how it works.

10 – (Laugh silently when no-one else is around)

Multi-level marketers aren't stupid which is why they laugh at how gullible people are. They get this stuff I've outlined as clearly as I do. They don't even care if you do too. In fact, they laugh even when they get caught, because they can dash off criticism so gloriously easy by pretending it's them taking the high-road once again. Poor martyrs that they are. The best way to discredit an article like this very one is to point out how negative the criticism is. That's the oldest one in the book. But if that becomes too simplistic, a typical defense goes something along the lines of this:

Shadesbreath is clearly, and unfortunately, cynical. He's obviously trying to do what he thinks is best for his readers but he confuses our beliefs with something that we expressly forbid to happen in our (school, system, compound... whatever). We at Marketing Cult, Inc. are not in this just for the money. Not at all. Obviously money is useful, but truth be told, we're here because we honestly believe that everyone deserves a chance at happiness.

We understand how, in a world that is so angry and quick to judge, our methods might seem too good to be true. But they are not. We work very hard and every one of our members knows that they have so much work to do. We don't try to fool anyone. This isn't an easy path, and for some it may even prove too hard, as has been seen in the actions of a few. But with effort and dedication, and with the support that our community ultimately provides, and with the guidance our fine leaders, our members will eventually find the successes that they are looking for. And they'll make some friends along the way. We're sorry that Shadesbreath has found so much insincerity in the places he has gone along his path through life, and we sincerely hope that he finds trustworthy people somewhere along that road. He's even welcome here with us, should he ever feel interested to try.

You see how nice that sounds? I can dismiss charges of profiteering easily with a glib "obviously money is useful" and then misdirect on to something else. Lots of squishy feel-good nonsense that says nothing really fills in the rest. And it's all so nice. Who doesn't want someone that kind and welcoming in their lives?

Unfortunately, all of that up there was crap. It sounds good, and it would be good if it was said in sincerity, but since I can come up with a spiel like that just off the top of my head as a writer using tricks of language and authorial voice, imagine what a marketing team could compose in response to some attack on its insidious ways. Notice how there is not one negative remark about Shadesbreath outside of "cynical" and how everything is couched in kindness, acceptance and love. That's called rhetorical device. Not all rhetoric is nasty or obvious.

These kinds of people aren't obvious at all, they're subtle as all get out. Look, nobody with something of value to sell talks like that, and these guys know it. It's a form of reverse psychology that's been around in snake-oil selling and cult conversions for at least a zillion years. "If I don't sound like a salesman, they'll never know I am." But don't be fooled. Crocodiles don't cry. Snake oil doesn't cure baldness or consumption, and none of the other stuff that is obviously garbage works either. Just know what you're looking for and watch out for people who will take your money while telling you they only want to help. Nobody is that nice. And if they are, they don't want anything from you at all. Especially not your cash.

Once again, the List

Here's the short list of what these scammers need once again:

  • 1. Charismatic leader
  • 2. A good story
  • 3. A good show
  • 4. That first sucker
  • 5. Bring on the testimonials
  • 6. Swell the ranks
  • 7. Give praise and succor to the believers
  • 8. Defend assaults from outside with ambiguity, sweet talk and open arms.
  • 9. Take checks to bank.
  • 10. Laugh silently when no one else is around.

Don't throw your trust around too casually. I'm an American and believe business can do great good. Capitalism, frankly, is an idea that is music to my ears. But be aware that the sweetest voices singing it are often the nastiest villains of bunch.


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