Test Drive: Inviting Investors to Test the Waters

Video Transcript

Kelly Kesner: I’m Kelly Kesner here with another session of Investor’s Watchdog University. I’m here with Pat Huddleston, the founder of Investor’s Watchdog, and today our topic is a sales topic that Pat likes to call “the test drive”. What is “the test drive”?

Pat Huddleston: Well, it’s absolutely deadly. It’s the thing that pulls most people who are reluctant at the offset into a Ponzi scheme.

Kelly Kesner: So, is this a sales tactic that’s specific to Ponzi schemes?
Pat Huddleston:

Yeah. Well, you see them most of the time in connection with Ponzi schemes. I imagine you can probably _____ rig it to fit in another sales context, but the point of it is that you got somebody who’s reluctant to believe that this thing is legitimate. If you’re the salesperson, what you tell them is, “Hey, I understand that you don’t want to put a big chunk of money in this.

Give me $5,000.00, $10,000.00 and we’ll see if it works. You can test it out and see for yourself. Take it for a spin as it were.” So, what happens is you’re going to give him the $10,000.00 and then you’re going to count off 30 days on the calendar because that’s when your first check is supposed to arrive, and low and behold it’s going to be there in the mail just as promised, and the next 30 days, and the next 30 days.

Kelly Kesner: And now you’re convinced.

Pat Huddleston: You’re convinced because you think you’ve seen it with your own eyes, right? So, now you’re kicking yourself for not putting $200,000.00 in instead of $10,000.00.

Kelly Kesner: And you usually end up giving the advisor more.

Pat Huddleston: Of course, yeah. Because you’ve imagined what you could be earning.

Kelly Kesner: And then at the end this turns out to be a Ponzi scheme.

Pat Huddleston: It turns out to have been you’re money. That $200 was either your money or it was another investor’s principle. It wasn’t any profit generating it.

Kelly Kesner: So, what happens at that point? How do you get alerted that you’re in the middle of the Ponzi scheme?

Pat Huddleston: Oh my goodness. Usually the FCC comes in to shut it down. And what’s really so tragic is people usually think in that scenario, “the test drive” is so powerful, the illusion is so powerful that when the FCC comes in and shuts it down I’ve had people say, “They’ll just be in there two or three days. They’ll realize it’s all legitimate and then they’ll leave and we’ll keep getting our checks.” That’s how powerful the illusion is. But, no, folks, if the FCC goes in to shut down a company the chances of it being legitimate, it all being a big mistake are in – I can’t say that.

Kelly Kesner: Infinitesimal.
Pat Huddleston: Are really small.
Kelly Kesner: So, tell people how to avoid “the test drive”.
Pat Huddleston: Don’t take it, bottom line. You should have done your pre-investment investigation before you put your money in anything. And I don’t care if we’re talking about $100 bucks, or $10,000.00, or $100,000.00. So, just don’t accept the invitation to take the drive. You’re not putting any of your money in anything unless you’ve done the kind of pre-investment investigation that we’re going to teach you how to do in this series.
Kelly Kesner: And that’s all for our class this week. Thank you and we’ll see you next week. Class dismissed.
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