Scratchcard Scam - Beyond the Desire

Bob Leggitt | Saturday, 8 December 2012 |

Free scratchcards. They’re still around, but if you’re in the UK, you’re probably not seeing anywhere near as many as you used to. That’s because the system employed by the companies operating free scratchcard rip-offs was recognised as a breach of UK law by a High Court judge in the winter of 2011, and subsequently, in October 2012, outlawed by the European Court of Justice.

Free scratchcards per se have not been banned. But the misdirection which drives the free scratchcard systems has been deemed unacceptable, and unlawful – throughout the European Union. Of course, the companies behind these rip-off systems are not the kind of people to go away and sit in a corner when they’re told off. They’ll loophole the regulations in whatever way they can, and if ever they’re forced out of their own particular facet of the ‘market’, they’ll take their bankrupt morals into another line. Whether or not scratchcards continue to be issued, a something-for-nothing ‘scratchcard’ culture looms large among the UK public, and there’ll always be companies ready to exploit it.



It’s a fact. People are greedy. We’re pretty much all the same in that respect. If someone offers us something really good or valuable for free, we’re going to want it. So why do some of us fall for the scratchcard-type cons which are now technically illegal, and others not? Simple: because some people view situations only from their own viewpoint, whilst others view situations from both sides. It’s the people who only see things from their own point of view, who are susceptible to these rip-offs. Those who analyse situations from both their own viewpoint, and the viewpoint of the party who’s making them the offer, are incredibly difficult to scam.

I’m suggesting in this article that the law is not going to stop commercial rip-offs. Whilst the ‘scratchcard culture' – that unquestioning acceptance of unlikely propositions – continues to exist, nothing will change.

Scratchcards show how easily people can be persuaded that they’ve won something spectacular, when in fact they’re only going to lose money. However (and this is the crux of my article), scratchcards also show how looking at the economics of a proposition from the vendor’s viewpoint can expose what’s going on – even when the small print doesn’t tell the whole story.

To get an insight into how scratchcard rip-offs work, I’m going to look at the card not from the viewpoint of the consumer, but from the viewpoint of the company who issues it. If 'scratchcard culture' is to be broken, it’s crucial that all of us seek to analyse ‘something-for-nothing’ propositions in this way – to think of ourselves as the party or company behind the ‘offer’ and then try and work out how we make a profit. Until we can see how a company makes its profit, we can never take an ‘offer’ or a ‘prize win’ at face value…

DETECTING A SCRATCHCARD RIP-OFF

It’s always been really easy to tell which scratchcards are overwhelmingly likely to be a rip-off: THEY’RE FREE. This is not to say that scratchcards you pay for won't be a rip-off, but with free scratchcards, attempting to claim a 'prize' means an almost inevitable rip-off. Let’s look at why, from the viewpoint of the issuing company…

Giving away something for free when a) you have to pay to produce it, and b) all it does is potentially allow people to get more stuff out of you for free, would be complete lunacy. I'm very tempted to repeat that, but I think the bold underlined should be enough. It would be easier just to put a pile of money in a wheelbarrow in the street and let people help themselves. No one is going to do that, so logically, they’re even less likely to give away a free scratchcard, and let all the winners win something for free. It’s just as stupid, but it’s more work, and more hassle. It’s not gonna happen.

So we’re left with an inevitability that somehow, the company is going make enough money from their scratchcard system to cover the cost of ALL the prizes (including the incredible cash sums, any motor vehicles, luxury cruises or whatever), the production and distribution of all the cards, and the staff wages/salaries. And then, on top of that frighteningly large amount of money, they’ve got to make a profit.

So what the company needs to do, is get people to pay for the scratchcards and the prizes. But there’s a massive problem. If the cards have been given away to unknown, random people for free, no consumer is ever gonna pay out any money… unless… Well, unless they’ve won a prize… So the company charges people who’ve won prizes, to claim their prize – typically via a premium rate phone service. That would work. But only if the prize was worth more than the cost of making the claim. Ah, so no, that still doesn’t work. The system still costs more to run than it makes in revenue. Back to square one.

Well, not quite... What if the vast majoirty of the prizes were worth less than the cost of the claim, but the scratchcard holder could be made to think they were worth more? Or if the prizes carried related charges which had to be paid as a condition of the claim, and which came out roughly equal to what the consumer would pay if he/she was simply buying the prize? Or if the scratchcard was worded so the holder thought they’d won a major prize, when in actual fact, due to a clause concealed within the small print, they couldn't get their hands on it? Well, all of these tactics, along with various others, have been used by free scratchcard companies to trick the public into wasting money on a non-prize. Every ‘winner’, or almost every ‘winner’, will be losing more than they gain.

EVERYONE ‘WINS’

So now the system is starting to make commercial sense. It’s making a return on that huge financial outlay. But it’s not yet making a big enough return. If only a small number of people attempt to claim prizes, the company’s outlay will still far exceed the return. The more people the company can persuade to claim a prize, the better. So, hop back into driving seat at the company. Are you going to fix the cards so only a few people ‘win’?… Or are you going to fix them so a lot of people ‘win’?… Well, if you want to maximise your revenue, there’s only one option: you have to fix it so that EVERYONE ‘WINS’. Or at least thinks they’ve won. Each ‘losing’ scratchcard you send out is a complete waste of the printing cost. A ‘losing’ card CAN’T make you any money. This is why, with the classic free scratchcard rip-off, everyone must ‘win’.

DOES ANYONE REALLY WIN?

As regards real winners, it’s been said by journalists that the very high value prizes (like £1,000,000) do actually exist within these shady ‘gaming’ operations, but I believe that’s rarely the case. The prizes are theoretically there, but have you ever heard of someone actually winning one – from an independent source who has no vested interest? I haven’t. I suspect these companies have their ways of wriggling out of ever having to pay someone a £million. Again, put yourself in the company's position. The whole system is built around bullshit. Why, amid that bullshit, would you pay out vast sums of money to unknown people, who have no more claim to a real prize than anyone else? There's also the issue of how many people do actually try to claim prizes, and the economics of that. For a company to be in a position to give away £1million without losing money, it would need a phenomenally high response from a scratchcard giveway. I find it hard to believe that sufficient numbers of people would respond to make a real £million giveaway viable.

CONCLUSION

The classic free scratchcard rip-off is a perfect example of people having money blagged out of them purely because they don't think beyond their own desires. They don't consider the fact that no one else could possibly be stupid enough to lose large amounts of money giving away prizes when no one is in any way covering the cost. Obviously, for the old and otherwise vulnerable, absence of mind can be an unavoidable fact of life, and the law has intervened in a bid to protect those people. But the masses who really fuel these rip-offs are not old or vulnerable. They're just greedy and self-focused, and blind to the wants and needs of other people. Avoiding most scams is as easy as asking one question: "How does this business make money?". If you can't work it out, you can bet it's a con.

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