Downside of trust: vulnerability to frauds

House of Cards - Flickr photo by tjflex2

Both Bernie Madoff and now Monroe Beachy (a 77-year old Amish man) were helped in perpetrating their fraud by utilizing high levels of trust within the Jewish and Amish communities respectively.  [Unlike the Madoff and Beachy examples were the perpetrators came from within the Jewish and Amish religions respectively, various people have posed as Mormons to perpetrate fraud within the LDS community, which is also very trusting.]

The Washington Post article asserts that Beachy raised $33 million over the last quarter century from Amish investors. Along the way, “Beachy became treasurer of the Amish Helping Fund, a nonprofit that takes in money from investors and makes real estate loans ‘in an effort to preserve the Amish way of life,’ the group said in a court filing. Beachy put some money in the Amish Helping Fund, which entrusted him with an even larger sum of $2.6 million.”

Beachy further undermined his standing in the Amish community by violating their norms of social capital: working things out among themselves rather than bringing in courts. “Much of the sour taste in Sugarcreek over the scandal has resulted because Beachy took the matter to bankruptcy court, contrary to religious precepts, instead of resolving it within the community. In piles of form letters, investors have asked the court to let them address Beachy’s debts in their own way because ‘participation as a creditor is abhorrent to deeply held spiritual principles.’ ”

I recently wrote on the American Grace blog about the evidence that the religious are more vulnerable to being scammed since they are deemed as more trustworthy and are also more trusting.  Read it here.

See “In an Amish village, the SEC alleges a Madoff-like fraud” (Washington Post, 2/17/11, by David S. Hilzenrath)

Kids vying to be seen as social influencers

Social butterfly; Flickr photo by massdistracton

Excerpt of WSJ piece on what PeerIndex calls the S&P rating of kids’ online social presence:

When Katie Miller went to Las Vegas this Thanksgiving, she tweeted about the lavish buffets and posted pictures of her seats at the aquatic spectacle “Le Reve” at the Wynn Las Vegas hotel.

A week later, the 25-year-old account executive at a public-relations firm got an email inviting her to a swanky holiday party on Manhattan’s West Side.

“At first I was confused,” Ms. Miller said. She read on to learn that she had been singled out as a “high-level influencer” by the event’s sponsors, including the Venetian and Palazzo hotels in Las Vegas, and a tech company called Klout, which ranks people based on their influence in social-media circles. “I was honored,” she said, sipping a cocktail at the $30,000 fete.

So much for wealth, looks or talent. Today, a new generation of VIPs is cultivating coolness through the world of social media. Here, ordinary folks can become “influential” overnight depending on the number and kinds of people who follow them on Twitter or comment on their Facebook pages.

People have been burnishing their online reputations for years, padding their resumes on professional networking site LinkedIn and trying to affect the search results that appear when someone Googles their names. Now, they’re targeting something once thought to be far more difficult to measure: influence over fellow consumers.

Some of the “influence” is real, but other youth are trying to game the system, befriending lots of others on Twitter in “one night stands” in the hopes of upping their own popularity and then dumping these “friends” a day later, or dramatically increasing their number of retweets in the hopes that they get greater attention or credit for Twitter traffic. Others realized that by raising the ratio of “those Twitter accounts following you” to “those Twitter accounts you follow”, they could increase their score. Companies are trying to use these services like Klout, PeerIndex, TweetLevel or Twitalyzer (which processes Twitter, Facebook and LinkedIn data) in an effort to determine which teens are popular and trusted by others.

Read “Wannabe Cool Kids Aim to Game the Web’s New Social Scorekeepers — Sites Use Secret Formulas to Rank Users’ Online ‘Influence’ From 1 to 100; ‘It’s an Ego Thing’ ” (Wall Street Journal, By Jessica E. Vascellaro, Feb. 8, 2011)

While they are in their early days, it’s not clear that any of these companies yet score accurately the true influence of youth or adults, as evidenced by how this can be gamed.

See also, “Web of Popularity Achieved by Bullying” (New York Times, by Tara Parker-Pope, 2/15/11) that notes that “students near the top of the social hierarchy are often both perpetrators and victims of aggressive behavior involving their peers.”

Meetup launches NewMeetup amidst grumbling

Flickr photo by ginamarr

Bob Putnam and I have long been interested in Meetup.  It was a serious contender for a chapter  in “Better Together” (by Robert Putnam and Lew Feldstein) on an example of technology that builds social capital.  And I wrote a paper on an earlier iteration of Meetup concluding that it helped the social-capital-rich get richer.

Meetup now has 7.8 members, turned a profit in 2010 and launched “NewMeetup” on January 24, 2011; the interesting story of Meetup and how “Bowling Alone” was inspiration for its founding can be read in this New York Observer article.

Meetup’s new slogan is “Use the Internet to Get Off the Internet”

Previously they launched “Ideas for Meetups” which made Meetups more effective by generating 500,000 ideas from Meetup members, but it wasn’t streamlined with the groups themselves.  Meetup wanted to increase membership activism and engagement by letting members suggest ideas and to help the organizer, what Meetup calls “let’s” (as in “let’s have an event”, “let’s form a new Meetup on a given topic”).  As you suggest an idea, it enables others to participate and help provide ideas about times and places.

Meetup enables lead organizers to shut off this feature, but this seems to have been lost on many lead organizers.

What sounds like an unabashed good, enabling anyone in a Meetup to organize an event has encountered criticism because the official Meetup lead organizers are the ones who pay monthly organizer dues to Meetup.  While lead organizers can share these fees with members, often times they don’t.  Lead organizers griped about why they need to pay fees if others in the Meetup could organize events at no charge.  [See Twitter criticism with hashtags: #newmeetup and #meetuporganizersunite.]

And the fact that Meetup has also recently helped refund some of the fees it has generated from marketers trying to reach Meetup members — $1,000,000 refunded to groups so far — hasn’t seemed to quell the criticism.

Competitors to Meetup like BigTent and GroupSpaces are trying to take advantage of the grumbling to recruit new members.

We hope that Meetup finds a way of communicating disgruntled lead organizers that they can simply turn off this feature if they don’t want the ideas of members, although this probably sends a bad message.  In general, we’re entirely in support of Meetup’s plan as member engagement is a critical component for ensuring that members want to stay engaged, an essential element for the success of Meetup more generally and the group lead organizers.

The unveiling of new features can be found here.