Skepticblog

I was recently asked about a device for saving energy costs at home – a device for power factor optimization. I checked it out, and it indeed does have all the red flags for a juicy scam.

Techno Scams

One flavor of scam is to overwhelm a potential customer with technical information that sounds superficially impressive but which the customer is sure not to understand. There may be a kernel of truth to the science, but it just takes one technical fatal flaw to doom an otherwise plausible scheme. Examples include special audio cables that cost thousands of dollars, but do not produce any audible difference in sound quality.

A subset of these scams is to take a technology that actually has some advantage in specific industrial applications and then adapt them for residential or personal use, where they have not benefit. An examples of this is filling tires with pure nitrogen – this has a small but real benefit for trucks and large vehicles, but not for your family car.

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How would the average investor know that
Bernie Madoff was running a Ponzi scheme?

Here’s a supreme irony for you. About six months ago a colleague of mine named Stephen Greenspan, a psychiatry professor at the University of Colorado, sent me a book manuscript to review and blurb for him (a blurb is one of those back jacket endorsements from someone who hopefully knows something about the subject of the book). Greenspan’s book is called Annals of Gullibility (Praeger, 2009, due out in January), and it includes chapters on gullibility in literature and folktales (Pinocchio, Gulliver), in religion (end-of-the-world predictions), in war and politics (the Trojan Horse), in criminal justice (child witnesses), in science (cold fusion), and in finance (Ponzi schemes). It’s a great read and an excellent reference source that, as I wrote in my blurb, “belongs on the bookshelves of skeptics and scientists, not to mention politicians and policy analysts, especially before they go to war.” Continue reading…