Statisticians hate small numbers (samples); now there is another reason to hate small numbers. In one word, scams.
The FTC has shut down a scam in which the crooks have sneaked through 1.35 million fraudulent credit-card charges, each valued at $0.25 to $9 -- after letting it run for four years. What's shocking is that less than 5% of the victims (78,724) noticed and reported the charges. So, instead of stealing $1 million from one person, steal $1 from a million.
Reading this article, I'm reminded of similar schemes:
- In 2006, a "student entrepreneur" asked Web users to buy $1 each to own one piece of a million-piece on-line jigsaw puzzle. The proceeds would "pay for his degree" -- how a degree can cost a million bucks I'm not sure. (his site).
- Once in a while, I get a notice of the results of some class-action lawsuit that I have been made a party to without applying. They would tell me that I am eligible to receive some tiny amount of compensation (say, $5). If less than 5% bother to collect their share, I wonder who gets the spoils (the lawyers?). I'm not a lawyer so I don't know the answer but I have my suspicions.
The onlyOne difference being that our society does not call these "scams".
A little harsh Kaiser :) The second and third examples are completely elective (opt in), but the first is more of an opt-out process because few people report it.
Posted by: case | 06/29/2010 at 09:19 AM
Case: admittedly, the analogy is only approximate. What's common among these situations is that each one depends on people either consciously or subconsciously making a decision that small numbers are not worth fretting about, and on the other side, a goal is achieved by aggregating little numbers.
Posted by: Kaiser | 06/29/2010 at 08:16 PM
there are many such cons using mobile phones. In a memorable one a few years back in France, a scammer had called hundreds of thousands of phones but ever so briefly that his calls would only register as "missed calls". Out of curiosity, a small portion of those who got such calls did call back, and reached an overcharged number.
the rationale of the scammer was that those calls were voluntary, and that the costs to users were so small anyway that no one would bother complaining. Yes, but out of hundreds of thousands victims, you are likely to find a nitpicker who won't tolerate an extra cent on their phone bill. And this is how they eventually got caught.
Posted by: twitter.com/jcukier | 01/13/2011 at 08:58 AM