consumer psychology

How to Rip Off Recession-Scarred College Kids

Photo: YPRAllAccess

Scams, like every other type of human institution, have to evolve in order to remain fit for the times. If you’re hoping to rip someone off, your best bet is to not just promise them untold riches, but to also find one of their weak points: Strike them where they’re insecure or worried or desperate. Lots of elderly people, for example, get ripped off by fraudsters posing as “cybersecurity experts” who charge them for free services or, worse, steal their personal information. It works because many old people don’t fully understand computers and are vaguely worried about Threats Out There, and therefore respond with gushing thanks and by reaching for their wallet when they get an unexpected call from someone offering to help.

A similar version of this is targeting young people at the moment, reports Caleb Hannan in Rolling Stone: Vemma, “one of the fastest-growing multilevel-marketing companies in the country,” is signing up thousands of enthusiastic college students to sell energy drinks and rope their friends into doing the same, even though the company’s own financials show that “97 percent [of participants] average less income than someone who works 40 hours a week at a minimum-wage job, without even accounting for expenses.” (The company claims “350,000 distributors and customers,” reports Hannan, and they skew quite young.)

Part of the marketing blitz here is old and tired: Of course there are luxury cars and watches and giant parties and other things a certain type of college student goes crazy for. But there’s another element here, and it ties into the recession in a poignant way.

Take this scene involving Alex Morton, one of the company’s young stars:

Morton’s pitch is built around the idea that college, and the debt that comes with it, isn’t worth the risk. It’s landed him some 13,000 recruits, many of them around his age, whose every sale earns him a cut. “What’s another synonym for ‘employee’?” he asks the crowd [at an event]. A young woman in the audience gives the answer – “slave” – at the exact moment that Morton says it. Then she lets out a self-congratulatory “whoo!” as if she were the only one at the concert to recognize the first few bars of the band’s deepest cut. “We’re living in the worst economy since the Great Depression,” says Morton, wrapping it up. “We need to find a new model. This is that new model.”

Think about what it must be like to be a 20-year-old in college right now — and not just any 20-year-old, but the kind who would be susceptible to this pitch in the first place: You probably know a lot of adults who were completely screwed over by the recession. Maybe you aren’t sure what you’re doing in college or if it will be worth years of student-loan payments given the grim jobs scene out there in the real world. And you’ve definitely heard a lot about “new models” and disruptive ways of becoming very rich, very quick, which is how Vemma is pitching itself.

Never mind that MLM is now a relatively ancient sort of scam; never mind that the father of Vemma’s founder sold Amway, an older version of all this. How could this not be enticing for young people who don’t feel they have a lot of options? It’s no wonder Vemma is so successful despite the level of predation clearly on display. It’s just hard not to feel bad for the kids who blow their savings on this — and for their parents, who, assuming they themselves have anything left in the bank, will inevitably have to bail them out.