Archive for the ‘Scams’ Category.

“What Does the Police Say?”

One day I received a call on my home line. I do not like calls from strangers, but the guy knew my name. So I started talking to him. I assumed that it was some official business. He told me that their company monitors Internet activities, and that my computer is emitting viruses into the Internet traffic degrading Internet performance. All I need to do is to go to my computer and he will instruct me how to get rid of my viruses.

While he was saying all this, I covered my phone’s microphone and made a call to the police from my cell phone. I was hoping the police could trace the call and do something while I kept the line to the guy open. The police told me to hang up. They said there is nothing they can do.

Meanwhile, the guy on the phone kept directing me to my Start button while I kept telling him that I can’t find it. After talking to the police, I got so angry that I told the guy that I wasn’t actually looking for the Start button, but talking to the police. So the guy asks, “What does the police say?”

These people are laughing at us. They know that the police do nothing. And then continued instructing me about my Start button.

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My Blog is Still under Attack

Recently I wrote that my blog is under attack by spam comments. Most of the comments were caught by my spam-filter Akismet, the best-known filter for WordPress. I was receiving about 50,000 comments a day and 200 of them were sneaking through this filter. I had to moderate those and delete them. This was an extreme waste of my time. But I can understand that the bots achieved some goal. None of their comments made it to my website, but at least I myself was made aware of opportunities for hair removal in Florida.

The comments crashed my server and I had to install CAPTCHAs. I was happy that the number of comments that I had to moderate went down, but the total number of comments was still so high that my server kept crashing. Now that the comments are blocked from human view, why are they still pouring in? One software package is trying to inform the other software package about weight-loss wonder drugs. I am convinced that Akismet is not interested.

My hosting provider couldn’t handle the traffic and asked me to upgrade to a more advanced hosting package. It’s annoying that I have to pay a lot of money for these bots’ attempts to sell Akismet fake Louis Vuitton bags.

The upgrade was too expensive, so I tried a different solution. I closed comments for older posts. It didn’t help. The bad software continued trying to leave comments that can’t be left. They especially like my post about Cech cycles, called A Mysterious Bracelet. My weblog tells me that every second someone downloads this page and tries to leave a comment. But no one will ever see these comments. Even Akismet will never know what it is missing: it might have had a chance to make $5,000 a day from home.

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Infinite Deductible

I have an idea for a start-up medical insurance company for Massachusetts. My insurance will have an infinite deductible. That means you pay your own bills. The cost of insurance can be very low, say $100 a year, as I do not need to do anything other than to send you a letter confirming that you have medical insurance. People who otherwise will be fined up to $900 for being uninsured will run in droves to buy my insurance.

I have an even better idea. For an extra fee, I will negotiate with doctors so that you will pay the same amount as medical insurance companies pay to them, which is often three times less than you would pay on your own.

Who am I kidding? I am not a business person, I can’t build a company. But I am looking to buy the insurance I just described.

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I Was Attacked

Not personally. Someone hacked into my website.

I would like to thank my readers Qiaochu Yuan, Mark Rudkin, “ano” and Paul who alerted me to the problem. Viewers who were using the Google Chrome browser and who tried to visit my website got this message: “This site contains content from howmanyoffers.com, a site known to distribute malware.”

It took me some time to figure out what was going on. It appears that on June 19 someone from 89-76-135-50.dynamic.chello.pl hacked into my hosting account and added a script to all my html files and to my blog header. It seems that the script was dormant and wasn’t yet doing bad things.

As soon as I grasped what was going on, I replaced all the affected files.

I have had my website for many years without changing my hosting password. Unfortunately, passwords, not dissimilar to humans, have this annoying tendency to become weaker with age. I wasn’t paying attention to the declining strength of my password and so I was punished.

Now I have fixed the website and my new password is: qwP35q2054uWiedfj052!@#$%.

Just kidding.

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Criminal Probability Theory

I am sitting in front of my computer and scheming, or, more precisely, scamming. I am inventing scams as a way of raising awareness of how probability theory can be used for deception.

My first scam is my lottery project. Suppose I create and run a private lottery. I will award minor payments to some participants, while promising a grand prize of one hundred million dollars. However, there will be a very small probability that anyone will win the big payout. My plan is to live lavishly on my proceeds, hoping no one ever wins the big ticket.

The beauty of this scheme is that nobody will complain until someone scores the top prize. After all, everyone has been receiving what I promised, and no one realizes my fraud. If nobody wins the big award until I retire, I will have built my life style on deception without having been caught.

Suppose someone wins the hundred million dollars. Oops. I am in big trouble. On the other hand, maybe I can avoid jail time. I could tell the winner that the money is gone and if s/he complains to the police, I will declare bankruptcy and we will all lose. Alternatively, I can suggest a settlement in exchange for silence. For example, we could share future proceeds. Probability theory will help me run this lottery with only a small chance of being exposed.

But even a small chance of failure will cause me too much stress, so I have come up with an idea for another scam. I will write some complicated mathematical formulas with which to persuade everyone that global warming will necessarily produce earthquakes in Boston in the near future. Then I’ll open an insurance company and insure everyone against earthquakes. As I really do not expect earthquakes in my lifetime, I can spend the money. I’ll just need to keep everyone scared about earthquakes. This time I can be sure that I won’t be caught as no one will have a reason to complain. The only danger is that someone will check my formulas and prove that I used mathematics to lie.

Perhaps I need a scam that covers up the lie better. Instead of inventing an impossible catastrophe, I need to insure against a real but rare event. Think Katrina. I collect the money and put aside money for payouts and pocket the rest. But I actually tweak my formulas and put aside less than I should, boosting my bank account. I will be wealthy for many years, until this event happens. I might die rich but if this catastrophe happens while I’m still alive, I’ll declare bankruptcy.

Though I was lying to everyone, I might be able to avoid jail time. I might be able to prove that it was an honest mistake. Mathematical models include some subjective parameters; besides, everyone believes that nature is unpredictable. Who would ever know that I rigged my formulas in my favor? I can claim that the theory ended up being more optimistic than reality is. Who could punish me for optimism?

Maybe I can be accused of lying if someone proves that I knew that the optimistic model doesn’t quite match the reality. But it is very difficult for the courts to punish a person for a math mistake.

When I started writing this essay, I wanted to write about the financial crisis of 2008. I ended up inventing scams. In a way, I did write about the financial crisis. My scams are simplified versions of what banks and hedge funds did to us. Will we ever see someone punished?

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Adjustments to Medical Bills

I once wrote a story about a mistake that my medical insurance CIGNA made. They had a typo in the year of the end date of my insurance coverage in their system. As a result of this error, they mistakenly thought they had paid my doctors after my insurance had expired and tried to get their money back. While I was trying to correct all this mess, an interesting thing happened.

To help me explain, check out the following portion of my bill. (If it looks a bit funny, it’s because I cut out some details including the doctor’s name).

My Medical Bill

On the bill you can see that I had a mammography for which I was charged $493.00, but CIGNA paid only $295.80. The remaining $197.20 was removed from the bill as an adjustment, as frequently happens because of certain agreements between doctors and insurance companies. A year later when CIGNA made their mistake, they requested that the payment be returned. You can see on the bill that once the payment was reversed, my doctors reversed the adjustment too.

When CIGNA fixed the typo, they repaid the doctors, but the adjustment stayed on the bill, which the doctors then wanted me to pay. And that was only one of many such bills. It took me a year of phone calls to get the adjustments taken off, but this is not what I am writing about today.

If not for this mistake, I would have never seen these bills and the revealing information on the different amounts doctors charge to different parties, and how much they really expect to receive. As you can see my doctors wanted 67% more for my mammogram than they later agreed to.

The difference in numbers for my blood test was even more impressive. I was charged $173.00, and the insurance company paid $30.28 — almost six times less.

If I ever need a doctor and I don’t have insurance, I will take these bills with me to support my request for a discount. I do not mind if you use this article for the same purpose.

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Dear Spammer

Dear Nita Palmira,

I do not recall your name and I’m not sure where you got my email address from, but I really appreciate you contacting me. I am excited by your Two-Procedures-For-The-Price-Of-One offer. I am really looking forward to my enlarged penis and my DDD breasts.

Meanwhile, I can give you a unique group discount on IQ tests. I can test the IQ of all your company employees for the price of one test. Moreover, you do not need to waste even a minute. Actually, no one even needs to answer any questions. You can send me your $500 check to the address below and I will promptly send you the IQ report, the accuracy of which I can guarantee.

Sincerely yours.

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Father’s Maiden Name

Credit cards often keep your mother’s maiden name in their database for security purposes. This so called “security” is based on two assumptions:

  • Your mother was married.
  • Your mother changed her last name to her husband’s last name.

Were these assumptions true, only your close relatives would know your mother’s maiden name. In reality, if your mother was never married, then your last name is the same as your mother’s last name. So, crooks who are trying to steal identities can try to use your last name as your mother’s presumed maiden name. Very often they will succeed. Besides, many women do not change their last names. If you have a different last name from your mother, but your mother uses her maiden name, then the bank’s security question is not very secure at all.

If you want your identity to be secure you might need to invent a maiden name for your mother. Alternatively, perhaps your parents can tell you a family secret that will help you choose a name that is related to you, but not transparent to the public.

My relative Martin took his wife’s last name after their marriage. Before his children apply for credits cards and bank accounts, he needs to explain to them that it is better for them to use his maiden name as their mother’s maiden name for banking purposes.

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Raymond Smullyan’s Magic Trick

Raymond SmullyanI love Raymond Smullyan’s books, especially the trick puzzles he includes. The first time I met him in person, he played a trick on me.

This happened at the Gathering for Gardner 8. We were introduced and then later that day, the conference participants were treated to a dinner event that included a magic show. In one evening I saw more close-up magic tricks than I had in my whole life. This left me lightheaded, doubting physics and my whole scientific outlook on life.

Afterwards, Raymond Smullyan joined me in the elevator. “Do you want to see a magic trick?” he asked. “I bet I can kiss you without touching you.” I was caught off guard. At that moment I believed anything was possible. I agreed to the bet.

He asked me to close my eyes, kissed me on the cheek and laughed, “I lost.”


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Office Lottery Pool

Suppose you want to increase your chances of winning the lottery jackpot by pooling money with a group of coworkers. There are several issues you should keep in mind.

When you pool the money and you hit the jackpot, the money has to be split. If you bought 10,000 tickets and the jackpot that you win is $100 million, then each ticket is entitled to a mere $10,000. Your chances of hitting the jackpot in the first place are 1 in 17,500 and you’re not going to get rich off what you win.

Perhaps you’d be satisfied with a small profit. However, as I calculated in my previous piece on the subject, even if you include the jackpot in the calculation of the expected return, the Mega Millions game never had, and probably never will have a positive return.

Despite this fact, people continue to pool money in the hopes of winning big. However, there are more problems in doing this than just its non-profitability.

Consider a scenario. Your coworkers collected $1,000 to buy 1,000 lottery tickets. You give the money to Jerry who buys the tickets. Jerry can go to a store and buy 1,005 tickets. After the lottery he checks the tickets, takes the best five for himself and comes back to work with 1,000 disappointing tickets.

It is more likely that Jerry is cheating or that he will lose the tickets than it is that your group will win the jackpot. But there is a probabilistic way to check Jerry’s integrity. According to the odds, every 40th ticket in Mega Millions wins something. Out of 1,000 tickets that Jerry bought, you should have about 25 that win something. If Jerry systematically brings back tickets that win less often than expected, you should replace Jerry with someone else.

There are methods to protect your group against cheating. For example, you can ask another person to join Jerry in purchasing the tickets, which they then seal in an envelope that they both sign.

Alternatively, you yourself could be the person responsible for buying 1,000 tickets. How would you protect yourself from suspicion of cheating? The same way as I mentioned above: bring along some witnesses and have everyone sign the sealed envelope.

The most reliable way to prevent Jerry from cheating is to have him write down all the ticket numbers and send this information to everyone before the drawing. This way he can’t replace one ticket with another. But this is a lot of work for tickets that are usually worth less than the money you collected to buy them.

But there are other kinds of dangers if you use this supposedly reliable method. If you bought a lot of tickets the probability of winning a big payoff increases. Suppose Jerry publicly locks the envelope in a desk drawer in his office. If one ticket wins $10,000, and everyone knows all the ticket combinations, suddenly Jerry’s desk drawer becomes a very unsafe place to keep the tickets.

Scams are not your only worry. You shouldn’t buy the same combination twice — whether picking randomly or not. You really do not want to waste a ticket and end up sharing the jackpot with yourself.

You cannot change the odds of hitting the jackpot, but you can change the odds of sharing it with others. Indeed, there are people who do not buy random combinations, but rather pick their favorite numbers, like birthdays. You can reduce the probability of sharing the jackpot if you choose the combinations for your tickets wisely, by picking numbers that other people are unlikely to pick.

Still want to try the lottery? If you feel a need to throw your money away, instead of buying lottery tickets, feel free to donate to this blog.

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