Fraud in the Time of Corona

Reactance, Failures of Leadership, Corona Scammers

In light of the global pandemic we’re all sheltering in place through right now, this week’s newsletter will delve into how people deal with bad news, how the people in charge act, and the ways scammers try to take advantage of a crisis.

Reactance

There is a trick hustlers use to get keep marks on the hook during a con. They give them a suggestion that is the opposite of their desired outcome - either letting them walk away with winnings, or suggesting they stop playing before they lose more. It is a calculated risk, but it works more often than not, because of something known in behavioral psychology as reactance:

People using reverse psychology are playing on reactance, attempting to influence someone to choose the opposite of what they request.

This is a particularly important concept right now, as we face a global pandemic that could kill millions of people around the globe. Alarmingly, many people do not seem to be taking it all that seriously! Syon Bhanot has written a piece for Behavioral Scientist talking about this phenomenon, and its dangers:

Psychological reactance is also made worse by a number of other factors at this unique time. First, in recent years America has seen growing antipathy toward expertise and intellectualism in our public discourse. Increasingly, experts are branded cultural elites who snobbishly look down on the common man. This makes reactance a convenient way to stick it to the elites who are trying to stifle our freedom by dictating to the masses.

Second, the nature of this crisis is fundamentally different than many that have come before—that is, the catastrophe is coming, but it has not fully “arrived” yet. Experts suggest that the peak of the pandemic wave is still several weeks away. In light of this, it is easy to wave a dismissive hand at the advice; “I mean, no one seems sick—this is a hoax!” (Worryingly, climate change is a crisis with a similar character.)

The concept of reactance was on my mind because I was just listening to the Grift episode about the carnival, and how the carnies used these psychological tricks to keep people playing - and losing - at rigged games. Anyone who’s lost money gambling can likely relate. In poker, “tilt” refers to an emotional overreaction to losing, when the player becomes sloppy and starts making mistakes. The expression originates in another game - one I quite enjoy! - pinball, when a player would attempt to tilt the machine if they sensed the ball was going to drop between the flippers.

All of these very human tendencies are on full display now, as countries around the world attempt to grapple with the coronavirus pandemic. We - Americans, especially - don’t trust experts, because we aren’t yet seeing the effects of the virus. The concept of an infection curve is difficult for even professionals to grasp - our brains do not do well with unknown future consequences.

What can we do about this? Probably, not much. While the world’s health experts are telling us what we should be doing, our political leadership is reinforcing the reactance - it doesn’t help that we have a carnival barker in the White House (more on that later). Of the various suggestions Bhanot makes, this is the most difficult for me to personally grapple with:

[…] we need to rid ourselves of the idea that we have complete agency in this situation. The virus is not a social being, it is a biological entity. You cannot will it away by being “tough” or “clever,” nor can you simply rely on medical care to be available for you if you do become sick.

Our society is wholly unprepared for what could happen if COVID-19 spreads more widely and rapidly than predicted, because a chunk of our population neither trusts nor is willing to listen to health experts. We may see sickeningly steep curves in places like Florida, where retirees and college kids alike don’t seem to care. I truly hope we do not, but decades of research in behavioral science tell us it may already be too late.

What we need is responsible people running things. How’s that going?

The People in Charge

Many countries are dealing decisively with coronavirus. We’ve seen stories about South Korea’s drive-through testing stations, administering tens of thousands of tests a day and enacting strict quarantines on those who test positive. China, uniquely positioned as an authoritarian state, locked down entire cities to “flatten the curve” on the virus - though, depressingly, people returning home may now cause another outbreak.

There’s a much longer list of leaders who have bungled the response, or been utterly negligent in the face of calamity. Let’s take a look at a few.

Remember Jerry Falwell, Jr? The son of a famous evangelical preacher who has turned his father’s empire into a slush fund to funnel money to himself and his friends? He’s decided to reopen his college, Liberty University:

On Sunday, Liberty University president Jerry Falwell Jr. announced that unlike virtually all other colleges and universities in the United States, Liberty would soon be reopening and permitting thousands of students and faculty to return to campus

They’re forcing faculty to have office hours - despite classes being taught online - and interact with students, who are interacting with one another in dorms and dining halls. 15,000 students attend Liberty in person, with hundreds more faculty and facilities workers who could potentially be exposed. I’m not sure whether it’s pure hubris or whether Falwell needs to keep cash flow going to fund his lifestyle, but his lunacy is putting an untold number of people at risk.

Then we have American governors. Some states refuse to take the necessary steps to curb the spread of the virus, even if mayors of their major cities are doing so. A few governors have gone so far as to overrule their mayors, claiming things like hair salons, gun stores, and golf courses are “essential” and exempt from business closure orders:

In Delaware, florists count, but not dog groomers. Arizona considers golf courses and gun stores to be indispensable. And Athens, Ga., has shuttered vape shops, but allowed lawn maintenance services and sporting goods shops to remain open amid the spread of the novel coronavirus.

Arizona is leading the charge in ensuring payday lenders are still open to bilk desperate residents out of whatever money they have left:

Florida has stepped in to defend pawn brokers:

The shops had been ordered closed last week as part of Miami-Dade County Mayor Carlos Gimenez’s sweeping mandate to shutter non-essential businesses in a bid to slow the spread of the coronavirus. Now pawn shops and jewelers join banks, grocery stores and gas stations as so-called essential companies still open for business.

What does this mean for people living in these states? Not coincidentally, they also have some of the highest numbers of vulnerable residents, many of whom lack insurance:

About one-fifth of Texas’ 29 million people lacks health insurance, and nearly one-quarter of Florida’s 21 million residents are elderly.

[…]

Jenkins displayed a chart showing the projected spread of the coronavirus far exceeded Texas’ available hospital beds. According to the projection, a statewide stay-at-home order could decrease coronavirus deaths from 430,000 to 5,000.

He noted that Dallas has 250,000 uninsured residents, the most of any U.S. city.

Is the governor of Texas sentencing up to a half a million people to death because he doesn’t believe in science? Unfortunately, we won’t know until the hospitals are overflowing and they’re putting corpses in refrigerated trucks, which is happening right now in New York City. It’s putting Texas mayors in impossible positions, because they have limited control over how they react to the crisis, since their cities could be affected via travel:

[Johnson] and Houston’s mayor, Sylvester Turner, declared emergencies before the governor did, but he said the orders have been difficult to enforce without statewide support.

“It makes all the economic pain you’re inflicting on one city a wasted effort if a neighboring city is doing something different — if people are continuing to congregate on the other side of an imaginary line,” he said. “The approach probably should have been statewide from the outset. I think the governor is there now.”

So, yes, we need state governors to step up and do the right thing. Ideally, they wouldn’t need to do this under threat that their state could be unfairly hurt economically by doing the right thing, because the federal government would be helping them out, ensuring that needed supplies go to the right places, and preventing states from undercutting one another*.

Well, yeah. Ideally that’d be happening. It is obviously not happening. The most glaring shortfall in local efforts to combat the coronavirus is lack of supplies. The federal government has something called the Defense Production Act, which could help solve this critical problem:

The DPA provides the president with the power to direct civilian businesses to help meet orders for products necessary for the national defense. Congress passed it in 1950 and has since gradually expanded its scope to include homeland security and domestic emergency management.

Essentially, the government could direct companies and government resources to maximize the production of things like masks and ventilators, and ensure they get delivered to the places hardest hit by the crisis. Instead, because our wise president refuses to use these tools, states are competing with each other - and with hospitals - for critical equipment at the worst possible time:

The market for medical supplies has descended into chaos, according to state officials and health-care leaders. They are begging the federal government to use a wartime law to bring order and ensure the United States has the gear it needs to battle the coronavirus. So far, the Trump administration has declined.

So, from the top down American is failing the test, and it’s going to worsen the crisis. As with reactance, human decisions - science denial, venal desires of Wall Street, and electoral fear - is driving a confused, deeply dangerous non-strategy that will result in hundreds of thousands or millions of people dead. For some, however, it’s an opportunity to make money.

The Scammers

Last week we talked Jim Bakker and Alex Jones, two of the most visible of the chorus of shitheads who are attempting to use fear to make a buck in a crisis. This is nothing new for them, since they’ve been scaring seniors into prepping for doomsday for years. However, a crisis like COVID-19 has opened all sorts of exciting new frontiers in scam. Shoshana Wodinsky writes about unemployment ads in Gizmodo:

Naturally, similarly predatory companies have found their way onto the search results for the newly unemployed. Looking up something like “unemployment benefits,” for example, will typically turn up predatory—if not outright scammy—ads alongside legitimate results.

Companies using people seeking work in a pandemic to pitch them on work-from-home scams, overpriced credit reports, or payday loans? Sure, of course.

According to a blog post published this week by the FTC, there are quite a few other creative ways scammers are fleecing people:

Online sellers claim they have in-demand products, like cleaning, household, and health and medical supplies. You place an order, but you never get your shipment.

Anyone who’s tried to go to a grocery store in the last week knows cleaning supplies are hard to find at any price. How are the online platforms like eBay and Amazon handling the shortage? Oh, you know:

The online shopping platforms eBay and Amazon Marketplace are failing to crackdown on a surge in profiteering by sellers due to the coronavirus, a consumer group has warned, after its investigation uncovered a wide range of products on sale at “extortionate” prices.

Mmmm, yes. That’s the stuff. Maybe they’ll be forced to “donate” the products instead. What else we got?

When a major health event — like the Coronavirus — happens, you might be looking for ways to help. Scammers use the same events to take advantage of your generosity. Some scammers use names that sound a lot like the names of real charities.

Charity scams! Nice. I wasn’t able to find any evidence of these on the Internet, maybe because they are only just getting going - GoFundMe seems like a platform ripe for this sort of con - but will certainly keep an eye out.

Did you know there is a law against committing fraud in connection with a major disaster or emergency? I didn’t either! They even set up a division within the Justice Department to prosecute these offenses. It was set up after Katrina, and while I won’t get into the undertones of the decision, there is certainly a lot of disaster scam content out there. Two men impersonated Salvation Army workers after Katrina to steal identities. Companies were accused of over-billing the government to clean up after a wildfire in California wine country. After the Paradise Camp Fire a year later, six people submitted homeowner’s claims for homes they…didn’t own.

The first arrest of an American coronavirus fraudster happened just last night! A guy in California was caught selling pills he claimed would prevent the virus:

Keith Lawrence Middlebrook, 53, was arrested by the FBI on Wednesday during a meeting in which he delivered pills to a potential “investor” — an undercover agent — that Middlebrook claimed would prevent covid-19

I’d never heard of this person before, but apparently he’s an actor with 2.4 million followers on Instagram? He seems very stable and normal:

The self-described “Genius Entrepreneur” frequently accused Democrats, the media and federal and world health officials of creating mass hysteria as a ploy to hurt President Trump. And at one point, he claimed his drugs had the support of a doctor with the Trump administration.

“Not only did I make the cure, but this pill right here is the prevention,” he said in one video. “Meaning, if I walk into the Staples Center and everyone’s testing coronavirus positive, I can’t contract it. It’s impossible. … I have what makes you immune to the coronavirus.”

I talk often about how our nearly non-existent consumer protections make Americans particularly vulnerable to fraudulent products and claims but, in Keith’s case, law enforcement had their work cut out for them. I hope his pills actually work, because he’s headed to one of the places most likely to have a deadly outbreak.

Short CoronaCons

WSJ - “[…] the group steers recipients to a petition to President Trump that asks him to “immediately cut through this red tape” to get more hydroxychloroquine into the marketplace, noting the drug is in short supply. There is no strong evidence that the drug has anti-coronavirus effects, though the U.S. is now testing that theory.

Tom’s Guide - “Coronavirus scams are flooding the internet from every alley, and the latest one might land in a text message from a friend. If you've been asked to click on a link to help your pal get a $100 gift card from Starbucks, don't.

Business Insider - “False messages are circulating on social media and in text messages that claim Netflix is offering free passes to people in isolation during the coronavirus pandemic if they visit a specific link. It's not.

* My first footnote! As I was writing this section, talking about governors of states fucking each other over, Greg Abbott in Texas issued this utterly insane executive order, to prove my point for me:

Tips, scams, and vaccine pills to scammerdarkly@gmail.com

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