When my nephew was a little boy, he went through a phase when he would only eat food that came in a package. Stuff like Lunchables and Kool-Aid. No fresh fruit, no vegetables, no broiled organic free range chicken, none of these things could pass those lips! It turns out, the culprit was TV commercials, the ones that run on kids’ TV networks. The people on TV told him to eat packaged food, so it must be the truth! When he figured out they were just saying that to make money, he changed his mind. He’s an adult now, and the last time I saw him he was eating a spinach salad.
I can remember being a kid and figuring out for the first time that not everything on TV, and even not everything adults say, is true. I realized I had to think for myself and make up my own mind, which meant educating myself about things like business and money and scams. 
Bleh. Learning about these things is work. It’s a whole lot easier to just let people tell you what to do, right? 
Like, when someone presents you with a dream opportunity to make easy money.
It’s lovely to think that we can coast through life, trusting everything that people say. Then we can be like the pretty people on TV with their clean houses and delicious meals and perfectly behaved children! 
And this brings us to the topic of this episode: Why people fall for get-rich schemes. 
This episode isn’t intended to shame anyone, and if anything, I really feel for those who lost their shirts on a dream. I’m all for dreaming and dreaming big, but always with a huge dose of reality.
In this episode we’ll take a look at get-rich schemes that do nothing for you but make someone else rich, and unpack just what it is about these schemes that makes them so attractive. And why you should inspect any business opportunity before committing any of your time or money to it.
First, let’s look at a few schemes I’ve encountered over the years, and what they have in common.
In 2013, a friend told me about this amazing opportunity at Amazon. Regular people were making a killing selling all kinds of stuff on Amazon like eye masks, and water purifiers, and oven mitts. All kinds of everyday items. And these sellers were so excited, they wanted to share this information with you. All you had to do was buy their course for around $2500, they would teach you all the secrets. And then you could be rich like them, too!
I was skeptical, and for good reason. This was my first encounter with what I call the “Early and Lucky” scheme. And while it’s not quite a scam, it comes close. 
Here’s how it works.
When Amazon first opened up its marketplace to outside sellers in the year 2000, some people got in early and tried it out. And sometimes they’d do a thing where they found some product in, say, China, that they thought looked promising. They’d post pictures of the product on Amazon, and anytime they sold one, they’d just get the factory in China to ship the product directly to the buyer. They never even had to touch it. This process, called “drop shipping,” is actually a great way to make money, but only if you know what you’re doing.
These Amazon sellers would do this with dozens and dozens of products, and sometimes one of the products would get super popular, and the money would roll in. 
In other words, some of these early adopters put out a bunch of products and got lucky with a few of them, and they made a pile of money. Good for them! But as the years passed and more and more people and companies got in on the game, there was more competition. And just 10 years later, in 2010, the sales weren’t what they used to be.  
So what could these sellers do, now that the gravy train had stopped rolling? Some of them took the next logical step: they created a course on how to do drop shipping on Amazon, and they started to sell that.
The problem was that unlike the person buying this course, the seller was early and lucky, and the same conditions that made it possible for them to get rich a few years ago, just didn’t exist anymore and could not be repeated. 
My friend and I knew a couple of people who had plonked down $2500 for the course, but after many months of diligently following the instructions, none of them had made more than a few hundred dollars. This, after many hours of looking for products and posting pictures and doing all the things the course said to do, following it to the letter.
This is because, 10 years after Amazon Marketplace opened, they were no longer early, and were competing with so many other sellers that luck was hard to come by.
I’ve seen the Early and Lucky game play out in so many ways, with early, lucky people doing great and others getting burned, sometimes for lots of money. Here’s a story that I was involved in myself.
I live in New Orleans, Louisiana. And on the heels of Hurricane Katrina in 2005, the city was a mess. A lot of homeowners got insurance payouts for the damage, but instead of fixing up their house, some of them just took the money and moved out of state. This left the city with a bunch of broken-down houses. 
I moved to New Orleans five years later, in 2010, and at the time you could drive down almost any street and see one or two boarded-up houses in terrible condition. Nobody liked this, not the neighbors, not the city. And there were lots of government initiatives to get these houses fixed up by selling them at bargain prices to people who pledged to fix them up and live in them.
For a few years after Katrina, you could buy a house for less than $50 thousand dollars, a whole house! And sometimes for as little as $10 thousand, less than a mile from downtown. Crazy bargain. I’m not kidding, the prices were that low. Now, the house had no working electricity or plumbing and maybe a hole in the roof or the floor, meaning it needed $50 thousand or even $80 thousand dollars’ worth of work, but then you’d have a nice house to live in that was worth double what you put into it. To keep out skeevy investors, these programs gave preference to buyers who would live in the house for at least two years after they bought it. Since I was planning to stay in New Orleans for a while, I checked it out.
I have a good friend named Shirley who knows real estate so well, she could look at one of these houses and in a few minutes tell you what it was worth, how much it would cost to fix it up, and how much you might be able to sell it for in a few years in that neighborhood. All speculative, no one knew for sure what was going to happen, but she had a good eye for this. She had done her homework! In the case of New Orleans in 2010, she and I were early to the game, where most people hadn’t really picked up on what was happening, or just didn’t want to deal with fixing up a broken-down house. My coworkers at my office job in New Orleans thought it was a weird thing to do, but I’d given it a good hard look and decided it was worth it.
Shirley helped me buy two properties, one I bought in 2011 and one in 2013, each of which I fixed up and lived in for at least two years. Shirley did the same thing, and we had the pride of knowing we brought these homes back to the community. The neighbors loved us for turning an eyesore into beautiful homes, and the buyer got a move-in-ready house for not a huge amount of money. In fact I drove by one of them the other day, and I was happy to see that the new owners have planted a garden and painted the porch a different color. They’ve made it their home, which is so nice.
Now, I didn’t make life-changing money, and it never once occurred to me to create a course about it, but I did pretty well because I was early to the game, and lucky that the city didn’t flood again in the meantime, and that I had a friend like Shirley to show me the ropes. And besides, I was in it for the adventure and a long-term gain, not easy money. Because that money was not easy. The stories from that time… if you ever want to live in a leaky, mouse-infested house with barely a working toilet, Shirley and I have a deal for you! It was a lot of work to fix up those houses, and I feel like I earned every penny.
But when I tell people about it, they just see the numbers. Oh, you made fifty thousand, eighty thousand on that! Easy money! No.
Of course, after a while, word got out about those cheap houses which sounded amazing to people who were looking at investing. But by 2015, ten years after Katrina, all those early, sweet deals were gone. People had bought them up and fixed them up.
Around then, I started hearing about these courses you could take to make fast money with real estate in New Orleans, blah blah blah. My neighbor took one of these courses for $400. He got all excited at first, but then decided it was all just a bunch of BS. The opportunity had passed. It was too late to be early, but that didn’t stop some vultures from swooping in and creating a course about it and taking peoples’ money.
By the time someone creates a course on a get-rich scheme, there’s no more money in it. Funny that way, huh? 
This brings me to multi-level marketing schemes, or MLMs, as they’re called. The premise sounds okay, on the surface. You sell some stuff, like makeup or kitchen gadgets or cleaning products, and you make a commission on everything you sell. When you join up, you become part of a team, with a leader that helps you figure out how to sell stuff, like tells you how to hold parties or contact friends or whatever.
The teams are organized in a pyramid, and your team leader makes money when you make money. The team leader tries to have like 10 or 20 people under them, so they make lots of commissions. The leader is called your “upline”, and you are their “downline”. Your leader is probably also part of someone else’s downline, and that person is part of someone else’s downline. 
The people at the top got in early, and managed to get a big downline. They were also lucky to get in on a product line that sells pretty well. You, on the other hand, are late to the party, and you’ll probably never hit six figures in sales.
You might think, well, so what? If you’re having fun selling stuff and making a few dollars, that’s fine. And you’re right, that would be fine. But a lot of MLMs do stuff like, they require you to buy a certain amount of stuff every month, even if you’re not selling. Or your upline tells you that you have to buy the company’s $100 course on selling, and if you don’t do it, they threaten to stop helping you. Meanwhile, the company might change the formula or manufacturer and the product goes downhill, and you’re stuck trying to sell crappy stuff.
So what starts out as a fun way to have parties and sell makeup or tupperware or leggings or something becomes a losing proposition. Between putting gas in the car to visit customers and having to buy stuff that never sells, you end up $500 or $1000 in the hole. Meanwhile, your upline is buying their second Mercedes.
Maybe you’ve had the experience of hearing from some high school friend on social media, and the conversation starts off like, “Hey, hon, it’s been a while, thought I’d get in touch,” and then says “Hey, hon, I’m my own Girl Boss now, and I wanted to tell you about this amazing opportunity…” They’re trying to get you on their downline. People who do MLMs are called “huns” for that very reason: because they start off the sales pitch with “Hey, hon…” Beware the huns!
In the past few years, a bunch of new MLMs have popped up, fueled by TikTok and Instagram, where influencers with big followings love to show off their expensive lifestyles so they can attract more downline sellers. “Hey hon, you can have all this too, if you just sign up with me…” 
But at the same time, there’s been a lot of clapback from other influencers pointing out that MLMs ruin people’s lives. A single mom with only $500 to their name signs up because they want to be able to afford school supplies or new clothes for their kids, and they end up a thousand dollars in debt. It’s a really crappy situation.
Maybe because of all this clapback, a couple of prominent MLMs have recently announced that in a few months, they’re changing to a direct commission-only model. A couple of notable ones are Seint, a makeup company, and Rodan and Fields, who sells skin care products.
This means their salespeople get a commission only on what they themselves sell, and that’s that. The upline Huns that got in early on these MLMs, the ones who were making six figures just for prancing around in front of a camera and roping in a bunch of downline Huns, are going absolutely berserk. Their incomes are going to take a deep dive now that they’re on an equal playing field with everyone else. Maybe it’s time to sell that second Mercedes, and take that Gucci purse you’ve been flashing around and put it on eBay.
Sorry, but not sorry. You had a nice run, but you had to know it wouldn’t last. You can’t make easy money off being early and lucky forever. Sooner or later it’s going to end. And crying about it won’t change a thing. Maybe you should have socked away some of that money instead of blowing it on braggy lifestyle stuff for your Instagram.
All this talk of braggy lifestyles brings me to one of my favorite subjects: cryptocurrency.
I know people who did great with cryptocurrency. One of my friends rode the wave and sold at the right time, and she paid off her car. Jack Rhysider, the host of the Darknet Diaries podcast, sold his one and only Bitcoin at a great profit, to fund his podcast. Good for them!
Investing in crypto can be fun, but it’s super risky. For every success story showing luxury cars and private planes on Insta, I’ve heard of a hundred other people who lost on it. It’s like Monopoly money. You could be rich one day, and broke the next. 
This is what investors in Logan Paul’s CryptoZoo game found out the hard way.
In case you’ve never heard of Logan Paul, he’s a super popular YouTuber, a wrestler who started posting all kinds of content years ago and now has millions of followers on YouTube. No, wait a minute…
Logan Paul doesn’t post on YouTube anymore. He kept getting kicked off YouTube for breaking their rules, including this one time he posted a video of him laughing at a dead person who had committed suicide. What a swell guy. Anyway, Logan got all pissy at YouTube and stopped posting. Instead, he uses TikTok, Instagram, and X (Twitter) now. 
Anyway, Logan Paul’s content is designed to appeal to teenage boys, I think. I’m not sure who it appeals to. All I know is, I’m not his demographic. I’ve watched a few of his videos, and yeah… not me.
Anyway, in 2021, Logan Paul announced a new game he was developing called CryptoZoo. The idea was that you could breed virtual animals and buy and sell them, all using the game’s native cryptocurrency called Zoo Keeper Tokens, or Z-O-O for short. Get it, Z-O-O, Zoo? Very clever there, Logan.
Logan told his followers that you could make real money by breeding these images of animals and selling them as NFTs, a sort of unique digital picture. I explain NFTs in another episode, so I’m not going to get into it here. It’s enough for you to know that the pictures of these crossbred animals were supposed to be worth something.
To raise money before the launch of the game, you could invest in virtual eggs that would hatch when the game finally came out. And then you’d have some kind of weird hybrid Leopard Chihuahua mix, or maybe a Bunny Hyena or a Hippo Possum-is, and you could sell for Zoo tokens, and eventually you could cash out your Zoo tokens to make actual dollah money. 
Logan Paul raised something like $3.5 million by selling these virtual eggs via the ZOO cryptocurrency. And after that, is when things went splooey.
The game was never finished, it never came out. Logan claims he was duped, that the game developers ran off with the money. At the same time, the dollar value of Zoo tokens took a nosedive until it was worth only 1% of what people paid for it. The investors can’t even sell their Zoo tokens now, unless they basically want to kiss their money goodbye.
The investors are now suing Logan Paul for lying about CryptoZoo, and Logan Paul is suing another YouTuber named CoffeeZilla for doing an investigative series on him. It’s a big mess. But that’s not the point of my story.
What I’d like to know is, how did Logan Paul think all this was going to work? My guess is, he just believed some developer guys who said they could make this game where players could make money, without really understanding how it would work. He didn’t do his homework. He just believed the people on TV who told him to eat the Lunchables and, you know, drink the Kool-Aid. 
As for the people who invested in those NFT eggs, some threw in a couple hundred dollars because they like Logan Paul, and those folks probably don’t care if they see their money again. But there are others who invested tens of thousands of dollars thinking they were getting into a get-rich scheme early. And they were early, but they were not lucky. They threw their money at a guy who makes videos about boxing a random person who shows up at his house. I’ll admit that Logan Paul’s videos are very well produced and fun to watch. But investing thousands because Logan Paul said so? Come on, guys. 
CryptoZoo relies on NFTs gaining in value. I mean, if it were working, that’s what it would rely on. But NFTs are a volatile market. They can go up, down, all over the place.
Now I get why these investors invested. I really do. CryptoZoo is a fun idea, and if it had worked, it would have been a lot of fun to breed… Monkey Sharks or whatever. But in this case, I don’t even think Logan Paul did his homework on how it was actually supposed to work, so the investors were left hanging out to dry.
My point in all this is, if you don’t understand how the money is going to be made, and I mean really understand it, you probably shouldn’t invest. Having said that, I wish the investors the best of luck in their lawsuit. Logan Paul is supposedly worth $150 million, so I think he can afford to throw a little of that toward the loyal fans who believed in him when he said CryptoZoo would work. But what do I know? Not my circus, not my monkeys. Not my monkey sharks or monkey hamsters. None of those are mine.
So many examples of Early and Lucky, so little time. I can’t help but think of James Siegel, a real estate guy who made a killing selling timeshares in the 1990s and 2000s. Siegel was basically minting money, and with all those pots of money, he and his wife Jackie set out to build a custom 90,000 square foot mansion, the largest home in the United States. For context, 90,000 square feet is around 30 times larger than the average house. Basically, the size of a hotel. This new house the Siegels were buildingincluded a ballroom, a bowling alley, a roller rink, a theater, and 30 bathrooms. 30 bathrooms! Geez, I thought I was living large when I upgraded to two bathrooms. 
Then in 2008, when the mortgage market tanked, James Siegel’s timeshare sales tanked too, since most people bought timeshares with a mortgage. Since Siegel was leveraged to his teeth, he suddenly had no money and lots of debt, and all construction on the giant house came to a halt. And they can’t really do anything with it. They can’t sell it, because who wants to buy a giant half-finished house for the asking price of hundreds of millions of dollars? 
Dude, you should have known the money wouldn’t last. You got in early and lucky with the timeshare market, and you thought it would never end. If James Siegel had maybe socked away some of that early-lucky money instead of mortgaging himself into a corner, maybe he and his family would be having fun in that bowling alley instead of scrambling to keep the house from being repossessed by the bank.
If you want to see the half-finished Siegel house and hear all about the family’s trials and tribulations, check out the documentary The Queen of Versailles. There’s also some great stuff in there about how salespeople try to suck buyers into timeshares, which is a whole ‘nother subject for another time. I hear they’re also making a musical about the family, so maybe that will help them make some money.
Maybe one day you’ll find that Early and Lucky opportunity. But if you do, it won’t be from Instagram or TikTok. By the time anything is posted there, millions of people have heard about it. You’ll hear about it from a friend, or by keeping your eye on the market. That’s where all my Early and Lucky opportunities have come from.
Get-rich schemes are soooo tempting. It’s easy to get so carried away on the dream that you don’t look too closely. But you can find a ton of information for free on the internet, so use that resource before you slap down a big fee for the supposed get-rich secrets, or invest a bunch of money in some scheme you don’t really understand. You are smarter than you think. You can make your own decisions about this stuff. And whoever’s selling it to you can’t really explain how the money gets made or it seems too good to be true, then run away. And take your cash with you. 
This is Michele Bousquet from How Hacks Happen, wishing upon you all the common sense you need to avoid scammy get-rich schemes. Special shout-out to Katie at Katie Haze Productions for producing this episode. See you next time on How Hacks Happen.