Douglas Rice, DBA is an assistant professor in the School of Business and Management.
Early one morning as I click the light on in my office I hear, “If it’s too good to be true, it isn’t true. That’s your motto isn’t it?”
Having not started a cup of coffee yet, this seemed to be a bit of a leading question. Yes, that’s something I say quite often. When something is so good that it’s unbelievable, at the very least you need to be suspicious.
Before I go on, you should know the person who came in so early in the morning is an accountant in the office: a CPA. He is logical and pragmatic. So what he told me next was quite a surprise.
He told me that he was trying to buy a car for his daughter and he found an ad for the perfect car. It was exactly what he was looking for and the price was fantastic at only $8500. So he sent an email saying he was interested. The reply came back from the owner that he was in France, but the car was local and they should meet for a test drive. But then he said that his only request was for a refundable deposit on the car before he gets there. He said it was so he wouldn’t waste his time and even offered to use an escrow company. He thought $1500 was a fair price for the deposit.
My reply was quite simple, “C’mon Bill, what do you think I think?”
The seller had pushed his buttons and he wanted the deal to be true so badly that he was willing to throw out his usually good judgment in favor of chasing a windfall dream.
This happens more often than we would think. Those who conduct themselves in this manner can be quite good at it. They pull on your emotions and get fear and greed churning inside you. Bill could have bought this exact car for $10K more, the more realistic listed everywhere. But greed pulled him toward the spectacular deal. He was going to get one over on them and pay less than market price. When greed overcomes fear many people take actions they wouldn’t normally take. They want it to be true so badly, they begin to think it’s worth taking the risk. The scoundrels simply prey on emotions.
He continued for a bit telling me about how good the papers looked from the supposed escrow company. He suggested that I check out the logo and the little printing at the bottom that was hard to read, as if that was sure sign the papers were real. In the end, it was wishful thinking and he agreed to move on and find a more reasonable deal for his daughter’s car.
I do often say that if it’s too good to be true, it’s not true. Scams can take advantage of anyone, even fiercely pragmatic accountants. Swindlers use emotional triggers to hook otherwise smart people. So if you ever see a deal that is too good to be true, either walk away, or at the very least get an objective opinion from someone who is knowledgeable and has no financial interest in the purchase. Your emotions can really play tricks on you, especially when it comes to money.