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HapiSofi
01-11-2012, 02:39 AM
From Bargaineering.com, an article on how to recognize fraudulent "mystery shopping" operations.

How is this relevant to the business of writing? Because its list of warning signs has striking similarities to well-known signs that you're dealing with useless or fraudulent agents, publishers, display sites, and other hazards of the writing business. Seeing how they compare can be a good way to get additional perspective.

Scams are bewildering in their number and variety until you get the knack of looking at them structurally. Once learn to recognize their underlying forms, though, you find that they're actually few in number, and that what initially looked like an ocean of complexity and diversity is just a lot of variations in surface decor.

12 Signs of a Fraudulent Mystery Shopping Company (http://www.bargaineering.com/articles/12-signs-of-a-fraudulent-mystery-shopping-company.html)
by Jim Wang"Many professionals in the field consider mystery shopping a part-time activity, at best."
– FTC.gov
Take that quote, from an Federal Trade Commission article on the Secrets of Mystery Shopping, to heart and you’ll be able to sniff out a lot of mystery shopping scams without the help of the red flags I’ve listed below. The bottom line is that mystery shopping is a side pursuit at best and anytime you hear any promises or comments hinting that they can offer you more will be a good sign that you’re dealing with a bad company. If you’re one for lists, the following might be helpful but nothing beats your "gut feeling."
"Mystery shoppers" are people who pose as regular shoppers in order to assess the staff performance and other features of retail stores. It's more a diagnostic procedure than a profession. Freelance employment opportunities will be sporadic at best, and will most likely be filled by people who have experience in retail marketing and already have contacts inside the industry.

The idea that someone can make a career as a freelance mystery shopper was invented by scammers who offer to help victims (hereafter "marks") connect with this supposedly lucrative line of business. The real transaction is either the money the marks pay for this access, or the personal/financial information they give the scammers as part of their application process.

This is typical of how most scams work. The marks are focused on lucrative future transactions, and thus are willing to pay what they see as a relatively minor amount of money to get to that point. The deal evaporates after the marks have paid, but before they collect their payout. The reason the deal evaporates is that those lucrative opportunities never existed in the first place. The only money that changes hands is what the marks pay the scammers.

Yog's Law -- "Money should always flow toward the author" -- will protect you from most of these schemes. You don't pay advance fees to agents, guarantee the purchase of a few hundred copies of your book, reimburse phone or travel or submission expenses, or anything else, no matter how they pitch it. You can pay Kinko's to copy your manuscript, and the Post Office to mail it, but that's all.

It's remarkable how many of the specific warning signs for fraudulent "mystery shopper" schemes have equivalent tip-offs in publishing:

1. An application fee is a sure sign that your mystery shopping company is a fraud. What job would ask you to pay an application fee? The answer is none.
Equivalent: Representation fees paid to agents, reading fees paid to agents or publishers, fees paid to agents for submitting your work, fees paid to display sites, or application, handling, xeroxing, or mailing fees of any kind.

You've offered them your writing, or the job of representing same. Assessing your offer is part of the normal conduct of their business. It's not a favor they're doing you.

2. Requiring that you be certified, likely by them, is another sign that you’re being taken for a ride. Essentially anything that makes you pay out of pocket to join is a sign that you’re being scammed.
Equivalent: Feeding you a line about how your manuscript has to be "professionally edited" before it can be submitted, then handing you off to a (supposedly independent) confederate who'll charge you thousands of dollars for an edit of unknown quality, then pass you back to the first bunch.

3. Selling access to a job list or company list also falls into the “pay out of pocket” category.
Equivalent: Representing the publishing industry as a closed system to which only a few have access. In reality, publishers and agents make their submission guidelines available online, or via snailmail for the price of a self-addressed stamped envelope. LMP, Literary Marketplace, is a standard reference work that's usually available at even quite modest libraries. There's no penalty for writing to ask questions, though you may wait a while for an answer.

Also: Overemphasizing the difficulty or impossibility of selling a book without an agent, or selling any book at all to conventional commercial publishing houses. Every bestselling author started as an unpublished newbie. You don't have to settle for a third-rate agent, or a bare-bones publishing operation that charges you for everything and has no bricks-and-mortar distribution. All you need is a really good book, an equally good query letter, and a cover letter that isn't actively toxic.

Also: Promising to sell you the secrets of how to profitably self-publish yourself, make any book a bestseller, do a face-to-face pitch for your book, become an agent or editor, or make money reading books. Few self-published books ever turn a profit. None of the authors of guides to making your book a bestseller have ever had a bestselling book or helped make a book a bestseller, and some have never so much as dipped a toe in commercial publishing. Pitching books is a skill for agents, not writers, and first novels are the single category of books least likely to be sold via pitch. Real agents and editors learn their profession by working for real agencies or publishing houses. Getting paid substantial fees for reading books is like working as a mystery shopper: employment opportunities are few, and they go to people who already have experience.

Also: Display sites. They're useless. If you want publishers to look at your manuscript, mail it to them along with a nice short cover letter. Even if they reject it out of hand, they'll at least have glanced at it when they opened the package, which is more attention than it's going to get on a display site.

4. Asking for lots of personal information. If someone asks for your social security number, it’s likely a scam. The most they’ll ask is for your name and your address so they can mail you a check. Some will ask for a bank account to direct deposit funds but that will always be optional if they are legitimate. If they require that you give them a social security number or your bank account, it’s likely a scam.
Being asked for banking information, site passwords, or your social security number should make you automatically stop, think, and say no. I can only imagine marks giving out that information because they think of what they're doing as applying for a job.

5. They contact you because of a resume you posted on a job website. Legitimate mystery shoppers won’t contact you like this, only scammers will scour employment websites for marks.Equivalent: Agents or publishers who contact you because you've registered copyright on your book, or otherwise identified yourself online as an unpublished writer. If you haven't submitted to them, you shouldn't hear from them, unless there's some specific reason or mechanism whereby they've heard about your work and gotten interested in it.

Legit agents and publishers never have to send out blind queries to get slush. A simple public announcement that one is accepting submissions will bring in all the slush an operation can handle. I know someone who many years ago announced -- once, without a lot of fanfare -- that his cat was an agent and was taking submissions. Last I heard, the cat was still receiving manuscripts.

6. Guaranteeing that you will get jobs is another red flag. There’s no way a company can guarantee that they’ll get enough shopping jobs and to make that promise is a sign that they’re not aboveboard.
Precise equivalent: Guaranteeing publication. No one can do that sight unseen, not even major writing contests with legitimate backers.

More approximate equivalent: Telling you that your book will make money. Claiming that any book, if properly promoted, can become a bestseller.

Equivalent in spirit: Telling you that they'll give your book a chance when they haven't read it. No one can say that about a book before they've assessed it.

7. You get to keep thousands of dollars in merchandise. Imagine if you ran a company and wanted to see how your staff was performing, would you give away thousands in dollars of merchandise, in addition to the fees, to do so? No, and actual companies don’t either.
It's not quite the same, but the closest match to this one would be, "Why let some greedy publisher take all the profits, and pay you a tiny percentage as a royalty? Self-publish, and keep all the profits for yourself!" Somehow, people who say that never get around to mentioning how rare it is for the sales of self-published books to approach even the low end of conventional publishing's sales figures, or that the net profit on a first or second book seldom equals its advance, which the author nevertheless gets to keep; and that if it does earn out, the author gets paid royalties on all sales past that point.

8. Promises of how it’ll take only a few minutes a day. The reality of it is that the actual shopping may take 10-15 minutes but the reporting often takes much longer.
Equivalent: Failing to mention how much work it takes to successfully self-publish a book, or the expenses involved. There are reasons why experienced authors don't do it.

9. Promises of how you’ll earn thousands in your spare time (or even a more modest $30/hr). While the potential to make thousands is there, the fact of the matter is you’ll need a tremendous amount of spare time to earn that much money. The pay from a mystery shop simply isn’t that great compared to the time it takes to complete it.
Failing to mention that aside from the labor and expense involved, it's extremely difficult to sell a book in any quantity if the publisher doesn't have a brick-and-mortar distribution deal in place, especially if the book isn't aimed at a specialized audience that's hungry for just that sort of thing.

Also: In some cases, failing to mention that their agency or publishing house won't even try to market your book.

10. They are internationally based. You have far less protection when dealing with an international company and they have more latitude in screwing you if they want to, there are plenty of companies in your home country that you don’t need to deal internationally.
Few publishing scams are internationally based, but they do have two other circumstances that protect them. One is the frequent inability of domestic law enforcement agencies to understand publishing scams and how they work. The other is that it can be difficult to prove that the agent, publisher, or other malfeasant party wasn't simply incompetent.

11. They want you to handle lots of money. ...
This one, at least, we're spared. It should go without saying that anyone who wants you to process large transfers of money, including refunds or overpayments, must be assumed to have criminal intent.

12. They’re not in the Mystery Shopper Providers Association. The MSPA represents 180 companies, while being a member doesn’t guarantee they’re legitimate, there are enough companies in there that you can find one there and at least get the comfort of knowing the MSPA has seen their name.
I've never heard of the MSPA, but I wouldn't be surprised to find out that they're the source of this list of signs.

Anyway. Most legit agents belong to the Association of Authors' Representatives. Some real ones don't, though it's not the way to bet. But the 24-karat test of authenticity for agents, as with publishers, etc., is whether they make their living by selling books. I'm not talking about publishers that sell a few hundred copies of their top title, or agents that once sold a travel book to a small press. That wouldn't keep a cat in cat food. If that's the best they can do, their income is derived from some other source, which always turns out to be their authors.

Before doing business with anyone, check up on them at Writer Beware and Preditors and Editors. See whether there's a thread about them at Absolute Write. There's also the basic test for publishers: Go into a big bookstore and see whether you can find their books on the shelves.

Remember, it's harder to get out of a bad deal than it is to get into one. Research is always your friend.

herdon
01-11-2012, 02:44 AM
Good piece. I agree that learning the basics of spotting a scam will help with spotting all scams, from those that give away a free iPad (which I've written about), to mystery shoppers and get rich quick scams, to not-so-above-board publishers and agents.

HapiSofi
01-11-2012, 05:03 AM
Herdon: You can analyze it in terms of the structure of the con game itself. For example, the difference between a pyramid/MLM scheme and a Ponzi scheme is that a pyramid/MLM has its mechanisms out where you can see them. If you stop long enough to scribble a few calculations, you can figure out that in order for you to collect, half the population of the planet will have to be selling HerbaLife or Amway by the time it's your turn -- or alternately, the whole thing will have fallen apart, which is a hell of a lot more likely. But as Bernie Madoff's victims can testify, you can't tell that a Ponzi is a Ponzi. Money comes in, money goes out, and no one's the wiser until it suspends payments.

Another way to look at it is as a moment-by-moment process. The marks sees what's happening as a single complex transaction: they pay for the instruction book or address list or whatever the McGuffin is, they get work as mystery shoppers, the client retailers pay them for their work, profit! Which isn't unreasonable; if this were a real process, resulting in business activity with some resemblance to the come-on, it would in fact be a single complex transaction.

The victims don't keep track of it the way a scammer, a paranoid, or someone with Bruce Schneier's turn of mind would track it: who's actually done what or paid what at each step in the game; what information is in play and where it's come from; how was it checked and who's in charge of the checking process; what are the results if the game ends now, or ten minutes from now, or a month from now; and so forth. Or, to put it another way: To the townsfolk of River City, Iowa, it's all about putting together a band to give their kids something to do. What Professor Harold Hill can see is that there's a brief period after everyone's paid up but before they figure out that the Think System doesn't work, and that this brief period is long enough for a prudent man to catch a fast train out of town.

(And because I'm an editor, I have to add that one of the reasons the storyline of The Music Man works so well is that you can see how the con game must have played out in other towns. The plausibility of the con bolsters the plausibility of the rest.)

Writers are notoriously vulnerable in the period between writing their first presentable book and a point in time several months after the book sees publication. My theory is that their mental processes handle "and-then-I-finish-my-book-and-send-it-out-and-it-gets-edited-and-published-and-printed-and-winds-up-in-bookstores-and-readers-read-it-and--" as a single word bridging the gap between the full realization of their intentions, i.e. finishing the book, and finding out what the readers think of it. Which, if I'm right, is entirely understandable of them; but the long uncertain gap between finishing the book and getting reader reactions drives them to distraction. It's the source of their vulnerability. Even a half-baked publishing scheme will seem good to them, if it promises to close that gap.

I don't think it's any accident that Publish America, which is one of the most sophisticated scams that's ever been run on writers, was invented by a trio of failed writers. Miranda, Willem, and Larry had an intimate understanding of writers' vulnerabilities that helped PA exploit them. What was gratuitous about their operation was that they went way out of their way to treat their writers as though they hated them. If I'm right about the rest, I suppose that must mean they hate themselves. I don't have much sympathy. IMO, if they do hate themselves, they don't do it nearly enough.

Filigree
01-11-2012, 05:12 AM
Desperate artists do this all the time: pay money for wall or gallery space, no matter if they can actually sell artwork or not.

My local paper just ran a front page article about a vanity gallery/co-op charging its artists 'no more than $275 a month' for the glory of having their work in a bare-bones store in a local mall. Some of them are selling, but certainly not enough to match the gallery fees, which are supposedly there 'just to keep the store open'. And if another, more-lucrative tenant comes along, the mall will boot out the gallery. Meanwhile, I pay nothing for wall space in a booming restaurant/wine bar, and keep the net take from what I sell there (minus taxes). I'll pay commissions for my other galleries and art agents, but they *earn* their percentages on sold artwork.

There's a difference between promotional and business costs, and scams.
For the most part, money should flow toward an artist or writer.

HapiSofi
01-11-2012, 05:26 AM
Filigree, is your user icon a picture of your work? It's beautiful.

Unimportant
01-11-2012, 05:28 AM
I don't think it's any accident that Publish America, which is one of the most sophisticated scams that's ever been run on writers, was invented by a trio of failed writers. They have an intimate understanding of writers' vulnerabilities that enables PA's exploitations. However, what's gratuitous about their operation is that they go way out of their way to treat their writers as though they hate them. If I'm right about the rest, I suppose that must mean that on some level, they hate themselves. I have no sympathy. IMO, if they do hate themselves, they don't do it nearly enough.


A slightly different hypothesis is that they despise PA authors for being foolish enough to fall for the PA scam (sometimes multiple times). The PA "pay us to do what we should be doing for free!" offers, which increase in ridiculousness (is that a word?) by orders of magnitude each week, almost seem designed to see how far they can push before PA authors finally say "no, that one is too stupid even for us". Meanwhile the authors continue to open their wallets, enriching PA and giving them yet more reason to despise the authors.