In the spring of 1920, Carlo Pietro, an Italian immigrant to the US, was living the American dream. He had started a successful arbitrage business that was paying investors handsome dividends and providing a comfortable lifestyle for himself and his new bride.

If you were living in Boston in the summer of 1920, you definitely would have had friends who had invested with Carlo’s Security Exchange Company—if you weren’t already invested yourself. You wouldn’t know him as Carlo though, but by his Americanized name:

Charles Ponzi.

Ponzi was arrested on August 12th, 1920 when authorities discovered he was using money from new investors to pay profits to older ones. As a result, six banks failed, his investors lost over $20 million (over $300 million in today’s dollars), and he got a scheme named after him.

What can we learn about trust from a con artist? Plenty.

Con artists rely on their ability to gain our trust by appearing to be trustworthy. They actually manipulate the elements of trust to achieve their ends.

Here are three techniques con artists and scammers use to get your trust quickly:

1. Connect Emotionally. As we’ve discussed, the key to quick trust is focus. Con Artists don’t waste much time talking about themselves. They observe, ask questions, and listen. Then they adapt their body language, verbiage, accent, and approach to maximize rapport with you. They let you win. They shower you with praise. They get you.
2. Fabricate Social Proof. Often con artists employ shills—apparent strangers similar to you—who enthusiastically endorse them. When the shill vouches the con artist is authentic, benevolent, competent, and dependable—all the elements of trustworthiness, you let down your guard even more.
3. Offer The Dream. Once they get to know you, con artists zero in on whatever it is you truly desire—money, status, health, etc.—and leverage it to distract you from thinking too much about anything else. They’re on your side; positioning themselves as a partner who is helping make your dreams come true.

While #2 can quickly reinforce all the elements of trustworthiness, #1 and #3 testify to the power of being on the receiving end of focused benevolence. Unfortunately in this case, that benevolence is being faked.

So how do you protect yourself? Here are three tips for countering the con artist’s techniques without sabotaging legitimate relationships:

1. Assess All the Elements. Don’t stop assessing trustworthiness just because someone seems genuine and nice. Seek evidence on competence and dependability as well. Ask questions. If something seems off, follow up. Honest people don’t mind questions.
2. Find Objective References. Talk to people you trust. Look for subject matter experts, unbiased reviews, and dissenting viewpoints to get a well-rounded picture before making a decision. A trustworthy person will give you the time and opportunity to do some research.
3. Ask Reasonable Questions. The men who exposed Ponzi and Madoff both said it took about 5 minutes of simple math. Using publicly available data, they proved the colossal investment returns were physically and financially impossible. Everyone else was too distracted by their profits to ask reasonable questions.

For Reflection: Where are you most susceptible to a confidence scheme?

Update: 85% Proposal Complete

With over 60,000 words written, I’m currently focusing on putting my book proposal together. I worked on the Sample Chapters this week to move the needle 5% toward completion. I’m on track to be done by my goal of September 10th.

9/10 Content (10%)

9/10 Market (10%)

4/5 Author (5%)

24/25 Synopsis (25%)

39/50 Sample Chapters (50%)

85/100 Total (100%)