GRIFTING IN BUSINESS

WHAT IS GRIFTING?

Let’s talk about a topic that’s as slippery as a New York minute: business grifting.

What is it? How can you spot it? And most importantly, how can you protect yourself from falling prey to it?

A business grift is a sophisticated scam. It’s a scheme that manipulates people into parting with their money, trust, or other valuable assets under false pretenses. Unlike the obvious cons, grifting is subtle, polished, and often involves a veneer of legitimacy. And with the rise of AI and Web3, the landscape is evolving, making it even trickier to navigate.

"In the world of grifting, the illusion of success is the bait, and the unwary are the catch."

HOW TO SPOT A GRIFT?

Let’s dive into the tell-tale signs of a business grift. What are the red flags to watch for? It’s all about awareness and asking the right questions.

Too Good to Be True:

Have you ever heard a pitch that sounds too perfect? Promises of guaranteed returns, zero risks, or instant success are classic hooks. Remember, in business, there are no guarantees. If it sounds too good to be true, it probably is.

Lack of Transparency:

Legitimate businesses are transparent. They provide clear, verifiable information about their operations, financials, and history. If you encounter vague explanations or evasive answers, it’s a red flag. Always ask for specifics. Who are their clients? Can they provide case studies or references? If they dodge these questions, be wary.

Pressure Tactics:

High-pressure sales tactics are another warning sign. Grifters often create a sense of urgency to push you into a hasty decision. They might claim there’s a limited-time offer or that you’ll miss out on a great opportunity if you don’t act now. Don’t fall for it. Take your time to research and make an informed decision.

Unverifiable Credentials:

Anyone can claim to be an expert, but true experts have credentials that can be verified. Check their professional history, education, and any certifications they claim to have. Use LinkedIn, professional associations, and other resources to verify their background. If their story doesn’t check out, walk away.

Too Much Focus on Personal Branding:

While personal branding is important, an excessive focus on it, especially if it overshadows the actual business model, can be a red flag. If someone is more concerned with their image than their product or service, it’s worth questioning their motives.

Web3 Grifting: A New Frontier

With the rise of Web3, grifters have found new playgrounds. Blockchain, cryptocurrencies, and NFTs offer incredible opportunities but also come with unique risks. Here’s how to stay safe in the Web3 world:

Fake ICOs and Tokens:

Initial Coin Offerings (ICOs) and new tokens can be lucrative but are also ripe for fraud. Research thoroughly before investing. Look into the team behind the project, their track record, and the technology. Check community forums and discussions for any red flags.

Phishing and Scams:

Be extra cautious about phishing attempts. Scammers often mimic official communications from legitimate projects to steal your information or assets. Always verify URLs and never share your private keys or seed phrases.

Rug Pulls:

In the DeFi (Decentralized Finance) space, rug pulls happen when developers abandon a project and run away with investors’ funds. Ensure the projects you invest in have locked liquidity and audited smart contracts. Community trust and transparency are key.

Unverified NFTs:

NFTs can be a goldmine for artists and collectors, but they also attract fraudsters. Verify the authenticity of the creator and the platform. Use reputable marketplaces and check for verified collections.

DISTINGUISHING TRUTH FROM FALSEHOOD

Now, let’s talk about how you can distinguish between truth and falsehood. Here are some practical steps to protect yourself.

Research Thoroughly:

Google and AI services are your best friend. Look up reviews, news articles, and any available information about the company or individual. Are there any complaints or legal issues? What do other people say about their experience?

Verify Claims:

Don’t take claims at face value. Verify them. If a business claims to have won awards, check the awarding body. If they say they have a major client, reach out to that client for confirmation.

Consult Experts:

Sometimes, you need an expert’s opinion. Whether it’s a financial advisor, a lawyer, or an industry expert, get a second opinion. They can provide insights that you might overlook.

Check for Consistency:

Consistency is key. Does the story they tell match up across different platforms and over time? Inconsistencies in their narrative can be a sign of deceit. Pay attention to the details.

Ask Direct Questions:

Don’t be afraid to ask direct, tough questions. How exactly do they plan to deliver on their promises? What are the risks involved? How do they make their money? Honest businesses will provide clear, straightforward answers.

Use Your Gut:

Trust your instincts. If something feels off, it probably is. Your gut feeling is an important tool in your decision-making process.

REAL-WORLD EXAMPLES

Let’s look at a couple of examples to bring this home.

Example 1: The Ponzi Scheme

We’ve all heard of Ponzi schemes. They promise high returns with little risk. Early investors are paid with the money from new investors, creating an illusion of profitability. But when new investments dry up, the whole thing collapses, and the scam is exposed. Bernie Madoff’s infamous Ponzi scheme is a prime example. He defrauded investors of billions of dollars before the house of cards came crashing down.

Example 2: The Phony Tech Startup

Imagine a tech startup that claims to have revolutionary technology. They have a slick website, impressive-looking demos, and charismatic founders. But when you dig deeper, you find no real product, just prototypes and promises. They’re constantly seeking funding, and their financials are murky. If it’s all hype and no substance, it’s likely a grift.

Elizabeth Holmes and her company Theranos falsely did all of the above when they claimed to have revolutionary blood-testing technology, leading to widespread fraud and significant financial and public health repercussions.

Example 3: The Fake NFT Project

A new NFT collection drops with much fanfare. The artwork looks amazing, and the community is buzzing. But after the initial sales, the creators vanish, and the value of the NFTs plummets. This is a classic rug pull. Always verify the project’s team, their history, and community trust before investing.

The "Evolved Apes" project was a major NFT scam where the anonymous creator, known as "Evil Ape", disappeared with $2.7 million after launching the NFT collection and promising to develop a fighting game featuring the ape characters.

PROTECTING YOURSELF

Staying sharp and vigilant is crucial. Here are some final tips to keep in mind:

Educate Yourself:

Stay informed about common scams and grifts in your industry. Knowledge is power.

Network:

Build a network of trusted professionals. They can provide valuable insights and warnings about potential grifts. This doesn't mean blindly trusting others you meet in an X Space or project Discord. Independently do the other things I shared in this issue.

Document Everything:

Keep records of all communications and agreements. Documentation can be crucial if things go south.

Stay Skeptical:

A healthy dose of skepticism can save you a lot of trouble. Don’t be afraid to question everything.

CONCLUSION

Business grifting is a real threat, but with the right knowledge and vigilance, you can protect yourself. Remember, if it sounds too good to be true, it probably is. Do your research, verify claims, consult experts, and trust your instincts.

Stay sharp, LinkedIn fam. Don’t let the grifters get you.

Mitch Jackson, Esq.

Tech Savvy Lawyer | Expert Private Mediator

?? 30+ years of award-winning legal cases.

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