International Law

What is too good to be true? That frauds and scams self announce.

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I am critical of regulators who claim that if the victims of fraud had just realized that "if it sounds too good to be true, then it probably is."

This "advice" makes the victim of a con criminal feel that there was some simple check by which they could have avoided the con criminal.

I believe this to be false.

But, now I have logical proof of the regulator fallacy, after my visit to a rather interesting place.

Recently, I was invited an amazing island, in the Raymond Smullyan archipelago.

On this Island, there are two types of people: Rogues and Saints.

Both the Rogues and Saints talk about earnings projections of franchises, business opportunities, and distributorships.

Now Rogues, unremarkably, always say things that are too good to be true. So if a Rogue says that vending opportunity B will make $3,000 a month, then it is too good to be true and it is false that vending opportunity B will make $3,000 a month. But the Saints, god bless their souls, never say anything that is too good to be true and generally have less to say than the Rogues.

Just before I arrived, the Saints had tired of the Rogues and the devastation they had caused on the Island. The Saints, knowing of my reputation, asked me to help design their due diligence scheme.

They had two proposals. First, they wanted every Rogue to wear a sign saying "I am too good to be true.", the belling of the Rogues. Second, if this was impractical, they wanted to set up a Rogue Registery, RR, which every Rogue would have to register with and have to produce on demand a card which said, "If I am registered with the RR, then what I say is too good to be true."

What advice do you think I gave them?

Well, upon reviewing Raymond Smullyan's many logical puzzle books, I realized two things.

First, a Saint could never say "I am too good to be true." And neither could a Rogue, since Rogues only say false things. So the Rogues could not be belled, without the logic of the Island collapsing.

Second, if a Saint said "If am registered with the RR, then what I say is too good to be true", then since the latter clause is false, and since Saints tell the truth, then the Saint is not registered with the RR.

But can a Rogue said "If I am registered with the RR, then what I say is too good to be true."? No, since Rogues always lie and if both the clauses are true, the whole implication is true.

But surely, the Saints exclaimed, at least if we form the RR, the Rogues will be mercifully more silent. I thought this was too good to be true.

Upon reflection, I pointed out that the Rogues would simply say "If what I say is too good to be true, then you can check the RR." A Rogue not registered with the RR can say this because it is false -what he says is too good to be true and he is not registered with the RR. The establishment of the RR would cause Rogues to adopt aliases to avoid registering, and would use the authority of the RR to establish that they were not too good to be true.

The Saints did not pay my bill, and instead held public hearings on the matter, I think that President John McCain called for the hearings.

Full post as published by Misleading Advertising Law on September 19, 2008 (boomark / email).