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What is a Scam?

By John Olson
Posted Saturday, October 30, 2004

We all see the word, "Scam" all over the place.

Some of us even use it ourselves.

But do we really know what it is?

I spent sometime looking it up. Here are some definitions of the word Scam:

From Cambridge International Dictionary of English: scam, noun [C] INFORMAL, a plan or action for making money which is dishonest, illegal and often clever. He burnt his own house down so that he could claim the insurance money - what a scam!

From the Merriam-Webster Dictionary: scam Main Entry: Pronunciation: 'skam Function: noun Etymology: origin unknown Date: 1963 : a fraudulent or deceptive act or operation (an insurance scam)

From The American Heritage® Dictionary of the English Language: Fourth Edition. 2000:
scam ...Slang A fraudulent business scheme; a swindle. Inflected forms: scammed, scam·ming, scams To defraud; swindle. Origin unknown. scammer -NOUN...

From The Newbury House Online Dictionary: scam n. a plan to make money by deception or fraud, (syn.) a swindle: They ran a scam where they burned cars and collected insurance money.

scam (skm) Slang n. A fraudulent business scheme; a swindle.

From the Dictionary of Slang: scam Noun. A trick or con.

As you can see there are very specific definitions for the word.

A scam is something that is set up to rip people off. To take their money.

It is not, as we sometimes think, a company that is having problems with their systems. All companies have problems. Look at AOL. They have lots of problems with their systems. But they are not a scam.

Just because we loose money or don't make money, doesn't make the company a scam. Just because a company is having problems getting their members paid on time, does not make them a scam.

Companies do have problems that are beyond their control.

It's how they handle them that tells you a lot about the kind of company that they are. If they are honest and up front about the problem, that is a good thing. If they hide the problem with a lot of double talk or no talk at all, that is a bad thing. It doesn't make them a scam, but it does say a lot about how they can be expected to do business.

When you look at companies, really look at them.

What is the first thing they say about themselves? Do they talk about the product or the service they offer? Or do they just launch into how much money you can make? If the first thing you read is all about the money to be made. Watch out. It might not be a scam, but it tells you that is all they are about. To them it doesn't matter what the product or the service is, it's all about the pay plan.

These companies, may not be scams, but they maybe illegal. There has to be a real product or service being offered. If there is no product, if it is just passing money from the ones below to the ones above, it is illegal.

How many of you have seen this kind of thing?

A program sets up a list of members for you to pay directly or with the help of the program, and you then take the first name off the list and add your name to the bottom. It doesn't matter if they tell you that you are ordering a report or something like that from each of the members, it is an illegal Chain Letter. It will not last and most people will not make money. Most people will loose money. The ones who will make out like bandits, are the people who started it in the first place.

Or how about Gifting Clubs.

I don't care what they tell you on the Website to make you believe it is all legal. I don't care what they say about Gifting being a time honored way of sharing. To do it in a program like this, is illegal. It will get shut down, and most people will again loose money. Only the ones who start it will get the big pay offs.

I see both types of programs being offered all the time. Don't fall for them. If you want to have any kind of reputation DO NOT promote these kind of things.

"But what about the ones who get in first… won't they make money?"

They can, but think about this. Think about the people who will be asked to join later. Think about the money they will be asked to pay. Think about the money they are going to loose because all the greedy fools who are going to join have joined and they can't find anyone to cover their costs. Think about all the people who will be out if the thing gets shut down by the Law.

Most of these things never get big enough for the Legal Authorities to get involved. They just die of their own wait. Are you the type of person who can sit back and tell yourself, "It's all right, I got mine."

It's not all right.

You are setting people up to loose money if you join and promote things like this.

But just because someone sets up a Gifting program or a Chain Letter type deal, doesn't make them scammers. They may have the best intentions and honestly believe what they are offering is perfectly legal. It isn't, but they may think it is.

In case you haven't noticed, PayPal is coming down hard on a lot of Network Marketing companies. They are not doing this on their own. MasterCard and Visa, are the ones who are forcing them to get out of Network Marketing companies. Why? Because the Credit Card Companies are getting hit Very hard with Charge Backs, and Fraud. Stolen Credit Cards are being used all over the World to join Network Marketing companies. The Thieves clean up, and the Credit Card Companies and sometimes the honest programs take the hit. MasterCard and Visa have both long had clauses in their contracts that people could not use their services for MLM type programs. Now they are enforcing it.

If the company you are with has not had these kind of problems, they will and they should be prepared for them. Companies that are going through this, are not all scams. In fact my guess is that if this happened to a scammer, they would just close up shop and move on with whatever money they could. A Real Company, will find a way to work around the problem.

So the next time you read someone calling this or that company a scam, think. It maybe a perfectly good company that is working through some problems.

A Real Scam is something that is set up just to take your Money and Run. A Real Scam will not try and work through problems. They will just pack up and go on to something else.

About the Author
Written by John Olson Owner and Webmaster ( (
(c) Copyright, 2003
Reprint rights available with this Signature only.


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