Archive for the ‘Scams’ Category.

Probability Theory for Crooks

It is unfortunate that crooks understand probability. Here is a scam that was very popular back in Russia.

A bad guy pretends that he has a close relative on the hiring committee of a college. He takes bribes from prospective students, promising to help them pass the entrance exams at this college. He doesn’t guarantee the admission, but he guarantees the money back. After getting the money, he does nothing. If the student passes the entrance exams, he keeps the money. If not, he returns the money. Simple probability — someone will pass the exams by chance, making him a lot of money.

Here is another Russian scam. This time the crooks have some understanding of conditional probability. These “psychics” promise to correctly predict the gender of your future child. They tell you a random gender, but for their bookkeeping they file the opposite gender. This way, even if you complain, they still keep your money. They show you their books and pressure you into believing that you misunderstood, misheard or misremembered the answer. The probability that you complain if they are right is zero.

Let us all learn probability theory to recognize scams and not fall for them.


Borrowing Money

To translate from a Russian joke, borrowing money is taking someone else’s: temporary; giving back your own: forever.

This is a story about my great-uncle Fred. His name is not Fred, of course, because I don’t want to reveal which one of my thirteen great-uncles created this ingenious scheme.

My great-uncle Fred asked to borrow 100 rubles from my mother. He was notorious for not returning money, but he knew how to work my mother. He whined about being sick and urgently needing to buy pills, until my mother, who has a big heart and is an easy touch, gave up. Of course, Fred wasn’t in a hurry to return the money. But 100 rubles was a lot of money for my mother and she wasn’t planning on giving up trying to get it back. My mother started bugging her uncle with increased intensity. Finally Fred promised to return the money as a gift for mom’s upcoming birthday.

Of course, it was tacky to present the money he owed as a gift, but my mom was so glad that she would finally get her money back, that she was actually looking forward to it.

During her party, as the guests sat around the table, Fred got up to give the birthday toast. Then Fred handed my mother an envelope and said, “Congratulations on your birthday! Here is a gift for you.” Everyone applauded.

My mom felt that something in this scene was not quite right. Why was the applause so enthusiastic when he was just returning a debt? After the party my mother decided to investigate. It turned out that Fred explained to my mother’s relatives that she prefered money as a birthday gift and collected the gift money from everyone. The cash he returned as his debt in the envelope was not his. Everyone else thought he was presenting the joint gift, except for my mother, who was made to believe that he was repaying his debt.

After that my mother stopped bugging her uncle Fred. It became clear she couldn’t match his superb skills in escaping his debts.


High Price of Bounced Checks

Here is an arithmetic problem for you:

You have $700 dollars in your checking account. You are sloppy and forget how much you have. You write three checks for $600, $200 and $200. For every bounced check you are fined $25 by your bank. How much in fines will you have to pay for your sloppiness?

Solution: the fine depends on the transaction order. If they process your $600 check first, you will have two bounced checks. If they process a $200 check first, then only your $600 check will bounce.

The question is, what will your bank do if all three checks need to be processed at the same time? There are three options:

  • Your bank doesn’t have a good mathematician on the staff and is not aware of this situation, and it processes the checks in random order. In this case you will have either two bounced checks (with a probability of 1/3) or one bounced check (with a probability of 2/3).
  • Your bank is evil, and purposefully processes your $600 check first. In this case you are guaranteed to have two bounced checks.
  • Your bank cares about its soul and purposefully processes the $600 check last. In this case you are guaranteed to get only one bounced check.

Assuming the worst — your bank is evil — what is the answer to the problem? Do you think you will be fined $50? If so, you are wrong. The company to whom you wrote the check will fine you too. Supposing that the company has the same $25 fine as the bank, can we say that you will be fined $100? Nope, this is not correct either. You are forgetting that companies will reprocess your bounced checks two days later and the checks will bounce again. You will be fined twice for each check by two different entities. Thus, you can face $200 in fines.

My next question is: what do you think is a fair fine in my arithmetic problem above?

Banks and companies have never heard of double jeopardy and do not think that it is unconstitutional to fine you twice for the same mistake. No doubt, the second reprocessing of your checks is done “for your convenience”. “For your convenience” they assume that the bouncing was due to a computer glitch, so they should reprocess your check immediately after it has bounced. “For your convenience” no-one will disturb you to notify you that your checks are bouncing. I also believe that if your fine depends on the random order of processing of checks, the banks should be graceful and shouldn’t pick the more profitable order for themselves. I do think that charging you more than $50 in my example is against the law and is not fair.

The law should protect us against entities that rob us “for our convenience.”


Challenging Start

Start is the STate of the ART question-answering system. You can ask Start any question in plain English — for example, “What is the population of Moscow?” — and instead of producing millions of pages like Google, it provides one exact answer: “The population of Moscow, Russia, is 8,746,700.” I am not sure where this number comes from, as Russian sites suggest that the population of Moscow is more than 10 million people. But anyway, back to my challenge.

I have my email address in plain sight on my webpage. As a result, I get a lot of spam. So, I am thinking about a way to present my address so that humans can easily deduce it, but computers can’t. Here it is: my email server is Yahoo and my user name consists of 7 lower case letters. Each letter answers one of the questions below, in the right order. As of today, Start can’t answer any of these questions.

  1. What is the first letter of the word 3?
  2. What is the first letter of the alphabet?
  3. What is the only common letter in the words “knowledge” and “triamphant”?
  4. What is the last letter of all the days of the week?
  5. What is the first letter of almost all the continents?
  6. What is the first letter of the word “knight”?
  7. What is the most frequent letter in the word “although”?

The advantage of presenting my user name in this manner is that I will restrict my new correspondence to people who are sufficiently eager to write to me that they can spare ten seconds figuring out my email address. The main advantage is that Start can’t answer these questions, giving me hope that spamming software can’t do it either.

I do think that the state of the art question-answering system should know the first letter of the alphabet. Start: these questions are a challenge for you. How much time will it take you to do it?

Watch out. Maybe Google can do it faster.


Reason Number 37 not to Trust NJ Transit

I was waiting for a train in Newark. On the platform, there was an LCD screen that flashed advertising. The ad I was staring at was titled, “Reasons to take NJ Transit to Prudential Center, #15.” I was impressed that the NJ Transit sales people were working so hard to invent that many reasons.

I waited for my train for half an hour. It turned out that the NJ Transit advertising people were not working hard after all. The screen was flipping between four reasons, numbered 3, 6, 12 and 15. This is a case of false advertising. You look at reason number 15 and think that there must be a lot of reasons. They fool with your head. Cheaters.

I hope you noticed that I did the same thing with this posting — purely in order to illustrate my point.