Edited to add:
they arent lying about anything...
How do you know they aren't lying when they send you that "This doesn't meet our needs at this time," rejection letter, because the very next line is, "But feel free to pay us to publish it."
I guess I don't see the "scam"
HQ can take a chance on your book (and every book is a chance, some are less risky than others) and invest in the production costs for what may be a big payoff in two years...Or they can, with no risk or investment on their part, actually *collect* money from you by rejecting you (and what might be a perfectly salable manuscript) with reference to the vanity arm where *you* (not they) will assume the risk *and* the expenses of producing the book, they will pocket the profits of your inflated production costs, and then take a 50% cut of whatever you sell. If you should be so lucky to burn down the barn with numerous sales, they are free to swoop in and offer you more traditional terms.
Every business minimizes risk and maximizes returns. What's their incentive to take any risk at all when you could be suckered into taking it for them. In an economy like this, businesses are hunkering down, cutting costs, minimizing risks, in an attempt to stay afloat. This is the time they are all scrambling (no matter what industry they're in), to save as much money and take as few risks as they have to.
The scam here is that you can no longer trust their motivation for rejecting you. Why would they bother offering you money to publish your work when they can sucker *you* into paying *them* to publish it.
When was the last time your mechanic paid you to fix your car? Or the grocery store paid you to take the lettuce off their hands?
And unrelated question--I know there were some posters a page or so back speaking of POD publishing. If I'm understanding correctly, POD is a printing/bindery process, is it not, rather than a manner of publishing? Or am I confusing my terms? Clarification would be appreciated.