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February 8, 2007

Should BioPerformance be Held in Contempt of the Consent Order?

BioPerformance, Inc. entered into a consent agreement with the Attorney General of Texas. The consent order can be read here.

As part of the consent order, BioPerformance is ordered not to make any representations, implicitly or explicitly, that BioPerformance reduce fuel consumption.

At the BioPerformance website, there is a report from a Wallace Lab about BioPerformance's product, in which it is claimed that "reasonable degree of confidence that the product causes a real improvement".

Over at Quatloos, Fuel Saving observes the following:

"Basically I challenged the BP people to release the full Wallace Labs test report and so clarify whether the "genuine improvement in fuel consumption" was 1-2% (ie the product really is effectively useless) or something much more (ie BP were right all along). [You can guess what my expectation is.] Doc FOG basically made two comments:

1) In his view, the testimonials (uncontrolled on-road measurements) are all that count. If the testimonials say it works and the scientific tests say it doesn't, then science must be wrong. Hence he believes the AG is just "out to get them". I did attempt to explain about placebo effects, double-blind trials, etc, but he either can't or won't take the point

2) (This is the bit that really gets me). He claimed that they would like to release the full Wallace Labs test, but cannot because they would then be prosecuted for breaking the rules of the Court judgement (making claims without scientific substantiation). He says they have been told they would need to test 50 vehicles before releasing test data. To me this seems like total nonsense, but I can't actually prove it. Maybe somebody based in the US would like to contact the AG and check if this is true?

What is so annoying is that they can keep hiding behind the "genuine improvement in fuel consumption" on the Wallace Labs test and say that this proves they were right, and the AG was wrong. Without the actual figure, and while they keep insisting it is the AG that stops them releasing the figure, we skeptics are struggling for a response to that. Ideas are welcome!"

A similar complaint is made at www.scamdex.com.com, in which a poster complains:

"If your Independent Testing was so positive....Very Happy

Quote:

Using the EPA's criteria for the evaluation of fuel additives, the FTP and HFET tests conducted by this laboratory provide a reasonable degree of confidence that the product causes a real improvement in fuel economy and reduction in emissions. The emissions tested were Hydrocarbons (HC) which showed an average reduction of 5.387%, Carbon Monoxide (CO) which showed an average reduction of 7.315%, and Nitrous Oxide (NOx) which showed an average reduction of 3.513%.

... then why are you keeping the full report secret Embarassed Question

Ok, so it reduces emissions by a couple of percentage points - but why not trumpet the 'real improvement' in fuel economy? - is it 40%, 20%, 5% - 0.001% Question."

BP's lawyers seem to counter this by claiming:

"The bottom line is that actual testing, per rigid protocols for the FTP and HFET tests under the EPA's "Motor Vehicle Aftermarket Retrofit Device Evaluation Program", was performed by an independent laboratory, and those tests demonstrate "real improvement in reducing emissions and fuel savings" based on EPA criteria."

Again, note that the full words "reasonable degree of confidence" are left out. There is a reason for this.

But let us review the BP position again: "He claimed that they would like to release the full Wallace Labs test, but cannot because they would then be prosecuted for breaking the rules of the Court judgement (making claims without scientific substantiation). He says they have been told they would need to test 50 vehicles before releasing test data."

I think this is a very clever, albeit completely misleading response by BP.

Let me explain, by way of analogy.

The FTC regulates the sale of franchises. To prevent eager salesman from making unrealistic earnings claims orally to prospects, the FTC requires that the earnings claims be incorporated into a written document known as the UFOC, at item 19. And all earnings claims must be confined to item 19. Problem solved, eh?

No, sharp salesman have now whetted the appetites of prospects franchisees by saying that the FTC prohibits them from making earnings claims! Technically, this is true if item 19 is empty, so that no representations can be made. (The FTC has proposed in the new FTC Biz Op rule to deem this practice -saying the FTC prohibits an earnings claim- as deceitful.)

Now how does that work in this case? The actual language in the Wallace Lab report posted is: "reasonable degree of confidence that the product causes a real improvement".

But I cannot tell you what that reasonable confidence is based upon without making a claim that would trigger an examination of 2 B) of the order. Since the AG is prohibited actions triggering 2 B, I cannot give you the Wallace order.

Of course it is all nonsense, but clever legal nonsense nonetheless. Clever in the sense that it probably won't attract a contempt finding.

January 26, 2007

I've got a secret, and you can't have it.

I am a sucker for secrets.

When I see advertising copy with the word "secret" in it, long before the logical part of my brain deduces that most secrets are worthless -which also should not be a secret- the part of the atavistic brain hardwired for the click her and buy now has rushed to judgment.

Google's Adsense only makes the temptation to click away on "secrets" links that much easier.

So when the Texas Attorney General announced the resolution of their BioPerformance lawsuit, I was most intrigued to read the press announcement at the BioPerformance website.

At the corporate website, we read "Recently completed testing of BioPerformance Fuel by an independent laboratory using the Federal Test Procedure (FTP) and Highway Fuel Economy Test (HFET) protocols of the Environmental Protection Agency (EPA) in a group of vehicles established a reasonable degree of confidence that the product gives a real improvement in fuel economy and reduction in harmful emissions." (my emphasis)

But further down the page, Wallace Labs who performed this test, state, in effect, our test methods are secrets and you can't have it. Ah, so much for scientific testing - our results which produce a miracle are not reproducible, because they are a secret. So there.

Some other interesting points about the judgment:

Paragraph 2 b) requires BioPerformance to refrain from making any statements about fuel economy or efficiency unless they are in possession of scientific testing showing the specific amount or percent of increased fuel economy or efficiency.

Compare this to the language from Wallace Labs: "Reasonable confidence that ... causing real improvement in fuel economy."

Paragraph 2 h) requires BioPerformance to disclose on their website that the product contains napthelene. Which has not been done as of January 26th, 2007.

Paragraph 2 0) is going to have the real bite, if enforced. It prohibits BioPerformance from making misleading representations about income levels obtainable as a BioPerformance distributor, including by not limited to: displaying bonus cheques or commissions. Reasonable earnings claims can be made as long as the earnings claim is: a) for a certain geographic region, b) states how many distributors were in the region, c) what the average distributor income, and d) how many distributors achieved this average income.

The order would have been better if it had incorporated by reference the proposed new deceptive marketing practices in the FTC's Business Opportunity Rule.

But all in all this is a very good win for the consumers.

January 23, 2007

Bioperformance Slammed for $7 Million

TheTexas Attorney General Greg Abbott today stopped a Dallas-based pyramid scheme from illegally marketing the so-called "top secret gas pill" that it falsely claimed would increase fuel efficiency in automobiles. The Attorney General's settlement with BioPerformance and its owners, Lowell Mims and Gustavo Romero, prevents the defendants from continuing to deceptively market their products and ends the State's eight-month legal action against the company.

How are the consumer defendants going to get paid? Is this one of judgments that is simply a piece of paper?

No, apparently "A combination of the defendants' frozen assets and the dissolution of two trusts created by Mims and Romero will provide more than $7 million in compensation to deceived consumers. Mims and Romero may continue to operate any legitimate enterprise, but may not deceptively market BioPerformance pills or similar fuel additive products."

This is a terrific result for consumers, $7 million in real money.

According to the press release, "Attorney General Abbott added: "Texans will not tolerate con artists who prey upon unsuspecting consumers. Though we will continue aggressively cracking down on fraudulent pyramid schemes that profiteer from worthless products, consumers should always be dubious when offered 'miracle' products that are long on hype but short on credible proof." (my emphasis)

Now how do consumers determine that a product is long on hype but short on credible proof?

Well consider this, "The Attorney General further alleged that the worthless product, combined with the defendants' downline marketing scheme, constitutes a product-based pyramid scheme, which violates the Texas Pyramid Promotional Scheme statute. By the defendants' own admission, they recruited 50,000 participants within six months of their scheme's inception."

This type of growth is typical of a product long on hype but short on credible proof. Fast and out of control growth is more likely a cancer than a real sustainable business.

Technorati Tags: texas attorney general, mims, fuel additive products, greg abbott, pyramid scheme, consumers, bioperformance, gustavo romero, fuel efficiency, legitimate enterprise

October 13, 2006

How to Avoid Believing Weird Things

competitonbureau.gif

The Competition Bureau on February 22nd, 2006 shut down an website "that duped job seekers around the world with promises of lucrative salaries". The website is up and running again, however.

The Competition Bureau took five years to shut this website down, which "used testimonials" from people who did not exist. Strangely, this is not legal.

Five years on the job and no restitution to any consumers.

On the other hand, the Competition Bureau did receive a $100,000 fine. Nice work.

But, why do testimonials work? Here is a marketing guru's take on testimonials:


"Most of us would rather act on a referral from a friend than make a purchase based on a sales pitch alone. We want to know that the product actually works before we take the leap to buy, and we're bound to put more trust in someone who has already used the product successfully than the person trying to convince us to buy it."
(my emphasis)

I agree that this is a psychological truth, but it really doesn't make any sense as a decision strategy. Why is it so compelling to "act on a referral from a friend"? Especially when it can be easy to fake the testimonials?

Technorati Tags: job seekers, competition bureau, testimonials, sales pitch, psychological truth, restitution, leap, guru, salaries, referral, promises, consumers, marketing

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July 12, 2006

Bioperformance and Recovery of Losses - Is this a viable class action?

· · · · ·
On the Quatloos site, there is a thread about the possibility of recovering damages from Bioperformance. In Canada, one source of liability for a private cause of action, ie lawsuit, against Bioperformance and its principals would be found in section 36, 55 and 55.1 The latter two sections relate to the operating of a multi-level marking plan. The Canadian Competition Bureau summarizes section 55(2) as follows:
It is illegal for operators or participants in a multi-level marketing plan to make representations relating to compensation or earnings under the plan unless they include the amount of compensation actually or likely to be received by a typical participant of the plan. Such representations can mislead potential recruits to believe that it will be easy to make large amounts of money.

As well, operators of, and participants in, a multi-level marketing plan should ensure that any representations made about the plan are -- or include information that is -- fair, reasonable and timely as the plan relates to:

* the different levels of earnings or compensation received by participants in the plan;

* the amount of money earned by a typical participant; and

* the time and effort required to reach specific levels of income.

However, I am not aware of any Canadian Class Action involving section 55 or 55.1. Perhaps as network marketers become more aware of their disclosure rights this will change.

Technorati Tags: multi level marketing, canadian competition bureau, marketing plan, quatloos, mislead, bioperformance, earnings

June 9, 2006

FTC Business Opportunity Rule

The FTC's new business opportunity rule is intended to deal with illegal pyramid schemes, such as the late, and possibly lamented, Bioperformance, recently shut down by the Texas AG. (For some excellent court video, see the following stories and accompanying video.)

According to the FTC, one of the problems with an illegal pyramid scheme is that the scheme does not clearly disclose to the individual at the beginning how many people have dropped out and therefore earned no money. While this seems laudable, will it work in practice? The MLM has to update its disclosure document every 4 months, but surely there will be reporting lags. In the case of Bioperformance, we learned that the company's owners made $5 million in approximately 5 months, leaving only 10% in earnings to be shared with the rest of the other "lucky" distributors. Thus, the proposed disclosure might not protect anyone until it is too late.

What might be a better requirement, or use of the disclosure document?

Technorati Tags: illegal pyramid scheme, illegal pyramid schemes, disclosure document, ftc, texas ag, lags, business opportunity, new business, disclose, mlm, earnings, lucky

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June 1, 2006

AG of Texas Wins TRO against fraudulant MLM Gas Pill Scheme - Bioperformance

The Attorney General of Texas won his temporary injunction against BioPerformance. From the press release: "The temporary injunction issued today by the court continues to bar the defendants from accessing millions of dollars wrongly diverted for personal uses from this illegal pyramid. These funds were frozen when Attorney General Abbott sued BioPerformance on May 16. The court order states the fuel pill marketed and sold by BioPerformance does not increase fuel economy, nor does it reduce harmful emissions. It also orders BioPerformance to cease marketing the fuel pill as a product that improves gas mileage."

The actual order can be read here, and reveals a number of interesting facts. Apparently, during the last 6 months the company had received $25 million.

Technorati Tags: attorney general of texas, gas mileage, illegal pyramid, injunction, fuel economy, press release, abbott, marketing, bioperformance, court order

AG Texas on Gas Saving Devices

The Attorney General of Texas's June email is reprinted in part, below:

"Weekly AG Columns - June 2006

Fighting Fuel Scams: "Gas-Saving" Products

--------------------------------------------------------------------------------

Fighting Fuel Scams: "Gas-Saving" Products

By Greg Abbott

Attorney General of Texas

High gasoline prices have led many Texas consumers to consider the use of "gas-saving" products. Consumers should be cautious about automotive devices or gas additives that claim to save money or improve fuel efficiency. The Environmental Protection Agency (EPA) has tested many of these products and devices to determine whether their use will result in any significant improvement to fuel economy and found the savings to be small, if any.

Several different products are available on the market today. For instance, air bleed devices allow air to feed into the carburetor. Vapor bleed devices are similar, bubbling inducted air through a water and anti-freeze mixture that is held in a container within the engine compartment. Water injection devices inject a solution into the engine and pump the fluid into the engine's air intake system.

Some products claim to heat the fuel before it enters the carburetor. Fuel additives are poured directly into the gas tank to improve the performance of your vehicle. Some devices claim to modify the operation of certain vehicle components, while other products claim to change the molecular structure of gasoline.

Last month, my office filed a lawsuit against BioPerformance, Inc., a Texas-based company that marketed a "top secret gas pill" it falsely claimed would drastically improve fuel efficiency by 30 percent or more and cut harmful emissions by up to 50 percent.

Laboratory tests conducted by scientists at the University of Texas at Austin and at a Florida university concluded the pill was little more than a mothball. Experts also found that the product could actually decrease engine performance. At start-up costs of between $300 and $500, BioPerformance sponsors were encouraged to purchase the pills in bulk and then recruit others to become dealers in an illegal pyramid scheme that has defrauded consumers around the country.

From ignition control devices to fuel line heaters to pressure regulators, all of these different gas-saving products attempt to control the mix and delivery of fuel to the engine in an effort to improve consumption. The terminology can be confusing and deceptive, pointing to the need for consumers to be extremely cautious.

Be wary of ads that claim a product can improve gas mileage by high percentage margins, and be skeptical of commercials that show allegedly "satisfied customers" who claim that their gas mileage increased due to the use of a certain device. These claims can be misleading or even completely fabricated. Most consumers do not have the means to accurately test the impact of such products on gas mileage. The condition of the car, the roads and the weather are all variable factors that can affect fuel economy.

Installing these products and devices on your vehicle could cause your manufacturer warranty to be voided, because they are not considered factory equipment. Also, long-term use of such products may damage your vehicle.

No government agency has endorsed any gas-saving products or devices, so be skeptical of such claims. In fact, the Federal Trade Commission notes several practical steps consumers can take on their own to improve fuel efficiency and combat the high cost of fuel.

The simplest way to improve fuel economy is to practice sensible driving. Excessive braking and acceleration, speeding and other aggressive driving habits can negatively affect gas mileage.

Avoid unnecessary idling, which wastes fuel and pollutes the air. Keep your engine tuned, your tires properly inflated, and your oil changed to save fuel and keep your car operating better and longer.

We are all concerned about the rising cost of fuel and its effect on consumers. Some gas-saving products and devices may work, but consumers should remember they can take easy steps on their own to help reduce the amount of fuel they use. If you have encountered a deceptive or fraudulent gas-saving product or device, do not hesitate to contact my office.

--------------------------------------------------------------------------------

POINTS TO REMEMBER

Gas-Saving Products and Devices

To file a complaint with the Attorney General of Texas:

(800) 252-8011

www.oag.state.tx.us

For information about EPA test procedures and test results:

(734) 214-4925

www.epa.gov/otaq/consumer.htm

For additional information on fuel prices and gas mileage tips:

www.fueleconomy.gov

Federal Trade Commission

1-877-FTC-HELP (1-800-382-4357)

www.ftc.gov

Information on this and other topics is available on the Attorney General's website at www.oag.state.tx.us".

Technorati Tags: attorney general of texas, texas consumers, email, gasoline prices, environmental protection agency, gas additives, greg abbott, scams, anti freeze, fuel efficiency, fuel economy, carburetor, cautious, epa, BioPerformance

May 26, 2006

The FTC's Proposed New Business Opportunities Rule and How it Might Work: Bioperformance Analysis

The FTC's proposed Business Opportunities Rule will expand the reach of the FTC to explicitly cover fraudulant multi-level marketing scams such as Bioperformance. By eliminating the condition in the Franchise Rule that the investor had to purchase $500 in order to be covered by the Rule, receive the appropriate disclosure document, the new Business Opportunities Rule will cover those cases in which the initial purchase was less than $500. But would the new rule have stopped the Bioperformance scam, faster than the AG of Texas?

One of the main hooks in the Bioperformance was not the use of the internet, but rather the travelling show or what I called pep rallies. How many of these shouting, happy people, were actually shills? The proposed Business Opportunities Rules, 437.5(q) addresses the problems of shill, paid testimonials. The seller would not be allowed to represent that someone, a locator, employee, or some other third party, owned one of the bizops. Second, the seller would not be allowed to represent that some independent third party, such as a broker, could provide them with a list of "satisfied customers."

Although this is a good start, it would have been better to attach the liability to both the seller and the shill - the shills as a group enable the fraud and should be also be liable for their misrepresentations.

Technorati Tags: pep rallies, business opportunities, franchise rule, multi level marketing, ftc, disclosure document, new business, initial purchase, happy people, shill, scams, hooks, travelling

Technorati Tags: pep rallies, business opportunities, franchise rule, multi level marketing, ftc, disclosure document, new business, initial purchase, happy people, shill, scams, hooks, travelling

May 23, 2006

Social Proof at Bioperformance Pep Rallies

Several weeks ago, WESH 2 I-Team reporter Michelle Meredith did some fine under cover works and reported on one of the Bioperformance "pep rallies". The article was posted on or around May 5th, 2005 but she pointed out some some interesting aspects of Bioperformance. Several points are worth highlighting.

Point 1. "Meredith said she can honestly say that she's never seen a happier, more excited bunch of people. "Everybody say, 'I'm ready. I'm ready,'" Mims told the crowd."

I'm ready?! Boy, I do like this language. This is similar to the sense of entitlement employed in the Cambodia ponzi scheme in which the founder told the marks that "it was there turn, now." We are never ready for bad things, so if we are ready, then something good must be going to happen.

Point 2. "Testimonials flowed like manna from heaven. In fact, the whole weekend had a religious feel. To hear them talk, the little green pill is the perfect package. They said it can save you money, save the planet, keeps money out of the Saudi's hands and it's "All American."

This is awfully clever too - the little green pill is the ecological answer to America's problems and solves the war on terrorism. But what I like about this as a social compliance technique is that it would be hard to be in favour of sending the money to the Saudis, wouldn't it? (Well, I suppose if they sent it back by buying US Treasuries and allowing more individuals to purchase homes because of low interest rates, it might not be so bad.) The appeal here is the well known fallacy of disjunction: either Bioperformance works, or you just want to send money to the Saudis. But both disjuncts can be false.

Point 3. "Is this too good to be true? Are you running interference?" Meredith asked him. "We have to protect ourselves. Like Barbara Bush says, we have to watch you all like the plague," Mims said."

This is pretty good, too. I don't remember what Barbara Bush was talking about if she used this language, but I pretty sure she was not supporting a MLM fraud. But, again Mims has got a line that is hard to respond logically to. Should we not protect ourselves? Should we argue against Barbara Bush, not knowing what she was talking about?

We can see why this language might overwhelm reason and provide us with too much gas to go.

Technorati Tags: pep rallies, ponzi scheme, manna from heaven, meredith, mims, entitlement, cambodia, crowd, testimonials

May 19, 2006

Don't Mess with Texas

A nice picture of law enforcement versus mlm fraud:

(Firefox users, view image)


Technorati Tags: law enforcement, mlm, fraud

May 18, 2006

Bioperformance in the News

A list of news articles about the restraining order against Bioperformance. Download file


Technorati Tags: news articles, download file, restraining order

Bioperformance Injunction

This Bioformance Injunction brought by the Attorney General of Texas is being heard by Judge Andy Mireless. The Court details can be found here. The factual finding for the injunction appears to have been made pursuant only to the Texas Deceptive Trade Practices, Section 17.46. I am not clear whether there was a finding on the injunction that Bioperformance may be an illegal pyramid scheme pursuant to section 17.461 of the Business and Commerce Code, although the AG had lead such evidence according to their Application, see paragraphs 13-15, plus the description of how individuals are paid.

Technorati Tags: illegal pyramid scheme, attorney general of texas, deceptive trade practices, injunction, commerce code, business and commerce

May 17, 2006

New Magic Gas Pills

IS 4-E - Corporation - the New Gas Booster MLM Scam? (Viewable with IE, but not Firefox.)


Technorati Tags: mlm scam, gas booster,

Texas AG Brings Action against Bioperformance

The Attorney General of Texas has brought an action against Bioperformance. Apparently, "scientists who tested the product at the University of Texas at Austin and at a Florida university concluded that the pills are mainly naphthalene, the chemical found in mothballs. The Attorney General's laboratory expert actually concluded BioPerformance's product could decrease engine performance". Oh dear, who would have thought this?

The AG alleges in the suit that bioperformance is simply an" illegal pyramid marketing scheme". No, I cannot believe that those little green pills did not work exactly as advertised. Who would have thought that this was just another business opportunities scam or fraud? And I thought Texas was different.

Technorati Tags: university of texas, attorney general of texas, texas at austin, university of texas at austin, florida university, illegal pyramid, pills, business opportunities, mothballs, naphthalene, fraud, scientists, chemical, bioperformance

May 9, 2006

The FTC and Mybpbiz rankings

This is a picture of the daily rankings, according to Alexa, of the popularity of the regulator's website, www.ftc.gov and the Bioperformance website, viewable only with IE Explorer and Safari.

Technorati Tags: ftc, alexa, gov

April 14, 2006

Testimonials, Covariation Tables and Magic Pills

plous.gif Scott Plous, in 1993, wrote an excellent text or compilation of the then current state of the art on the Psychology of Decision making, and included a number of test exercises at the beginning of the text. The tricks of the mind that psychologists have discovered are very ably covered by Plous. There is a general agreement amongst scientists is that there are heuristic tools that we use to break down a decision problem, which generally work well. But we overuse these heuristics and make predictable mistakes.

Here is an example about the use of testimonials to aid our decision making. If I am going to buy a new computer, I will generally read product reviews, especially from authorities. Some of these reviews provide important information. When the "discovery" of a Mac OSX virus was a hot topic, reading authoritative reviews helped my understand what the problem was and how to gain protection until Apple released its security update. In general, relying upon authorities is a good idea and trying to identify an authority is a worthwhile exercise.

Where is this a bad strategy is when the event you are seeking information about is highly unusual, rare, or wildly out of the norm. How important are authorities in these cases? Consider the following problem. You are a member of jury in personal injury lawsuit. The plaintiff has testified that the car that hit him was yellow. Let's make the plaintiff an "authority" on spotting cars: if a car is yellow, then the plaintiff will correctly identify it as yelllow 90s% of the time. Further suppose that there are only two colors of cars: yelllow and green. Our authority is just as good as spotting yellow cars as green cars. You also know the total number of cars is 200, and 180 are green. What are the chances that if the plaintiff says that the car was yellow, it was yellow, given that he is an authority. Well, let's count the cases.

A = number of cars that are yellow & are identified as yellow. C=number of cars that are green & are identified as green.
B = number of cars that are yellow & are misidentified as green

D= number of cars that are green & are misidentified as yellow.

From the population totals, we know that A + B + C + D = 200, and that A + B = 20, while C+ D = 180. We also know that our authority doesn't make mistakes very often, so that A/A+B = .9, or A= 18 and B =2. Similarily, we know that C/C+D = .9, so C = 162 and D =18. What is the universe or total collection of cars and identifications in which our authority says that the "car was yellow". It is the information state containing A and D, a total number of 36 different states. Only in half of those states, A, does our authority get it right despite his 90% ability. This is because the chances of getting a yellow car are small, 20/200. So when our expert identifies a yellow car, he has picked a relatively rare event to be right about. As David Hume said, and I paraphrase, when presented with testimony as to a very rare event, I have to judge whether the rare event happened or that testifier has made some mistake.

What does this have to do with magic gas pills?

Technorati Tags: hot topic, authoritative reviews, heuristic tools, test exercises, mac osx, gain protection, topic reading, psychologists, new computer, predictable, compilation, state of the art, scientists, psychology, testimonials, discovery, heuristics, product reviews, scott plous

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April 11, 2006

FTC Popularity v MLM Scheme

More interesting pictures:

 

Technorati Tags: interesting pictures

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April 10, 2006

Testimonials

scamdex_logo.gif

 There is an interesting thread at scamdex about Bioperformance, and a link to a very interesting discussion by an engineer.  He raises the interesting question about statistical variation.  Consider the following graph, representing his gas mileage.  What is the relation between this graph, the testimonials from Bioperformance fans, and a well known scam involving "secret tips"?
 

Gas Mileage 

 

Technorati Tags: email, gas mileage, graph, ibm stock, internet works, forecaster, credibility, betting, variation, brilliant, testimonials, secret tips

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April 7, 2006

How to do Due Diligence on MLM's, like Bioperformance

coreylewsis.jpg

Corey Lewis is a lawyer in Manitoba who has a nice checklist for doing due diligence on a type of business opportunity known as network marketing or multi-level marketing. His checklist can be found here. Anyone considering an MLM scheme, like Bioperformance, should seriously review this checklist, whether they are American or Canadian.

Another nice economic explanation of when network marketing makes sense can be found in this article.

Technorati Tags: multi level marketing, network marketing, mlm scheme, due diligence, nice, business opportunity, corey, manitoba, lawyer, canadian, american

Capital Punishment and Gas Pills

gilovich.gif

Thomas Gilovich, in his charming book entitled "How we know what isn't so", published a little over 15 years ago, wrote about a fascinating experiment demonstrating bias.

People generally evaluate positive evidence for their favourite hypothesis favourably, and negative evidence is given less weight. But people tend to rational consistency, so that negative evidence tends to be scrutinized more in order to dispel it. This was illustrated by a study in which the effectiveness of capital punishment as a determent was given to people, who were known to be either supporters or opponents of capital punishment. For half the participants, they read studies showing the effectiveness of capital punishment within a particular state, while the opposing argument used statistics between states. For example, Study A would show that before capital punishment, State X would have a murder rate of Y, while after capital punishment the rate would drop to Z, less than Y. The opposing study B, would review an number of states to see whether Study A held up or not. That information was given to 1/2 of the participants. The other half would get similar information but with the roles of Study A and B reversed. "Thus, for both proponents and opponents of capital punishment, half of them had their expectations supported by one type of study and opposed by the other, and the other half were exposed to the opposite pattern of data."

What was the net result of exposing individuals to a balance of information? Gilovich reports that "exposure to a mixed body of evidence made both sides even more convinced of the fundamental soundness of their beliefs." Instead of simply ignoring unfavourable evidence, "participants cognitively transformed it into evidence that was consider relatively uniformative and could be assigned little weight." (my emphasis)

What does this have to do with gas pills?

Technorati Tags: capital punishment, negative evidence, charming book, state, murder rate, hypothesis, rational, bias, consistency

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April 6, 2006

Due Diligence: The SEC versus Mybpbiz

The image below is interesting. Gas Pills are getting to be as popular as real investments. Neato.
mybpbiz v sec.png

Technorati Tags: neato, pills, investments, popular, image

April 4, 2006

Dueling Gas Pills

The Bioperformance drama is growing; a MLM competitor claims patent infringement. I wonder what the folllowing graph really means?

extremeresearch v mybpbiz.png

Technorati Tags: patent infringement, competitor, mlm, graph

April 3, 2006

Ripoff Report Update on Bioperformance

ripoff report.gif

On of the more feisty scam and fraud reporting services is the Rip0ff Report website. On the site, there is a very good exchange of views regarding Bioperformance, the magic gas pill.

The poster from Indiana makes a very important observation about due diligence. USE YOUR CREDIT CARD TO PURCHASE OR INVEST IN BUSINESS OPPORTUNITIES. Don't get a cash advance from your card, use your card to purchase the inventory.

Why is this good advice?

Technorati Tags: credit card company, due diligence, fraud, credit cards, money back, feisty, cash advance, merchant account, downside, cue, credibility, business opportunities, observation, invest, mastercard

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March 20, 2006

Web Page Rankings and Due Diligence

One of the elements on the FTC's checklist for business opportunities fraud was the presence of an 800 number. In particular, the FTC noted that an upturn in business opportunities frauds and scams often: "Use[d] classified ads that urge[d] the prospect to call an "800" number. "

Over the last three or four years, the net has become more utilized by business opportunties frauds and scam. Tracking classified ads by their 800 number while still an important step is no longer enough. What is becoming important is the ability to track the page ranking of a website: spectacular growth is warning sign that a mania may be developing. Consider this graph: Graph of 12DailyPro v Mybpbiz. A very interesting pattern may be emerging, which will bear following.

March 6, 2006

Bioperformance Due Diligence

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A quick list of websites that may be of interest to people investigating BioPerformance and its MLM product.

The following is a daily graph of the popularity of the regulator, the FTC, and mybpbiz.com.

February 20, 2006

Gas Pills and Press Releases

The internet has seen the return of an old news scam: the paid press release. Anyone can release their own press release on prweb.com. PRWEB makes the following disclaimer:


"PR WEB does not warrant or guarantee 1) the accuracy, adequacy, quality, currentness, validity, completeness, or suitability of any Information for any purpose; 2) that the Information will not contain adult-oriented material, or material which some individuals may deem objectionable; or 3) that the functions or services performed by PR WEB will be uninterrupted or error-free or that defects in PR WEB will be corrected."

In conjunction with websites designed only for Google's adsense programs, PR WEB allows business opportunities promoters to promote silly ideas like BioPerformance with impunity. Note that the Hispanic website does not carry the disclaimer on the PR WEB site. Do you wonder why?

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