Tag Archives: Bait and Switch


Historians record the earliest known commercial fraud as that of Xenothemis and Hegestratos, who arranged to deliver a shipload of corn to buyers in Athens, planning in advance to sink an empty ship, then claim payment for the corn. The buyers, unaware that the ship was devoid of its load, became an early mark for insurance fraud.

Xenothemis and Hegestratos had not counted on the ship’s other passengers, who they planned to also sink with the imaginary corn, finding fault with the plan. When the scheme was uncovered, the passengers quickly identified alternatives, the least offensive of which was sending Hegestratos to the briny deep with his imaginary load.

The story, though ancient, is by no means the earliest commercial fraud. One need only look to the pages of Genesis to find accounts of commercial fraud that are centuries older. Genesis 29:16-25 describes a classic “bait and switch” that serves as a model for all such scams. After striking a deal to win his beloved Rachel, Jacob honored his contract with Laban, only to find himself wed to Leah. Strange things happen in the dark.

Every thief knows that. Conversely, fraud prevention starts with shining bright lights into dark corners. Crooks hate that. Like Hegestratos’ phony corn, and Laban’s phony plan, the scam artist can be undone by asking hard questions, and imposing even harder conditions.

Take, for example, commodities scams.

The Setup

A gold merchant reaches through your mail, your radio, your television, or your telephone to persuade you that the world is facing economic chaos, in which all investments, including stocks, bonds, cash, houses, and everything you value, will plummet, leaving you destitute. But some will prosper – the wise few who have traded their worldly wealth for gold. When all else fails, they tell you, gold will reign supreme.

Indeed, their charts and graphs and busy digits serve only to confirm that the end is already in sight, and gold is soaring. But for a limited time, and a limited time only, you can get in on the last of the truly great deals – gold at a fraction of its price. With fever mounting, you call the convenient (800) telephone number.

The Proof

Your call will be followed by massive amounts of mail, “proving” the value of the investment. Brochures, flyers, and slick printed documents invariably depict mounds of precious gold coins to fire the blood. If that is not enough, the mail will be followed by telephone call after telephone call alerting you to the desperate need to act now. Charts will show the heady stuff climbing to such heights that it is out of reach for all but the wealthiest few.

The Hook

If you act now, you will receive, free of charge, a gold coin, or a silver dollar that George Washington threw across the Delaware, or the original widow’s mite, or some other ancient “find” that has just been discovered in a cache in some dark hole. But there are only 100 such treasures that will go to the first 100 callers.

The Sting

The price of the investment is inordinately greater than its value. The likelihood of it ever achieving the towering heights to which it is pitched are remote in the extreme. Gold coins sold at a 300% markup are not uncommon. Many a buyer is stuck with an “investment” that will never mature.

When the buyer realizes that the investment was little more than a heavy paperweight, the scam is completed, and the damage is done.

How can I avoid the scam?

Remember Hegestratos’ corn, and Laban’s daughter. Strange things happen in the dark. Shine light on the issue. Ask hard questions. What do independently researched investment journals say? How does gold compare to other available investments? Who is this seller? What information is available about the seller by organizations such as the state Attorney General, or the Better Business Bureau, or FINRA?

Impose hard conditions. For example, any coins purchased must be independently escrowed pending independent appraisal, with no money transferring hands until the conditions are satisfied. When faced with such conditions, the scam artist will slink away to find an easier “mark”.

As every youngster knows, when you turn over a rock, the vermin scramble for cover. Turn over the rocks, and do not allow the vermin to hide from scrutiny. In so doing, you will quickly sink Hegestratos, his phony corn, and a shipload of baloney.

Copyright © Gregory D. Lucas 2014

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