Gabriel Mizrahi (@GabeMizrahi) joins us for this deep dive into common scams to watch out for, why even the smartest among us get suckered into falling for scams, and what we can do to help ourselves and others break free of scams for good.
What We Discuss with Gabriel Mizrahi:
- The most common scams to look out for — from multi-level marketing (MLM) pyramid schemes and large-group awareness training (LGAT) to fake gurus and spiritual shysters.
- The dangerous consequences you or someone you care about can face when suckered into participating in these predatory scams.
- The qualities of people who often fall for scams — and why even the smartest among us are vulnerable to chasing their empty promises once hooked.
- The role of environment (like economic crisis and upbringing) in scam susceptibility.
- The right — and wrong — ways to approach someone who’s fallen for a scam (even if that someone is you).
- And much more…
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Here on the Jordan Harbinger Show, we’re on a crusade to expose scams for what they are and teach people how to avoid them. MLMs, guru scams, LGATs, and other predatory programs are dangerous and insidious. They compromise their members’ relationships, reputations, safety, and sense of self in the pursuit of money and power. Most disturbingly, they do this under the guise of empowerment and enrichment, which makes it hard for people to realize just how badly they are being scammed.
On this episode, we discuss the most common scams you’re liable to come across, why these scams are so dangerous, the traits of people most susceptible to falling for scams, why even the smartest among us are vulnerable, the ideal variables that contribute to the success of a scam, what to do when someone we care about has succumbed to a scam, and what we can do if we find ourselves getting caught up in one. Listen, learn, and enjoy!
To dive even deeper into what you can do to identify, avoid, and break free from scams, make sure to read this episode’s companion article here: How to Save Yourself and Loved Ones from Scams by Jordan Harbinger.
Please Scroll Down for Featured Resources and Transcript!
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THANKS, GABRIEL MIZRAHI!
If you enjoyed this session with Gabriel Mizrahi, let him know by clicking on the link below and sending him a quick shout out at Twitter:
Click here to thank Gabriel Mizrahi at Twitter!
Click here to let Jordan know about your number one takeaway from this episode!
And if you want us to answer your questions on one of our upcoming weekly Feedback Friday episodes, drop us a line at firstname.lastname@example.org.
Resources from This Episode:
- How to Save Yourself and Loved Ones from Scams | Jordan Harbinger
- How to Fire Someone You Care About | Feedback Friday | TJHS 376
- How to Rescue Your Loved One from an MLM Scam | Feedback Friday | TJHS 164
- Coffeezilla | How to Expose Fake Guru Scams | TJHS 368
- Steven Hassan | Combating Cult Mind Control Part One | TJHS 237
- Steven Hassan | Combating Cult Mind Control Part Two | TJHS 238
- Watch: ‘Zombie’ Parasite Takes Over Insects Through Mind Control | Hostile Planet
- MLM’s Abysmal Numbers | Consumer Awareness Institute
- In Young Living’s MLM Network, 89% Make Only $4 Annually on Average | Business Insider
- Bernie Madoff | Investopedia
- Uncommon Knowledge: Extraordinary Things That Few People Know by Tom Standage
- Uncommon Knowledge You Need to Know & How to Handle All the Paper in Your Life | Something You Should Know 458
Transcript for How to Avoid Scams | Deep Dive (Episode 395)
Jordan Harbinger: [00:00:00] Welcome to the show. I'm Jordan Harbinger. On The Jordan Harbinger Show, we decode the stories, secrets, and skills of the world's most fascinating people. If you're new to the show, we have in-depth conversations with people at the top of their game, astronauts and entrepreneurs, spies and psychologists, even the occasional four-star general. And of course, we do our deep dives, which is what we're doing here today. Each show turns our guests' wisdom into practical advice that you can use to build a deeper understanding of how the world works and become a better critical thinker.
[00:00:32] Now, you all know me, I'm obsessed with scams, scammers, shysters. And there are a lot of you in my inbox asking how do I prevent scams, how do you get yourself and your loved ones safe from scams, or pull a loved one away from a scan that they're in. Today, Gabriel Mizrahi and I are doing a deep dive on the types of victims that scammers' target. We can go over scams all day but really it is the victim that is the key here. Fraudsters look for specific personality traits, which make for a good victim. And we'll outline what those traits are, how to spot them in others, and perhaps most importantly, how to spot them in yourself as well. Last but not least what to do if you or a loved one is caught up in a scam or is the type of person who gets caught routinely in a scammer's web and how to free yourself from it.
[00:01:16] Got to plug our course Six-Minute Networking. It's a free course. Jordanharbinger.com/course is where you can find it. Build a network for personal reasons, build a network for business reasons, or just learn how to navigate some complex social scenarios. That's all for free at jordanharbinger.com/course. And most of the guests you hear on the show, if they don't contribute to the course, they're in the course. So come join us, you'll be in smart company.
[00:01:38] Now, here's our deep dive on scams with Gabriel Mizrahi.
Gabriel Mizrahi: [00:01:43] So Jordan, a few weeks ago, we got a really interesting letter on Feedback Friday. It was from a young woman whose brother was caught up in a multilevel marketing scam, in MLM scam. I think at the point when she wrote in, he had already been caught up in another one before selling like protein powder or something like that, supplements.
Jordan Harbinger: [00:02:03] Of course. What else?
Gabriel Mizrahi: [00:02:05] What else is there? It's always some physical product that is just a front for the deeper thing going on.
Jordan Harbinger: [00:02:11] Right.
Gabriel Mizrahi: [00:02:11] We'll get into that. I think it took him, you know, a period of several months or maybe the better part of a year to realize that that was a scam. Part of her story was that a bunch of people who joined that program with him figured it out and left. And at that point, he was like, "Okay, maybe it's time for me to move on to," but sure enough, he got caught up in a currency exchange MLM. So same story, different product, but even more complicated. And what she was writing about was really interesting. She was saying, "I'm really worried about my brother. I see him getting caught up time and time again in these sorts of vague, shady manipulative programs that are not just forcing him to buy a ton of product or pay a penalty every month." Surprise, surprise. "But it's also sort of hijacking his whole way of looking at the world. He doesn't even seem open to talking about whether the MLM is legit."
Jordan Harbinger: [00:02:58] Right.
Gabriel Mizrahi: [00:02:58] "I feel like I need to save my brother. Can you help me figure out how to critique this program in a way that he will understand?"
Jordan Harbinger: [00:03:06] And it was very specific, like, "Do you know anything about such and such foreign currency exchange being a scam." And I'm like, "I don't even need to because it definitely is," because it's got the MLM pyramid model behind it. And those are universally 100% of the time a scam and he knows that they are, and he goes from scam to scam to scam. But there's deeper, psychological reasons behind it, because look, even if we had the founder of that Forex company come in and go, "I'm scamming," he would go, "Okay." And he'd move 10 degrees to the right and he'd find another very similar program that, "This time is definitely going to work," and all his other supposed mentors moved down to.
[00:03:47] So in that question, our answer was us trying to get to the base-level psychology of why is it that this person or people in general, who are scam victims, tend to be serial scam victims. There's a lot of people that get scammed ones and go, "Ah, okay." And there's a whole lot of people who get scammed multiple times every year for their entire life somehow by the sound of it. And we get this all the time in our inbox. So we wanted to dissect that. And this is a — Gabriel, is it just multilevel marketing? I know we widened the net a bit.
Gabriel Mizrahi: [00:04:19] Yeah. I mean, what we really delve into is that it's really not just about things that very obviously look like scams, like multilevel marketing companies and stuff like that, but it's also large-group awareness training programs, also known as el-gats or LGATs. It's also the guru scams. You did an episode about that recently. It was excellent. It's also any group, you know, a spiritual community, a support group. I don't know a circle for aspiring authors who have to pay a fee to some person to read their pages and give them — you know, whatever it is.
Jordan Harbinger: [00:04:48] That was oddly specific. It sounds like you've got experience with that one.
Gabriel Mizrahi: [00:04:51] I probably saw an ad, I think, the other day on Twitter or something. I don't know — But yeah, like these scams can come in so many different forms. And you said something very insightful on that Feedback Friday, you said, "You know, if you want to convince somebody that they're part of a scam, you're not going to succeed by critiquing the logic of the scam itself. The only way to succeed," I think you said, "Was by pointing out the qualities that make the victim susceptible to the scam in the first place." And that really led to a discussion of the psychology of scam victims and not just how to save other people from scams, but to how to check in with yourself and make sure that you're not caught up in a scam which can happen. I mean, sometimes we get caught up in groups that seem really great and give us some benefits for a while and then we realized that there's something else going on.
[00:05:31] So that's what we're going to be talking about on today's episode, how to help someone — save someone from a scam — and how to know when you, yourself are part of a scam, whether it's an MLM, an LGAT, a guru cult, spiritual program, or some other scammy thing you got caught up in.
Jordan Harbinger: [00:05:43] First, I want to talk about the danger of groups like this and business cults like this. They do follow the BITE model. These are people that flow right from Steven Hassan's work and can do things like that. We do see cult-like ideas and psychology around these types of business cults. I did talk a lot about this with Coffeezilla on the Coffeezilla episode about fake guru scams. But scams that sink their teeth into their victims psychologically — exploiting their needs in order to extract money and allegiance.
[00:06:12] So these are companies and people that will create a giant lie, a story around a company that feeds the victim with beliefs, promises, rationalizations that are so strong, that it becomes damn near impossible for friends and family to reason with the victim. And they do this to extract money and extract allegiance, which really just is kind of more leads to money. Honestly, it's just allegiance which leads to money and often will lead indirectly to money because maybe the allegiance just requires you to share a bunch of stuff and go after haters or people that have left the group and things like that, and ostracize those people.
[00:06:50] That still at the end of the day, results in money for the group, because it protects the power structure that sucks the blood out of these people, so it makes more victims. It makes victims more defensive. Wearier of outside criticism which causes people to, unfortunately, double down on their commitment to whatever program this is because they feel attacked from the outside. Just like the cult leader/their upline/5whatever guru they've got going said would happen.
Gabriel Mizrahi: [00:07:16] Yeah. Which is actually a really tragic and destructive cycle. And it's one that we all need to be more aware of, I think, in a world that is full of people and organizations, sadly, that are looking to take advantage of us.
Jordan Harbinger: [00:07:26] Yes.
Gabriel Mizrahi: [00:07:26] Because at some point or another, no matter who you are, what kind of person you are, or where you live, I think it's a safe bet that you will almost certainly be approached to join some kind of predatory organization. I mean, I've been approached by like distant family members and people at weddings, trying to get me to sell juice with that. I didn't do it luckily, but anybody could be caught up in the orbit of this thing and it might be a classic MLM trying to turn you into like one more brick in that pyramid.
[00:07:53] But it could also be something that's a little more insidious. Like I said, it could be like a mastermind or a support group. It could be like a casual group therapy type of situation. That seems really helpful but ends up being led by some charismatic leader who ends up charging for their wisdom or tries to manipulate you with their ideas. Some of the worst ones, in fact, are the ones that are harder to spot. It's easy to know when an MLM — well, it isn't easy, but it's relatively easy to know when somebody is reaching inside your pocket after six or nine months of that. You realize I have less money now than I did when I started. But it's a lot harder to notice when somebody is sort of slipping into your thoughts and giving you false beliefs or extracting your commitment because you show up at this group every week and they start to subtly run your life.
[00:08:34] So whatever the particulars. These groups will always have one ultimate goal, I think. And that's their enrichment to your point at your expense. So to avoid them, we have to understand how those works operate. But even more importantly, we have to understand how human beings operate. Why do they become susceptible to those groups? So let's talk about some of those qualities. What are the qualities that lead people to fall for scams?
Jordan Harbinger: [00:08:55] What's key here is there are certain qualities of a scam victim. The qualities of the people who fall for scams are something we should outline here. A lot of people will say, "Well, it's just a really clever scam or it's disguised really well." That's fine if you get scammed once. But if you go from scam to scam to scam, usually it's not because you can't spot one, it's usually because you have rationalized getting into one, even though you probably already know you're in one. And I'll explain what I mean here in a second. At the end of the day, all scams, they operate on essentially the same principles, whether it's protein powder or pesos, life insurance, weight loss smoothies, spiritual enlightenment, electricity, whatever it is, the underlying dynamics of the program are almost always the same.
[00:09:39] The rules and economics are almost irrelevant. What thereafter is people and more specifically people with money or people with — they don't have to have money, they have to be willing to go get some and give it to the company. They don't have to be wealthy already. In fact, usually, these companies prey on people that don't have a lot of that. And we'll get into that in a second. But let's talk about who these people are. What kind of personality falls for programs like these?
[00:10:02] And in general, predatory schemes tend to look for targets who embody a few key qualities. The first one that comes to mind is insecurity — insecurity, intellectual, financial, emotional, whatever. It's one of the easiest qualities to exploit in a victim. People who feel unstable in their lives, they feel uneasy in the world. There's uncertainty about where their life is going, their careers going. They're anxious about their own abilities. These people tend to seek out programs. That offers stability, reassurance safety of some kind. MLMs used to say — when times are good, they say, "Look, you'd go on a cruise and you're going to get this free car and it's going to be amazing." And there are all these conferences. And then five minutes later, they'll go, "Ooh, do you really need that extra $600? I think a lot of us do. Well, come join this sisterhood or brotherhood of people that are making thousands of extra dollars a month in some cases, selling magical Feng Shui bracelets, whatever it is.
[00:11:05] These victims, they tend to lack self-confidence, motivation, and experience. They often don't understand how real businesses are built. Not that these people couldn't do real business, not that they have anything wrong with them, per se. They just don't know how real businesses are run. So that's why you see this weird contradictory stuff like, "You can be CEO of your own company," and it's like, well, okay, if you're the CEO, this is a corporation. You're not the CEO of Herbalife. You're the CEO of the one person company that is you, and you're recruiting other people to be the CEO. You're not the boss of anybody. You have no authority. The company owns you. You know, they own your business, they own your supply. So those people don't necessarily understand that. They just like the idea of being their own boss, which isn't really true. They're also less likely to question and criticize a powerful group, even in the face of mounting evidence. That's important. Because if you're the type of person that goes, "Wait a second. If I'm in a corporation and I buy everything from Herbalife, then I'm not the CEO. They don't want you to even think about that. They want your critical mind silenced and hushed when it comes to that.
[00:12:10] Also insecure people often tend to discount their own instincts and their own analysis, which is why they will double down on this group even when they feel confused, disillusioned, weirded out. Their whole family is saying, "This doesn't work. Look at your bank balance. You are losing money." They often don't have the conviction to honor their gut reactions or act on their own beliefs. And this shows up not just in their victimhood with whatever MLM or whatever business they're in. This often manifests as well in their relationships. You know, sometimes they're in relationships that don't honor their beliefs or their gut reactions or their boundaries. And of course, many scams, they want to wear that conviction down more and more and more over time, encouraging greater dependence on the groupthink of the organization. That's why when you try and leave a lot of these groups, they ostracize you. "You can't be in the Facebook group. You're off the WhatsApp chat. You can't go to Cheryl's house for Karen's birthday party." You find that out the hard way. And it's like, "Wait a second. Why can't I join in the fun that you guys are having? If I'm not selling beads anymore? What the hell?" These people aren't really your friends. This is a pressure tactic to get you to stay in. They want you to think, "I better buy more or beads this month, even though I didn't sell them otherwise, I can't go to the pool parties this summer." That's literally what they want you to think. They won't tell you explicitly because it's manipulative, but they sure as heck want you to feel it.
[00:13:34] Also it's worth noting that insecure does not mean unintelligent. Tons of smart people, fall victim to scams every day, even intelligent people can struggle to have conviction in their intellect. In fact, a lot of really smart people are really good at rationalizing their own behavior. They'll go, "Well, this isn't working and that's not working and this isn't working but," and they'll do all these mental gymnastics to get to, "But I still have to buy these beads this month, or this protein this month, or these bars this month because of X, Y, Z." A lot of smart people and intelligent people are often very insecure, and this is a bad combination when it comes to becoming a scam victim. That's actually one of the scarier aspects of a scam. It can successfully target people who on paper could be well equipped to avoid it.
Gabriel Mizrahi: [00:14:23] You see that a lot, don't you? People who get caught up in these things you wouldn't necessarily expect because they don't fit the typical mold of the victim you imagine in your head.
Jordan Harbinger: [00:14:31] Right. You expect some bumbling knucklehead.
Gabriel Mizrahi: [00:14:34] Yes.
Jordan Harbinger: [00:14:35] But it's often not that. It's often not that. I mean, I know people that are completely normal. They have come over to my house, pitching me prepaid legal services or, you know, toilet paper, MLMs, Amway, whatever it is. It's ridiculous. These people should all know better in air quotes.
Gabriel Mizrahi: [00:14:51] Another highly exploitable quality and it's very closely tied with insecurity is a vanity. People who are vain. So people who are arrogant or egocentric or excessively proud. These people often I find tend to fall prey to scams for a variety of reasons. Sometimes their arrogance kind of alienates them from other people and alienates them from more legitimate forms of employment. Sometimes, they're so proud that it can make them avoid the hard work that actual or more productive employment actually requires. Sometimes their ego attracts them to the promises of power and wealth and freedom that you find in some of these MLMs and other scams in order to shore up that shaky sense of self that they have. And ironically vain people, people who have excessive ego will often stick with a scheme, even when the scheme starts to make them look bad.
[00:15:41] I find it so interesting because I think what it signals is that there need to be successful or just to be seen as successful or desirable or correct is so strong. That it outweighs the negative reflection on their reputation being involved in this group. It's no wonder that so many get rich quick ads — and I think, you pointed this out before, Jordan, that especially on YouTube, they feature people standing in front of like Lamborghini's or Instagram influencers in Learjet. Like they're showing people what they lack by shoving it in their face. I think what they're doing is they're really using people's vanity to expose and then reinforce that vanity. Sadly, it works. It works rather well.
Jordan Harbinger: [00:16:20] That's insightful. So they kind of tap you with the magic wand to vanity. And if you have that in you, it takes over your mind.
Gabriel Mizrahi: [00:16:28] It works, it works.
Jordan Harbinger: [00:16:29] I'm trying to think of like, this is almost like some sort of weird — you know, those ants that have the fungus growing out of their brain and then like zombie ants.
Gabriel Mizrahi: [00:16:37] I sure do, yeah.
Jordan Harbinger: [00:16:37] This reminds me of that, where you look on Instagram and what I see some d-bag in front of like a rented jet and a Lambo and a pool full of women, I'm just like, "What an insecure turd." But there are other guys —
Gabriel Mizrahi: [00:16:50] There's a reason.
Jordan Harbinger: [00:16:51] — that sees this and they go, "Whoa." And if I were standing next to that person, I'd slap him beside the head and be like, "Snap out of it. This is fake you dummy. But this is a magic wand for a certain type of inexperienced young guy who is aspirational.
Gabriel Mizrahi: [00:17:10] They wouldn't be doing it if it didn't work.
Jordan Harbinger: [00:17:12] For sure.
Gabriel Mizrahi: [00:17:12] That's the bottom line. And I think it works because we all, as human beings, contain a certain degree of narcissism in us. Some of us have it more than others. Sometimes it's healthy narcissism. Sometimes it's malignant narcissism, but that narcissism is very exploitable. It responds to the narcissism in other people very well and scammers understand how to capitalize that.
[00:17:30] By the way, that ant and the fungus metaphor is even more apt maybe than you intended. Because if I remember that story correctly, the fungus sort of takes over the ant's brain, and then eventually it forces them to heave themselves off of the leaf or the tree that they're on and plummet to their death. And then the fungus can grow and find other hosts to infect.
Jordan Harbinger: [00:17:51] I believe you're correct. Yeah. So first, the fungus takes over their brain and they literally make the ant or insect do what it does the fungus is bidding and then, yeah, it eventually dies. And you see this like fungus start growing out of the top of the head. If you don't know what we're talking about, Google ant fungus, it's got to be like the first Google result. This will blow your mind. Watch a short video on this. And if you're a person who is scared of bugs, definitely do not Google or watch a video about this because this is nightmare fuel with the zombie ants.
Gabriel Mizrahi: [00:18:20] You know, it'd be hilarious if that took you to an MLM that was selling ant fungus.
Jordan Harbinger: [00:18:25] Zombie ant fungus. Get your own army of zombie ants.
Gabriel Mizrahi: [00:18:29] It's the latest supplement.
Jordan Harbinger: [00:18:30] They'll bring over a Lambo and a jet if you tell them to and an Instagram model.
Gabriel Mizrahi: [00:18:34] You get all of those things on your front doorstep if you buy 9,000 ants.
Jordan Harbinger: [00:18:41] So they show you what you'll lack by shoving it in your face. And like you said, they use your own vanity to then expose and reinforce that vanity through their kind of BS lifestyle.
Gabriel Mizrahi: [00:18:53] That's right. And that, in turn, connects to another really exploitable quality, which is desperation. So people who become desperate are even more susceptible to shady schemes, right? Like when a program like this is somebody's last resort. They're far more willing to devote themselves to the group because the costs of not buying into the group are too high.
Jordan Harbinger: [00:19:13] Right.
Gabriel Mizrahi: [00:19:14] Like if they urgently need cash, if they urgently need a sense of community, they are more likely to compromise on their values than we're likely to follow orders. They're more likely to overlook their concerns. They look for shortcuts to success and seek out stories that will confirm that belief for them. The belief that those shortcuts are possible. And that also makes it more likely for victims to identify with the desperation of the other people in the group. But that's a very heady experience for some people that can make it even harder to leave. If you look around and you see a room full of people who are in the exact same mental and financial position that you are. And even if that doesn't end up helping you in the long run, at least you're like, "Oh, but I'm with my people and these people that are here for the reasons that I'm here. And if we're all here for the same reasons, if we're all equally desperate, then there must be some solution."
Jordan Harbinger: [00:20:00] And this has to be it. Like, "You wouldn't believe it. We wouldn't all be here if this wasn't possible." And they want to believe the narrative. It's also that idea that this has to work because we all need it badly, which is really bad logic, but totally understandable.
Gabriel Mizrahi: [00:20:16] Yeah. I mean, paradoxically desperate people, people who are in a desperate position have at the same time, too little to lose and also too much to lose. They're often in dire straits. So in a way, they seem to be risking very little by throwing everything they have into a group. Their last $600. The rest of their time every week, whatever it is. That's despite the fact that they can probably least afford to lose that money in time when they're being targeted. At the same time, admitting that they've been conned in the first place is too threatening because the group is all they have. So it becomes the costs of admitting that something is wrong and it gets higher and higher and higher. The group eventually becomes everything. And at that point, the sunk costs are so big that most people feel very afraid to leave.
Jordan Harbinger: [00:21:00] Yeah, it makes sense. Desperate people both have too little and too much to lose by quitting this type — well getting involved in, and then trying to quit this type of scam.
[00:21:13] You're listening to The Jordan Harbinger Show with Gabriel Mizrahi. We'll be right back.
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Jordan Harbinger: [00:23:17] For a special $150 VIP offer for our listeners, check out designcrowd.com/jordan to learn more and save up to $150 when you start your next project. That's designcrowd.com/jordan or simply enter the discount code JORDAN when posting a project on DesignCrowd.
[00:23:36] And now back to Gabriel Mizrahi on The Jordan Harbinger Show.
[00:23:41] Also the other side of that coin is hopelessness. This isn't the same thing as desperation, but it's kind of desperation's ugly sister I would say or ugly brother — got to be woke these days. Hopelessness is another dangerous quality. And it's again, closely tied to desperation in many ways. People who feel hopeless are in dire need of solutions. Just as we said, with people who are desperate, it's financial, it's emotional, it's social. People are going to look for these solutions wherever they can find them. These schemes deliberately will target those people too. Hopeless people often have very little to no power and that weakness makes it hard to question or leave the group. And hopelessness attracts people to scams. And when they don't manage to cure their hopelessness and desperation, which you never will through a scam because you're losing, not gaining, that's when it locks you in. That's when the scheme or the scam locks you in.
[00:24:33] And it's again ironic because many MLMs, self-help groups, guru scams, they claim to offer this hope but they actually require you to have a lack of hope. The target needs to lack hope so that they can rope you in and it will often then perpetuate that hopelessness, make it worse. Take the little money that you had, threatening to take away your new social circle of friends, dangling the carrot of hope to keep you there. It's really sad. And I've heard from people that have lost tens of thousands of dollars on proteins and different vitamins. And they'll say, "You know what, though? I met the best friends ever doing this." And I'll go, "Are you still friends with them? Well, I keep in touch with some people." And then if they're still in it, it's like, "Yeah, we hang out all the time," and I'm like, you still sell Isagenix or whatever it's called. What are you doing?" And I love how I'm name dropping a lot of these scams. We're going to get some hate mail for this. Honestly, I hope it helps people who are stuck in those scams. They dangle the carrot of hope. They dangle that lifestyle but also if you're not attracted to the lifestyle, the lifestyle, again in air quotes might just be, "Hey, you don't have to worry about your bills. You don't have to be lonely anymore." It's really, really insidious.
Gabriel Mizrahi: [00:25:44] Of course, all of those qualities are closely related, right? Vain people are often the most insecure and insecure people tend to cling to their narcissism to protect their vulnerability. Hopeless people become desperate and desperate people often become hopeless and that desperation often makes them even more hopeless. So when you see one of these qualities in a victim, you usually find one or two of the others or flickers of all of them in that person. But no matter which particular qualities a scam victim has, they all share one quality, I think, and that is the need to believe in the win. That need to believe in the win that you were talking about earlier is the Holy Grail. I think that all of these programs are dangling in front of their converts. It's not actually the money or the prestige or the reputation, even though all of those things are attractive. It's actually the belief that you can move through life with this idea that there's this beautiful promise land at the end of the struggle.
Jordan Harbinger: [00:26:36] Pot of gold at the end of the rainbow.
Gabriel Mizrahi: [00:26:38] Exactly.
Jordan Harbinger: [00:26:39] It is all about that win. And they got to keep you in daydream mode. They want you thinking, "Oh man, and then I'm going to do this. Yeah, I don't know if I can get a Lambo. Maybe I'd get a McLaren." They want you in that mode. But as we know, from looking up the statistics — because we do a little bit of research here before we start going on our rants. For the vast, vast majority of people, this win will never materialize. In fact, most people don't even break even when they do an MLM. 99 percent of recruits in an MLM actually lose money. That means that 1 percent of people either breakeven — because people are like, "I'm in the one percent. Cool." You might be making a dollar a year or zero dollars a year. You're just not making negative $10,000 a year if you're in that 1 percent. So think about the amount of people that make a living in that top one percent. It is minuscule. Everyone else loses money. This is according to the FTC, the Federal Trade Commission. So this is a government organization.
[00:27:35] Also, this is based on numbers that are self-reported. I want to highlight this, Gabriel. These are self-reported numbers. So when you say, "Oh, how did they come to that? It's skewed." This is based on data voluntarily given or at least given in tax filings or other filings from companies like Herbalife. There's spending this in the most positive way they possibly can and it's still a 99 point whatever percent failure rate. That's the marketing version. Imagine what the real number must be when you take out all the baloney. It's far under one percent of people making money of any kind in an MLM. So if you wrap your head around that, it starts to make way less sense to join anything like this.
[00:28:21] And also if you're such a gifted salesperson that can do this, they will try to convince you it's all about the work but it's not. There's a lot more that goes into this and we'll do a whole MLM episode at some point. But this perversely only adds to the allure of the win or illusory win. The more victory recedes in front of people, the more scam victims tend to double down and keep chasing it. Not because or not just because they've invested too much money already, so there's a sunk cost here, but they need to believe in the win. They need to continue to believe that the win exists. These people typically prefer to live in the fantasy of success in some future time in order to escape the unappealing truth of their reality, which is that right now, success is not just around the corner. And they are deeply in trouble either financially, spiritually, mentally, emotionally, whatever way you want to paint it.
[00:29:17] And that it actually creates a ton of effort to even approach that one percent. And even if you had everything go your way, you may still not actually make it. Of course, many targets could escape by chasing a legitimate form of success that's less work and more profitable, but that again would require self-confidence. That would require hard work that would require a conviction and many serial scam victims, lack that self-confidence, or that work ethic or that conviction. So they go after what they think is easier, but it's actually a complete red herring. Does that make sense? So it's illusory entirely. So if you take somebody who really has self-confidence and isn't afraid of a little hard work, they're usually not going to choose a scam like this. They're going to choose a legit path. So people who perversely don't have the confidence to make it in a legit way think that this is going to be easier, but it's really practically impossible.
[00:30:09] So in conclusion here to this section, anyway. The need to believe in the win is actually — that's the real product these scams are selling, the skin moisturizer, the motivational seminar, the currency exchange. That's an excuse. That is a random label, but the real one product is hope. That's what's so effed up about this kind of thing. That's what's so insidious. It's the belief in the win these people are selling.
[00:30:33] So now that we've talked about the main qualities of a scam target, I want to talk about what to actually do if someone you know falls for a scam. Because, look, the hard truth is most people involved in an MLM or guru scam, they don't really want to be rescued. They're probably going to put up a fight if you try. Most people you try to save from a scam they're not going to respond well. In many cases when I've tried this, the initial response to my attempt to help them is some version of you don't know what you're talking about or go fuck yourself. It really is. So given how difficult it is to deprogram somebody who's caught up in a scam, I want to talk about how to actually breakthrough, and it's not really — Gabriel, it's not pretty because a person who's joined a scam is usually in the grip of almost like a mania in the clinical sense. After wandering through the proverbial woods for a while, trying to make ends meet, find people — other entrepreneurs or whatever they're calling themselves even though they're not business owners — they've finally found this organization. That primarily gives them hope. They're on a high, they went to a self-help seminar where they learned how to do some cool sales tactics.
[00:31:37] They've been relieved to have found what they've been told is the answer to almost all of their problems. And even if they don't want to admit it out loud, they're afraid of losing it, not the solution because it's a fake solution, but the hope of finding that solution. They think, "Finally, this is now happening for me," and anybody who's like, "Well actually," is just seen as a Debbie Downer and not a friend.
Gabriel Mizrahi: [00:31:57] Right. So it's hard to approach a scam victim who's "doing well," because they have too much evidence so to speak that the group is working. They have too much confidence that the win that they've been chasing is real. In fact, I would argue that the more someone else challenges them, the more likely it is that they're going to defend their commitments. So if you're going to puncture that programming, then you really have to catch a scam victim when they've hit a rough patch. In other words, when they're losing, not try to talk to them reasonably when they're doing really well.
Jordan Harbinger: [00:32:27] Yeah. I was going to say even if but, especially if they found some early "success" with the group, their mood is even more elevated, their convictions even stronger. So MLM and guru scammers will try to get you some early — something that feels like results. "Look, you bought your way into a single diamond. You're going to be a double diamond before you know it." It's like, well, yeah, you have to spend more, but then they're done. They're making you dance. They're giving you all this stuff. They're having all the people call you. You're getting "mentored," right? It's all smoke and mirrors. So it can be really hard to approach a scam victim who thinks they're doing well.
[00:33:02] And by the way, they're not actually doing well. A company called Young Living and yes, I'm name checking them. They run a multilevel marketing empire dealing with essential oils, and according to a business insider investigation, 89 percent of all Young Living member entrepreneurs make an average of four dollars a year.
Gabriel Mizrahi: [00:33:23] Wow.
Jordan Harbinger: [00:33:24] Four dollars a year.
Gabriel Mizrahi: [00:33:25] That's wild.
Jordan Harbinger: [00:33:26] That's the average. 89 percent — sorry, it's not the average. It's what 89 percent of people make. It's far above the average. It's the vast majority.
Gabriel Mizrahi: [00:36:34] Wow.
Jordan Harbinger: [00:36:35] I misspoke the vast majority of Young Living and any MLM, this one, in particular, four dollars per year.
Gabriel Mizrahi: [00:33:43] So almost 90 percent of people are making four dollars a year, but that does not mean that 10 percent of people are making a killing either.
Jordan Harbinger: [00:33:50] No.
Gabriel Mizrahi: [00:33:51] Right?
Jordan Harbinger: [00:33:51] No, it means they're making above four dollars a year.
Gabriel Mizrahi: [00:33:54] You're right.
Jordan Harbinger: [00:33:55] That's all it means.
Gabriel Mizrahi: [00:33:56] That's all it means. So it could be five or six or whatever.
Jordan Harbinger: [00:33:59] Look, it could be $40 a year, 10 times, whatever everyone else is making. I mean, it's ridiculously crap pay and that's what they're making for all their work. So people who think they're doing well and MLM spend a lot of time making you think you're doing well. These people, they have too much "evidence" that the group is working. They have too much confidence that the win is right around the corner. In fact, the more someone else challenges them, the more likely they are to defend their commitment. As you mentioned earlier, right? Like they dig their heels in because the group is programming them to dig their heels in and to resist haters.
[00:34:35] So if you're going to puncture this programming, you have to catch a scam victim. Like you said when they've hit that rough patch. In other words, when they're losing and they know it. And that might take some time but it will happen because all scams eventually fail. If you don't believe me, look at one of the greatest games of all time, Bernie Madoff, right? Like that dude had a real killing going and he eventually failed. And a lot of these MLMs eventually failed. They just get sued into oblivion a lot of the time as well, but only then will the victim be open to questioning the value of their group. You got to get them before they grab onto the branch of the next multilevel marketing scheme or network marketing scheme.
[00:35:13] So if you know, someone caught in the MLM, your best bet is literally to wait until they've spent an extended period losing money, questioning their identities, slipping into unhappiness. And that sucks. But you have to do it because otherwise, you're fighting mania. You're just pissing into the wind. When their referrals dry up, their earnings disappear — if there were any which there usually aren't, once you figure in the expenses. Their friends drop out, the group abandons them, only then are they going to be open to seeing the scam for what it is. And then when you get them to peel back a little, the group will usually respond with a lot of hate vitriol, isolation, getting kicked out of the Facebook group, all that stuff. And you'll see that your friends were absolutely not conditional at all. They're not your friends, they just wanted you as part of their downline.
Gabriel Mizrahi: [00:35:58] And by the way, that's not just about business scams.
Jordan Harbinger: [00:36:00] Good point.
Gabriel Mizrahi: [00:36:01] This same principle applies to shady spiritual groups, for example, right? Like you'll have much better luck discussing one of those groups openly with somebody when they're feeling unhappy, when they're feeling demoralized, when they're feeling neglected by their guru. When the daily cleanses, and the meditations, and the retreats don't actually make their lives better or make them more fulfilled.
Jordan Harbinger: [00:36:21] Yeah.
Gabriel Mizrahi: [00:36:22] Then there's a little chink, the armor that you can start to pry open a little bit and start to actually have an honest conversation. Like those are the moments that create a crack in the armor. That allows for that conversation. Sadly, that window usually only opens after a lot of damage has been done, but that's kind of part of the game. If you don't approach a victim on a downward swing, your chances of success are going to be a lot lower because people are — like you said, they're on the high of the scam they're on, they're still grasping to the hope of the group or whatever the product in question might be.
Jordan Harbinger: [00:36:50] Yeah, I mean, good luck convincing somebody that they're going to a shady cult when they've had like sex with 14 different attractive people and they spend their days smoking pot and running around and dancing and playing bongos or whatever the hell. You got to get them when they go, "Ooh."
Gabriel Mizrahi: [00:37:05] It was one weekend, Jordan. It was one weekend.
Jordan Harbinger: [00:37:08] But it was a glorious weekend.
Gabriel Mizrahi: [00:37:10] It was glorious. But I admit that we couldn't talk about it until Tuesday.
Jordan Harbinger: [00:37:13] That's the thing, right? Like you're not going to convince some 27-year-old kid — and I say kid but not really — like a young adult, that they're in a cult when they've been having group fun with a bunch of ladies they're drinking and, or smoking weed, running around in the sun. You've got to catch them when their family has kind of said, "You're full of crap," and they're completely broke and now they find themselves working for like 3 cents an hour, begging for change on the streets of New York to give it to the cult leader. Like that part comes later on. That part eventually comes. And listen to our Steven Hassan ep about him being in the Moonies and him being sent to like corners of Harlem from 1:00 a.m. to 7:00 a.m. in the morning. Literally, they begged for money on the streets in New York that they're giving to some guy that they think was the Messiah. It's ridiculous.
[00:38:01] The same thing is true for multilevel marketing. For people who think we're using hyperbole right now, these are a lot of the same tactics. You might not be in Harlem begging for change from 1:00 a.m. onward in an MLM but you will be using — and I'm not even kidding, these are real examples. I've seen photos. There are people who are using funerals to recruit. There are people who are using really sad family tragedies to have reunions and they're pitching MLMs at these reunions. I read these accounts on Reddit and elsewhere about people who are in MLM. This isn't like, "Well, I heard this person was." This is like, "I was taught to do this at the funeral. I recruited my widow does something, something, something into my stupid MLM at like her son's funeral, or like her uncle's funeral." Like it's dastardly. And it isn't like, "Wow, you're a real scumbag for doing it." It's like the group encourages this behavior.
[00:38:58] So someone's going to send me an email, "Not all that work marketing is like that." The vast majority, even if they really aren't all like that, who cares? You're making four bucks a year for crying out loud.
Gabriel Mizrahi: [00:39:08] Good point.
Jordan Harbinger: [00:39:08] You've got to catch people when they're on a downswing to get them out, just like the MLM caught them on a downswing before to get them in. Unfortunately, that's when people are receptive to these types of things. Educating people gently, Gabriel, as you know, is not really my strong suit, but let's talk about that. You're better at that than I am.
Gabriel Mizrahi: [00:39:27] I do think that once you found a window into that conversation, whatever it is, your job is to help the other person see the scheme for what it is. And that does mean kind of educating them, at least opening their eyes a little bit — gently, yeah, respectfully — about the concerns that you have about the program, and basically, its effect on their life. And this is the hard part, right? Like real hard to just wait for the downswing. But the really hard part becomes when you sit down and you're like, "I have some concerns here they are."
[00:39:55] So we did spend a little bit of time thinking about what the best approach to that conversation is. And I think it's really about asking questions that allow the other person to elicit the answer that you're looking — that you already know is true. Like if you go in there and you're like, "Your life sucks. Probably time to ditch that MLM." That's probably not going to go down very well. But if you sit down with that person, ask them, "Listen, I really want to understand how this program has helped you. But also I would love to know how the program might be holding you back. What do you think?" Or asking them, "When you join that MLM they told you, you would be financially independent and you would be running a team of your own people and you'd be working two hours a day and life would be great. Have you achieved that? Is that actually what's happening? Or other people in the group benefiting in the way that you expect it? Are they struggling the way you are right now? Is the organization that you're a part of. Are they explaining all of this to you? Like, do you guys have open conversations about what happens when the plan doesn't go the way you thought it would? Are you even allowed to question it? Are you even allowed to criticize it? Is there a forum for that? Are you objectively better off now than you were before you joined?"
[00:41:00] And if you ask the person these questions and they're willing to engage with you even a little bit, pretty soon, they are going to be supplying the answer. But it's much more effective if they can supply the answer, then you just tell them, "Here's what I'm saying. Here's what it is and you just need to agree with me." But those questions, they have very clear answers and the answers are hard to argue with. You can spend years debating whether a beauty product's pyramid with some complicated referrals bonus waterfall is a valid enterprise and a lot of smart people have. A lot of billionaires, in fact, I've tried to do that and haven't entirely succeeded. I'm thinking about Herbalife, for example, Bill Ackman.
Jordan Harbinger: [00:41:33] Yeah.
Gabriel Mizrahi: [00:41:34] But it won't take more than a few hours to settle the question of whether a pyramid scheme has actually made the victim. Like that's just a much easier thing to wrap your head around.
Jordan Harbinger: [00:41:46] You are listening to The Jordan Harbinger Show with Gabriel Mizrahi. We'll be right back.
[00:41:51] This episode is sponsored in part by HostGator. Sure, self-quarantining can be a drag, but it can also be an opportunity to pick up a new hobby while responsibly waiting for the scientists to give us the all-clear to go outside and road rage at strangers in person again. Learn to knit, pick up a new language, read the classics, or build that personal website you've been meaning to for ages. You don't even have to start from scratch. You don't have to know anything about web design, coding, domain registry hosting. HostGator takes care of all the basics for you and building a website has never been easier. Listeners of this show can save up to 62 percent off their hosting plan on the first term by going to hostgator.com/jordan. That's hostgator.com/jordan. Select a plan. Start building that website right away.
[00:42:34] This episode is also sponsored in part by OxiClean. When Jayden, my son, pooped in our sheets and we just sprayed that OxiClean Max Force on it. We let it sit for a few days. It washed right out. And this was no ordinary baby booty either. This was a cheery poop pit and all, right? If OxiClean Max Force can get that out, I'll use it on anything. It even works on dried-in stains. Also, it's not just for white clothes or sheets, but on any color that you can stay in which after having a kid, I've learned are all colors. So even if you don't have kids and you just got to stain on your clothes — I mean, my kid has gotten stains on his clothes. He has gotten stains on my clothes and I've thrown out a couple of. And I know what you're thinking, "Just get rid of the kids." Well, now you don't have to because you can try. OxiClean Max Force, spray it on there. Get the stain out. You've got to try OxiClean Max Force for yourself. To work your magic with OxiClean, go to oxiclean.com/maxforce to get a coupon for a dollar off. That's O-X-I-C-L-E-A-N.com/maxforce to get a coupon for a buck off.
[00:43:34] Thanks for listening and supporting the show. Your support of our advertisers helps keep us going. And to learn more and get great links to all the discounts you just heard so you can check out the deals for yourself, go to Jordan harbinger.com/deals. We've also got a worksheet for today's episode. That link is in the show notes at jordanharbinger.com/podcast. And now for the conclusion of our episode Deep Dive on scams with Gabriel Mizrahi.
[00:44:00] They'll probably say, "Well, it has helped me. I made all these friends and I learned how to sell, dah, dah, dah." "How has it set you back?" They're going to say nothing unless they're on that downswing. "Well, it was pretty expensive. It does take a lot of my time." "Have you achieved what the group promised?" "Well, it's right around the corner." That's what you're going to hear. "Has it? I mean you're six years in."
Gabriel Mizrahi: [00:44:20] Yeah.
Jordan Harbinger: [00:44:20] "How long is it going to take? Did they tell you it would take that long on your first day?" "Well, no, but you know, this, that, and the other thing."
Gabriel Mizrahi: [00:44:26] "And how long are you willing to stick with it before you see the results?"
Jordan Harbinger: [00:44:30] "What if it's 10 more years?"
Gabriel Mizrahi: [00:44:31] "Tell me about these friends. Are they doing well? Are they happy? Are they fulfilled? Are they figuring this out? Are you the only one who's struggling?" I mean, you can dig into it a little bit.
Jordan Harbinger: [00:44:38] Right. Because everyone's struggling and nobody's at the triple diamond super level. No one when they started with. It's all the same people that were there before.
Gabriel Mizrahi: [00:44:46] Right if they stick around.
Jordan Harbinger: [00:44:47] If they're even still there, yeah.
Gabriel Mizrahi: [00:44:49] For many victims that their involvement is actually compromising their relationships to other people — like if you're the one having this conversation — that's the alarm bell that wakes them up a lot of the time. Ironically, it's not their negative bank balance. It's not their utter lack of motivation. It's the fact that this group, whatever it is, is starting to put a wedge between them and the people they care about. So let's just imagine that you're talking to a sibling, a brother or sister. They're involved in a foreign currency MLM. You might say, "Look, I've noticed that a lot of our conversations these days are kind of focused on you getting me to join the program. I get it. You want to hustle. You want to make money. I appreciate that. But that kind of makes me not want to talk as often because I feel like I'm being manipulated. I feel like I'm being sold to, and then I feel bad when I say no because I feel like I'm disappointing you." That is a very compelling experience to share with somebody who's in a group that you don't approve of. And it's going to be a lot more effective than saying, "I don't approve of the business model of the group that you're a part of."
[00:45:49] You could also point out that it's hard watching your brother or your sister spend more and more money on a program that isn't generating returns. That the program feels like this taboo topic that you kind of have to avoid, and that's sort of driving a wedge between you two. Again, just coming back to like the emotional experience between you and this person. That approach keeps the focus of the conversation on how the scam is affecting the target's relationships. Eventually, they'll have to choose between the perceived benefits of the program and the quality of their personal relationships. And I'm not saying that every single time it's going to go the way you want it to. The sad, sad, sad fact about this is that sometimes people will choose the program over their personal relationships, but if they really do care about the people in their lives and they see clearly that this is getting in the way, then there are a lot more likely to listen.
Jordan Harbinger: [00:46:34] That makes sense, right? Because nobody can argue with you saying, "I think our relationship has affected." They can't say, "No, it's not." They can't argue with the way that you feel and the way that you stand on it. They can argue about all the objective stuff, whether it's been too expensive, whether there's ROI, but you're talking about something that they cannot really credibly argue with. And that I think is kind of a beautiful strategy especially, if you get their other friends to do this if they're also concerned — you know, their mom's concerned, their dad's concerned.
[00:47:05] It's kind of like an intervention. It doesn't have to happen all in one room. But imagine if over the span of two or three weeks, the mom sits you down and then your dad sits you down and then your best friend sits you down. Your brothers and sisters sit you down. It's a problem for everyone. Even if this was like, "Oh, did Gabriel put you guys up to this? He hates Young Living. He's a hater." It's like, "No, this is how we all feel." It would be a ridiculous thing. If one person got your entire family to say stuff about a company that they didn't like, and everybody just played along.
Gabriel Mizrahi: [00:47:38] Right.
Jordan Harbinger: [00:47:37] That would be highly unusual and make no sense for most people.
Gabriel Mizrahi: [00:47:41] Yes.
Jordan Harbinger: [00:47:41] So it's going to spur people to think, "Hey, maybe there's something to it." And saving someone from a scam is inherently antagonistic. They want to stick with the program. You want them to leave the program. Your goals are just fundamentally at odds, right? You're going to bump heads. Victims often are going to feel attacked, hostile, misunderstood. That's probably the worst set of conditions under which to convince someone to change their beliefs. And that's why it's very, very important to support the person you are trying to help. The more you can speak from the same side of the table, the more receptive they will be to reconsidering their involvement in the group or in a scam.
[00:48:17] The first step, of course, In supporting the target of a scam is to just make it abundantly clear as possible that you are on their team. Tell the other person that you only want what's best for them. You want to see them succeed. Your relationship with them is important to you. Explain that your agenda in the conversation is not to be right all along and give them a good old, "I told you so," or to make them feel bad, but make sure they are making the best choices for themselves. That's your agenda of the conversation. You might even add that you're willing to be proven wrong, but that you just want to have an honest conversation.
Gabriel Mizrahi: [00:48:50] Yes. That's really smart. That's a great way to reduce the defensiveness that gets in the way of it. I think another important step in the process is empathizing with their situation, which is so hard to do when they're deep in it. And you see the problem so clearly, but they can't. And again, you know, you talked about an intervention. In a way, this does share some qualities to approaching an addict who's in the middle of an addiction. It might not be as life-threatening immediately, although it is probably similarly damaging and potentially just as damaging financially, but, you know, empathizing with the person while they're going through this thing that they can't quite see is so critical. And it means taking the time to understand what attracted them to the program in the first place. What are they wanting out of life? What are they needing out of life? What are they looking for? How are they feeling? Not just about themselves, not just about the program, but about the whole world.
[00:49:39] I mean, remember, these are people who have sought this out. Not because they're dumb, not because they want to lose money, not because they want to meet people who are BS but because they really want to be fulfilled and they want to be successful and they want independence and they want all the things we all want. And if you can get to the core of that, then it's a lot easier to empathize with them even if you disapprove of the decisions that they're making.
[00:50:01] As the other person opens up in that conversation, try to listen without judgment. Appreciate that this person did not join the scam in order to be hurt. They joined it, get all the values that we all care about. Stability, praise, connection, community, purpose, financial success, whatever it is, we're all seeking that stuff. And if you can validate those needs as the person is discussing them, make the person feel heard. "Yes, I hear you. I totally get it. Of course, you want to have money. Of course, you want to be independent. I get it. The last job didn't work out. This seemed great. I probably would have thought the same thing If I were in your." You know the more you can do that, you can create the rapport necessary to not just have a meaningful conversation but eventually, to change their mind. People are very reticent to change their minds in light of new information if they don't feel understood first, but if you can make them feel understood, it's way less threatening to entertain the possibility that they made a mistake.
Jordan Harbinger: [00:50:54] And supporting the other person. Isn't just a one and done thing. You have to continue to support them through every phase of the process. And once they realize that they're part of a scam, you have to help them come to terms with the decision to leave because that part's not going to be easier. I mean, they have to kind of wrap their mind around leaving people. They think they are their friends and they're all in this together. Once they leave, you're going to have to help them transition into their next chapter. Otherwise, they might just feel really alone and rationalize jumping back in.
[00:51:22] You might even have to continue helping them to avoid other scams, which can be so tempting. Because you think we've won and it's like, "Oh, you should join my team at Isagenix," or whatever the next thing is. "We're all so tight and friendly," as long as you buy your monthly kit. In short, you have to approach the scam target the same way you yourself would want to be approached which can be hard to put yourself in their shoes if you haven't done this. If you have done it, you should know. But if you haven't, then you got to maintain that sort of open-minded lack of smugness, which can be really hard to do when you're finally proven right.
[00:52:00] Recognize the qualities in them, in the victim or in you too, and how would you need those qualities to be understood and validated in this conversation. At every single step, act in their best interest. Approaching the problem, not as an antagonist battle for who got to be right, because it is you at the end of the day, but this is a process that leads to the most responsible decision, hopefully.
Gabriel Mizrahi: [00:52:22] So, Jordan, we spent a lot of time now talking about what to do. If somebody you love fell for a scam. But what do you do if you yourself have fallen from a scam? I think a lot of people listening to this might be wondering if maybe they need to look at that yoga community that they joined a couple of years ago. Or they're thinking about like, maybe they're part of a startup where everyone's a family.
Jordan Harbinger: [00:52:44] Right. By the way, whenever you're at work and someone says, "We're a big family." What they mean is they're going to ask a lot of you, probably not pay you for it, but if you ever need something real bad that a family would provide. There's a 50-50 chance that you are not getting it.
Gabriel Mizrahi: [00:53:01] Yeah. It's so true.
Jordan Harbinger: [00:53:02] We're family means to answer your email while you're on vacation. It doesn't always mean, "And if you get sick and you're out of paid leave, we're still going to pay you because we're family."
Gabriel Mizrahi: [00:53:11] Right.
Jordan Harbinger: [00:53:12] There are a lot of businesses like that. But when startups, you usually say that they are not talking about that. What they mean is they spend way too much time together. That's all it means.
Gabriel Mizrahi: [00:53:20] And to be clear, I'm not saying that every startup or all companies are scams or culty. I just mean that there's a spectrum here where there can be qualities of culty-ness in places that you might not expect them.
[00:53:32] So if you are part of an MLM, if you're part of a guru-led program or some other spiritual community or something like that, constantly questioning the group is not just essential, it's healthy even if you're not in immediate danger, even if the group is ultimately helping you. It's your responsibility to make sure that you're not getting pulled into something more insidious, which happens all the time.
Jordan Harbinger: [00:53:54] The first thing we have to do is take stock of your experience. You have to ask yourself all the questions we discussed earlier. How the group is helping or hurting? What your relationship is like with leadership and other members? Whether you're actually feeling empowered and successful or disillusioning and things like that, so on. You have to have that honest conversation with yourself. Interrogate yourself as if you were a third party making sure to be completely honest with your answers. Resist the temptation to only do the exercise when things are going well. I can see that happening too. It's very difficult to accurately assess a group when you are on that high. You have to check in with yourself during upswings, downswings, successful weeks, unsuccessful weeks, inspiring milestones and demoralizing milestones if you can call it that. Only then will you have a truly accurate picture of how you're doing.
[00:54:47] After doing this exercise several times, ask yourself a few key questions. At the end of the day is the group helping or hurting me? If a friend were in my shoes, what would I tell them to do? And am I better off now than I was before I joined, both financially, emotionally, whatever? You might find that you are in fact part of a scam and you need to make some changes, or you might find that you're not part of a scam, but you have a greater appreciation for how the group operates that you're in, or the company operates that you're in. Maybe you'll change the way you interact with the company, the program, maybe you'll help the program evolve to meet your needs if that's possible, or maybe you just avoid the temptation to invest too heavily in a program overall. And whatever the result is, this practice will give you greater insight into yourself and more clarity about the group that you've joined.
Gabriel Mizrahi: [00:55:32] Absolutely. And I think another important piece of this is to know that it's okay to ask for help. Once you've discovered that you're part of a culty or scammy or dangerous program, you'll have to make some pretty big choices, namely how and when to leave. You know, shady programs, they tend to keep their members locked in. So you might need a little bit of help getting out. So wherever you are in the process, consider finding some support if you need it. If you need to work through your thoughts about the group or your feelings about the group, then ask a friend, ask a family member, ask a counselor to spend a few hours talking it through.
[00:56:02] If you need to physically leave somewhere or financially extricate yourself from a group, then you can also ask a friend or an expert to help you transition out. And if you need to find a new source of employment or support, or even in some cases, a place to live, if this is like an intentional community or something that you relied on for like shelter and housing and stuff, again, ask for guidance and ask for recommendations from the people you trust.
[00:56:25] Trying to leave a scam on your own is really intense and it can be really tough. Not just because sometimes the group gets in the way, but because your own attachment to it can get in the way or the people you're close with in the group, they don't want you to leave either. I mean, there are a lot of barriers to getting out. So it's one of the reasons that a lot of capable and smart people stick around for so long but you can avoid that trap by seeking out the resources you need.
[00:56:48] You'd be amazed to find how willing people are to help you leave a dangerous situation if you're willing to cop to it and you know that you need to make a change. People will tend to rally around you. So I do think that's an important thing to notice. If you're the one who's in this situation, don't be afraid to ask for help.
Jordan Harbinger: [00:57:02] Also, Gabe, once you get out, you have to stay vigilant because sadly the sad truth here — remember we mentioned the classic scam victim qualities if you will and many people leave one scam only to fall into another because of those vulnerabilities. They eventually realize that a program is taking advantage of them. That they haven't resolved the underlying issues that led them to seek out that program in the first place. They still feel desperate. They still feel hopeless. They still feel insecure. Often even more so than they did before they joined the scam. They still have a deep need to believe in the win, the sort of bill of goods. The hope is still there. And they're often worse off financially and emotionally, which makes them an even better target for a scheme that just goes by a different name, same pyramid, different day.
[00:57:46] So as you transition out of a program, continue to check in with yourself. Notice if you're being drawn towards people in programs that create a similar dynamic to your previous situation. To come in and fill the hole, they're more than happy to do that. Go through the introspection process we talked about. See if you're dealing with similar thoughts and feelings as you consider this new program. Ask people to give you their perspective before you sign up, especially people who don't always agree with you. Give yourself as much data as possible before making your next move. And often these programs — you should just get a different job, right? You should just start a real business. But I also realized that a lot of people are going to want to jump into stuff or can't tell between a real business opportunity and a scam. So that's why you need to have people around you that are advising you, maybe have a bit of a better sense about what's a scam and what isn't.
[00:58:41] As you can tell, I am on something of a crusade to expose scams for what they are and teach people how to avoid them. Multilevel marketing BS, pyramid schemes, guru scams, large-group awareness training, predatory self-help cults, all of these are dangerous. All of these are insidious. They are more than happy to compromise their members, relationships, familial, friendship, otherwise reputations, safety, sense of self in the pursuit of money and power for the people that run the scheme, not for the people who are taking part in it. And most disturbingly, they do this under the guise of empowerment and enrichment, which really makes it hard for people to realize just how badly they are being scammed. It's like something that makes you fat under the guise of making you skinny. It's literally just bad for you and they just paint over it with a layer of something that looks like financial empowerment or otherwise.
[00:59:33] Here's the good news though most scam victims already know on some level that something isn't quite right. They might not be willing to admit it because their need to believe in the win is greater than their desire to be free. But at a certain point, the reality of the scam becomes impossible to ignore. When somebody consistently loses time, money, happiness, and hope, they begin to suspect that something just is not adding up. And that's when the crack opens up in the facade. So there's usually a window into a productive conversation with a scam victim. The challenge is to open that window slowly and carefully so that you can have a non-threatening conversation about the legitimacy of their program. And that conversation, that conversation requires practice, empathy, and honesty. And it also requires a target who is ready and willing to engage with you.
[01:00:23] When the eclipse of those variables line up, you can save someone or yourself from a truly dangerous situation that millions of people around the world are currently caught up in which really is the greatest gift you can offer a scam victim, namely, a way out. Thanks. Gabriel Mizrahi for your help with this one.
[01:00:44] Before I get into the wrap of this, a lot of folks ask me, "Who are your favorite episodes? Which one should I check out?" You know, we've got a trailer for you, a guest from a few years back, Bill Browder. He was one of the first investors in Russia after the fall of the iron curtain and became a thorn in the side of Vladimir Putin, who to this day has him looking over his shoulder after he uncovered a massive fraud inside the Russian government. This is one of our most popular episodes. So if you haven't heard that yet, you'll want to check that out. Here we go.
Bill Browder: [01:01:13] Making 10 times your money is the financial equivalent of smoking crack cocaine. And once you do it once, you just want to repeat it over and over and over and over again. It was completely, absolutely wild West chaos, gold rush type of situation. The companies who were run by these oligarchs and these oligarchs said, "Well, we might as well just cheat everybody on everything. And so while I was sitting there down 90 percent, they were going to steal my last 10 cents on the dollar. I took a decision which nobody had ever taken before, which was to take on one of the oligarchs. I did. I fought back big time.
[01:01:49] I ended up with 15 bodyguards. There was a lead car, lag car, a sidecar, three armed guys in my car. When we got close to the home, they would go scout the rooftops for snipers. They look for bombs under the cars. They'd secure the stairwells and then escort me into the apartment. Then I had two guys with automatic weapons sitting in my living room. It was very, very intense, very scary.
[01:02:12] And after that, I hired a young lawyer named Sergei Magnitsky to help me investigate it. Sergei and I exposed the crime. The same people who Sergei testified against arrested him and then tortured him to try to get him to withdraw his testimony. And they thought, "You know, here's a guy, he buys a Starbucks in the morning. He wears a blue suit and a white shirt and red tie. He works in the tax practice of an American law firm. He'll buckle it a week." And it turns out that they got him wrong completely. He's the most principled guy in the world. It's really a man of steel
[01:02:44] On the morning news, November 17th at 7:45 a.m. I got the call from Sergei's lawyer, and it was the most horrifying life-changing, soul-destroying news that I could have ever gotten.
Jordan Harbinger: [01:02:58] And if you want to hear more about how Bill Browder took on one of the most powerful men in the world, Vladimir Putin, and continues to fight for change, check out episode three of The Jordan Harbinger Show.
[01:03:11] Hope you all enjoy this Deep Dive. Naturally, I love creating them with Gabriel. He's always a blast to record with. Big thanks to Gabriel. All books if you buy those, they're linked in the show notes. Please do use our links. They help support the show. Worksheets for this episode in the show notes, transcripts for this episode in the show notes. There's a video of this interview. It's on our YouTube channel as well, jordanharbinger.com/youtube. I'm at @JordanHarbinger on Twitter, Instagram. You can hit me on LinkedIn.
[001:03:35] I'm teaching you how to connect with great people and manage relationships, using systems and tiny habits. That's our Six-Minute Networking course — that's free — over at jordanharbinger.com/course. Dig that well before you get thirsty. Most of the guests on the show, they subscribe to the course. They subscribe to the newsletter. Come join us, you'll be in smart company.
[01:03:54] This show is created in association with PodcastOne and my amazing team. That's Jen Harbinger, Jase Sanderson, Robert Fogarty, Ian Baird, Millie Ocampo, Josh Ballard, and Gabriel Mizrahi. Remember, we rise by lifting others. The fee for the show is that you share it with friends when you find something useful or interesting. You know someone who gets caught up in scams, have them listen to this. You know somebody who's got a family or friend that's caught up in scams, have them listen to this. You know someone who's just interested in psychology, this is a great episode for them. Hopefully, you find something great in every episode of this show. Please do share the show with those you care about. In the meantime, do your best to apply what you hear on this show, so you can live what you listen, and we'll see you next time.
[01:04:35] A lot of people, me, which podcasts I've listened to and recommend, and something you should know with Mike Carruthers who always comes to mind. This is a really popular show. I've got Mike here. Mike, episode 458, Uncommon Knowledge You Need to Know, that seems like most knowledge to me, but I want to hear what you have to say.
Mike Carruthers: [01:04:52] Well, it's one of my favorite kinds of shows that we do from time to time. It's really fascinating knowledge that you never knew, that you probably thought about. Tom Standage who's a deputy editor at The Economist recently published a book called Uncommon Knowledge. And it's answers to things like who owns all the stuff that's floating in space. Can you claim it if you can get to it? And he explains why — and I've always wondered about this — why terrorists claim responsibility for some attacks but not others, why some go unclaimed. And he also reveals the interesting answer to why the sale of house plants is exploding and it may all have to do with Instagram. And he also talks about the myth of eating carrots is really good for your eyes and how that story started. It started in World War II and it was the military who started it and he explains that. As well as things like, you know, what does Interpol do? Just really those interesting little things you've probably wondered about but never bothered to look up.
Jordan Harbinger: [01:05:55] That sounds like a book that I would have loved, especially as a kid, and that I should pick up and read with my kid when he's old enough to not just tear the pages out of books, but actually pay attention.
Mike Carruthers: [01:06:06] Yeah, it's really interesting. It's episode 458 that was published on August the 10th.
Jordan Harbinger: [01:06:11] And we'll link to that in the show notes as well. Something you should know. Thanks, Mike.
Mike Carruthers: [01:06:15] You bet.
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