A quick mental exercise: Imagine electricity were just discovered, and during the residential rollout, there were no rules. No fire safety measures, no voltage standards, no common size for outlets.

I imagine there’s one image that comes to mind. FIRE! Everywhere.

That’s kinda what we’re hearing from some quarters about artificial intelligence right now. We dare not hinder development of AI with regulations and questions, lest we fall behind ... in some sci-fi-inspired race to save humanity by destroying it, I suppose.

The analogy is imprecise, but the sentiment is real. AI-branded tech is being shoved into every kind of work right now, and as is often the case with Big Tech, valuations count much more than consequences.

Of course it often helps to explain the macro by storytelling the micro, so I leapt at the chance earlier this year to begin work on a podcast series for Duke University about the impact of AI on the music business. The final episode just dropped.

We have a great messenger for the topic -- Tift Merritt, a Grammy-nominated folk singer who is also a music scholar and a very shrewd businesswoman. A credit to her industry, she’s taken a keen interest in the future of ... gosh, I hate to type this phrase ... human-created music. Particularly folk music, which tends to serve as the conscience of whatever culture it belongs to.

“I think very much of myself in terms of a lineage of people who came before me and a lineage of people who will take the stage long after me, and how I can do my best to care for the folk musician tradition in the moment that I inhabit. And that is carrying the news of the day,” she tells me in the fourth and final episode. “That is carrying the emotional message of being a woman in this moment. That is reacting politically to what’s happening about me, and hopefully igniting in other people the song that is within them. So I’m not sure that technology that’s training on backwards-facing material is going to be able to have the reaction that is really deeply embedded in the forward-facing moment and the human connection that we all hunger for.”

In other words, AI is not going to write great protest songs. Neither will anyone else, if AI-generated music puts actual musicians out of business.

This sounds like hyperbole; it’s not. Big Tech has already figured out how to siphon off big profits from the music industry, leaving precious few crumbs for today’s emerging musicians. Crumbs, as in 0.003 cents per stream. But that was only step 1. Those partial pennies will sound generous to bands who get nothing as AI-generated music has begun crowding their art out of listeners’ playlists.

By now, I hope you’ve realized, this is the same basic threat facing nearly all labor.

Fortunately, there is nothing inevitable about this dark future. Tift Merritt is working with Duke Professor David Hoffman at Duke’s new Trustworthy Technology Lab.

“Luckily, we have people studying this, and we know that there are solutions...(We are) taking a look at different public policy interventions that we would be able to make that would preserve some of the things that we really value out of music, and thinking about that as a canary in the coal mine for what we see in lots of other sectors of the economy,” David says in the final episode. “We actually know how to go and protect labor, and to protect the listener, and to protect society here.”

The series is wrapped around Tift Merritt’s new album, called Sugar -- it’s her first studio work in a decade, which makes her an excellent witness to “things that have changed.” In a nod to her album, the series is called “Sugar High” -- the kind of fake energy that bad food gives you, or bad music.

I hope you’ll give the whole series a listen. You can grab it from all the usual podcast places. Tift is an engaging interview and her music is great. Below I’ll paste links to all four episodes and transcripts. But I’d like to leave you with an important nugget from my conversation with Prof. Hoffman, who is also executive producer of the series. If you care about AI or music, this is for you:

David Hoffman: Bob, maybe the one other thing I would add is I think we would be very interested in continuing to collaborate with people who have a skeptical approach to this call for no regulation whatsoever for artificial intelligence.

We’ve seen with some of the recent releases the potential for significant impact on critical infrastructure and on people in general. We’ve never, as far as I can tell, said that for a new area of technological innovation that’s going to have that kind of impact that we shouldn’t regulate at all.

Coming back to the food analogy, can you imagine if we were to say for either food or for the pharmaceutical area, “No, we don’t wanna chill innovation, therefore, we’re not gonna regulate at all the food that you eat or the drugs that you have to take”? That would obviously be insane. I think it’s actually equally insane that we’re taking that current approach with artificial intelligence.

Bob Sullivan: It was just striking me. What if we rolled out electricity without any rules? How would that go?

David Hoffman: Absolutely. Sam Altman recently came out and said that he actually believes that the future for these models is that they would become a utility, and basically serving up knowledge and thinking to individuals like they receive power.

I wonder how much he’d actually thought through that then the natural result of that is we regulate utilities, and we regulate the cost of utilities on individuals and the safety of them. I’m not saying that I necessarily agree that’s the foreseeable future, that, number one, we will go or that we should go, but I think it does show the lack of clear thinking right now about how we’re supposed to have governance models for this technology and to hold the powerful people who are advancing them accountable.

Home page for the entire series | Ep 1 | Ep 2 | Ep 3 | Ep 4

Transcript, part 1

Transcript, part 2

Transcript, part 3

Transcript, part 4

I sat down at his table and he had probably 100 cards and letters and gifts and boxes and he said, ‘I bet there’s at least 500 .... This isn’t nearly all of it.’ And he really lost count. There were just stacks of love letters and gifts and cards, and it just... the emotional power of sitting at his kitchen table that was just covered in evidence from women who believed that they were in love with him. — ABC News reporter Lisa Fletcher

Cards. Flowers. Candy. Gifts that just never stop. It might sound quaint at first, even charming. But every one of these love stories ends the same. With Pat Marsh pleading for the sender to stop. Sometimes, that conversation happens at his front door...with anger and even violence hovering in the air.

“These people have also come to my house....And this is where it gets dangerous,” he told me for this week’s two-part episode of The Perfect Scam.

“After about 6 months of this, one night... There was a knock at my door...and I was looking at a guy and he was like... ‘you told me to come over.’ and I was like, ‘Dude, get outta here.’ And that’s when he grabbed the door and he opened the door and tried to come in... and my exact words were, ‘You’re playing a dangerous game. You need to get out of here.’ .. I would have shot him, if he had come into my house, I’d have shot him.”

“These people” are romance scam victims. And the parade of victims who call, write and visit Pat Marsh has been relentless for nearly a decade. Marsh is a test pilot, a generally fascinating man who caught the attention of criminals back in 2017. They thought he’d make the perfect bait for would-be lovers on dating sites, and by all accounts, the criminals were right.

Marsh is the victim of a particularly cruel kind of identity theft. No one can really say how many women and men have been enchanted by the fake Pat Marsh and various variations. But here’s a hint: One police detective investigating a Pat Marsh romance scam in Easley, South Carolina - a widow who’d had $600,000 stolen -- used email records to find 60 more cases.

Marsh is really the victim of industrial-scale crime, says Detective Eric Gillespie.

“The fake Pat Marsh here is actually probably a dozen if not more people,” he told me. “You’ve got professional outfits in West Africa and Southeast Asia that you might have 100 people who are the same person more or less, for lack of a better phrase.”

Even if you don’t believe you could ever be the victim of an online scam -- and I think you are foolish for that -- you should care about the current surge in digital crime. Pat Marsh is collateral damage in the ongoing international scam wars we are all fighting. You can be next. All of us can get wrapped up in a scam even if we never communicate with a criminal. That’s why these stories matter so much.

After a decade’s worth of investigations, TV news stories, and late-night door knocks, Marsh has no idea when his headaches will end. He really has no control over it. Instead, an entire system needs to be changed. Online dating sites need to police their membership much more aggressively. Banks and new money systems need to get better at stalling suspicious transactions. And we all need to be more sympathetic about the isolation and boredom that create fertile ground for crime.

I hope you’ll listen to this week’s two-part episode about the man with hundreds of fake lovers. If podcasts aren’t your thing, I’ve pasted a partial transcript below.

-----------------------Partial Transcript----------------------

[00:01:15] Pat Marsh: My dad was a three-war Navy fighter pilot guy. Started in World War II, then Korea and Vietnam. He is one of the founding pilots of Top Gun.

[00:01:24] Bob: And obviously you got the flight, flying bug, right?

[00:01:27] Pat Marsh: Yeah, I was too late to fly Tomcats in the Navy, but I was a natural. I’m as comfortable upside-down as I am sitting here talking to you.

[00:01:34] Bob: That’s probably useful for what’s been happening to you then.

[00:01:40] Bob: That’s Pat Marsh I’m talking to there. And what’s happening to him is, well, that’s a story, such a story it’ll take up to two episodes to tell it. So get comfortable while we explain how Pat Marsh’s life has been turned upside down, and why his story reveals why everyone needs to care about scams and fraud because even if you never directly encounter a criminal online, well they can steal from you too and they can steal a lot more than money

...

[00:11:11] Bob: Tell me the first time or whatever you remember about the first time you get an inkling that any of this was going on.

[00:11:17] Pat Marsh: Oh, I was actually on a job and I got a call on my cellphone, and the person on the other line was a woman and she was, what’s the word I’m looking for, kind of hesitant, unsure of herself. And she goes, “Is this Pat Marsh?” And I said, “Yes.” I didn’t recognize her. I wasn’t volunteering anything. And she’s, “You and me have been talking for a number of months.” And I said, “I don’t recognize your voice. I don’t know who you are.” And in a real short order it, basically we got to the point that she said that me and her had a relationship, and we had been talking, and it was time for us to meet, and this and that and the other. And basically my response was, “I don’t know who you are. I’ve never spoken to you before. We definitely don’t have a relationship.”

[00:12:08] Bob: It’s 2017. The woman is an attorney in Pittsburgh.

[00:12:14] Pat Marsh: They were supposed to meet and then this clown came up with some, oh the airplane’s broken, I’m stuck in an airport. I lost my passport. Can you send me $5000. And I think that’s when she said I need to check this out. Because you know when the person she thought was me started asking for money on, on some BS excuse.

[00:12:36] Bob: The woman thanks Pat. He hangs up the phone and doesn’t think too much more about it. But...

[00:12:42] Pat Marsh: Within a day or two I got another call, and this was from a professor at MIT.

[00:12:49] Bob: Oh God.

[00:12:50] Pat Marsh: Same story. She thought she was having a relationship with me. She was doing her due diligence. And I’m like, wow, a professor from MIT, and an attorney from Pittsburgh. And then in real short order I started getting cards and other calls and that’s when I knew I’ve got a problem here.

[00:13:12] Bob: Cards, calls, flowers. Suddenly his home is deluged in romantic things from people, mostly women, he doesn’t know. Roses, treats, even a box of lingerie.

[00:13:26] Bob: Now when this first happened, had you heard of romance scams before?

[00:13:30] Pat Marsh: No. And in fact, like I told my, I’ve never even been to a dating website before. I just, I was never even out of curiosity on one. I’m just, it’s something that doesn’t interest me.

[00:13:40] Bob: So at what point do you go google romance scams, or when do you figure out what’s really happening?

[00:13:44] Pat Marsh: I didn’t. It, I, I knew a reporter down here. We were doing another story on a plane crash. He always calls me whenever there’s a plane crash because he, of my background and he wants to know what kind of the inside track is, and things about how these things are investigated and what do I think the cause was, just shooting from the hip, things like that. And we were doing something and I mentioned that I was having this problem. And he said, “Hey, I’m going to go to Lisa Fletcher, who’s our investigative reporter. She would love to do a story on this.” By then I had received dozens and dozens of cards, flowers, candy from all these imaginary girlfriends.

[00:14:28] Bob: Pat turns to Lisa, a real reporter for ABC News in Washington DC, to ask about all these imaginary girlfriends.

[00:14:37] Lisa Fletcher: A colleague said you should talk to this guy. He’s got this crazy scam that’s happening around him in a dating website, and there’s a million scam stories, and I thought, oh, another scam, dating scam. I’ll call him up.

[00:14:50] Bob: Pat, she quickly learns, is a stunt pilot, a funny guy, with a very well, not funny story.

[00:14:58] Lisa Fletcher: And he was the most interesting guy, right. He’s a fighter jet pilot in airshows, and he’s rugged, and he’s handsome, and he’s just very, he’s very outspoken, and he’s just, he’s very interesting. He’s one of those very charismatic, compelling personalities. And he’s, so you’ve got that, right. You’ve got that tough guy exterior. But then he says, women, somebody’s been using my identity, my image, my name, my photographs, everything about my life; posting it on dating websites that are geared toward older women, and then scamming them. And he’s like, all of a sudden, he’s like that exterior started to melt, right, and this tough guy started telling me how his heart was breaking for these women. And he was getting gifts and letters, and phone calls, and he had saved all of them, and methodically was going through each one with a letter he’d written back to them saying, I’m not this person you think I am. So when he started telling me this, I’m like, I’ve got to see this. I’ve got to go out to your house and, and I went out to his house and...

[00:16:14] Bob: So Lisa takes a camera crew to Pat’s home and it’s even worse than she imagined.

[00:16:21] Lisa Fletcher: I remember when I sat down at his table and he had probably 100 cards and letters and gifts and boxes and he said, “I bet there’s at least 500.” He said, “This isn’t nearly all of it.” He said, “This is just some of it.” And he really lost count.

[00:16:38] Bob: Do you remember what it felt like when he had this table full of letters and cards and gifts?

[00:16:43] Lisa Fletcher: Yeah, I was wondering what I was getting into. I had the phone call, and we got to his house and sitting down at the table there were just stacks of love letters and gifts and cards, and it just, the emotional power of sitting at his kitchen table that was just covered in evidence from women who believed that they were in love with him. I really could feel what he was feeling and what he communicated to me on the phone, how difficult this was, how heartbreaking this was, how this was so much more and so much bigger than one scam that affected one individual.

[00:17:18] Bob: And what is Pat doing with all those cards and letters? Basically what he tried to do for Pam. He tries to save these victims.

[00:17:28] Pat Marsh: And then I had like a, a form letter, and I would just change the name, and I would send it back to that person, that woman with her card so she could see that it was genuine. And just saying, hey, you’re a victim of a sweetheart scam, call the cops or call the FBI.

[00:17:47] Bob: But many of these warnings don’t arrive in time.

[00:17:51] Pat Marsh: But a lot of them like that it’s too late. They told me they sent them hundreds of thousands of dollars. Then I got to the point where you know every time one of these women would like, I sent him $25,000, I sent him, one of them sent him $1.2 million by the way.

[00:18:06] Bob: Wow, my God.

[00:18:07] Pat Marsh: Entire life savings.

[00:18:09] Bob: That’s horrible.

[00:18:11] Bob: And often by the time they find the real Pat Marsh, they’ve already discovered there is a problem, and they’re angry.

[00:18:20] Pat Marsh: And it’s too late, and the reason they’re all mad is they every, they sent whatever they sent, and once they, there was no feedback, no bounce back, they wanted their money back. They wanted their return, and it wasn’t forthcoming. And all of the sudden they said, let me call this Pat Marsh and see what’s going on. And obviously they came to me and that’s when they got the bad news that you’re being scammed. You were scammed.

[00:18:47] Bob: But by the time they find you, they’re already suspicious, they’re already angry, right?

[00:18:51] Pat Marsh: Yeah, they’re getting angry because they lost their money.

[00:18:54] Bob: And some of these angry people, they do more than call.

[00:18:59] Pat Marsh: But these people have also come to my house.

[00:19:02] Bob: Oh God.

[00:19:02] Pat Marsh: This is where it gets dangerous.

[00:19:04] Bob: Oh my God. Wow.

[00:19:05] Pat Marsh: After about 6 months of this, one night, it was like on a weekend night, I was up late. There was a knock at my door. And I looked through the window and I was looking at a guy, and I opened up the door and I was like, what the hell? And he swore that me and him were having a conversation and he was like, I was like, “Dude, I don’t know who you are. I’m not talking to you.” “Yeah, we just talked, you told me to come over.” And I was like, “No, I didn’t. I don’t know who the hell you are.” And he was really insistent. And I actually had my gun on me, and I had it behind my back. I mean he was really being forceful, and I was like, “Dude, get outta here.” And that’s when he grabbed the door and he opened the door and trying to come in. And that’s when I took a couple of steps back, I let him see the gun then, and my exact words is, “You’re playing a dangerous game. You need to get out of here.” And that’s when he realized I wasn’t the guy he was talking to.

[00:19:57] Bob: Wow.

[00:19:59] Pat Marsh: I would have shot him, he had come into my house, I’d a shot him.

[00:20:02] Bob: And this isn’t the only time one of these lovers had come to his home.

[00:20:08] Bob: How, how many people, just roughly, have come to your house like that?

[00:20:11] Pat Marsh: Oh, it’ll, a dozen would be a nice round figure.

[00:20:14] Bob: You’ve had a dozen people ring your doorbell and say I’m your online lover.

[00:20:17] Pat Marsh: Yeah. Lately they’ve come with a whole bundle of like paperwork. Um, oh God this, I had a woman come to my house just this last fall. As I pulled up, I saw this strange car sitting in my driveway, and I’ve got a long driveway, and I knew instinctively what it was. So I pulled up behind the car and this elderly woman gets out with a whole handful of papers, and I just kind of like cut her off, and says, “I’m not that guy.” She was coming to check. She had been sending this person a lot of money, and I don’t know how much, but she said it was a lot.

[00:20:54] Bob: Well you must be so fed up with this.

[00:20:56] Pat Marsh: Yeah. But I’ve had women some to my door and they’ll bring their daughters or their kids with them.

[00:21:02] Bob: Oh God.

[00:21:03] Pat Marsh: And one time this daughter, probably, I don’t know, in her 30s or 40s, she’s screaming at me from the car. She won’t get out of the car, her mom’s standing on my doorstep, and we’re talking, and I’m telling her what’s going on; she’s a victim of a romance scam, and I’m not that guy. But her daughter is screaming from the car, and I don’t remember the exact words, but it was basically, “You stole my mom’s money, give us our money back!” Just screaming at me that I ripped off her mother and that I needed to return the money.

[00:21:34] Bob: Not all the visitors are quite so angry at him anyway.

[00:21:39] Pat Marsh: One of the ones that came in my driveway and she had a bunch of paperwork with her, and she came in my driveway knowing that I think what was going to happen as far as she was going to meet this illusive Pat Marsh, he was probably going to tell her, nope, not me. You, your money’s gone, and sure as heck, that’s what happened, and, and then I don’t remember the exact words, but when I thought we were all settled, then she wanted me to go out, she asked if I would go out to dinner with her.

[00:22:08] Bob: (chuckles) That’s a pretty good plot for a romantic comedy movie.

[00:22:12] Pat Marsh: Ah, I don’t know about that.

[00:22:13] Bob: So Lisa Fletcher, after seeing all these cards and gifts and hearing about everything else, goes on television and tells Pat’s story.

[00:22:23] Lisa Fletcher: Yeah, so we did the interview with Pat. We obviously looked at all of the cards and the letters and the gifts, talked to him about what was going on. Talked to some experts on these dating scams. Talked to the FBI. And then tried to reach the dating websites to talk to them about it, because I think that’s one of the big questions and that was part of our original storytelling on this was what, if any, responsibility do these dating sites have?

[00:22:48] Bob: Did they ever respond back then?

[00:22:51] Lisa Fletcher: I don’t recall if they, I know that they wouldn’t sit down for an interview with us. And I think that they, their position is we can’t safeguard every single individual on our site. Everybody is an adult. They have to take a certain degree of precaution and understand that sometimes people aren’t who they say they are. But I think there are a lot of people who would disagree with that.

[00:23:14] Bob: So that leaves Pat without any real option to get control over this situation.

[00:23:20] Lisa Fletcher: Pat is a victim, but he was also a first responder to the other victims. So that ery uniquely positioned him, right, because he didn’t lose money, but his life was deeply disrupted. Because you imagine, like you have strangers believing that you stole their life savings, that you manipulated them emotionally, that you ruined their retirement, and so he had a very large, emotional toll that was being taken on him in addition to the victims who were, in some cases, having their life savings pulled out from under them.

...

Lisa’s story comes out on television which you might think would be the end of it.

[00:28:20] Bob: So after the story came out back 9 years ago, did this stuff ebb and flow? Did it wind down for a while?

[00:28:25] Pat Marsh: No, it kept on going strong. ‘Cause the story came out in November, and I always got the cards around birthday time and holiday time. So I got a bunch that Christmas, and I got a bunch the next year during the birthday time, because they had my birthday too.

[00:28:42] Bob: Oh God.

[00:28:43] Pat Marsh: Which I just, I can’t... and I got to the point where as fast as I got them, I, for a long time I would just, I would get the card, and then I had like a, a form letter and I, I would just change the name, and I would send it back to the, that person, that woman with her card so she could see that it was genuine, and just saying, “Hey, you’re a victim of a sweetheart scam, call the cops or call the FBI or go look at Lisa Fletcher’s story, but we don’t know each other.”

[00:29:15] Bob: But even that doesn’t deter the fake Pat Marsh, something that victim Pam Dodds confirmed a few years later. And again, we don’t recommend this.

[00:29:25] Pam Dodds: It was probably three years afterwards. I thought, huh, I wonder. And I called he hone number I had. And he answered.

[00:29:35] Bob: Wow! Wow!

[00:29:36] Pam Dodds: So he’s still doing this.

[00:29:38] Bob: Oh my gosh. Did you talk to him?

[00:29:41] Pam Dodds: Yeah, I did.

[00:29:44] Bob: What did you say?

[00:29:45] Pam Dodds: Oh, I asked him. “What are you doing? You’re still doing this?” “Oh, what do you mean? What do you mean? Why are you calling me?” I said, “You’re still scamming all these people.” “No, I’m not, I’m not.” And then he hung up, but and probably if I called the same number again today, he would answer again.

[00:30:06] Bob: That is wild.

[00:30:07] Pam Dodds: Because they’re not stopping.

[00:30:11] Bob: Wow.

[00:30:12] Bob: They’re definitely not stopping.

[00:30:17] Lisa Fletcher: Pat and I stayed in touch over the years, and I think we probably did one or two follow-ups along the way just saying this was still happening. I remember getting some really disturbing phone calls from Pat saying, you know, “I’m in physical jeopardy here. I’m having people show up in my driveway. I’m having people show up on my front porch thinking I stole their mother’s retirement.”

[00:30:41] Bob: That’s really scary.

00:30:42] Lisa Fletcher: It was really scary, and he’s a tough guy. He is not easily scared, but this had him concerned, reasonably so. I mean imagine that, in the dark of night people are banging on your front door demanding to see you because they believe you have bilked their mother out of her life savings. And that’s what he was facing. He’s, “Somebody’s going to get hurt. And, and it’s probably going to be me.”

[00:31:05] Bob: So now it’s deadly serious. It must be a helpless feeling for you, right?

[00:31:09] Lisa Fletcher: Yeah, as a reporter, I want to be able to do something, right? I think it’s embedded in all of our DNA that the reason we do this job is because we hope to fix things that are going wrong. And this is not a situation that I or anyone could fix. The genie was out of the bottle.

[00:31:26] Bob: The genie is out of the bottle. Somebody’s going to get hurt, and everyone seems powerless to stop this crime. Years go by. 2020 passes. The pandemic, and then...

[00:31:40] Lisa Fletcher: And then it must have been oh two years ago now. I got a call from Detective Gillespie in South Carolina. And he said, “I’m working on a case about a man named Pat Marsh.”

00:31:56] Bob: Detective Eric Gillespie, in small Easley, South Carolina, is investigating a case about 8 years after Lisa first met Pat.

[00:32:06] Det. Eric Gillespie: Yeah, so the general outline, she uh, I believe was a recent widow, don’t, not 100% sure on that. Some circumstances lead to her creating a profile on a handful of different dating websites for, exclusive to older uh, older people. So she met “Pat Marsh” through one of those websites.

[00:32:30] Bob: And she had sent him money.

[00:32:32] Det. Eric Gillespie: Yes. So it started, I believe started pretty small, I say pretty small, it’s a lot of money to me still, a few thousand dollars here and there. And eventually evolved uh, I, I’d say pretty quickly evolved especially for what we typically see with romance scams. It evolved pretty quickly into her taking out home equity lines of credit to finance these and actually attempted to get a couple of them. And as, as a result, just the, our victim here had sent approximately $600,000.

[00:33:05] Bob: Oh my God, $600,000.

[00:33:09] Bob: Detective Gillespie trying to help the widow in his town who took out a loan on her home and sent $600,000 to a man named Pat Marsh. Well he pulls on a thread and he finds his way to reporter Lisa Fletcher

We just learned that Waymo is recalling about 4,000 self-driving cars because they can’t read highway construction signs.

According to Road & Track, some Waymo cars “failed to recognize and drove past ramp closure signs into pre-planned freeway construction zones; Waymo recorded six of these events in April 2026 in Phoenix, Arizona. In an additional seven incidents in May 2026 in San Francisco, California, the offending Waymos drove between cones designating lane closure.”

That’s a) terrifying b) a ridiculous engineering failure. Construction is hardly a rare condition of highway driving. How did cars not equipped for this get released into the world?

Because someone, somewhere, believes certain sacrifices must be made for progress.

Waymo’s mistake is a very bad example of the kind of real-world exception conditions that have been derailing self-driving cars for more than a decade. Those same pesky, weird realities will soon make many wild promises about artificial intelligence look equally silly -- and cost a lot of investors a lot of money.

A few years ago, I wrote a book called The Plateau Effect with Hugh Thompson, former CEO of Symantec (this piece is my opinion alone, fyi). The concept of the book is simple: plateaus appear everywhere in life, and they bedevil everything and everyone that seems to be making quick progress. People losing weight hit plateaus; people learning guitar or a new language hit plateaus; drugs hit plateaus. Once you start to look, you see plateaus everywhere. A simple example for geeks: Finding the first 99% of bugs in software is relatively easy. Finding the last few is often a nightmare -- finding the last 1 percent can take longer than finding the first 99 percent. Sometimes, they’re never found. And so it will be for AI. The Plateau Effect looks like one of those calculus curves where you approach...but never reach...a limit.

Life is full of these kinds of exception conditions. Shit happens. One might say Murphy’s Law suggests that weird stuff like this is normal. Computers don’t do well with irregular inputs, as I’m sure you know. “That....does....not....compute...”

This is part 2 of a three-part miniseries on Artificial Intelligence.
Read part 1: Disarm AI, yes, but the Pope was just getting started
Read part 2: Artificial Intelligence needs a police blotter. Wait, it already has one!

Were a tech mogul sitting here, he’d furiously confiscate my keyboard at this point and tell me that millions of miles of data will solve this problem -- there are only so many exception conditions on the roads, and eventually the supercomputer in the sky will be prepared to deal with all of them. Even without The Plateau Effect, this feels foolishly optimistic to me. Exhibit A is Waymo’s current inability to deal with road construction. But assuming that can be fixed, there will be weird, pesky, unexpected road conditions for as long as humans roam the Earth. Dealing with the first 99% won’t be so hard. Dealing with that last 1 percent will be very, very hard. It’s not going to happen soon, with self-driving cars and many AI applications.

Elon Musk has been promising full self-driving cars will be ready in a year or two since...2013. There’s nothing new about this kind of hype cycle. It’s meant to generate excitement and investment so early investors can make off with a lot of cash, funded by later investments. And this pattern keeps working as long as investors believe in tomorrow. Forget autonomous cars; the real future is on Mars! And so it goes.

See, it’s easy to make a car that can ride on highways which can follow predictable patterns -- roads you could drive with your eyes closed. But when an 18-wheeler loses a tire tread and cars in front of you start to swerve and dart, well, your eyes better be open. Another example, shared with me recently by Sean McGregor of the AI Incident database: When a dog gets loose in stop-and-go traffic, What Would Waymo Do?

But what about all the dire warnings of AI software teaching itself how to destroy humanity? First off, if one were actively building a tool that would blow up the world, wouldn’t someone at one of these firms throw the assembly line emergency stop switch? But more to my point here: I suspect AI investors don’t mind all these doomsday scenarios because they help build buzz. I’ve watched entire documentaries about scary AI futures that don’t even raise the question: Are we sure this stuff will actually work? The a priori assumption that we’re successfully building God is pretty valuable to these early investors.

I’m *NOT* saying none of this stuff works. AI is great at writing perfectly trite emails, though my smartphone recently replied “how are you?” to someone on my behalf when I had no intention of asking. That was awkward. Can a Tesla in FSD mode drive better than a teenager playing with his smartphone? Yes, I think so. I drive a car with a lot of automated safety technology that I think works great. But can a Tesla on autopilot deal with a dog on the highway better than a human with good judgment? Not yet. And, I’ll wager, not for a long time.

I’m harping on this point because ignorance of The Plateau Effect sets up a perfect situation for those who benefit from AI hype. Tech moguls and PR firms generate a lot of attention and money with wild promises about tomorrow. At trade shows, I used to call this the ‘next quarter’ game. People would hawk all kinds of great new hardware and software through amazing demos in Q3, then promise it would be ready by Q4. But in tech, Little Orphan Annie is a liar. Tomorrow is much more than a day away.

I don’t care so much about people who want to play this game with investment cash. That’s their business. What I care about is the “sacrifices” that tech firms will decide are acceptable as they run harder and harder into the Plateau Effect. Regulators and voters have to be ready to recognize the dangers we are about to encounter, and the language that will be used to distract us. Like Google itself, AI will be in beta mode for a long time.

In our world of black and white, it’s difficult to be a tech skeptic without being labeled a Luddite. The Holy Grail is progress, so the thinking goes, and any pesky questions threaten to stifle innovation. Do you want us to lose to the Chinese!?!?

It’s ok, I’ve been doing this a long time. Not so long ago, my nickname among CNBC bookers was “Big Data Hater.” You remember the age of Big Data, don’t you? If you don’t, it was yet another marketing moniker that took over the tech world for a few years, stoking stock valuations everywhere it went. A mini dot-com boom, if you will. Big Data, unfortunately, often became synonymous with Bad Data, which always gives bad results, no matter how much data you shove into the GIGO machine. Today, we call these Large Language Models, which sound much more sophisticated, but suffer equally from the same garbage problem.

This is part 2 of a three-part miniseries on Artificial Intelligence.
Read part 1: Disarm AI, yes, but the Pope was just getting started

Back then, I would protest with a glint in my eye -- how can someone hate data? That’s like hating atoms! Some of my best friends are data!

I don’t hate data. Or tech. What I hate is thoughtless “progress” without discernment about side effects and collateral damage. And I really hate when the progress ... is promised, down the road -- soon! -- while the roadkill piles up today. What’s the roadkill of this never-ending tech bubble cycle? Pension funds that are crushed when the bubble bursts. Workers who are laid off in the name of cost savings needed to offset investments. Kids who end up with addiction machines in their pockets because there’s no other legitimate business model for social media. Adults who’ve sacrificed every shred of human privacy so they can be stalked by ads for items they purchased last week. And so on.

Yes, the consequences are real, and they are here -- even if the innovations are...just around the corner.

I’m not arguing that AI isn’t real. Already, it’s freed an entire generation from writing trite, jibberish-laden emails back and forth at work. AI can turn meetings that should have been an email into a summary of said email. That could be real progress -- but let me know when those meetings are actually canceled.

Can AI do a great job of writing a meeting summary for people who weren’t really paying attention anyway? Yes, absolutely. Can it pull out that one critical moment in the meeting which most attendees missed...which might very well be what was left unsaid? Ha! (You’ll read about this in part three of this miniseries.)

AI is great at writing code, getting rid of some of the grunt work of the digital age. It helps people with blank page syndrome get a start on papers and presentations. And it’ll do a fine job of summarizing large amounts of material for people in a hurry. A great application I read about recently solves that “too-much-to-read” problem for practicing physicians who have scant time to digest all the latest medical research. AI can do these things today.

As for tomorrow -- there seems good reason to believe AI will be great at finding needles in research haystacks, which could very well lead to amazing medical advances. I will be the first to cheer on this work. I’m sure I’ll need it someday.

But tech titans have a decades-long pattern of racing forward with innovations, intermediate consequences be damned. Of doing things simply because we can, not because we should -- in fact, not even asking if we should. And, specific to my main work right now, of creating tools that are easy to abuse and darn near impossible to stop.

I am not a Luddite. I think tech does more good than bad. But I think in a playoff series, “good” wins in the 7th game, and probably in overtime. It’s often a close call. We can’t ignore the bad things that AI will enable because honest evaluation might slow progress a smidge. The best thing we can do is air every single one of these side effects and work to eliminate them. That’s how penetration testing has always been done. That’s the ethos of open source software. More than ever, we need to approach the coming age of AI that way.

That’s why I was so happy to learn recently about the Artificial Intelligence Incidents Database. It is what it sounds like -- a list of mishaps caused by, or enabled by, AI. I recently interviewed one of its leaders, Harvard fellow Sean McGregor, for The Perfect Scam, a podcast I host for AARP. McGregor is the kind of plain-speaking genius we desperately need right now. We talked for an episode about a family who was targeted by an AI-generated photo of the family dog depicting him on an operating table, riddled with injuries from a car accident. (That is incident 1,478 in the incident database).

McGregor made this point: Early on, the database was full of (funny?) incidents about AI failing to work properly. But increasingly, the database is loading up on tales of fraud committed by criminals using AI. That might be the bigger problem, he suggests -- the so-called dual use problem -- as AI gets better at what it does, it gets better for the bad guys. I left our chat thinking my sarcasm about AI’s clumsy failures might very well be misplaced.

You can see a partial transcript of our chat below, if podcasts aren’t your thing. But I hope you’ll listen to our entire conversation, which you can hear at this link, or on your favorite podcast platform.

But whatever you do, don’t call someone a Luddite because they’re worried about the future. We do get to decide what kind of future we want; we don’t have to just accept what Elon Musk gives us. In fact, I’d argue, that’s a poor choice.

Tristan Harris from the Center for Humane Technology appeared on CNN this week and made a very sharp point about incentives. In the end, AI is going to become whatever the incentives nudge it to become. Right now, the only incentive on the table is shareholder value. That means AI will principally be used to eliminate labor costs. The End. But we have the chance to design other incentives right now. To reduce human suffering. To build more housing. To make mass transit far more efficient. Heck, to enable human happiness. Whoever told you that our society’s only goal is profit sold you a very shallow future. We can, we must, do better. An honest, real-time look at AI’s failings is going to be a big part of that.

-----------------------------------PARTIAL TRANSCRIPT---------------------

[00:28:16] Sean McGregor: My general reaction to the scam is while people are inventive and sometimes horrible, and as soon as you see someone, someone do the thing, the bad thing, you’re like yeah, that’s something we have to deal with in the world now, that this is something that technology has made possible. It can do many amazing, wonderful things, but it also empowers the bad actors.

[00:28:40] Bob: And, and taking a tool and abusing it or using it for abuse, that’s, that happens at every stage of technology, right?

[00:28:47] Sean McGregor: That’s right. It’s a tale as old as time.

[00:28:50] Bob: How hard is it to generate a photo using say you know I go onto someone’s Facebook page, I find a picture of their pet, and then I tell a computer, make a photo of this pet looking like it’s in dire need of surgery. How hard is it to do that?

[00:29:01] Sean McGregor: It’s very easy. You don’t need to be a computer scientist, you don’t need to have any great degree of technical sophistication, you just have to search around a little bit, find where the tool is, plug the photo in and you’re good to go.

[00:29:14] Bob: In fact, Sean helps track stories like this one in that AI Incident Database, and yes, Archer’s tale is in there. It’s Incident 1478. But back up a second. What is this database?

[00:29:28] Sean McGregor: I started a project and an organization behind it about 8 years ago that’s dedicated to indexing what are called AI incidents. And AI incidents can be a misuse, they can be scams, they can also be malfunctions. It’s basically any time someone’s harmed out in the real world we want to collect that and put it in the database because this is how you make safety. This is how you make AI safer. It’s inspired by some other databases in aviation where a plane crashes, you record the circumstances of that crash. And that collectively gives the aviation industry the charge of making sure it doesn’t happen again in that way. And so as a result of that, I’m one of the most well-read people in the world about bad things that happen with AI, and it’s a funny point to me because I more or less got my start in doing good things with AI, figuring out how to solve problems in ecology and wildfire and all environmental management problems, and here I am reading about all the bad things.

[00:30:35] Bob: Uh this sounds like the police blotter to me. I don’t know if you remember police blotter in newspapers, but it always on like on page 2 or 3, and it was just all the small bad things that happen in your town, but yet it was always the most read thing in the newspaper. This is like the police blotter for artificial intelligence it sounds like to me.

[00:30:51] Sean McGregor: Yeah, you could call us that, police blotter for AI. That fits.

[00:30:55] Bob: Why do we need a police blotter for AI?

[00:30:59] Sean McGregor: AI is increasingly everywhere in the world, and the problem is AI isn’t always all that robust to all the ways in which the world varies. It often fails and is unsafe as a result of that, and I ask the question of what is safety, how do we build effective safety culture and processes to make these systems something that we actually want to have in the world.

[00:31:22] Bob: So give me an example of like an exception condition, or something weird that happens that AI would handle badly.

[00:31:27] Sean McGregor: Sure. When I think about the physical system side of things, is I once saw a dog that was in someone’s car on the freeway and we were in stop and go traffic, and the dog jumped out of the car onto the middle of the freeway. An autonomous car hasn’t seen a lot of instances of a dog in the middle of the freeway, and people know, let’s stop driving right now. The whole freeway’s stopped to let the person get out of the car, collect the dog that looked none too happy about this situation it got itself into, and got back in the car and then freeway kept on going. But we don’t actually know how an autonomous car would react in this scenario. It’s built to try and proceed down the freeway. And this is an example of the, there’s a big, wide-open world and we need to build systems that are able to handle that.

[00:32:14] Bob: So initially, the harms that Sean logged were failures of the technology to work, to detect things like runaway dogs on highways. But that’s changing.

[00:32:25] Sean McGregor: I think that the story of AI safety is one where new technology is introduced and initially it’s unsafe because it just hasn’t gotten operational history in the world. We haven’t learned from the collective experience of the technology in society. Then through time, particularly with these systems that are based on a technique called machine learning, which is basically the system is produced by data, we accumulate data and the system gets safer to operate in the world. Then as that continues and as it moves from a place of it’s unreliable to reliable, then it gets more reliable for the bad actors and the bad people, and then you have to solve that, what’s in our community called the dual use problem of it could be used for good, and it could be used for bad. And so there’s this kind of transition from we need to care about, it’s just not working to we need to care about it’s working for the wrong people.

[00:33:25] Bob: Working too well in some cases. That’s really interesting. It’s a dual use problem, huh.

[00:33:29] Sean McGregor: Right.

[00:33:30] Bob: AI is now working for the wrong people. Sometimes anyway.

[00:33:36] Sean McGregor: North Korea, for instance, a country that really needs hard currency. This is something that will keep them, keep the government afloat and it actually has a large number of people that are trained to go out there and figure out how to do cryptocurrency scams. There was one incident where, actually we’ve seen several incidents wherein important business people were impersonated and used to instruct others to transfer funds. That the capacity for impersonation has gotten much greater than before where you might have a scam previously of someone’s grandson calling supposedly from Mexico and saying, I’m in jail and so forth, and it doesn’t sound like them but they make the line noisier so that it’s harder to tell. Now we can have people sound like the grandson, sound like the CEO, and extort funds or not extort, just command funds to be transferred. And so we’ve seen a quite a few of those as well.

[00:34:39] Bob: And since we’re talking about executives, that, that can be hundreds of thousands of dollars, right?

[00:34:44] Sean McGregor: Yeah, they, they can move around quite a lot, the funds, without it, so it’s not an unusual thing to do.

[00:34:52] Bob: Until very recently, we conclude many stories like this by saying something like, well watch for bad grammar, or stilted weird speech patterns. That’s not really useful advice anymore.

[00:35:05] Bob: If I saw a picture of my dog in pain, I, I’d do anything, right, and I, and I kind of want to make that point, like really drive it home for people that, that you can’t believe anything you see anymore, even in these emotional situations, right?

[00:35:18] Sean McGregor: Yeah, you need to approach digital information with skepticism because it’s much easier to create very convincing contact than it was previously. And there is this distinction in the community of cheap fakes vs. deep fakes that I think is good to tease out. That a cheap fake has been possible for a while. It’s using photoshop, it’s using photo editing tools. You can cre--, create those very convincingly without necessarily using a advanced AI model to, to produce it. The thing that’s different is that took some level of skill and time to produce and most scams fail. It’s a volume and a numbers game, and so what we have here is it got a lot cheaper, a lot faster to generate these kinds of highly personalized attacks, and so we see a lot more of that now and we’re going to see a lot more in the future. Another way of, of thinking of this is if you, if you plug a computer into the internet that hasn’t touched the internet for a few years, it will pretty instantly get a virus. Like it, there’s this kind of background radiation that is permeating computers that the computers don’t get into trouble just because they’ve been hardened through time; they’re robust to that background radiation, and we are moving that kind of radiated state, that scale of just there’s always something roaming around trying to attack systems. We’re moving that into the human space because we’re making the human space available to the machine and making it possible for AI to generate and interact with people more directly.

[00:37:04] Bob: And, and so that’s, that’s a fascinating comparison actually. None of us have this sort of built up immunity that our computers do to computer-related crimes.

[00:37:13] Sean McGregor: No.

[00:37:14] Bob: Has all this work on the police blotter changed any of Sean’s views on AI?

[00:37:19] Sean McGregor: I don’t think so. I think I’ve always been somewhat measured and just in awe of what we can do and how we can work with these mag--, magical chips that allow for doing such useful things at fantastical speed. It’s just a, a sense of we need a corresponding response to that power for making and preventing things like scams, and I find that we haven’t nearly adequately invested in that. And even looking at the AI Incident Database, we’re leading in the world in that particular kind of indexing of very critical information for making the technology safer. But we’re still very much subscale and if anyone wants to support the program, you can go to, it’s DatabaseAI and donate to it. We, every dollar goes to covering these things and making it so people can be better protected and that the safe-, the technology would be safer.

[00:38:14] Bob: So on one side of this ledger we have the, the world’s largest companies making the world’s largest investment ever in data centers, and on this side of the world, we have what sounds like a bake sale to me.

[00:38:26] Sean McGregor: That’s probably a fair description. We’re making some tasty Rice Krispie treats over here, but uh...

[00:38:32] Bob: (chuckles)

[00:38:34] Bob: So what can we do about this future?

[00:38:36] Sean McGregor: One of my favorite sayings often attributed to sci fi author William Gibson, is “The future is already here. It’s just not evenly distributed yet.” There is a great many ills that have been produced as a proof of concept. You can find a, a lot of those in the AI Incident Database, and you can see then what’s coming around the corner, what things that you need to start worrying about. A lot of these stories about deep, deep fake dog, they’re just moving from the perfect concept phase to this is a scam deployed at great scale. And so you can watch what has been proven and what happens, and you can use that to protect yourself, but if you want to be ready for that future that, that’s going to be increasingly distributed, the best way to operate is to just try and figure out what is the unfakeable ground truth. How do you operate in a manner that doesn’t trust the pixels on the screen in front of you or the, increasingly the voice coming out of the speakers. And that’s run things to ground, have a, a physical place, that’s see the person in, person in-person because a lot of these scams are not operating from near you physically because that would make them vulnerable to law enforcement in a way that uh, they’re not then operating internationally.

00:40:04] Bob: Unfakeable ground truth. What does that expression mean?

[00:40:08] Sean McGregor: That is looking at what can’t be produced at the moment by computers, and that’s often not being mediated by a computer in some form. It, it is going physical to an event that can be safe, that can choose its own hazards. But uh, going physical, looking at authoritative, trusted resources, and making sure that you’re communicating via those validated channels, verifying the domain of the email address that you’re receiving the emails from, being skeptical of anything that is not associated with a real identity, with the real world. Ask yourself, could I find this person given a, a few hours and determination? Could I knock on their door? And if you can’t answer yes to that, then be very skeptical, even if you can’t answer yes to that, you’ve got to be careful.

Keyboard warriors. Instagram. Finance bros. Crypto scammers (and their enablers). And most of all, financial hoarders masquerading as super-humans. Pope Leo XIV had words for all these groups and many more in that “AI-must-be-disarmed” encyclical the Vatican released this week. You’ve seen the headlines about artificial intelligence and the risks it poses to humanity, and yes, the Pope has tried to kick-start an overdue conversation about that. But the head of the Catholic church said a lot more than that in his essay. It’s believed to be the first major Catholic document that’s native to English, and as such, it’s an eminently approachable text for English speakers. I strongly recommend you take an hour or two and read it yourself. It’s highly relevant to our time, whether or not you consider yourself religious. But be prepared: you’ll probably walk away sad, as a would-be disciple did when Jesus told them what he’d really have to do to be faithful in the Gospel of Matthew. There’s some really challenging truth bombs in here.

Hopefully by way of teasing you, I’ve pulled out a set of items from the document that I found particularly meaningful, and on point. On a personal note, Magnifica Humanitas elegantly raises concerns across dozens of issues, many which I’ve spent the past 25 years squawking about in this newsletter and in my time at NBC News. I find it affirming. I’ve added a few thoughts to the Pope’s words; I’ve tried to be sparse and stay out of the way.

But this means my approach to the document is clearly biased, coming from my point of view as a tech skeptic and market critic. Which means you should read the whole thing yourself.

Some generic warnings about the power of tech, and tech companies:

“Never has humanity had such power over itself.”

“Today, however, the main drivers of development are private, often transnational, parties that are endowed with resources and the capacity to intervene that surpass those of many Governments.”
---A small group of unelected tech elites is making decisions for all of humanity without any accountability. They are “Too Big to Sue,” as I described in a podcast for Duke University not long ago. To wit, Facebook faced a $5 billion fine for ignoring a court order, the largest ever, and that had virtually no impact on the company’s (mis)behavior.

“Technology is never neutral, because it takes on the characteristics of those who devise, finance, regulate and use it. Therefore, the primary choice is not between a ‘yes’ or ‘no’ to technology, but rather between constructing Babel or rebuilding Jerusalem; between a power that claims to dominate the heavens and a people who work together in the presence of God to rebuild the walls of fraternal coexistence.”

“Today, the human desire for fullness of life is at risk of being misled by deceitful goals, such as the prospect of a technology that promises to free us from all weakness, and models of wellbeing that leave behind entire populations.”
--Generations have learned the hard way and keep forgetting. There is no Fountain of Youth; anyone selling access to it is a charlatan.

“All too often, we place our hope in unlimited “upgrades.”
--Even Paul McCartney hates constant upgrades assaulting our gadgets and software

We cannot wait for AI to fix itself

“To think that new technologies will automatically benefit everyone is to ignore the evidence.... More than ever, in the age of AI and robotics, it is no longer possible to rely solely on the ‘invisible hand’ of the market.
--The pattern is clear. New tech arrives, capable of both good and bad things. People scratch their heads while crime thrives, investors hoard, and fallout like digital addiction piles up. Then eventually we get around to passing safety regulations. This pattern is foolhardy, and much human suffering is caused by the foolish delays. The safety of humanity must be considered alongside the invention of new capabilities.

Gotcha Capitalism is bankrupt; it’s a terrible way to run AI

“It is certainly desirable for technology to relieve humans of arduous, repetitive or dangerous tasks and to provide intelligent support for human activity. Yet, the protection of employment opportunities and the irreplaceable role of the individual must remain the general rule. The pursuit of greater profits cannot justify choices that systematically sacrifice jobs, because the human person is an end, not a means, and the economic order must remain subordinate to human dignity and the common good.”
--It’s so lazy to say shareholder value trumps every other concern. That’s a modern invention, one that’s quite convenient for a select few.

“Economic models that exalt efficiency and individual success often view investment in disadvantaged people or in those with slower development paths as useless or inconvenient, as if their futures depended solely on their ability to keep pace with the ‘winners.’ “
--Giving voice to the voiceless is a high calling; the opposite is a very dark art. And trust me, we will all be voiceless someday and hope someone will speak for us

“Instead of waiting for the benefits of growth to reach the poor ‘eventually,’ decisions need to be taken to ensure that growth becomes inclusive from the outset. The experience of recent decades shows that in economic and financial crises, it is always the poor who pay the highest price, while the theories that promise automatic general prosperity often prove to be illusory.
---The phrase “trickle down” has been used to excuse market distortions, like monopolies, for decades. Time to stop being fooled by promises that things will be getting better any day now...

“In recent years, finance has increased in importance and has undergone significant innovation, driven partly by the introduction of cryptocurrencies. The reflections and observations contained in the teaching of my predecessors, particularly in their Encyclicals, have highlighted how the financial intermediation sector, “when operating without the necessary anthropological and moral foundations, has not only produced manifest abuses and injustice, but also demonstrated a capacity to create systemic and worldwide economic crisis.” It is likewise the case that income from capital risks replacing income from labor, which is often confined to the margins of the economic system’s primary interests. Yet savings transformed into credit for the real economy, thereby creating both jobs and self-employed work, remain central for development and the investments that must accompany ongoing transitions. The social function of credit remains irreplaceable. Finance for its own sake is fundamentally different from finance aimed at the development, creation and evolution of work.”
--The wrong people are rewarded in our version of (Gotcha) Capitalism. The pastry chef who arrives at 4 a.m. to make treats for his store barely scrapes by, while the landord who owns half the city simply cashes rent checks. And the investment banker who securitizes the landlord’s loans buys vacation homes in the Hamptons. This is not capitalism; it is financialization, and it’s destroying the middle class. A good book to learn more is Rana Foroohar’s Makers and Takers.

Data collection and profiling dehumanizes all of us

“First, transparency and accountability: when data and algorithms influence credit distribution, personnel selection or access to services and opportunities, it is necessary that decisions be understandable, contestable and subject to oversight, so that individuals are not reduced to mere profiles....A further risk, less visible but no less serious, is that of social control made possible by the massive collection of data and use of algorithmic systems. When every action—movements, purchases, relationships and preferences—leaves a trace, a new form of power emerges, namely the power to profile, predict and influence behavior, often without individuals being fully aware of it. If such kinds of data are used to make decisions affecting concrete opportunities — such as access to credit, employment or essential services — there is a risk of undermining freedom and discriminating against the most vulnerable
--Credit reporting and credit scores are considered a modern miracle in financialization. They are also riddled with errors that are the cause of much unfairness. There’s been a decades-long battle to bring credit reports out of the shadows to give ordinary people a fighting chance against this system, and that fight still goes on. Our world has now moved far beyond that kind of labelling. Our every move is now watched, and logged, and held in a database to be used against us someday. People are not profiles. We’ve barely begun to understand the consequences of such data collection, let alone put real guardrails around it.

For those who peddle in digital crack -- thriving on human weakness

“Having reflected on truth and education, work and families, we must now consider the impact of the digital revolution on human freedom, addressing risks to both the mental health of individuals and broader social challenges. The subtler forms of addiction linked to the “digital attention economy” should not be underestimated, since platforms and services are often designed to capture users’ time and attention, exploiting their vulnerabilities and weakening their inner freedom. When business models thrive on human weakness, the person is treated as a means rather than as an end; those who design or finance such systems bear a moral responsibility that cannot be ignored. There is an urgent need to promote technologies that strengthen interior freedom by fostering education in digital sobriety and the protection of minors, thus countering models that exploit vulnerability.
--Pretty sure the Pope is talking directly to Mark Zuckerberg here

Slouching towards slavery in the digital age

“What prevails is efficiency, rather than respect for freedom and human dignity. Some post-humanist currents even go so far as to envision “second-class” human beings, subordinate to the interests of elites who consider themselves superior....This reality deeply challenges the moral conscience of our time. It is not enough to invoke efficiency, nor to celebrate the benefits of innovation, if they are built on a chain of exploitation that remains deliberately hidden. If technology promises emancipation, yet produces new forms of global subordination, it stands in contradiction to the fundamental principle of human dignity.....The fight against new forms of slavery is a decisive test for the ethical discernment of AI and digital transformation.... Without this ethical and humanizing reflection, the growing power of digital systems could lead us toward new atrocities that are no less shameful than those of the past that we now deplore, while we continue to present ourselves as “advanced” and “civilized” societies.
--The kind of language that justifies the exploitation of others

“Even today, colonialism assumes new forms. It no longer dominates only bodies, but appropriates data, transforming personal lives into exploitable information...Entire regions, especially those marked by structural fragility and limited geopolitical relevance, are currently subjected to a new mindset of extraction: that of health data, epidemiological profiles, genetic maps and demographic information. These have become the new “rare earths” of power:
--And yes, data collection is elemental to this scourge

About war without humans

“Here the question is not merely the efficiency of new tools, but also the risk that technology, detached from ethics and responsibility, will render decisions about life and death more rapid and impersonal, and will present the use of force as an immediate and viable option.”

“Thus, war is not only fought, but also culturally conditioned through simplistic narratives, a friend-or-foe mentality, disinformation and fear. When historical memory fades and the ethical principles that protect civilians and the most vulnerable are weakened, it becomes easier to justify violence as necessary, inevitable or even “sanitized.”

“Cyberspace too has become a battleground. Cyberattacks, data manipulation and campaigns of influence, orchestrated with the help of AI, can destabilize entire countries even before open armed conflict erupts. Moreover, in this area, the attribution of responsibility is often uncertain. When it is unclear who carried out an attack, the risk of disproportionate reaction, miscalculation and escalation increases. For this reason, diplomacy must be capable of operating effectively in this new environment, negotiating shared regulations on the use of digital technologies, in order to protect civilians and the most vulnerable from “invisible” yet real forms of violence.

“No computational system, however sophisticated, can create a heart that gives itself, or a conscience that discerns good from evil. Even when machines excel in efficiency, a human face that asks to be gazed upon remains the center of our history.”

Name-calling in the age of keyboard warrior politics

“We live at a time of significant spiritual and cultural blindness...In such a climate, nihilism and pragmatism become intertwined and end up normalizing grave errors. Religious extremism and identity-based fanaticism ally themselves with irrational economic policies, while politics often turns to misinformation and ridiculing opponents, and systematically cultivating fears and resentments. Thus, diversity is increasingly perceived as a threat, which fuels a desire for possession, a will to dominate, hegemonic ambitions, abuses of power and a fear of those who are different, thereby creating an environment in which new conflicts can develop almost imperceptibly.

“The first contribution we can make toward a more humane civilization is to be mindful of our words.

Some moments of inspiration -- the reward for reading this far

“No one can single-handedly bear the weight of the challenges the world is facing, just as no one is so weak that they cannot play their part, for ‘power is made perfect in weakness.’ “
---As a music friend often reminds me, when playing with a group, your job is simply to mind your business and play your part

“Let us not be afraid to get our hands dirty on the ‘construction site’ of our time.”

“In the era of artificial intelligence, when human dignity is threatened by new forms of dehumanization, ours is the pressing duty to remain profoundly human. “

“The construction of a world in a state of perpetual conflict is an evil and must be named for what it is. This way of portraying our current situation may seem bleak or pessimistic, yet I consider it necessary to do so. The Christian perspective, however, is not limited to denouncing evil. We view history in the light of the crucified and risen Lord, to whom the Father has given ‘all authority in heaven and on earth.’ We do not consider the present as a predetermined fate, but an opportunity for personal and collective conversion. Moreover, we believe in the power of the Kingdom, which grows from the tiny size of a mustard seed, which, once sown, sprouts and grows. While the tumult of confusion is all around us, goodness grows silently from the earth. In the words of the prophet Isaiah: “Behold, I am doing a new thing; now it springs forth, do you not perceive it?’ “

“A closer analysis of history confirms this. Even in the darkest nights, the Lord raises up men and women who refuse to give up, who persevere in doing good, who protect the vulnerable and open pathways to reconciliation. The memory of the saints, righteous people and the oft-forgotten peacemakers, show us that grace does not magically eliminate conflict, but instead it inspires active resistance to evil and an astonishing creativity in doing good. Christians see the darkness and acknowledge it for what it is, yet they do not merely gaze upon it passively, for they know the light and understand that the darkness has not overcome it and cannot defeat it. For this reason, even when suffering seems to have the last word, Christians serve the good and are sustained by a theological hope that gives reality both meaning and direction.

“The twentieth-century Catholic author J.R.R. Tolkien, in the words of a protagonist in one of his novels, described our responsibility in this way: “It is not our part to master all the tides of the world, but to do what is in us for the succour of those years wherein we are set, uprooting the evil in the fields that we know, so that those who live after may have clean earth to till.” [187] The civilization of love will not arise from a single or spectacular gesture, but from the sum total of small and steadfast acts of fidelity that serve as a bulwark against dehumanization. For this reason, it is worthwhile pausing to reflect on some aspects of how we, each in our own way, can cooperate in building the civilization of love.”

But lately, Sholas has been put in a no-win situation by artificial intelligence. His likeness was used to create a deepfake video hawking supplements -- specifically targeting Black consumers. Try as he might, he still hasn’t been able to remove all the various videos that have landed on places like TikTok and Twitter.

So instead of caring for very sick children, the Harvard-educated New Orleans doctor now spends time fighting AI and learning about intellectual property law.

“What’s frustrating is that it costs money, time, effort, and relationships to protect something that should be intrinsically mine, “ he told me during our interview for The Perfect Scam podcast I host for AARP.

There’s been a lot of talk about the problem of Deepfake videos and politics -- how activists might change an election by, quite literally, putting words into a leader’s mouth. I believe consumers have become relatively sophisticated at spotting the more outlandish fakes -- President Trump wearing Pope garments, for example. On the other hand, fake ads -- especially those involving less popular figures -- can be harder to discern. And they might ultimately cause more damage.

Sholas told me he knows of at least one person who bought the supplements based on the fake videos. After telling his story on local television, a victim reached out.

Scholas is not identified in the video; his appearance is altered slightly, and a fake voice is dubbed onto it. But his lab coat nametag is visible.

There is very little a victim can do to get fake content removed from the Internet. Sholas first reached out to the account that posted the videos, which ultimately blocked him. The very tool used to abuse his identity was now being used to prevent him from defending himself. Initially, he says, social media companies ignored his complaints. Later, after the local story aired, some services took action, but by then, copies of the video had spread across multiple services. He consulted a lawyer and was redirected to a PR company.

“They said the best thing you could do is hire a PR firm basically to go out there and do a sweep of the internet and push positive content to counteract whatever misinformation is there,” he said. That kind of search engine optimization could cost up to $20,000, he was told. Instead, he has taken to posting a series of self-made content.

“When someone borrows, to use a kind word, or steals, to use a real word, it puts me at risk, it puts my medical license at risk, and it puts my livelihood at risk. And to protect all of that, there’s nothing I can do as a small guy but spend more money,” he said.

Fake video is far more pervasive on social media than most people realize, says Frank McKenna, chief fraud strategist of a company called Point Predictive. He’s also the author of the popular Frank on Fraud newsletter.

“I see these all over TikTok, all over Instagram, all over Facebook. They’re inundating people’s news feeds; the social media platforms I don’t think are doing enough to kind of control the problem,” he told me.

NBC’s Al Roker was actually the victim of a similar deepfake attack about a year ago. You can watch his interiew about it at this link.

“I think people probably don’t realize how many deep fakes they’re seeing as they scroll through social media. From my experience, it’s at least half the videos that you’re seeing ....there’s some element of AI generation in those videos. And that’s only going to get worse,” he said. “The case will be that most of the content you’re looking at online is AI-assisted in some way ... So people are going to have to get accustomed to the fact that they’re going to have to question pretty much everything. ... These other celebrity deep fakes, I think, are going to surprise a lot of people, because they’re becoming more and more common.”

How hard is it to make fake videos like the ones that use Sholas’ likeness? Not hard at all, McKenna says.

“Using information off of YouTube videos, Instagram videos, or Facebook videos that you post, the criminals and scammers can take that content and put those into AI generating videos, and make you say anything that they want,” he said. “So just a few seconds of video can create these...they call them AI avatars, and they can basically make you sell vitamins or make you sell crypto investments and things like that. So it’s not hard at all, anybody can do it and a lot of scammers are.”

And, perhaps the most alarming part of this dark new trend -- consumers are over-confident in their ability to spot fakes.

“The thing about AI deep fakes is 60 percent of the population thinks they can spot them, but in reality, I think a study ... found that only .1% of people can actually identify those deep fakes,” he said.

I hope you’ll listen to the full interviews I conducted with Sholas and McKenna at this recent episode of The Perfect Scam. But if podcasts aren’t your thing, here’s a partial transcript.

---------------------Partial Transcript---------------------------

[00:04:09] Dr. Maurice Sholas: So a friend of mine sent me a link on TikTok, and said, “Is this you?” And so I’m, I was relatively new to TikTok at the time; I’m trying to be the old guy that stays current on all the new apps (laughs) and I clicked on the video and it was a likeness of me hawking vitamins, K2D3, which is something I’ve never done, and something I’ve never recorded. And I was just stunned to see what looked like me and words coming out of my mouth. It wasn’t me. Now the voice didn’t sound like me, but it definitely looked like my face.

[00:04:44] Clip: I asked, do you want me to give you the safe answer or the truth? He said, the truth.

[00:04:51] Bob: That’s the sound from a TikTok video of someone who looks like Maurice hawking a vitamin saying things Maurice has never said. Seeing this is shocking for Maurice. It takes a moment, but pretty quickly the doctor figures out where the germ of that video came from.

[00:05:09] Dr. Maurice Sholas: It was a background that was pulled from a story I told, one of my most popular videos where I talked about how one of my patient’s brothers hit the panic button on my name badge, and the security busted into my visit thinking I was in trouble when I was really just being hugged and kissed to death by a, a 3-year-old. (laughs)

[00:05:29] Bob: The authentic video is purely charming. This fake video is alarming, and there are more like it. Soon Dr. Maurice, he calls himself Doc MoSho, finds himself a host of similar videos all over TikTok. Criminals have taken a small segment of one of his videos and created a host of fakes designed to sell this supplement. Why was he targeted? Maurice thinks he knows exactly why. The ads targeted Black Americans.

[00:05:59] Dr. Maurice Sholas: Yeah, we are closer to 16, 18% of the population. I live in New Orleans, which is a 60% black city, so there are pockets of Black Americans that are vital members of communities all over, and to establish trust, people know that when your doctor shares the same representation of you, it helps with that trust. So they picked me specifically to talk about that product, to talk to the population they wanted to buy supplements.

[00:06:23] Bob: And supplements that were allegedly essential because they’re Black, right?

[00:06:29] Dr. Maurice Sholas: Correct, supplements that were allegedly essential because they’re Black, when, you know, there’s no data showing those supplements are more or less essential to Black people, there’s no data showing that these supplements are coated in a way that makes melanated skin process them better than if they were given to non-melanated people. It just was a flim flam that used my reputation to sell a product.

[00:06:51] Bob: The flim flam that used his reputation to sell a product. All those years, decades, making very sick children and their families trust him, abused, violated on bogus supplement ads.

[00:07:06] Dr. Maurice Sholas: It felt like the 20 years I’ve spent in medical practice, all of the work I did to become a first generation doctor and get an MD PhD from Harvard University and to really break my way into a specialty that most people had never heard of before, they heard of it from me, was just taken without my permission to do something I would never do or say.

[00:07:29] Bob: Is there some kind of mistake? The voice isn’t his. But when he zooms in on the video, his name is clearly on the lab coat, so he reaches out to whoever posted the video.

[00:07:43] Dr. Maurice Sholas: I tried to respond to the video, and, and I was like, hey, this isn’t me.

00:07:49] Bob: Silence. He gets no response. But he does get a reaction.

[00:07:55] Dr. Maurice Sholas: What they did was they didn’t take it down, they added age lines to my mouth and added like some little sets to look like some of my teeth were missing or different, so they could say it’s not you anymore, ‘cause it’s older, or they don’t have the same, I have good teeth, I’m proud of my teeth. But they could say it wasn’t you. But they didn’t take it down, they just tried to alter the digital image to make it so they could pretend like it wasn’t me or utilizing my likeness.

[00:08:20] Bob: So it sounds, you’re saying you complained, first you complained directly to the creator ho...

[00:08:26] Dr. Maurice Sholas: Yes.

[00:08:26] Bob: ...then made this crazy adjustment, right?

[00:08:29] Dr. Maurice Sholas: Yes.

[00:08:30] Bob: And then he escalates the complaint.

[00:08:34] Dr. Maurice Sholas: Uh, so I reported it to TikTok and TikTok basically didn’t do anything. I guess I don’t have enough followers and I’m enough of a nobody on there that they didn’t respond. I don’t have a PR firm. So TikTok just ignored me.

[00:08:49] Bob: Frantic, Maurice turns to journalism for help to WWL-TV, that’s where we got the audio for the fake doctor.

[00:08:58] Dr. Maurice Sholas: I actually have a good friend that’s a news anchor here, I reached out to her and said have you ever heard of this, what’s going on. She ended up talking to her producers. They sent a reporter out to talk to me and that reporter reached out on my behalf. As soon as the reporter reached out, hours later the account that was offensive was banned and taken down.

[00:09:18] Bob: But that is hardly the end of the story. For one thing, Maurice quickly learns there’s already been real-life consequences.

[00:09:26] Dr. Maurice Sholas: When I actually, the story ran here in New Orleans on TV, my friend’s husband that saw the story on TV and said, “Oh gosh, I actually bought that because I thought it was you.”

[00:09:37] Bob: (chuckles)

[00:09:39] Dr. Maurice Sholas: And I was like, bud, that wasn’t me! He said, “I’m sorry, I didn’t know.” I was like, it didn’t link to me or any of my accounts. It, so why would I be saying something about a product I never use in real life, you’ve never heard me talk about in real life, and it didn’t link to any of my real-life accounts?

[00:09:57] Bob: And at this point Maurice learns his trouble is only beginning. Those TikTok videos were removed.

[00:10:04] Dr. Maurice Sholas: By that point, the material that spread from TikTok to Instagram and also to X, when I tried to reach out to Instagram to get them to remove this TikTok generated content, again, just ignored me. I made my account verified to see if I could get more traction, and it was just literally like whack-a-mole; as soon as you get one thing, a video would pop up somewhere else.

[00:10:27] Bob: With, but this was with Instagram. Are, you actually paid for the verification process?

[00:10:31] Dr. Maurice Sholas: I did. I paid for the verification process on the advice of my attorney because they said, if you’re verified it gives you more rights and privileges, so I feel like I had to pay for the privilege of being me.

[00:10:41] Bob: Oh my God. And then it didn’t work anyway, right?

[00:10:44] Dr. Maurice Sholas: It didn’t work anyway. They were just, sorry, bud. Kick rocks. Just wait for it to blow over.

[00:10:50] Bob: Meanwhile, the problem keeps getting worse.

[00:10:53] Dr. Maurice Sholas: There were more videos that they used my likeness or something similar to like, my likeness. Again, I’m bald and I have a gray beard. They tried to make my beard darker; they tried to take in and take out of some of my teeth. They added some frown lines to my forehead and my cheeks to make me look a little older. I am 55, but I’m proud that I’ve got good skin and not too many wrinkles, so they got plausible deniability. And so every time I would say that’s me and I never said that, they eventually, the creator blocked me so I couldn’t see it anymore or any of these things so I had to have another person say, is it down yet? (laughs)

[00:11:31] Bob: Okay...

[00:11:31] Dr. Maurice Sholas: So it’s something to be blocked from yourself.

[00:11:34] Bob: (laughs) This is such like a Kafkaesque odyssey you’re describing to me. That’s, first of all, like we’re running past, it’s unnerving to have someone make a video of you that’s an older you that you’ve got to look at. That’s weird, right?

[00:11:48] Dr. Maurice Sholas: Yeah.

[00:11:49] Bob: Yeah, and that’s the smallest offense that I’m hearing of all these things, but then this could still be going on and now the tools of this tech company are being used so that you can’t even defend yourself, you’re protected from seeing it.

[00:12:01] Dr. Maurice Sholas: Correct.

[00:12:02] Bob: That’s awful.

[00:12:03] Dr. Maurice Sholas: Correct. They, so what they started doing is they started systematically blocking me on all the platforms that I was complaining on. So I couldn’t see whether or not the information was down.

00:12:13] Bob: Maurice keeps talking to his lawyer, keeps looking for some kind of solution. The answers aren’t comforting.

[00:12:21] Dr. Maurice Sholas: And when I talked to the lawyers, what became clear to me is that this is a way that technology really outstrips or outpaces the rules. We had a law that actually was passed last year in Louisiana’s legislative session, but it was vetoed by our governor, that would have given us some sort of redress for people misappropriating and misusing our likenesses. That’s important here in Louisiana because we have a film industry that’s based here, so you can imagine if you’re Meryl Streep and somebody doesn’t want to pay your rate, but they just use you to do what they need to do -- boom -- they can get a lot of traction. But that law was shut down and there’s really nothing at the federal level that we can lean to. I was talking to my attorney and I was like, what can I do? And she said, “Send me, now that we know somebody bought it, we can actually see who that actual distributor/manufacturer is.

[00:13:10] Bob: Ah-ha.

[00:13:10] Dr. Maurice Sholas: Because the other part about this, Bob, is that even if you could figure out what rule of law applied to this, which I told you was already dicey, then you have a jurisdiction issue. Because what happens is the product manufacturer typically hires a separate company to do the marketing. So the product manufacturer can say, I didn’t really misuse you, that was the marketing company. And the marketing company can say, I didn’t misrepresent you, because the product company told me it was cool. So it’s like fingers pointing back and forth and none of this matters if those companies are not based in the US.

[00:13:44] Bob: And boy, are you getting an education in all this very quickly.

[00:13:47] Dr. Maurice Sholas: Yes, I never thought I would want to understand the ins and outs of intellectual property rights and how they apply to an individual and their likeness. I’m not an actor or a famous person, but I’ve learned way more about this than I thought. So in talking with the attorney, they brought in a crisis management attorney...

The most dangerous hack is a brain hack. And criminals are getting very, very good at that. Meanwhile, I fear, the rest of us have spent precious little time learning to defend against brain hacks. Hopefully, today’s piece will help a little. Today I’m going to discuss an important way to think about brain hacks -- the amygdala hijack. And crucially, I speak with an expert who offers practical ways to calm your amygdala. Who knew crafting could be a fraud-fighting, cybersecurity tool?

Our brains were designed thousands of years ago, in large part to help us run away from large predators. Human brains haven’t really caught up to the digital age, and that fight or flight instinct is exploited by criminals constantly. There’s a warrant out for your arrest; there’s child porn on your computer; wire $2 million, or you will be fired...and so on.

The key for criminals is to knock us off our game, separate us from our rational selves and shove us into our reactive selves -- then tell us the only way to avoid the dinosaur chasing us is to buy a bunch of gift cards or shove money into a crypto ATM. You can tell people not to do these things in a classroom or an email a zillion times -- those consumers will nod their head and maybe even remember those words in the rational part of their brains. But it won’t do a lick of good when criminals cook up just the right story at just the right time -- grandma, I’m in jail! -- and instinct takes over.

That’s an amygdala hijack, and it can happen to anyone.

Every time you hear the story of a terrible Internet crime and say, “How could they fall for THAT? How could anyone in their right mind...” you are feeding the problem. You are an unwitting accomplice to these crimes. All this quiet superiority keeps us in the situation we find ourselves in. The implicit “they should know better” keeps us from investing in training and tools that counteract these very human attacks.

It’s all part of the trap we are falling into right now; we’re playing into the hands of organized cybercrime, and it shows. Fraud is skyrocketing at extraordinary levels, by any measure. Our grand tech tools are being used against us to feed crime gangs, foreign governments, and yes, terrorism. These crimes pay for North Korean missiles, for heck’s sake. We are counting on the most vulnerable people in our population to form the front line in this war we’re losing. Worse yet, these foot soldiers are fighting criminals armed with billions of dollars of research and even more valuable tech tools, and they have to “win” 100% of the time. We need a new strategy.

A big part of this will be understanding how brains work, and planning around that reality. To that end, I was thrilled to interview Austin Cusak recently. He’s an expert in behavioral science and a trainer at the FDIC. I’ve seen him give talks on amygdala hijacking before, so I was eager to interview him about that. You can listen to our chat at The Perfect Scam podcast -- and I hope you will -- but if podcasts aren’t your thing, here’s a transcript of our chat. This episode also includes an interview with a repeat romance scam victim, so we have an example to discuss. My chat with Austin begins at about 32 minutes. Don’t miss his amygdala calming techniques at the end.

Click this link to listen.

-------------PARTIAL TRANSCRIPT------------------

[00:32:07] Bob: We are in a different world, yes, but it’s a world we need to understand. We all have questions about how someone we know might become a victim of an ongoing long-term crime like this, how a person’s heart and mind can be well hijacked. And here to help us understand that much better is Austin Cusak. He’s Assistant Professor of Leadership Development at the FDIC. He’s an expert in behavioral science.

[00:32:35] Austin Cusak: A lot of us don’t realize that our brain right now is in the exact same configuration as its been for the last 35,000 years. And so our brain is very worried about snakes in tall grass, about sabretooth cats. It’s very worried about attacks from other tribes. So the brain is going to do whatever it can to be a good member of its tribe. So we are very tribal in that category. So the current configuration of our brain is not wired for social media, it is not wired for fraud from the inside. So that’s the first thing that happens to Anola is criminal is convincing her that they are part of her group, part of her tribe, a safe person first.

[00:33:29] Bob: Once on the inside, once a criminal gets a victim to feel like a member of the same team, the same tribe, then the criminal can get to work turning off the victim’s rational side.

[00:33:41] Austin Cusak: The easiest way to kind of explain why this is happening is, so Daniel Kahneman got a Nobel Prize for his work on why the brain does what it does, over 20 years of research, and he boils it down to these two types of thinking. And so I’m going share this as just like a simplistic way for us to understand a lot of these complex things. You are either doing fast thinking, or you are doing slow thinking. Neither is bad, it’s just that your brain is going to receive input and when it’s receiving input, it’s going to say, okay, am I in danger? And if you are in danger, or perceive some type of danger, it goes right to the amygdala and it says, fast thinking, I’m going to use the emotional reactions that I know. I’m going to poke through really quick this limbic region which stores our memories. Do I associate this with something bad? Yes. I run or I fight. And then there’s the slow thinking which is what we want to have engaged which is, there’s no immediate threat. I can now take my time, go out to the prefrontal cortex, think about associations, what kind of long-term planning do I associate with this? What kind of risk assessment might there be with this? So the brain’s going to go one or two ways. And so the criminal’s goal is to prevent Anola at every stage from having this slow, rational logical thinking.

[00:35:15] Bob: So criminals want to talk past the thinking part of your brain and talk right to the instinctual part.

[00:35:22] Austin Cusak: Okay, so amygdala hacking by the way that Goldman described it, is this immediately overwhelming emotional response that our brain is perceiving as a threat that is going to trigger the fight or flight and bypass our brain’s logic mechanisms. So it is, in fact, fast thinking. It’s Kahneman’s fast thinking. That is the hijack. I personally in my experiences, I expand the amygdala hijack to not just that overwhelming emotional response, but also the hijack of the slow, insidious relationship-building, trust-building, love-bombing. It is any actions that the criminal is taking to force the victim into fast, emotional thinking all the time. It is, that is the hijack. The hijack is I only want information being received through my eyes, my ears, my skin. All that information straight to the amygdala, emotional responses. That’s the hijack. That’s why we can’t see the red flags, that’s why we ignore things. That’s why the brain says, something’s fishy, but it would be too painful for me to actually explore that road. Too painful. I’m going to avoid the pain; my emotions feel this. And part of the amygdala hijack is creating lots of cognitive dissonance, which for a criminal is a very good thing. The criminal wants to create cognitive dissonance where there are these two competing thoughts in the victim’s brain because then they can provide the answer. They can have the emotions tied to that. That’s the hijack.

[00:37:19] Bob: And when our brains are hijacked, criminals can really get down to the business of grooming and financial manipulation. It is so hard after the fact to talk about some of these stories, to compress 18-months of manipulation into a few minutes of a podcast. Even the language we’re using is rational, and we’re talking about irrational things. It’s really important to understand that all of us, under the right circumstances, say and do things based on purely emotional or instinctual responses.

[00:37:51] Austin Cusak: I tried to talk with even some of my neighbors about this and her story, and I was very disappointed in their responses to it. Well she should have known better. So it really does, like we, we tend to very quickly move into that victim attribution or the attribution bias, like we should all know better. Now that scam and how that went down, it was kind the same playbook that they used, is that they saw the opportunity, it wasn’t an immediate, I’m going to ask for money, it was a slow, them impersonating someone. They did the same thing. But she was very--, she was wary, she didn’t send them money, but the tactics didn’t change that they, the brain still needs that stability. The brain still hopes that it’s going to happen someday. So when I heard the second story, like on first blush you hear that it happened to her a second time, and the first thing that we think of is, she should have known better. It’s that attribution bias. But then when you hear her explanation of it, and how that started to go down, and how they did it, you’re like, wow these, these people and whoever is creating these textbooks that they’re following, they’re very good. Like they are very good at what they’re doing, and think of it kind of like a car salesman, and I don’t mean to demean car salesmen, but there was, there was a time where I had a friend that was going to get a car, and they were like, ah, I’m going to win this negotiation. I’m going to talk them down, and in my head, I was like, wait a second. So you’re not a negotiator, you don’t have experience doing negotiations, and you’re going to go up against someone that does this all day, every day, and you think that you’re going to like conquer them? This is you against them. This is their job. This is the full-time thing that they do day in and day out every year making small tweaks, making minor things. That’s what these criminals do. They are masters at manipulating, they are honing their craft, they are making little tweaks here and there, so when she is reaching out, right, so this is, the brain needs closure. So that’s part of it is that she has this terrible thing happen to her, and our brains are wired to seek closure.

[00:40:13] Bob: While it might be hard to understand why Anola suffered a second romance scam, in some ways the first time set her up for the second. Remember she reached out in an attempt to warn a person she thought was a victim too. The man’s image was being used as a lure by criminals.

[00:40:29] Austin Cusak: That second criminal is looking at this as, she’s already in this very heightened emotional state. It is very easy for me to now trigger her fast thinking once again by pretending to be the person that she really hopes me to be, because she’s trying to do the right thing and I can take advantage of that.

[00:40:53] Bob: So in some ways, the fact that she was already a victim made her more likely to be a victim again?

[00:41:00] Austin Cusak: I don’t know if that’s every case. I’m sure that there is probably some research that has been done on that. I would say from my understanding of just behavioral science in general, yes, absolutely. Especially if she’s been in that state of fast thinking for a very long time, she does not yet have closure, she has not yet processed everything that has happened for her. The brain is going to reach and stretch, and want to have, ‘cause she would still be in the state of cognitive dissonance, I’m assuming, in that moment; where I’ve got these two competing ideas, I need an answer. And that gives the criminal a very good opportunity to start to control that narrative, provide those answers, lead that person where they want it to be.

[00:41:51] Bob: And there is another powerful tool criminals use, they’re very good at appearing to have very intimate conversations.

[00:41:59] Austin Cusak: We’re looking at criminals that are very masterful at using cognitive empathy. They’re not feeling these emotions, but there is a thing called the dark impact where you can use empathy to very much manipulate other people. I would say that a lot of the tactics of dark empathy is exactly what the cult leaders are using to manipulate, to keep manipulation, and they get very good at it.

[00:42:25] Bob: Dark empathy is a new term to me.

[00:42:27] Austin Cusak: The dark empathy?

[00:42:28] Bob: Yeah.

[00:42:29] Austin Cusak: There, there’s quite a bit of research on it that you can kind of dig in in the leadership realm, and this is why I mentioned this because it’s going back to leadership development. When we are trying to develop leaders, sometimes, and this does not happen very often, but sometimes we do come across someone who is a textbook narcissist. And I don’t mean that in kind of the, ah, they’re narcissistic. I mean that they would top off if they took an assessment for narcissism. They are drawn to tactics of leadership, because at its core, a tactic of leadership is to positively influence others towards a common goal. I can remove that positively and just influence others towards a common goal. And so the people that want to manipulate, the people who want power, find that by studying leadership, by studying how to use cognitive empathy, by studying active listening, they study those same tactics which they can then use to move upward. They can then use to shift others’ behaviors. And that’s essentially what she ran up against.

[00:43:35] Bob: Meanwhile, the victims are in the throes of a crime and what feels like a very real romance. The end is an incredibly painful moment, so is telling people about what happened. Criminals use that to their advantage too.

[00:43:50] Austin Cusak: And so just like with a lot of people not reporting these things, or not talking about these things, is because we fear that we will experience more pain of rejection, pain of betrayal if we openly talked about these types of things with people. So we avoid that pain, and that is a normal thing, it’s just kind of a crappy thing, especially in regards to this. The criminals know this. They know that we are going to avoid those feelings of embarrassment because our, again, 35,000-year-old brain says, if I show myself to be a weak link, if I show myself to be someone who can’t be trusted by this group, I might get kicked out of the tribe, then I’m dead. So this is a survival tactic that the brain is going to constantly push is I must hide these things because this could lead to a problem with the tribe, but also, I’m going to avoid this because I know that this will experience, like I will feel pain if I go down this road. And so as we start to kind of approach that pathway, like that physical pathway, the brain’s like, nope, nope, I’ll do it another day.

[00:45:07] Bob: I don’t think we talk enough about the avoid, pain avoidance element to this, because it is very painful that moment when you realize, my money’s gone forever. That’s a very painful recognition.

[00:45:17] Austin Cusak: I think the threat of betrayal of the whole thing not being real. As a personal thing, I actually had a conversation with someone very close to me who was in a religion, and some stuff came out about the religion that kind of debunked some of the founding tenets of the religion, and they stayed in it. And I was asking them, why? Why stay in it? And it was understandable and it was very hard for me to listen to them because they’re much older, and they said, my entire life I believed this. My entire life. It’s part of my identity, it’s my community. If you took this away from me, it would break me.

[0046:03] Bob: Austin really wanted to drive home a point about these powerful tactics that criminals use. Some of them are used in traditional persuasion. He already mentioned sales tactics, but you might find some of these ideas in leadership training or management training which is part of Austin’s job at FDIC.

[00:46:21] Austin Cusak: I may be a very unpopular person for saying this, Bob, but a lot of the leadership tactics that we use is exactly what the criminals use. They use the same tactics but they use it for nefarious purposes. But influencing people, the tactics, the way the brain works, it’s the same. And so in, in some cases it is us saying, these are the things that we’re going to practice so that you can positively influence. And at the same time it is you need to be aware that these people are doing these things to you so that you can actually counter them, so that you can stop them, so that you can be on the lookout for. So in that world of leadership development, there is a surprising amount of crossover in terms of both helping people and manipulating and avoiding manipulation.

[00:47:14] Bob: So there are light and dark ways to use behavioral science, right?

[00:47:18] Austin Cusak: Cialdini has his book “Influence” and his book “Pre-Suasion,” and I’m going to throw out the disclaimer that things that I say are not representative of my agency. These are my own opinions, but I do want to point out that Cialdini has done a lot of great research on this subject, specifically on influence. And he even calls it out in his books about like the tactic is the same. You can use this. It is the knife that you can use to carve something beautiful or stab someone in the back, but the brain’s going to receive it the same way.

[00:47:53] Bob: It did strike me talking with Anola that the criminals did more than just appeal to her emotions, however. Remember, they showed her an account that allegedly had $4 million in it, so they were working to counter any skepticism she might have had.

[00:48:08] Bob: So it seems to me like they, they know how to play in the rational brain space as well.

[00:48:14] Austin Cusak: Yes, so, so that is, that is part of the ethos, pathos, and logos that has been used on us since Aristotle perfected by Plato, so we’re talking what 300 and like 48 BC that we had these three compelling means of persuasion. 3--, 347BC where it is essentially what is going to be the most compelling for you? Am I going to make an appeal to character, lead with an appeal to emotion and then follow it with just enough logic to make it plausible. Those three things, ethos, pathos, and logos, is the core of marketing, like all marketing is based on that. You see a car commercial and it is a basketball player who’s famous driving the car. That’s an appeal to character. So the use of logic, the use of data to reinforce is very compelling. But that is the answer to the cognitive bias. If it’s plausible enough, if it’s data and it’s plausible enough, or if they say, look, I have these bank accounts, why would I need your money? It’s plausible enough to answer and remove the cognitive bias. And that is the insidiousness of this entire thing is that I put like, I, the criminal, am putting my victim into fast thinking. They’re making emotional decisions. The second that they start to have this, and I can feel them starting to pull away, I reinforce it with lots of love, lots of dopamine. When they start to question it, I give just enough data, just enough of a logical response to, to basically shift away from these two competing ideas so they can only hold onto this one idea. I use time pressure, I use empathy, I, right, like I reinforce these things. And then, this is the thing that is really just err, is that they just inspire the shared vision, and then they reinforce it with this is our future together. This is the compelling image. This is the dream of what’s possible with us if this happens. This is the long-term interest. You are the only one that can do this. And they paint this big, shared aspiration.

[00:50:39] Bob: Feeling like you’re on the same team with that shared vision is also a behavioral trick that well-trained criminals employ.

[00:50:47] Austin Cusak: And so when you’re in alignment with each other, the principle of this is a psychological principle called homophily. And homophily is this idea that we really gravitate towards people who like the same things we like, who we perceive are part of the same group. So a great example of this, I play a lot of Dungeons and Dragons, I’ve been playing Dungeons and Dragons since I was 8 during the Satanic panic, where we had to hide it from my mom when me and my two older brothers did this. So if I meet somebody and they also play D&D, I instantly like them. They could be a terrible human being, but I’m now giving them the benefit of the doubt because they love a thing that I love, so therefore, they can’t be that bad. And that is that concept of homophily. So Pedro did that very well. And also, what the scammers did, and like she said, I am suspicious, right. So the cognitive processes are happening, he didn’t back out at that moment, he kept going. Even multiple times when in that relationship when she called him out on things, he weathered those storms. He talked her down. He convinced her otherwise. He got outraged. He threatened to walk. And that is really hard for a couple of reasons. One is because we crave that dopamine, we crave that oxytocin, and the threat of that being yanked away very suddenly, that’s going to hurt. And the brain is going to avoid pain. And this is one of the things that we don’t necessarily recognize, is that our brain is going to process physical and mental pain the same way in the exact same area. And it wants to avoid it. So that mental pain must be avoided. The brain says, can’t have this, don’t want this.

[00:52:45] Bob: Okay, so under all this knowledge of how our brains work, and sometimes work against our own interests, what can we do to better protect ourselves from an amygdala hijack? For starters, we could teach ourselves to be more understanding of victims. Austin has a lot of very practical advice for helping someone who you’re worried is under the influence of a criminal.

[00:53:08] Austin Cusak: When we suspect someone is ignoring these types of red flags, when they are stuck in that amygdala hijack, they are not in control of this. They have someone who is manipulating them and the self-acceptance that they are being manipulated is going to hurt. It is going to cause a lot of pain. So the first thing that we want to do with that person is to use our own cognitive empathy, because if we’ve not been through something similar, it can be very challenging to allow our emotions or even our compassion in. So cognitive empathy is, I’m going to listen, I’m going to get very curious, I’m going to try to ask questions, I’m not going to give judgment, and then this is probably the first thing that I would say. Approaching this as, I know someone that I suspect is being uh, is, is being manipulated by criminals. So this is that that’s the lens I’m looking at right now. That person needs to say, okay, before I give you any advice, I will always ask if now is a good time for me to share some advice or give you a thought. I always want to give that person the locus of control. It’s not that they’re not going to receive that information, it’s is now a good time? It’s, hey, I have a real concern that I need to talk to you about. Is now a good time for me to share that? That’s the first thing is you don’t let that person off the hook, you don’t say, oh, I’ve got some, I really want to share this. Is it okay for me to share it? Is now a good time for me to share it? Let them choose the time. We want them to have that control, ‘cause oftentimes they know, they’re feeling that, and there’s that initial fear, the cortisol is spiking. The adrenaline starts to flow because the brain now feels, I’m in trouble, I’m in danger. So when we say, is now a good time for me to share some thoughts or give you some advice... if they say no, that is amazing. Okay when can I do this then? Let them choose a time or they’ll say I’ll come back to you. They always come back. I use this tactic frequently. Sometimes it’s a day, sometimes it’s two days, the person almost always comes back to me and says, I am now ready to talk about this thing. But you don’t want to try and force the flag on them when they are in that state of emotion.

[00:55:42] Bob: Getting back out of the highly emotional state, out of the amygdala hijacking often requires something Austin calls calming the amygdala, talking with empathy can help others, but you can do that for yourself too.

[00:55:56] Austin Cusak: If you do physical movement, you can also have a mental shift with that movement, hence the beauty of going and getting coffee. I can’t tell you, Bob, I do a lot of coffee at work, and the code for, hey, can we get coffee, it’s not really a, I need coffee, or I want to spend time with you, the code is, I really need to get a sanity check from somebody, and I don’t really want to ask, ‘cause that’s embarrassing. But in the act of walking to the coffee and walking back, that allows the person to share the thing and calm the amygdala. The other thing is breathing. So there’s been a lot of research that’s done on the, the 4x4, the breathe in for 4, hold for 4, release for 4, hold for 4. And then there’s also a lot of research that’s been done on what’s called the 478, which is where you breathe in for 4 seconds, you hold for 7 seconds, and then you do this exhale for 8 seconds. Now the reason why these work so well is because when you are breathing in a normal way, you are cueing and telling the amygdala, I am safe. I am not in danger. So even if that cortisol is starting to spike and the adrenaline is starting to spike and your body is going into fight or flight, you can calm it. Some people are like, ah, I don’t want to breathe. So just go for a walk. Just, just walk and then talk and then say, hey, I want to share this with you. But that’s it, is that those are the very first steps that always work because we have to get that amygdala calmed down before we can share something with them.

[00:57:45] Bob: Amygdala calming doesn’t have to begin with a conversation though.

[00:57:49] Austin Cusak: When someone is suspicious that they might be stuck in one of these things, there’s a lot of advice online, it’s oh, walk away or do this thing, or put your phone down or take breaks; that can be really hard to do. My number one recommendation when I am working with someone who is in one of these highly emotional states, is to try and do a hobby, try and do an activity that allows you to get into flow a little bit, meaning that it is requiring some effort but not too much effort. As an example, I started painting miniatures, these little miniatures that I use for my games. My wife started playing pickleball. I know that some people really like to knit, taking walks. There, there are lots of activities that you can, when you are doing that type of activity that is requiring the brain to hyperfocus on something and it’s requiring effort, but not too much effort, just the, the right amount, right, being in the zone, getting in the flow, that is giving enough space for the brain to say, I’m not in danger, I am going to shift from the fast into the slow thinking. It’s the same thing. We want to try and find ways to move the brain more into this slow, analytical thinking.

I’ve long held the opinion that the only real use case for cryptocurrency is fraud; we can debate that. Crypto kiosks, on the other hand, leave little room for discussion. These ATM-like machines you’ll find in gas stations and convenience stores just make it easy for criminals to steal hundreds of thousands of dollars from victims. They have little other purpose. No sane person would use the machines for a normal cash-crypto conversion; the fees are too high.

I talk to scam victims every week and for the past 18 months or so, nearly every story ends with a tragic scene of a victim shoving $100 bills into one of the Crypto ATMs. Generally, these are crypto novices who spend half an hour or more nervously shoving their life savings into these machines, bills getting spat back at them like a misbehaving vending machine, as onlookers avert their eyes. Victims often believe they are minutes from being arrested on an outstanding warrant, or about to have all their cash stolen in some kind of bank conspiracy. It doesn’t matter why -- they are being manipulated by crime gangs using AI tools, behavioral science, and teams of experienced worker bees.

But all that was no match for Eric Stewart, a gas station employee in small-town Tennessee who is a genuine digital age hero in my book. Not long ago, Eric noticed a woman named Ellen walk frantically into his store. She was chattering on her cell phone and looking around nervously for the crypto kiosk. She also had $6,200 in her hands. A few minutes earlier, Ellen had received a phone call from the county sheriff saying she’d missed a court hearing about her PPP loan, and there was a warrant out for her arrest. The caller knew exactly how much Ellen had borrowed through that pandemic-era program and demanded she repay half of it immediately -- via bitcoin.

Eric didn’t avert his eyes, the way so many people do in the stories I hear. Instead, he stepped right in front of Ellen and confronted her. Here’s the scene, as told in our podcast, The Perfect Scam.

Eric Stewart: And that’s when I said, my very first question is, “Do you know who you’re talking to?” She said somebody said there’s a warrant out for her. A warrant? Yeah, and I said, “No ma’am,” I said, “No.” I said, “You can go to the police station. There’s no way that the money going to a Bitcoin machine is going, that’s not how you pay this. That’s not, that’s not how that gets paid. There’s, that’s not the form of payment that you would pay for something like this.”

Bob: And then Eric tries to be even more direct.

Eric Stewart: I was like, “Please, just hang up the phone. Just hang up the phone.” I said, “If it is a warrant, you can go to the police and ask them if there’s a warrant and everything.”

Bob: Ellen remembers looking up from her phone to listen to Eric.

Ellen: And then the manager came over and said, “Stop, that’s a scam. Don’t put any cash in that machine.”

Bob: Wow! That’s very dramatic.

Ellen: Yeah. The way I remember it, he, he just came over and said, “If they’re asking you to put cash in that machine, it’s a scam. Don’t do it.”

Bob: Wow.

Bob: So Ellen looks down at her money, back down at her phone, and tries to tell Karen what’s going on.

Ellen: On the phone I said, “The manager here is telling me this is a scam.” And she wasn’t even there anymore ‘cause she could hear him talking to me.

So, Eric saved Ellen that day. And you can probably already guess, this wasn’t the first time. Eric often notices agitated customers on their phone headed for the kiosk in his store, and stops them. He does so in the gentlest way possible -- after all, these people are scared and carrying a lot of money. In the episode, you’ll enjoy his homespun wisdom about how he does it. And you’ll enjoy his great accent. But more than anything, I hope you’ll enjoy his sense of decency and duty to his community. He’s so decent, he actually feels regret for the one woman he wasn’t able to stop in time because the store was busy.

While we wait for cities and states to regulate or outright ban these machines (many are!), and we wait for tech companies to do the right thing, we’re going to need a whole bunch more Erics in this world.

Below is a partial transcript of the episode, but I hope you’ll listen to the whole thing.

----------------------PARTIAL TRANSCRIPT-----------------------

[00:14:34] Bob: It was a small moment in time, but it was genuinely a life-changer for Ellen.

[00:14:40] Bob: I wonder if you remember, maybe like her facial expression when suddenly it dawned on her that, that yes, this was a scam? Have, do you remember anything like that?

[00:14:47] Eric Stewart: Yeah. Her face did change. And as I’m sitting there, exactly I could see, you’re exactly right, her face did change when it was coming to her an understanding of things that me and her were speaking to, making her understand that this is a scam and bringing obvious steps into this. So yeah, her face went from like confused and oh my goodness, and like, you could see a little bit of shock and the realization in her face. But yeah, I could see the relief on her face too right there at the end when she was leaving. Oh, more or less like I probably don’t have a warrant on me. I can’t believe I almost got scammed, but also that I don’t have a warrant out for me, I’m not going to lose... I had to lose all this money, spend all this money on what she thought she needed to do. The relief on her face when she left was, was a huge difference from when I first had approached her.

[00:15:49] Bob: Not only does Eric save Ellen from having a lot of money stolen; he cares for Ellen’s fragile emotional state too.

[00:15:57] Ellen: I just felt so foolish.

[00:15:59] Bob: Oh.

[00:15:59] Ellen: Really, and Eric was like, “It just happened to two other people here this morning.” He told me that.

[00:16:05] Bob: Wow!

[00:16:05] Ellen: He just said, “It happens to everybody.” He said or, “It could happen to anyone. You don’t feel bad.” ‘Cause I was saying, I feel so foolish. (chuckles) I can’t believe I almost put $6000 in this machine, and so he was just really nice, a nice guy.

[00:16:21] Bob: Five minutes out of his day or whatnot, but it really was a life-changing thing for you, right?

[00:16:26] Ellen: Absolutely, absolutely. I love Eric. I don’t hesitate at all to go into Kwik Mart anymore; you know what I mean?

[00:16:33] Bob: Eric, rightly so, enjoys feeling like he’s done something for the community.

[00:16:38] Bob: That must feel great for you.

[00:16:40] Eric Stewart: Yeah, it does, it does. It really does, and I remember, I don’t think I said anything to my wife about it, till the end of the day I was, oh yeah, by the way... But to me it’s like, it’s just, ‘cause the way I think about it, what if that was your family member? What if that was your grandma, your aunt, you know your mother, you know, your neighbor, you know your best friend? Why would you not, why would you not help another person in need, ‘cause that is someone’s grandma, that is someone’s mom, aunt, sister, relative, neighbor; they’re all those things. And I wouldn’t, why would you not want to help that person, when it takes a couple minutes, that’s it.

[00:17:20] Bob: But he didn’t even realize the depth of the trouble he saved Ellen from until I told him. Ellen would have had to make monthly payments with interest to pay back that $6200 she borrowed from her HELOC.

[00:17:34] Bob: So she didn’t have that money. She had to take out a loan to have that money.

00:17:38] Eric Stewart: Oh wow.

[00:17:39] Bob: She would have had years of $200 a month payments or whatever in addition to everything else. You really, it’s a big deal what you did for her.

[00:17:47] Eric Stewart: Wow, that’s amazing. That makes me feel even better now. Hah. That’s awesome.

[00:18:52] Bob: Yeah.

[00:18:53] Eric Stewart: Wow, that I was able to help that, prevent that. Wow.

00:18:57] Bob: Yeah, she had a HELOC, and so she borrowed money out of the HELOC in order to get the $6000. That would have been a years’ long problem for her that you stopped.

[00:18:04] Eric Stewart: Yeah, and stress especially if she’s on a fixed income. I know she was a little bit older, I don’t know how old she is and or anything like that. I know a lot of people are just living off of one check a month trying to survive, and then that stress added more. Wow, that would have been a lot more stress, yeah, wow. I’m going, God had put me there on purpose, for that, at that moment. Absolutely.

[00:18:29] Bob: Maybe you can tell from Eric’s matter of fact tone of voice, this wasn’t his first crypto ATM rodeo.

[00:18:37] Bob: This isn’t the only time you’ve stopped other people from doing this too, right?

[00:18:41] Eric Stewart: That’s correct, yeah.

[00:18:42] Bob: How many do you think?

[00:18:43] Eric Stewart: Easily two more, easily two more after that. And the last one, he was, I assume a spouse, and I’d had done the same thing. And I said, “Sir, just...” He was fighting me on it. He really was. And he moved the phone away from his cheek, and I was seeing on there, I said, “Sir, your phone for caller ID says, ‘SPAM RISK.’ It says on your phone just ‘SPAM RISK.’” I said, “Please just hang up.” And he fought me too. He had walked out that door. I told his wife, I said to whoever she was, I was like, “Hey...” She said, “I’ve been trying.” I said, “Please, just hang up that phone. Just get that phone from him and hang it up ‘cause I promise they’re not going to call back.” I think he; he didn’t do it because there’s not that many of those ATMs or machines around, those Bitcoin machines. There’s not a lot of them.

[00:19:33] Bob: How did Eric learn to be so attuned to potential crypto ATM scams? Well, he listened.

[00:19:41] Eric Stewart: How I learned about this was, I had a elderly customer, unfortunately it’s been a lot of elderly people, same scenario was happening, and a customer had said, told us, he goes, “Hey, whoever that is over there, she been over there talking to, that’s a scam, ‘cause I could hear the conversation on the phone going back and forth. That’s a scam.” And so that’s how I got the information on figuring out how it’s a scam just learning from that right there. And I just used my intelligence and common sense and put things together, hey, y’all, okay, this is a scam.

[00:20:15] Bob: But the first time you saw this, somebody actually tipped you off that they had heard the conversation and it was a scam.

[00:20:19] Eric Stewart: Yes, sir. She actually fought me.

[00:20:22] Bob: Fought you. Wow.

[00:20:24] Eric Stewart: Yeah, yeah. “Ma’am,” to the customer and I was like, “alright, since I work here, I’ll approach her.” And she goes, “No.” I said, “Do you know who you’re talking to?” She goes, “No, but it’s okay. I know what I’m doing.” And I was like, “Well someone overhead and said that you’re, you know, that you’re being scammed.” I was like, “Do you truly know who you’re talking to on the phone?” And she really fought me. I sat there and asked her a couple of questions and tried to use red flags, I tried to use, I can’t remember the question was, a red flag question is I think there is something there, “If you don’t know who you’re talking to, do, are you sure you should be doing this and putting that money in there?” And luckily, her husband had been sitting out in the car. I don’t know; this was a great scammer, whatever he or she had told this lady to actually convince her husband as well. These people are super topnotch. It goes from you leaving your destination where you’re at, physically going to the bank and withdrawing this cash, probably with a bank teller because it’s a couple thousand. I don’t know what the limit is on the ATM, I’ve never pulled, tried to attempt to pull that much money out, and they go from the bank to the Bitcoin machine and this whole time this is fighting traffic on the traffic, could easily, we could be at an hour now, they’re on the phone.

[00:21:45] Bob: Yeah.

[00:21:46] Eric Stewart: By the time we get to the Bitcoin machine, that’s an hour conversation easily, you know, so when I left it, I told her husband, I said, “Hey, y’all, that’s a scam that’s going on with your wife and everything,” and he goes, “I figured,” you know. “You might want to stop her.” And he went in there. I don’t know what happened, ‘cause I was leaving for the rest of the day and hopefully they didn’t go through, or the minimum.

[00:22:09] Bob: But she ultimately didn’t believe you. She believed the person on the phone.

[00:22:13] Eric Stewart: Yeah, yeah, that person was really good. Cause for her husband, for her to defy her husband who was with her as well, to go to the bank and had gotten that far. That person, unfortunately, they are really good at their job.

[00:22:28] Bob: Do you have, ‘cause one of the, I think, really important things you’ve mentioned is that when somebody comes in and they’re upset obviously, and they’ve got a lot of cash in their hands, they’re nervous, and so you’re very careful with how you approach them, right?

[00:22:43] Eric Stewart: Absolutely. Usually they have a phone in their hand, if it’s females, it’s going to be in the purse. The gentlemen, unfortunately, he had those little envelopes that you get from the bank, and you could see it in his pocket hanging out a little bit. I understand there was a lot of money, so I easily give him the space and let him know I’m not trying to rob you or anything, but I let him know I’m aware of the situation and of what’s going on. But yeah, most of them are just, they’re on the phone just like everyone else is, and but when they get to the machine they find it really easy, it’s right next to the ATM machine, so this is just like an average person coming in on the phone, but I wouldn’t say that they was hanging, having the money in their hands and all that, but yeah, I definitely give him the space. I give everyone the space ‘cause you don’t know, so some stranger’s walking up to you. And you had a machine that either you put money in or you take money out of, so obviously, you want to make them feel, I want to make them feel safe around me.

[00:23:44] Bob: So Eric has learned to approach potential victims with great care.

[00:23:49] Eric Stewart: And I try to pull a flashlight over their head, let them think, I try to let their mind, not me tell them, because me telling them is not going to mean nothing because these scam people are smart. But let me alert them and let their senses say “Hey, wait a minute.” I try to use easy language, understandable language because obviously there’s a lot going through this person’s mind; fear, anxiety, I’m pretty sure, a little bit of shock of “Hey, what is really going on?” So I’m sure this person’s feeling all these emotions so I try to make everything as simple worded, for them to understand that “Hey, yeah, you know what? Let me stop this and not do this.”

[00:24:35] Bob: You are natural at the psychology of the situation. We hear all the time when family members say, “That’s a scam” that people don’t listen. Because sometimes when you’re that direct with someone in that state of mind, they reject it, but you have described it as shining a light over their heads so they can figure it out themselves. How did you get so smart about psychology?

[00:24:55] Eric Stewart: I don’t know. Like I said, I’m a people observer, and uh, I was in management in the fast-food industry for many years.

[00:25:04] Bob: Aha.

[00:25:05] Eric Stewart: And I noticed every employee is different. Some, you don’t have to say nothing to, they just do a great job. Some, you have to pat them on the back. Some you just have to slowly guide them. And then others, you have to tell them, “Aw, man, that’s amazing. Great job!” ‘Cause they need to hear that. Everyone’s different in the workforce and just, so I observed that and just noticed that. And I guess I used that, me watching people, working with people, understanding how they work and I just use my intelligence to guide me through those situations, scenarios with them.

Owner Jack Dorsey -- the founder of Twitter -- claims AI enabled the workforce slashing. My hunch is the reverse is true. I read a persuasive article recently suggesting that big firms like Amazon are laying people off to justify their gigantic investments in artificial intelligence and placate investors. So far, some studies seem to show AI implementations don’t lead to big productivity gains. They sure do provide cover for massive layoffs, however. Either way, it’s clear Wall Street loves to hear about AI-driven cost-cutting.

But will music fans love AI-created songs? Enough to win a Grammy Award within two years? And what will that do to professional musicians? And why is the looming fight over AI music a great proxy for the coming robot vs. human fight?

I’m in the middle of a four-part series called “Sugar High,” at Duke University’s Debugger podcast, which I host. We’re looking at the role of Big Tech and AI in the future of music. For the series, we are following Grammy-nominated folk singer Tift Merritt as she makes her first new album in about a decade after a self-imposed hiatus to be a mom. You can listen to the setup with Tift here.

This week, my guest is Reid Wick, who works for the National Academy of Recording Arts and Sciences -- the folks who give out the Grammy Awards. He’s also a working R&B musician from New Orleans, so our far-ranging conversation is really entertaining. We talked about the importance of mistakes in music and how Deepfakes that are too perfect are unnerving. We talked about Muzak and its similarity to fully AI-generated songs. We talked about what music fans can do to support real-life musicians, and what lawmakers can do.

Among my favorite moments -- a discussion about the ways AI tools might be co-creators in new music, as opposed to job killers. I try to keep an open mind.

“When I was in Nashville a couple of weeks ago ... I actually heard a half-written song that one of my friends and another songwriter had started writing,” Reid said to me. “The other songwriter took it home, put it in Suno, and sent him a finished version, fully demoed, full production, and we were all dumbfounded how good it sounded.

“But then you stop and think, okay, so you just put five to 10 musicians outta work ... the studio that you would’ve gone into to make that ... demo tape, the recording engineer, probably the crew at the studio. So while you would’ve saved a few dollars, you put a whole bunch of people outta work. And I think that’s the balance we have to figure out in the industry ... how far do we want to go with that, you know?”

Just as we sat down, a fully AI-generated tune topped one of the country music song lists, which Reid says caused a bit of a freakout in Nashville. Between that and Wall Street’s bloodthirsty taste for layoffs...well, it’s easy to be nervous.

You can hear part two by clicking here for Spotify, or by finding Debugger on your favorite podcast platform. If podcasts aren’t your thing, you can find a machine-created, lightly-human-edited transcript below.

----------------------------TRANSCRIPT--------------------------

Reid Wick: [00:00:00] What we say in New Orleans is that you’re born to music, you’re married to music, all your major milestones in life have some sort of music attached to it. And of course, in New Orleans, we’re famous for burying people to music too, you know? And so it’s easy to take it for granted because it’s so ubiquitous. It’s everywhere, right?

And I think the danger right now is that some of these big tech companies find ways to almost trick the listener into not realizing that what they’re listening to might not be as authentic as you think it is… it’s a way for them to save money, cut costs at the expense of people who deserve to make a good living at the art that they create. And so I think that we’re in a timeframe of a lot of uncertainty, a lot of unknown, a lot of scared composers and songwriters out there, and performers.[00:01:00]

Bob: Welcome back to Debugger, and this special four part debugger series on the future of music called Sugar High. Debugger is brought to you by Duke University’s Sanford School of Public Policy. I’m your host, Bob Sullivan. We’re following Grammy nominated folk singer Tiff Merrit as she heads back into the studio after an eight year hiatus and how she’s digesting the dramatic changes to the music industry.

They begin with a change in economics brought on by the shift to streaming services. But many artists are worried storm clouds are quickly gathering, and an even bigger shift is imminent, A shift away from human created music to a world where AI music edges out people like Tiff Merrit. We left Tift just as she was about to walk into a studio and record her new album which will be called “Sugar.” So while we wait for that, we’re going to talk to a couple of other experts. You were just listening to Reed Wick, who works with the National Academy of [00:02:00] Recording Arts and Sciences, better known as the organization that hands out the Grammy Awards. Reed is also a New Orleans based r and d musician, so he’s got a broad perspective on what’s happening in the world of music.

Here’s my conversation with Reid.

Reid Wick: So the Recording Academy is the membership organization for professionals in the music industry, both from the creator side and from the sort of industry side. The full name of the organization is the National Academy of Recording Arts and Sciences. We’re best known for the, our annual Grammy Awards, but we work year round on all kinds of issues in the advocacy space.

Uh, we work in professional development and networking for our members, and so I work primarily as an interface between our advocacy department in Washington, DC. And our chapter system, which we have 12 chapters around the country that covers every state in the country. And I work more so at the state and local level with regard to [00:03:00] public policy and advocacy.

Bob: So you work on music policy, but you are also a working musician, right?

Reid Wick: I am. I have been pretty much my entire life, yes. So, uh, I’m very much an active working musician. Played twice this past weekend and kind of still tired from it.

Bob: I think people who have heard your voice could already tell probably that you’re from New Orleans.Is that right?

Reid Wick: That’s true. I am sitting in New Orleans as we speak, finally after being on the road for several weeks. So,

Bob: What kind of music do you make?

Reid Wick: I’m primarily playing a rhythm and blues band. We play a whole variety of things depending on what the gig is, but it’s a a nine piece R&B band and it’s a lot of fun. Get a lot of big corporate events and festivals and weddings and the whole gamut of kind of things that a working musician would do.

Bob: So I’m gonna guess that there aren’t too many working musicians who also work on the policy side of the music business. So that gives you [00:04:00] kind of a unique perspective, isn’t it?

Reid Wick: I think so. I know of a few others that do, but probably not as working as a working musician to the same degree that I am. But I am familiar with a number of the people around the country and in Washington DC that work in the public policy space related to music. But I’m probably pretty unique in that way.

Bob: So we’re gonna talk about artificial intelligence and the impact that may or may not have on music, on people who work in music and in lots of forms. But before I get there, I wanna step back a little bit because I don’t think the average person knows a lot about how musicians get paid and how an entity like Spotify can impact the way that musicians get paid. So can you just talk to me about your experience with that issue first?

Reid Wick: The way musicians get paid is just such a mystery to so many people and even to many musicians. You know, the interesting thing about taking advantage of the intellectual property that [00:05:00] a musician creates is that there’s…45 different potential income streams.

Most people are familiar with the live music setting where a band, an artist, whoever plays a particular show. Whether it’s a festival or a club date or a corporate gig or whatever it is, and you get paid for that particular performance, but the intellectual property that you create also has a variety of income stream possibilities.

But probably the one that most people know about is when your music is performed. We use that word intentionally because a performance right is in the copyright law in some ways, and in some other ways it’s not. But as music is played over the air or it’s played through a Spotify or a digital service provider, DSPs, as we call ‘em, or if your music is played in a restaurant or if it’s played live even, those are all considered performances and they all have different ways of [00:06:00] deriving income from those different performances.

And so additionally, there’s ways that music can be monetized by having your music used in a TV show or a commercial or a music, a movie soundtrack, or a video game, or any number of uses like that. You know, ringtones was a popular thing for a while. So there’s all kind of ways that your intellectual property can earn income for a creator.

Obviously, we’ve seen large paradigm shifts in the way people get paid with regard to how music is distributed going back to people who go back to vinyl records. And even though we’re seeing a resurgence in vinyl, but also, you know, CD sales and things like that, and as streaming or originally digital downloads kind of took over there was a definite shift in the way creators got paid, as people consume their music. And today with the [00:07:00] streaming platforms having taken over, it’s a, another huge shift in the way that artists get paid.. It’s a mystery to a lot of folks because I often describe it as … you could be riding in your car and you could be listening to the same song in any number of formats, whether you’re listening on terrestrial radio, on satellite radio, on a Spotify, or a digital download, and the average consumer doesn’t realize that under one set of circumstances an artist and the songwriters might be getting paid a certain amount and under another, it might be a completely different amount … if they get paid at all. And so there’s just so much ambiguity in the way that the money actually flows from the people who are, um, sending that music out into people’s ears and the way that the creators who created that music get paid.

Bob: This is all very confusing, just right off the top, right. I imagine if I buy a book the author gets, a couple of bucks when I buy a book. [00:08:00] When I bought an album, I would hope the band would buy, get a dollar or two from the album. But now, I don’t quite know how to support an artist who I like.

Reid Wick: Yeah. And you know, that’s one of the biggest issues that we’re facing in the industry ‘cause fans still do wanna support their artists. When you pay a monthly subscription, you have no control over how that money is divvied up as the individual subscriber and I know a lot of folks talk about a user-centric model, meaning that if I listen, I pay my 10 bucks a month to be a member of a, or to be a subscriber of a particular service, and I listen to these five artists, ideally I would love my money to go to those five artists, but I have no control over how that money is divvied up.

And so if I really wanted to just support those artists, I would go buy their vinyl or still go digital download. If I can do that or find some other way that I can ensure that the money hopefully gets directly to the artist and not through third party tech companies that kind of stand [00:09:00] between the consumer’s money and the artists that they hope to support.

Bob: You’ve given me a kind of neutral description of the landscape so far. I can tell you other musicians haven’t been quite so neutral, and I wonder if you think the, the opaqueness of the entire situation carries with a very serious risk for the creation of music.

Reid Wick: I’m not sure if I would characterize it as a risk. Being a musician myself and being surrounded by musicians on a daily basis…you know, on one hand I feel like… to create as part of being. And so those who create music, just like somebody who writes a book or somebody who … any kind of creative endeavor… you’re called to do that as part of your persona of who you are. You know, it’s part of your identity. The hard part is that, how do you monetize that? [00:10:00] Right? And so they used to be way more of a defined methodology, if you will, I think in the older models, if you will. But now there are so many different ways that music can be distributed. And look, I feel like in these situations the DSPs need the musicians just as much as the musicians need the DSPs and, and it’s kind of been like that with every technological revolution that’s impacted the music industry.

And I mean, if you think about it, it goes all the way back to the ability to travel and electricity, where the first. Real disruptors in the music industry.

When people were able to start traveling from town to town, that gave rise to the professional musician where somebody who was more talented than the family sitting around piano who used to, you know, read sheet music and play songs together as a family. It turned, it on its head and all the different technological advances since then have created some sort of disrupt disruption [00:11:00] in the industry. And I mean, I think we’re at one of the biggest points of disruption we’ve ever seen with artificial intelligence and streaming as well. But you know, it’s kind of where we’ve gone and we have to, as an industry, figure out where do we land in that and how do we try to create, whether it’s legislation or best practices or whatever those are, to try and make sure that we don’t get ourselves shut out completely.

Bob: It’s very hard to put ourselves into other timeframes. But I read a book not too long ago about music, which reminded me that …in my grandfather’s lifetime, there was no recorded music and there was no radio. And so if you wanted music, someone had to play it.

Reid Wick: Yeah, exactly.

Bob: Which is why there were pianos everywhere. I was reading this book about the Dust Bowl and people draging their belongings across the Midwest. They would drag their pianos.

Reid Wick: Yeah, I mean, to me that just goes to show how important music is to people. You know? I [00:12:00] feel like, you know, in a city like New Orleans where American music was literally born, it’s easy to take music for granted. Right? And I think that’s kind of where we are right now. What we say in New Orleans is that, you know, you’re born to music, you’re married to music, all your major milestones in life have some sort of music, attached to it. And of course, in New Orleans, we’re famous for burying people to music too, you know? And so it’s easy to take it for granted because it’s so ubiquitous. It’s everywhere, right?

And I think what’s happened in the streaming world, and you know, I just read. Mood Machine as you probably did. And I know Liz Pelley just spoke at Duke recently. It’s easy to take a lot of things for granted, and I think the danger right now is that when some of these big tech companies find ways to almost trick the listener into not realizing that what they’re listening to might not be as authentic as you think it is, and it’s a way for them to save money, cut costs at [00:13:00] the expense of people who deserve to make a good living at the art that they create. And so I think that we’re in a, a timeframe of a lot of uncertainty, a lot of unknown, a lot of scared composers and songwriters up there, and performers.

Bob: Okay, so let’s talk about AI. It sounds to me like maybe you think the leap from, say, digital downloads to streaming pales in comparison to the leap we’re on the cusp of where a lot of the music we might listen to could be entirely artificially generated.

Reid Wick: Yes, I am very concerned about it. You know, I mean, it’s here, there’s no, it’s coming, it’s definitely here. I was in Nashville last month and the day I got there was the first time that a completely artificial intelligence [00:14:00] based artist was at the top of the country charts and people in Nashville were freaking out. We’re seeing complete AI artists get major record label deals. So that you know when a real human is… should be in that spot and not somebody, some entity, if you wanna call it that, I don’t even know what we call it, right?

I think that …. like a lot of technology … there’s gonna be aspects of AI that can be useful in the music industry, but this right now, you don’t know what to believe right now,ight? It’s this kind of.. we’re on the cusp of the unknown of.. what’s real and what’s not real and or you know, how do we create mechanisms that protect the authentic real humans who create music?

It’s been a huge topic for a lot of us. I just spoke on a panel in Memphis last week about this topic, about how, um, there are pieces of legislation currently filed and soon to be [00:15:00] filed that will hopefully offer some protections and ways that our artists can get compensated fairly. But right now it’s still the Wild West.

Bob: Well, let’s talk about the legislation in a moment, but just for folks who haven’t thought about this… I’m not old enough to remember this, but I’m old enough to have talked to people who do remember this. You know, when Bob Dylan first grabbed an electric guitar, it was scandalous in the folk world, right?

So how is this different from that?

Reid Wick: I mean, it’s totally different. I mean, Bob Dylan was just expressing himself and at that point, and you know, I’ve read, I didn’t see the movie, but I know a lot about the story at Newport and you know, he was just … we’ve seen so many musicians go through changes in the way that they want to express themselves.

I mean, you think about a lot of other musicians that have gone through changes that people didn’t expect, You know, I mean, the one that comes to mind a lot because I’m a huge [00:16:00] fan, but I know Esperanza Spalding

put out a record that was kind of a rock record, but it was expressing where she was in her life and a lot of the…one of my friends played in her band at the time. And she wound up losing a lot of the gigs that she had booked because the people booked them at the time when she was doing a straight up jazz thing and they wanted her to play that repertoire. And she’s like, no, I’m playing my new record my life as an artist, and if you can’t book me for being me, then, you know.

So to me that’s a whole different ballgame than then a technology company absorbing copyrighted works that’s been out there for, you know, in some cases 50, 60 years. And then a person being able to go in and type in some prompts and be able to call on all of these things that have been fed into a machine to build something fake, that kind of emulates things that it’s [00:17:00] learned.

You know, they can’t pull this stuff out of thin air. They have to train it some kind of way. Right. So I think that’s where it’s a huge difference. It’s not the same by any means in my opinion.

Bob: There’s a great podcast that Tift was on where they, I’m gonna use this word loosely, confronted her with a recording of herself and then a recording where the podcaster generated a song in a style of Tift Merrirr, which of course was saccharine and boring, but nevertheless awful for poor Tift to have to listen to this and respond to it on the spot. This soulless music is a terrifying concept, I think, to most people.

Reid Wick: Yeah. And you know, it’s interesting ‘cause at this panel I was at last week that I spoke at on artificial intelligence, we played a couple of different videos just to give the audience a sense of the topic that we were talking about. And one of ‘em was a, a video that Charlie Puth put out and the video talked about how the art [00:18:00] is in the imperfections of what humans put out, right?

Bob: Mm-hmm.

Reid Wick: It’s the little mistakes that wind up in there that make it unique and it make it. Uniquely human and emotion comes from a true, you know, to me, great music is about emotion. It’s about how do you connect from one human being to another? And as you mentioned, you know, if Tift is here in a soulless version of herself created by AI, that’s soullessness, if that’s the right word, is what’s lacking from that human connection. And I think, you know, right now it’s a novelty. I think over time … and it’s interesting, another friend of mine who told me that her son can pick out AI fakes instantly because he can tell that it’s way too perfect, you know?

Music: Mm-hmm.

Reid Wick: And, um, Charlie also talked about how, um, September by Earth Wind and Fire, the whole [00:19:00] connection of a group of musicians playing together. You know how the emotion of the song started at one tempo, but by the end of the song, it built up so much emotion that the actual tempo of the song had increased. But you don’t notice it as when you’re listening to it on its own unless you’re sitting there counting along, look and working with the metronome. To get that technical with it, but you’re caught up in the emotion of the song that you don’t realize that the song sped up from, you know, minute one to minute four.

So to me, that’s the pieces of art that makes it human. And when you take the humanity out and put the perfection in it generally is gonna render, you know, render a piece of music or whatever, a piece of art, soulless, you know.

Bob: I love that example. There’s this concept in digital video, deep fakes. Basically, if a video is too good, it creates this unnerving reaction in humans, you know? Yeah. It’s, it’s okay if it’s okay if it’s obviously a video fake, but if it’s [00:20:00] almost but not quite human, then it’s like revolting in some strange way.

Reid Wick: You know? I was thinking about that a little bit. ‘cause I read, I didn’t read the whole article. I read a headline actually this morning about … it made me think of like a cartoon versus someone trying to make something look like a real human right. And to the effect that you just mentioned, that you can totally recognize or relate to our cartoonish rendering of a person that’s real and you get the sense that it’s kind of got this little, uh, maybe it’s joking, you know, maybe it’s comedy or whatever. But when they try so hard to make something look totally real and it just misses the mark because it’s too perfect. And I’ve seen some of those things where, you know, there’s not a hair out of place. There’s, you know, not a blemish in the skin. There’s, you know, the eyes never blink or whatever it is.

It’s like. I find that I reject that too. Like it’s a [00:21:00] gut feeling, you know, like, you know, I don’t connect with this. So I think when you think about removing the humanness from communication, whether it’s through a song or through a movie or, or any kind of communication at all, that’s where the soullessness comes in. You know, until you can find a way to actually have that heart to heart or gut to gut, uh, vibe happen. I think that’s, um. That’s where technology gets in the way.

Bob: And how much more do you enjoy songs by your favorite bands when you’ve seen the band perform at once?

Reid Wick: Yeah.

Bob: You know, and then forever you remember that feeling from that moment and all that.

Yeah. Yeah.

Reid Wick: And being a musician, right. I also enjoyed it. They might take it up diff, they might play it different than the record and it adds a whole nother, you know… and to me, music being a musician is about interpreting the song. And you know, I talk about this a lot when I’m play. I was like, you know, I’m projecting what I feel today into a song that I’m playing.

And if I’m mad, [00:22:00] I feel like you’re gonna hear a little bit of my anger in the way I play. If I’m happy, you’re gonna hear a little bit of that. If I’m feeling blues, you’re gonna hear a little blues, you know, if I’m, and so to me that’s, those are those elements that no computer can add in there. Right. You know, and, and sometimes it might not be the notes that you play, but it’s the way that you phrase things.

It’s the way that you attack a note and let go of a note. All of those little aspects, that’s the minutia of humanness that a computer …If we let this keep going, I’m sure it can…it’ll emulate human qualities to the nth degree. For the most part. I don’t know if we’ll ever really get to the point where a machine has soul.

Bob: I can tell you, a computer will never be as good at making mistakes as I am,

Reid Wick: But that’s where the beauty is, right? Same here. The beauty is in the mistakes. And um, who was it? Not everyone always would agree with that. It’s not the wrong note that you play. It’s the next note that you play. How do you recover?

Bob: It’s how you fix it. Yeah, sure.[00:23:00]

You mentioned the word outrage a little while ago, and I wanna get back to this question, which is, I’m dying to ask. When Millie Vanilli happened, everyone flipped out and felt cheated, wanted refunds, right? All that sort of stuff. And these things happen from time to time in the music business. Why do you think…the public hasn’t reacted with that kind of emotion about … wait, fake music. What, what is this? Where is that reaction coming do you think?

Reid Wick: You know, that’s a great question and honestly I don’t have an answer ‘cause I think about that kind of stuff from time to time. And I almost wonder if the day and age that we live in of, of short attention span. You know, one of the things that Mood machine talks a lot about is passive listening. You know, and I think we as most humans are in a spot where they’re listening to music passively, which I think is why some of these things that these streaming [00:24:00] services put out there, like these chill playlists that are all, you know, meant to be almost like emotionless so that it doesn’t interrupt your life, that you could just put something on in the background and you can go about your day and not have to think about the music and you know, I guess there’s a place for that for some people. I mean, I go back to the days of walking through grocery stores and hearing Muzak, which is kind of where all this came from, right? You hear these bland versions of, oh, I recognize that melody. You know, it’s another steely dance song or something.

But it’s, you know, really bland and yeah, I can notice, and I’m probably not the right person to ask that kind of question too, ‘cause I always be like … man, that’s really cheesy way to play that song. You know, they, they could have at least kept the major nine chord in there and they didn’t even use that.

But I’m, you know, I’m analyzing too much as I go along, but I think that, uh, that I, I don’t think, I wonder if that’s where we are today, is that like we get bombarded with so much information that a lot of people don’t have the time to [00:25:00] waste their energy on that when there are so many other things going on in this world that are time consuming, energy consuming, draining of your emotion? Honestly, from watching, I had to basically stop watching the news ‘cause I’m worn out just watching the news. And I can imagine that there’s a lot of people who are in the same place. It’s like, this isn’t the fight. I’m gonna fight a, you know, I’m a raise a stink about. I just don’t know. I wish I had that answer, honestly, Bob,

Bob: On the list of things to be outraged about. It wouldn’t crack the top 25 or so. Yeah.

Reid Wick: Yeah. I’m not sure for a lot of people. Right. So I kind of wonder when it’s gonna come to a head. If it’s gonna come to a head. I mean, I would like to see a little more vociferous, a proposition to fake music from a lot of people. Maybe it’ll happen one day soon and you know, maybe we will be the ones who drive that eventually.

Bob: So I know you’ve worked with things in the Louisiana State legislature, right? And you have also supported some of the federal laws. So can you just talk about, you know, what kind of things you hope might work either at the state or the federal level?

Reid Wick: Sure. Obviously, you know, one of the issues, I do work in a lot of states and, and a couple of ‘em have already passed some AI protections. For instance, last year in Tennessee, we passed the Elvis Act, which, um, does protect likeness and image and things like that. And, and we have a version of that here in Louisiana called the Allen Toussaint Legacy Act. I’m actually working to put a version of the Elvis Act together for Missouri next year in 2026.

And that’ll be, uh. We are gonna brand it … the Chuck Berry Legacy Act, ‘cause it’s the hundredth anniversary, Chuck Berry’s birthday, the founding fathers of rock and roll. And, um, but, you know, ultimately federal level protections is where we need to be. And [00:27:00] so back in April we introduced the No Fakes Act, um, during our annual Grammys on the Hill, which would offer name, likeness and voice protections from, you know misuse of artificial intelligence in that space. A little later in the year, in the fall, the train act was introduced. The real short version of the Train Act is that we’re looking for what we kind of refer to as the three Cs. First being that if a tech company is interested in using my music, for instance, I hope that they would, we would like them to require that I give consent, that they use my music as the first C.

The second C would be that they, um, compensate me appropriately for training their ai, um, robot on my music. And then third, that I would get the credit that I would deserve, so that if you wanted to make a song in the likeness of one of the songs that I created that you would know that it was my song that you were basing it off of, you know that.[00:28:00]

And that the other two Cs were put in place that I gave consent and that I was compensated appropriately. So those are two of the pieces of legislation that are already been introduced. We are working with, um, representative Deborah Ross there in North Carolina as well as. Trying to get a, um, a prominent Senate Republican to sign on to the Protecting Working Musicians Act, which would allow independent artists to come together and sort of … I don’t know the best way to describe it. Kind of do you know, collective bargaining class action work together as independent artists so that we can work together and have a say in how our music is used or not used when it comes to these AI robots coming out. So we are hoping that that bill will get introduced early in the, um, in 2026, so that we can sort of work those as a three-legged stool that could approach.

AI legislation from three different angles at the federal level and hopefully, [00:29:00] you know, at least put the brakes on a little bit so that we can maybe work with the legislature to make sure that our artists are protected and, and, uh, ‘cause it’s not only we’re focused on the music side of things, but you know, when it comes to artificial intelligence, you know, it’s looking at, it’s you, it’s looking to use intellectual property, right.

And a lot of people don’t, you know, might think that’s just a buzzword. But I mean, intellectual property is pretty much, it’s the largest export the United States has, right? It’s our songs, it’s our movies, but it’s also the software that we create. It’s the books we write. I mean, when you think about it, anything that a creator creates, it’s their intellectual property, right?

And it’s, it’s amorphous for a lot of folks. ‘cause you can’t really hold intellectual property in your hand as a concept, you know? It’s, it’s something that’s created outta thin air. And so you can hold the CD that a song is recorded on, but you’re not actually holding the intellectual property. You’re holding the sound recording, which is a whole separate copyright.[00:30:00]

And so to me, it’s an ongoing educational process every single day. That’s what I do every day. It’s our job to educate. Legislators, the general public, even our fellow musicians and creators, that the crux of it all is intellectual property. And how do we protect that? How do we keep companies that don’t feel like they have to pay or ask or, you know, consent with us and just use it because it’s out there in the world?

Bob: Hmm, I, is there anything that a fan, a listener, uh, can do or should do right now in, in this time?

Reid Wick: You know, I think one thing that we would do is really take the time to pay attention to these points they’re talking about, because, you know, if they truly do care about music and do care about supporting an artist that they may be a fan of … then thinking through these kind of things, which the average person doesn’t think about. [00:31:00] And that’s why organizations like the Recording Academy and others who work in this space think is such a service that we do to not only the musicians that we support, but fans that, that support them. Is that they need to understand that maybe, uh, utilizing that service is not really gonna pay the artist well or, or …. maybe they should go to a show, buy a piece of merchandise, you know, buy the actual album or a vinyl or something that you do know that that money is going to support that artist. It goes a long way, but I mean, it’s easy as we talked about in this world of distractions and so much information coming to you that to not even take the time to think about it.

And I would like to call on people to actually think through some of these things and when they see these buzzwords out there, maybe take a few minutes and actually research what it means and how it affects your favorite artist or, or things like that. So, um, you know, it’s a time of change. It’s a time of a lot [00:32:00] of new things coming at us from every direction. But to me this is really important that if we want to see the survival of creativity, I think if fans really wanna see the survival of creativity, then they really need to be paying attention to what’s happening in this artificial intelligence space.

You know, I saw a pundit this morning on a video talk about … Will an AI artist be winning a Grammy award anytime soon? And he predicted that within two years as of right now. Last year, Harvey Mason, Jr. Our CEO, made a public statement that AI will never win a Grammy. And I will tell you that for years if somebody is submitting their recording for consideration in the Grammy awards process, you have to indicate whether this song was built on samples has been around for a long time, and you have to acknowledge that. But now you also have to [00:33:00] acknowledge that if AI was in the creation of music at all, because we will still .. even if the human did use some elements of artificial intelligence, I believe. But they have to declare what those elements are and we won’t be seeing, uh, any of these AI artists that are out there actually getting a Grammy anytime soon, and I hope that never happens.

Bob: You know what, what I think what we will see though … I mean a lot of writers now are using AI to sort of overcome blank page syndrome, right? So I mean, I could see as someone writing song lyrics and using chat GPT to, to get ‘em started on, on a verse or something like that, you know?

Reid Wick: Yeah, I’ve heard that. And um, heard, I’ve also heard. When I was in Nashville a couple of weeks ago, or a month ago when I was mentioned earlier, I actually heard a half written song that one of my friends and another songwriter had started writing the other songwriter, took it home, put it in Sumo, [00:34:00] and sent him a finished version, fully demoed, full production, and we were all dumbfounded how good it sounded. But then you stop and think, okay, so you just put. Five to 10 musicians outta work. The studio that you would’ve gone into to make that demonstration. You know that demo tape, the recording engineer, probably the crew at the studio. So while you would’ve saved a few dollars, you put a whole bunch of people outta work.

And I think that’s the balance we have to figure out in the industry is like, how far do we want to go with that, you know?

Bob: Forgive me if I are putting my thoughts into the middle of this conversation, but I have a strong feeling, especially when it comes to writing, which is AI is very good at generating B plus work for someone who’s sort of lazy and doesn’t wanna do it. But the thing you didn’t mention about the collaboration of finishing that song is how much better it would be when the five or 10 people who are all professionals kicked in their point of view. Right. [00:35:00]

Reid Wick: Well, and you know, and that’s the secret to. You know, one of my very best friends is a, a music row songwriter. And he is, I mean, he’s had several number one hits and several, many, many, many cuts on not only country, but pop and rock and the jazz, uh, over the years and. He swears to the collaborative effort between three or four human beings in a room actually bouncing ideas off of each other and editing their work. And, you know, writing a part of a song today and going home and thinking about it and coming back tomorrow and finishing it up and, and, you know, putting the time and effort into making something as good as it could possibly be, and not just being satisfied with C plus or b plus, you know, but going for A+

In this world of everybody can write a song, everybody can get it out into the [00:36:00] world. How do you still cut through the clutter and get to the top of the heap? And I still believe that, you know, the really, really great music is gonna eventually find its way to the top and get to people’s ears. A lot of people talk about how, oh, there’s just no more great artists anymore, and I would beg to differ it. You just gotta take the time to push past the clutter that’s out there and you can find great music. I find it every day.

Bob: Next on debugger. Not everyone is quite as optimistic as Reid that will be able to push past all this digital clutter and find great music. Getting great musicians every day. So while TIF is still working in the studio, we’ll hear from Jen Jacobson of the Artist Rights [00:37:00] Alliance.

The next time you fire up your favorite streaming service, the music you hear might be made by a robot. Maybe you don’t care; you’re just looking for something to help you kill those 30 minutes on the treadmill. But you should care. The sound you might not hear is a canary in a coal mine that’s gone silent. If “human” musicians can be replaced by bots, so can you.

That’s why we’ve just released a new four-part miniseries on the future of music over at the Debugger podcast, which I host for Duke University’s Sanford School of Public Policy. Grammy-nominated folk singer Tift Merritt is our guide through this complicated cultural and economic story. The series is called “Sugar High.”

“I think that everyone is a little shell-shocked from streaming, and it’s very hard to get your mind around things getting worse than that,” Tift told me.

The vast majority of music fans don’t know how much streaming services have changed the economics of the music business, but Tift makes it crystal clear. The series follows Tift as she enters the studio to record her first new album in almost a decade -- she’d taken time off to raise her daughter. She’s going to spend about $50,000 to make the record, a bargain by historic standards. But to earn out that advance, she’ll need about 10 million streams on a service like Spotify.

Ten million streams! Just to get back to ...$0.

Tift Merritt is, as I explain in episode one, a huge success story. Don Henley covered one of her songs. She toured with Elvis Costello. She has several songs with millions of streams. Her record Tambourine earned a Grammy nomination for country album of the year. And yet, her ability to earn even a middle-class living as a working musician and mom is....well, it doesn’t really exist any longer.

There’s no arguing that tech has made more music available to more people, and it has made it easier for unknown artists to share their undiscovered talents with the world. That was always the promise of the Internet. But along the way, the path towards discovery has narrowed, as the spoils of the system have been siphoned off by tech companies.

“I remember in 2010, I put a record out, and I got my first royalty statement, and I realized what a huge impact streaming was on our economy. It was a fourth of what I usually got, and I realized that I could no longer live in New York City. I couldn’t afford it,” she said. “So...oh my God, shouldn’t I be a dental hygienist? This is a, an equation that is broken.”

But that problem pales in comparison to the storm clouds gathering around artificially-generated music. Artists and record labels alike are worried that “robots” -- trained by ingesting decades of music recordings -- will generate endless royalty-free ghost music. Those songs will fill listeners’ playlists, crowding out real art, leaving musicians like Tift without revenue streams.

That future feels overstated. Listeners will reject soulless music, won’t they? Like so much of today’s AI conversation, this debate is full of hyperbole and puffery, investment bubbles and doomsayers. One can imagine AI tools being part of human music creation, just as synthesizers and sampling have been used to make art. But one can also imagine large tech companies making the decisions that suit them, artists and art be damned.

One thing is certain: absent some other force, cost-cutting will drive the outcome. If AI ghost music is more profitable than real music, it will replace art and artists. Just as AI will replace lawyers, and journalists, and....every other kind of work that can be done cheaper by software. How do we prepare for this? How do we design outcomes that benefit society as a whole, rather than a small set of investors? It’s a conversation we need to have right now.

Of course, this conversation deserves far more nuance than I just gave it, so that’s why this miniseries is just the start of a dialogue. Later in the series, we’ll hear from Reid Wick of the Recording Academy of America (the Grammy people) and Jen Jacobson, Executive Director of the Artist Rights Alliance. We’ll be having more interviews at Debugger after we release this four-part miniseries. I hope you’ll be part of the conversation, too.

I do hope you’ll listen to this series by clicking over to Apple Music, by clicking off to Spotify, or by finding it on your favorite podcast service. But if podcasts aren’t your thing, a transcript is below.

----------------------RUSH TRANSCRIPT------------------------------

Bob: When I went to buy tickets for your City Winery show, one of the notes on the webpage said, first show in eight years in New York. Is that right?

Tift Merritt: I would imagine that that’s very true.

Bob: First show in eight years, how does that feel?

Tift Merritt: I, you know, the funny thing about the City Winery is that when I lived in New York, which I lived there for nine or 10 years, I lived really near the Old City Winery, and I would actually go there in the mornings before they opened and play their piano. They would let me do that.

Bob: Wow.

Tift Merritt: Yeah. That was a really, ‘cause I, you know, I didn’t, I didn’t have a, I didn’t have room in my apartment to have a grand piano. And so that is a really sweet and special memory from New York. But I’m really grateful actually [00:01:00] to this period of time where my life was the most important parts of my life were off stage. I’m really grateful to that eight years and what I learned about myself and what I learned about the world during that time. And I don’t wanna forget that as I start doing shows again.

Bob: But it seems like in some ways you might be able to enjoy this a little bit more than in the past.

Tift Merritt: I think so, and I think I’ve spent a lot of time thinking about my sort of personal “why.” I think when you are an artist in the early years, there’s a kind of wonderful, desperate connection that you have with your work. Like, this is your purpose. This is your meaning. This is how you are understood. This is how you make sense of your feelings, and there’s a real urgency and dependency on it.

And, um, at this [00:02:00] point, that’s not why I’m, I mean, I, of course I make work for all of those reasons, but I have other places in my life that give me those things. And I really feel like singing and making music are just a way to put love in the world. And that’s really all I’m trying to do.

Bob: Okay. So this record, I can’t help but now think about…. As you’ve taken this sort of eight year sabbatical and you’ve woken up 200 years later when it comes in the technology. The timeline, right? So, um, TIFF, what, yeah. Has anything changed?

Bob: That dear listeners, is what we call a leading question, maybe a loaded question. Welcome back to Debugger, a podcast about technology’s impact on society. Brought to you by Duke University’s Sanford School of Public Policy, and this is a special debugger series about big tech’s impact on the music business. We’re calling it “Sugar High.” [00:03:00] You’ll understand why later. Our guide through this complicated cultural conversation is Tiff Merit, who you’ve just met.

She is a wildly successful musician, as you’ll hear. She holds a Grammy nomination for Best Country Album of the Year. One of her songs was covered by Don Henley, and yet here is what Tift is up against.

{Montage}

Tift Merritt: I remember in 2010 I put a record out and I got my first royalty statement and I realized what a huge impact streaming was on our com, our economy. Um, it was a fourth of what I usually got, and I realized [00:32:00 – original time code] that I could no longer live in New York City. I couldn’t afford it. So, you know, now I’m going in more, uh. I mean more like, oh my God, shouldn’t I be a dental hygienist? I, I, this is a, an equation that is broken,

Reid Wick: And the average consumer doesn’t realize that under one set of circumstances, an artist and the songwriters might be getting paid a certain amount and under another, it might be a completely different amount if they get paid at all,

Jen Jacobson: Certain genres of artists are gonna disappear. Well, we only have like independently wealthy people able to make music. What’s that gonna do to the flavor and type of music we hear?

Tift Merritt: I. I think that everyone is a little shell-shocked from streaming, and it’s very hard to get your [00:04:00] mind around things getting worse than that.

Jen Jacobson: Are people’s tastes gonna change? Are people’s standards gonna go down? Are people not gonna care as much about human art? If they don’t have access to it, they won’t even potentially. Know what they’re missing.

Bob: That’s a really profound thing to think about, that we, we might lose our taste buds, as it were for music.

Jen Jacobson: Yeah, yeah, exactly.

Tift Merritt: Changes in technology are gatekeeping moments always, and the people that the gatekeepers find valuable are who benefit from it most and make the successful leap in the technology. Um, and generally that’s he white guys, the major label, 1% the mainstream, easily sellable.[00:05:00]

---Break---

Bob: Okay, so. I played baseball as a kid, kind of Seriously.

Tift Merritt: Yeah.

Bob: Played in high school, played in college, played a little after college. And one of the things you learn when you play [00:06:00] baseball really early is that the numbers are really against you.

Tift Merritt: Yeah.

Bob: So 1% of the kids who play make varsity on the high school team, oh, 1% of those kids make college teams.

Oh, 1% of those kids get drafted. 1% or less of those kids actually end up making it in the major leagues. So the odds are. Really against you when you play baseball. But Tiff Merit, I think the odds were even more against you. If you think about all the kids who ever sat down at a piano, picked up a guitar, sang thought about it’d be cool to sing in front of thousands of people, and then the tiniest percentage of people make it, and you have made.

Tift Merritt: I, I mean, I, I did make it and I’m proud of that.

Bob: I wanna explain to people that, how you’ve made it, who, who might not be familiar with your work. So, first of all, I just looked, you have a song with 18 million streams on Spotify.

Tift Merritt: Oh, really? Do I really?

Bob: You do. You have several songs with over a million streams and,

Tift Merritt: okay.

Bob: You have a Grammy nomination, not just [00:07:00] any Yes. Grammy nomination. You were nominated for Best Country Album. You’ve toured with Elvis Costello.

Tift Merritt: I know I did.

Bob: You have made it in a way that people only dream of.

Tift Merritt: Yeah.

Bob: If you are a person who plays Major League Baseball for 10 years, your life. Is set up. You have four homes, you make money just signing baseballs once in a while. Is your life as comfortable as that?

Tift Merritt: No. No. Um, my, my life is very precarious and I’m okay with that. I’m not here to fight about $20,000 here or there. Um. Uh, Don Don Henley covered a song of mine when I was pregnant with my daughter, and people told me that 20 years earlier I would’ve been able to buy multiple houses off of that money.

{Music}

.[00:08:00] But that’s not what the music economy is right now, and that’s okay. Right? I mean, and we’ve always known that it was hard to be a musician. It was hard to be an artist. I think the story is that it’s untenable and we’re killing some culture in the way that it’s untenable and it’s coming for other mediums.

Bob: Okay? So not only do you not have a nice middle class life as a working musician, as, as a 1% of a 1%, as of a one percenter, but, but it’s, it’s almost impossible.

{Music break}

So you were about to go record an album. Yeah. So I wanna get into the nitty gritty for people because I think it’ll be interesting.

Let’s do,

Bob: I’ve known a lot of [00:09:00] musicians in my life, and I think very few of them could have sent me this incredibly detailed spreadsheet that you did.

Yeah.

Bob: Of what is going to cost you Yeah. For this recording studio. So let’s talk big numbers. First of all, you’re about to try to record some new songs. How much is that going to cost you?

Tift Merritt: It’s gonna cost me $50,000.

Bob: Okay. So just, we have to go over every line. But $50,000 sounds like a lot. How does it add up to $50,000?

Tift Merritt: I mean, it adds up to $50,000 because the producer gets paid. The studio is a thousand dollars a day. There’s an engineer that you have to pay in the studio, then you have to have four to five musicians show up, and they cost $500 a day, which they are worth more than that. Um, if there’s anybody that you wanna fly in or put up at a hotel, uh, and feed, I mean, you know, it’s just. It is 12 minutes before [00:10:00] $50,000 is out the door.

Bob: So $50,000 adds up pretty quickly now…

Tift Merritt: And, and I mean, you know, honestly, 20 years ago we, we spent more on recording. Records than $50,000. Nobody would, would make a record for $50,000. You know, $70,000 was a cheap record, but, um,

Bob: But who paid that $70,000 two decades ago?

Tift Merritt: The, the record companies.

Bob: And who’s paying it today?

Tift Merritt: The record companies.

Okay.

Bob: Yeah.

Tift Merritt: It’s, it’s still the same. I mean, I, you know, and it’s kind of a bad loan. I, you know, if I had $50,000 that I could pay for that record myself, I, that would be great. But what, what is the incentive, right? Because I have to give it away for free to Spotify. I mean, we kind of have to say thank you to the record labels at this point for taking [00:11:00] that risk on us. I, I. Made Traveling Alone with my own money. I was so proud to do that, but it was just like hemorrhaging $40,000 and then you put it on Spotify for free.

{music}

What’s the incentive?

Bob: So let’s talk about that. So, okay, so it costs $40,000 of your own money to make Traveling Alone, but as everyone says. Nowadays is the easiest time ever to get exposure because Spotify or digital tools can make your music reach people immediately. You don’t go press records or whatnot

Tift Merritt:. I’m sorry. I’m sorry. I’m sorry. Let’s walk that back. Can you go to the dentist with exposure? Can you go to the grocery store with exposure?

[00:12:00]

Bob: Okay, so you spent $40,000 on this record.

Tift Merritt: Yeah.

Bob: How, how many streams are required for you to get that investment back?

Tift Merritt: I mean, I, well, I know I’m about to spend 50,000 on this one because I made that one 10 years ago. So with inflation, um, 10 million streams.

Bob: It’s gonna take 10 million streams

Tift Merritt: Ten million streams for me to break even. And. Bob, I, you know, I’m not a whiner, I’m kind of the best case scenario. I’ve been a musician and a recording artist for 25 years. I, I have never been someone who sold Taylor Swift numbers, but I’m, I’m respected in my industry. I am the, the success model, and this is what it takes.

Bob: And, and again, when I start rattling off [00:13:00] those numbers at the beginning of our conversation, every artist I know would die to have.

Multiple songs with a million more streams on them. And yet that’s you, you, you’re not even breaking even doing that, right?

Tift Merritt: No, not at all. I mean, I, I got something from Spotify for artists in September and I put out a reissue of an old record and some demos, and they said, oh my gosh, you’re a new single has gotten 150,000 streams.

That’s $35.

Bob: I, I really think most people, most music fans, most Americans don’t understand how little artists are paid for each play on Spotify.

Tift Merritt: I, I and, and I, you know, I understand the idea that Spotify is a library. It is a collective, but it isn’t caring for the people that are really the main stakeholders in what [00:14:00] they’re doing. I mean, they are making money off of advertising. They’re making money off of backdoor deals with major labels, and they’re paying artists so little. Uh, you know, I, I, I think the easiest thing I can say is that, and I sound like a dinosaur when I say this, but when I sold a product in 1999 or 2005, I got a dollar no matter how in debt I was to my record label, and I was a commercial failure year as I was told by all the major labels, but I was selling 40, 50, 60, 70,000 records. That was enough of a basis for me to go on tour, for me to take risks, for me to have a life as a family member. And [00:15:00] now I, you know, I’m getting 0.003 cents a stream. If you stream it for 30 seconds or more,

{music}

Tift Merritt: You know, you can look at the executive saying, oh, a million streams isn’t all that much. Have they ever given a concert to a million people, have they ever even tuned a guitar? I mean, this is tech inserting itself into a business that it really doesn’t understand the business model and deflating the price to the extent that it is not tenable.

Bob: I’ve heard you give that a metaphor before, and I would like for you to do it again now. You ask people to just picture a concert hall with a million people in it, that that’s what you’ve done, right?

Tift Merritt: Yeah. I’ve never played for a million people, but I mean, if I played for [00:16:00] 150,000 people, how, how huge is that room?

Right? And I’ve heard people say to me, well that’s just like the radio broadcasting your song to all these people. And I say, oh no, it isn’t. Because they had a product that they could go buy. And at this point, I am simply investing in negative numbers to make my music

Bob: Okay, so can’t you just quit Spotify then?

Tift Merritt: That’s an interesting point and the great point. Um, musicians do not have, we lost the ability to unionize in the eighties in an antitrust exemption. So we do not have the ability to, um,

Bob: to organize Musicians are independent contractors largely. Yes, exactly. So they, they can’t bargain the way Starbucks baristas can.

Tift Merritt: Exactly. Exactly. We do not have. [00:17:00] The Writers Guild, we do not have the Hollywood SAG AFTRA. We are really out of luck. Yes.

Bob:: Okay. But the other thing I hear is that people make money on tours.

Tift Merritt: Oh, really? Oh, really When was the last time you took five people out to dinner and put them up in hotel rooms and traveled with them for. A whole week, I mean you, what is the best guarantee that a small band is getting a thousand dollars a night? What does it cost to travel with five people on salary for a week? It costs between 10 and $20,000 a week.

Bob: And again, you sent me an amazing spreadsheet with various different iterations of what it costs based on flying and driving and all that sort of stuff. Yeah, yeah. So can you just break out again [00:18:00] why it costs, I’m sorry, you said it’s about 20 grand for you to tour for a week, right? Yeah. Just what are some of the expenses associated with that?

Tift Merritt: Okay, so some of the associate, the expenses associated with that are the musicians themselves, and they deserve to be paid. And the first thing that gets cut in any budget in the music industry is the salary of the musicians. So I just wanna say that there’s lots of music. Being made, and there’s lots of money being made in the music industry, but it’s not going to musicians. And that makes me really angry.

Um, the second thing is like, how much is it gonna cost you to put a. Grown person in a hotel room every night. How many people are we gonna put in a hotel room? Are we gonna put four people in a hotel room? No, these are, these are. Really [00:19:00] grown people who have studied their craft.

So we’re gonna need five hotel rooms a night, and that’s a thousand dollars we’re gonna need to fly if we’re going to a festival, we’re gonna need to rent gear. If we’re going to a festival, we’re gonna pay the manager 20%, we’re gonna pay the agent 10%, we’re gonna pay the accountant 5%. So if we’re just working on the basis of a thousand dollars a night, we’ve got only, I don’t know, 600 bucks to work with, and how are we gonna feed everyone?

Bob: And there’s all sorts of other nitty gritty expenses like this 11% payroll taxes, for example.

Tift Merritt: Yes, exactly. Oh, the payroll taxes. I don’t even know how to deal with that. Do you have a tax attorney that I could talk to?

Bob: I was gonna ask you the same question. Um, yeah, and so I, I think one of the other things that’s hard for people to understand is. Yeah, [00:20:00] there’s sort of small, medium, and large venues, right? And so U2 gets a lot of money when there’s 70,000 people in a room.

Um, it’s not worth you playing at a bar that has 50 seats and the medium sized venues that, that might be able to pay 20 grand for a show or something. Those are kind of disappearing, aren’t they?

Tift Merritt: Well, I mean, you say $20,000. I, I mean, that’s, I don’t get that kind of money to these shows. I, I, I, I actually have started referring to touring as the touring industrial complex because I think it has been consolidated, like a lot of our lives have been consolidated and generally, you’re going to a cement block after … success is you’re going to a cement block after cement block. You’re getting airport food at airport food prices, and it’s not fun for the audience, right? You’re not having any [00:21:00] kind of local experience, so I’m certainly not going on tour playing for 20,000 people. I, I, I can’t even speak to that. I’m going on tour playing for like a hundred or 200 or 500 people, and that’s, you know, that’s not a sustainable number, but that’s also because the music business…like so much else in our world is really designed for the 1% and the 1% could fix it.

{music}

Bob: I think a lot of people think, well, artists sort of choose this life. They, it’s, oh, they’re supposed to suffer, aren’t they?

Tift Merritt: Ah, isn’t that nice? I, you know, I get that. I, I get that art, the artistic life is a hard thing. Um, I tell my daughter all the time, [00:22:00] do not do this. Do not. However, I think, you know, I’m actually an interesting person to talk to about this because I wanted to be a career artist.

I mean, my, my models were people like Townes Van Zandt and Emmylou Harris. They weren’t huge commercial successes. They were career artists, and I think that as a path I am an endangered species, and that’s why I’m speaking out about it because I, I actually think it’s not sustainable anymore and. I also have a lot of people that I care about, that I work with who are musicians who have spent their whole life honing this craft, who are so amazing at what they do.

And they couldn’t have done that [00:23:00] if they just did it on Monday night. Right. They mm-hmm. Couldn’t have done it if they were a hobbyist.

Bob: There is a difference between a, a real professional musician and

Tift Merritt: And a blues lawyer

Bob: Yes, of course, of course. Yeah. Yeah. I think this part is really, really important because first of all, it takes, you know, the 10,000 hours, it takes a long time to get good at something. And if we leave music to 22 year olds who are okay with eight people living in a hotel, well, how is a mom ever going to write music? And don’t we want moms to write music?

Tift Merritt: I mean, I, I think this is a huge conversation because I think the music industry is absolutely before streaming an AI not built for single moms. And I’m a single mom and, um, my daughter’s dad is a career musician who’s played with everybody. And I said, oh, I’m gonna go on tour next [00:24:00] year. And he goes. You can’t do that. And I said, why not? I, I mean, it is not built for women. Um, so that’s a whole ‘nother conversation. And I think we want women like Carol King and Aretha Franklin writing and Joni Mitchell writing what they have to say about the world, but I think when technology updates, and forgive me for getting on my platform here, when distribution changes, it’s usually a group of five dudes who decide what music is worth, what music is important, and what music is, and they usually don’t think about women. So I, I think about that all the time.

Bob: You just gave me a shiver with the thought that if Joni Mitchell were born 25 years later, she, she might not [00:25:00] exist.

Tift Merritt: Yeah, I, I think that’s true. So I haven’t made a record in 10 years because I am a mother and. I didn’t wanna drag my daughter around on tour with me to, you know, on behalf of my own dreams. My daughter is awesome and she loves going on tour, but it’s a totally different scenario for women.

Bob: And if we don’t have moms writing songs, this is a large part of the human experience that we’re just not going to be singing about. Right?

Tift Merritt: I, I appreciate that you said that so much. I think that’s true, and I think it’s a really important part of the human experience. It’s my favorite part of the human experience.[00:26:00]

{Music}

Bob: Let’s talk about the Spotify of it all.

Tift Merritt: Um, I mean, I think that the music industry has been consolidated for a long, long time, and I. Am slightly disappointed in my peers for not talking out about it more. Um, and if that’s my place, then that’s my place. But I think from national playlists that eclipsed regionalism on radio, uh, to Spotify, sneaking in AI generated music that they used, your data and my data to [00:27:00] make something perfectly situated and put it right where it belongs in the marketing.

I, you know, I think those are all symptomatic of, of, dare I say, capitalism. Um, and I think there is a. Uh, an illusion of democracy in all of that. I’m not sure what the solution is. I think we definitely need labeling on AI generated material, be it music, political content, content, whatever you, we need to know that this is…I think of it as misinformation myself. Um,

Bob: You know, let’s just define it for people who might not be familiar with it or, or, or how prevalent it is. What, what is AI generated music?

Tift Merritt: A hundred percent AI generated music is ghost music that has been created to take up space on playlist, where you don’t have to pay royalties.

Bob: So it’s just computer generated music and there’s no artist behind it.

Tift Merritt: And just to be clear, we do have the technology to filter that out. Um. We aren’t using that technology to filter that out. We are not showing up for artists that way. So, um, I don’t know. I, I, you know, my friend Professor Hoffman, who works in Brazil a lot of the time, talks about this in terms of cultural appropriation and I think those are the right [00:29:00] words, right? I think. People’s intellectual property is being consumed to replace it. And that is not fair use. And it, it’s, it’s not done with transparency or compensation. And I think that’s, that’s super disingenuous.

Bob: Again, if today it takes 10 million streams, God help us to, to earn back the, the what you spend making an album when AI generated music is half of Spotify.It’ll take you 20 million streams or 40 million streams, so you won’t even get those, right.

Tift Merritt: It will be harder and harder to find me. And you know this as a podcaster and a writer. I mean, you know, the, the. Uh, the world of AI has consumed all of the copyrighted material in the world. And, um, [00:30:00] you know, next time we talk, we can talk about the, the intellectual property of podcasts .

Bob: There are definitely AI generated podcast hosts.

Tift Merritt: Oh,

Bob: coming down the train tunnel at me. Oh gosh.

Tift Merritt: I’m well aware of this.

Bob: So

Tift Merritt: I do not like that.

Bob: Yeah, fortunately people can’t make mistakes quite as well as I do, and I think that’s. That’s what’s my, I love your mistakes, my bread and butter in the future.

Tift Merritt: I love your mistakes and I hope you love mine.

{music}

Bob: Okay, so you are going to the studio for a week. How many songs you’re hoping to rec record.

Tift Merritt: [00:31:00] 13, uh, maybe 11 that week, and then I’ll go, we’ll do 11 in six days, and then I’ll go out to LA and we’ll do two that are just vocals only and we’ll do two out there. So.

Bob: That makes my skin crawl to think you’re gonna have to try to do 11. I mean, under what kind of a pressure schedule. Oh my God.

Tift Merritt: Oh, well, I mean, it, it is, it’s a, you know, I have been trying not to think about it quite frankly, because

Bob: I’m here to help. Yeah.

Tift Merritt: I can’t get sick, right? Yeah.

Bob: Yeah.

Tift Merritt: I have to be in good shape and, um. I know the crew that we’re going in with, and they’re amazing musicians, so I, I do think that we, we have good odds. I, my last record I. Recorded in four days, six months pregnant, so,

Bob: Wow.

Tift Merritt: Yeah. So six days feels, you know, luxurious.

Bob: As, as you’re doing this, as [00:32:00] you’re costing it out, as, as we’re, as with, you know, this, the streaming thing in the back of your mind, does, does it change how you feel about going into the studio at all?

Tift Merritt: Oh, of course. I mean. I remember in 2010 I put a record out and I got my first royalty statement and I realized what a huge impact streaming was on our com, our economy. Um, it was a fourth of what I usually got, and I realized that I could no longer live in New York City. I couldn’t afford it. So, you know, now I’m going in more, uh. I mean more like, oh my God, shouldn’t I be a dental hygienist? I, I, this is a, an equation that is broken, and I say that as someone who has been practicing the guitar [00:33:00] and has calluses at that are 25 years old. Old, and I, I just, I don’t know how. Um, how musicians are doing it. I, I don’t understand how musicians are doing it. I have three jobs, as you know. I, I am

Bob: What are your three jobs?

Tift Merritt: Uh, I am a musician and a writer. Um, I’m. Developing a hotel that will open next summer, and I’m a researcher at Duke University, so I, I have three jobs and that’s how I make my life work because there’s no way to make it work off of…

Bob: I, I, yeah. I’m just sitting here thinking this is a math problem without a solution.

Tift Merritt: Yeah. No, I, I mean, and I’m, I’m sad and sorry that more musicians aren’t talking about it because I feel like there’s this [00:34:00] culture of like, oh, if you’re really a star, you are just supposed to worry about the songs and you’re not supposed to worry about how the equation works. But that historically has been a power maneuver for managers and labels. I don’t really understand why our industry as a whole isn’t talking about this because, and maybe it’s because they’re just so busy trying to make it work that they can’t ask. The systemic questions, um, but I don’t understand why it’s not an industry-wide conversation.

Yeah.

Tift Merritt: I think it’s really important to point out that the whole streaming economy is built for the 1% of musicians, right? Mm-hmm. I’m a major label artist. I, I. Do not make Taylor Swift kind of money. Who is Taylor Swift’s favorite artist? Probably somebody who isn’t a one [00:35:00] percenter. We need a, we need an economy that works for all of the artists, and the one percenters could fix it if they wanted to, but they’re not.

And I, I, I find that a real problem. I, I find that a real problem systemically with our society. So, um. You know, the one percenters are just fine and the rest of us are working with math equations that don’t work.

Bob: So this happened in the news business and, and it’s, it’s a hard thing for me to explain, but I’m sure that you’ll understand. When the internet happened, there was this idea that the doorway to news stories was now wide open and people could get exposed to way more things right? But the reality was the opposite. The, the, the doorways through which people find news are really tiny now, and the average person reads far fewer individual stories than they ever have when they were, it’s rifling through a newspaper. And it’s the same with [00:36:00] music.

Tift Merritt: It’s the illusion of democracy. It’s totally the illusion of democracy, and the more and more that AI and misinformation, which I call AI music are filling our news feeds and our Spotify, the harder and harder it is. Going to be to get to authenticity, be it in journalism or in music.

{music}

Bob: This is where I, I want to end our conversation for now with this idea of the gig economy and why this matters, not just to struggling musicians, but it matters to everybody. Yes. The term gig economy is now used so much, I think we forget that musically musicians were the original gig economy, right?

Tift Merritt: Yeah.

Bob: And so what is happening to musicians is going to happen to everyone eventually. Do you think?

Tift Merritt: I, I do think that, and I wouldn’t waste [00:37:00] your time talking to you about, you know, $20,000 here or there that I deserve for my work, but I would sit here and talk to you about how. Tech has come into an industry that it has no knowledge or business in, and no talking to this actual stakeholders who do the work and devalued the price of the laborers.

And I think that is something that we all need to be thinking about. How are we going to stand up for humans? Because in this way the MP3 has made musicians a canary, a coal mine, and you know, if we’re totally fine taking on saccharin artificial music without human connection, what is, what is, [00:38:00] what is the price of that? Like what is the real human price of that

Bob: Next on Debugger as Tift toils away in the studio, working on that upcoming album, which will be called. Sugar. We talk to Reid Wick about the future of music and we’ll begin by addressing a burning question. Will a computer soon win a Grammy award?

Want to cut your rent in half? There’s a new, easy way to do that!

Just pay the second half in two weeks.

Sound crazy? Many landlords are offering this option now, just the latest incursion of buy now, pay later into consumers’ lives.

If you haven’t yet encountered the word precarity, that might be the most perfect definition I’ve yet heard. Imagine being so financially insecure that a two-week reprieve on rent means so much. Well, you don’t have to imagine it, because if you aren’t living this way, it’s likely your neighbors are.

As Wall Street continues to flirt with new highs, you’ll hear commentators talk often about two “pillars” of economic strength -- artificial intelligence and the resilience of the American consumer. I’ll leave the AI bubble for another day, but today I’m going to talk about the “resilience” bubble.

Let’s talk about the new car market for a moment. Fully one in five new car loans come with $1,000-plus monthly payments now...and 20% of new car loans have 84-month-plus terms. In an economy where splitting rent payments is a lifeline, $1,000-a-month car payments are extraordinary. So are 7-year-long car loans. I know, I know, people can buy used cars, but that’s not the bargain it once was. The average used car price was $29,600 in December 2025, so people are taking loans out to buy them, too. And the average interest rate on used cars is north of 11%, according to Experian. Rock, hard place. You have to drive, and you need a reliable car to keep that job and gets the kids to school, right?

In other words, the car market is being propped up by borrowing. Expensive borrowing.

As is the retail market. The explosion of the buy now, pay later marketplace is a screeching canary in a coal mine that something isn’t right. I’ve been asked a lot about BNPL lately – by NPR’s Planet Money, and by Scholastic – and when I went for a refresher on the industry, the numbers shocked me.

Just in case you’ve been living under a virtual rock and haven’t bought anything online recently, many websites (including Amazon) allow customers to spread purchases over four payments, in theory with no interest penalty. This turns a $500 pair of boots into a $125 pair of boots (today) and….well, some debt. The psychology here is obvious, and it works. BNPL exploded during the pandemic, when people were stuck at home with nothing else to do but shop. The number of BNPL loans in the United States grew more than tenfold from 16.8 million to 180 million from 2019 to 2021 -- from $2 billion to $24.2 billion in volume. Growth has surged since then. Today, about 90 million Americans have used a buy now, pay later loan. And the average user took out six BNPL loans last year, according to the Consumer Financial Protection Bureau.

And now, for the dark side. While, in theory, these are no-interest loans, 41% of consumers have made late payments and been liable for whatever fee their lender charges – up from 34% a y year ago, according to Lending Tree. But even darker: Consumers are using BNPL to buy essentials like groceries or, as we’ve seen, rent. Some 25% told Lending Tree they’d bought groceries using BNPL, up from 14% a year ago.

I’m not morally opposed to these kinds of “layaway” arrangements. They might make sense for a young person who’s just moved and needs to outfit a new apartment, for example. Or to pay for a surprise, expensive auto repair. Some folks call that a “bridge” loan, a one-time backstop for an extreme situation.

But instead of a bridge, millions of Americans are using financial instruments like this as a crutch. The number of consumers who hold multiple BNPL loans from multiple providers is also soaring, and that’s where things go sideways, fast. It’s much easier to miss payments and incur fees, and of course, that’s the ultimate robbing Peter to pay Paul arrangement.

The BNPL industry, with help for the current Consumer Financial Protection Bureau, recently shared data showing fairly low default rates on these loans – fewer than 2 percent were charged off or uncollectible in 2023, the report says. About 4% of borrowers paid a late fee. The data lacks context, however. This research from Stanford shows consumers who take out these loans suffer higher late payment rates across their financial lives – “rapid increases in overdraft charges and credit card interest and fees,” for example. This might be because BNPL loans are often tied to checking accounts with auto-draft payments. BNPL gets paid first, but bounced checks follow.

There are other downsides to BNPL, too. In general, paying off these loans on time doesn’t help a consumer’s credit score – so they aren’t a stepping stone to cheaper credit. And unlike credit cards, these kinds of non-standard lending programs enjoy few federal consumer protections.

BNPL appeals mostly to people who don’t have credit cards or haven’t otherwise established credit yet – typical for younger consumers. Tempting offers in bright colors lure shoppers. There is a massive generation gap in BNPL loans – while about half of Gen Z’rs and Millennials have used BNPL, fewer than 1 in 5 of those over 62 have done so.

You might think you are too smart to fall for all this, but I’m here to warn you – even if you’d never take out a BNPL, I fear we will all pay a price. Since BNPL loans aren’t generally reported to credit bureaus, lenders have no way of knowing how many BNPL loans an individual consumer has. And writ large, lenders can’t be sure borrowers of traditional loans – like auto loans or mortgages - don’t have some kind of BNPL debt hidden away in their financial lives. Bloomberg last year called this Phantom Debt that Wall Street can’t track.

To restate the thesis: In a world where renters are “splitting” their monthly payments in two just to get buy, no one should feel comfortable – let alone bet the farm, or the economy – on the resilience of the American consumer. We can’t go on living in a state of permanent precarity forever.

NOTE: One of the wisest sentiments I have read in recent weeks is this — “Our brains see what they are looking for.” Simon and Garfunkel said it a little more artfully, as you’ll read in a moment.

How can two sets of people see the exact same video and come to such strikingly different conclusions? This week’s news brings us a dramatic example of confirmation bias, but I’m concerned that this very powerful cognitive principle is now being exploited on an industrial scale. I can’t help but think that the tribal nature of the Internet, and particularly social media, has given us confirmation bias on steroids. Any thinking person should understand why humans are so quick to discount new information that challenges their worldview. Failing to do so is often a very expensive mistake, but as we’ve seen, the consequences can be far more dire.

As the caption explains, I wrote this essay many years ago for a website devoted to workplace development. It feels very relevant now, so I’m republishing it here.

There’s a close play at the plate. Under a cloud of dust, the runner’s hand appears to sneak in just before the catcher applies the tag, but in real-time, it’s hard to say. The umpire signals safe. There’s an instant replay challenge. Video is shown on the board at Chicago’s Wrigley Field, and 41,000 Cubs fans cheer lustily at what they think is conclusive evidence that the call on the field was correct.

But home, watching on television, a million St. Louis Cardinals fans are certain the video shows the runner was out, and the call will be overturned. Cubs broadcasters wonder aloud why umpires are even looking at the call, the play is so obvious. Cardinals broadcasters wonder why the reversal is taking so long.

Same play. Same video. Same evidence. Same million-dollar, freeze-frame technology. Two very different conclusions. “My side is right. I’m sure of it,” people from both sides say. How can individuals looking at the exact same set of facts come to such diametrically opposed conclusions? And perhaps more curious...why are these conclusions so predictable?

This kind of scene plays out at nearly every serious sporting event that takes place every day, sometimes several times each game.

Something very similar happens every time there’s a car accident. “She/he cut me off!” In many family “discussions” and in business meetings everywhere, too.

“All lies and jest, still a man hears what he wants to hear and disregards the rest,” Simon and Garfunkel sang in their hit song, “The Boxer.”

This phenomenon is described in many ways: my-side bias; having an internal “yes man;” cherry picking; selective memory. Humans have a very bad habit of seeing what they want to see and being blind to what they don’t. This inconvenient trait is known by social scientists as confirmation bias, and it’s one of the most important and most studied cognitive biases.

It’s also among the hardest to overcome.

Tests about the phenomenon usually go something like this: subjects are shown research about the death penalty. They accept at face value evidence that confirms their point of view, while they subject “disconfirming” evidence to intense scrutiny. Despite what the evidence suggests, subjects on both sides end up feeling even more strongly about their original point of view after the experiment.

This might seem obvious based on today’s political situation, but Stanford University researchers who ran one such study concluded that sharing information with people might not be a good way to settle political debates.

“The result of exposing contending factions in a social dispute to an identical body of relevant empirical evidence may be, not a narrowing of disagreement, but rather an increase in polarization,” they wrote.

Confirmation bias is one reason it’s so hard to change people’s minds about almost anything.

Confirmation bias plays out at work all the time. Many bosses surround themselves with people who agree with them (yes men), because it makes them feel good. Many underlings go along with the boss, believing that’s the way to get ahead. Those with contradictory opinions are labeled as difficult, or naysayers. They are ignored when they speak, interrupted, or not given prominent platforms.

Co-workers can be victims, too. If you’re told that Joe is a lazy millennial, you’ll notice the occasional day when he is late for work, and ignore all the days he arrives early. If you are told Mark is an airhead, you’ll note that he laughs a bit too loud at meetings, and won’t bother to read the excellent reports he writes. If you are in competition with Joe or Mark – say you are fighting for the same promotion, or the boss’ attention – you have all the more incentive to see the world this way.

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” Upton Sinclair famously said while running for governor of California.

Confirmation bias is also vexing because it protects us from internal conflict. Being wrong is hard; it can shake your world view. If you were sure that Blackberry made the best mobile phone product, and spent a bunch of company resources outfitting your employees with Blackberries, you were naturally slow to shift towards other smartphone platforms. After all, doing so meant admitting a mistake. Worse yet, it meant enduring cognitive disconnect – that uneasy feeling which arises when you realize your perceptions don’t match reality. It often seems easier to rationalize your internal world view, and mentally bend reality to fit your perceptions, than tear down and rebuild your view of the world.

Our dastardly tendency to draw conclusions based on scant evidence and connect dots that don’t connect also contributes to confirmation bias. In the 1950s, psychiatrist Klaus Conrad coined the term “apophenia” to describe the human tendency to see patterns in disparate events – to take two instances of lateness and paint an entire picture about someone’s work habits. He compared this “abnormal meaningfulness” to hallucinations.

That’s taking confirmation bias a bit too far, but such “abnormal meaningfulness” is often the root of a lot of old-fashioned stereotypes. If you believe older workers can’t keep up with technology, a single example of a 50-something struggling with a new app could be all you’ll need to perpetuate that mental myth, and you’ll conveniently ignore hundreds of contradictory examples.

How does one try to avoid, or at least minimize, their own confirmation bias? Wall Street traders face this issue constantly, whenever they invest in a clunker. When do they admit defeat, reverse course, concede they’ve made a bad investment, and sell? Usually, later than they should, a mistake that can cost millions.

Billionaire investor Warren Buffet employs an interesting strategy that he credits to Charles Darwin.

“Darwin used to say that whenever he ran into something that contradicted a conclusion he cherished, he was obliged to write the new finding down within 30 minutes,” Buffet wrote in an essay more than a decade ago. “Otherwise his mind would work to reject the discordant information, much as the body rejects transplants. Man’s natural inclination is to cling to his beliefs, particularly if they are reinforced by recent experience – a flaw in our makeup that bears on what happens during secular bull markets and extended periods of stagnation.”

Another popular method is to appoint a designated devil’s advocate for each decision – someone who pokes holes and points out pitfalls in every strategy.

Disinterested parties can be really helpful, too. Way back in 1924, psychologist L.L. Thurstone wrote in The Nature of Intelligence, “If we have nothing personally at stake in a dispute between people who are strangers to us, we are remarkably intelligent about weighing the evidence.”

At least, that’s how it’s supposed to work. Forty-one thousand Cubs fans would colorfully disagree.

Most of you know I normally write about scams, and this week’s episode of The Perfect Scam is an exploration of fake ticket sales online. If you listen, you’ll hear about Facebook groups devoted to scamming fans via bogus sales, and you’ll hear about an NYPD investigator who chased down a single criminal who spent three years stealing from NFL and NBA fans looking for tickets.

The arrest of the criminal, Nikhil Mahtani, got a fair amount of media attention in New York -- the full investigation story is a good listen -- but here’s what most reports missed. Matami stole well into six figures through his bogus sales. Where did all that money go? When McCaffrey showed up to arrest Mahtami, I asked if he was driving around in a sports car?

“Quite the opposite,” Detective Michael McCaffrey told me. “Our first human interaction with Mahtani was ... he was sleeping on the couch in his mom’s apartment, so the exact opposite of what you just said.”

So where did all the money go?

“From what we could gather based off the records that we were able to get, Mahtani was taking a lot of the proceeds of his scam, and he was pushing them into Draft Kings and Fan Duel; so he was doing his own betting with the proceeds.”

Mahtani was covering gambling debts with fake ticket sales on Craigslist. And he did very little to hide his tracks. The scam was simple. He placed posts on Craigslist saying he had tickets for sale, he took buyers’ money, and never produced the tickets. But in at least one case, a victim asked for proof that the tickets were real, and Mahtami sent a photo of his driver’s license along with a picture of the alleged tickets. Not a sophisticated criminal.

Mahtami took the cash he earned through crime and funneled it all into online sports gambling websites. Mahtami, 28, quickly pleaded guilty and was sentenced to 15 months in prison. I asked McCaffrey if he thought Mahtami was an addict.

“I can’t say he’s an addict,” he answered. “I’m not medically credentialed to make that call, but any money that this guy was getting from this scam, he was pushing back into Fan Duel and Draft Kings.”

I’m not a doctor, either. But I am worried we’re going to hear a lot more scandals like this as sports gambling takes hold of our national pastimes. And it’s past time we have a serious conversation about online sports addiction, other than the conveniently dismissive “Well, people get addicted to alcohol, too.”

The rise of online sports betting has been truly meteoric; we’ve hardly had time to adjust

Since a 2018 Supreme Court case cleared the way, 38 states have made online sports betting legal. Total wages increased from $4.9 billion in 2017 to $121.1 billion in 2023, according to The Journal of American Medicine.

Adoption has been quickest among young men, not surprisingly -- Sienna University has found that 48% of men 18-49 have an account with at least one online sportsbook. There isn’t great research yet on rates of addiction, but there are plenty of warning signs. According to VCU Health, the number of people calling Virginia’s problem gambling helpline tripled from 2019-2024. And there’s been a 1,500% increase in total calls. There are far more callers, and they are calling far more often.

Meanwhile, in that Sienna survey, participants revealed signs of problems: 52% have ‘chased’ a bet, 37% have felt ashamed after losing, and 20% say their gambling losses came with serious financial implications. Nearly 10% said they’d called a hotline or taken other steps to control problem gambling.

I’m not saying that one criminal’s story about stealing to feed an online gambling addiction should force states to change their gambling laws. There is widespread support for legalized sports betting -- we all know it’ll just go underground if it were to be banned again. Might as well buy a few school textbooks with the tax receipts. But there is also widespread support for regulating the industry, and there will soon be support for funding gambling addiction programs, as more of us come to know someone with a problem.

But let’s cut to the chase -- smartphone apps are addictive, and developers know it. We know this from research leaked by Frances Haugen, formerly of Facebook. Combine the addictive power of apps with the addictive power of gambling and you’ve got a really nasty combination. VCU Health offers just one example of how that’s abused:

“These apps track your play patterns and learn the best time to prompt you to play more. So even when you try to take a break from gambling, the apps may give you a $10 bonus to entice you to come back. Now with improvements in artificial intelligence, we will likely see even more strategies for getting people to gamble more. “

Meanwhile, efforts to help people with gambling problems can be described, politely, as token. There’s that 1-second tagline at the end of the flashy ad. My favorite sports radio station airs non-stop sports gambling ads, then a half-hour addiction show on Saturday mornings.

Much, much more has to be done. It would be foolish to wait for an epidemic of Emmanuel Clase’s and Terry Rozier’s and Nikhil Mahtani’s before taking swift action.

Meanwhile, if you notice someone you care about with their heads stuffed in their phones at a bar, yelling at random dropped passes, engaging in big mood swings, maybe even directly expressing regret about a recent bet, offer to chat about it. A lot of people are struggling with online gambling right now.

I write a lot of stories that reveal how much systems let people down and set them up to be victims of crimes. You’ll often hear me lament that big tech companies or financial institutions don’t do more to stop crimes.

Today, I have a different story to tell at The Perfect Scam podcast. It’s about a crime that *almost* happened, but didn’t -- thanks in large part to well-trained bank employees who followed a well-designed system...with care. But there’s another important element to this near-miss crime that plays a huge role: It happened in a small community, at a small bank, where employees had a personal connection to the victim. Like this:

“The young man who is an assistant manager up there went to high school with at least one of my grandsons.”

And this:

“The lady at the bank, the one who was the person who called me initially, my son had a coffee truck in Rogersville for about a year and a half, and this bank manager loved his coffee. So she had come through his line so many times, and so knew me because of that.”

It’s human nature: When you know someone, or you know someone you know will know someone, you are far more likely to step in and ask questions when something seems amiss. After all, who could go to bed at night knowing they helped criminals steal $25,000 from an 83-year-old woman who is a pillar of the community?

I realize I’m telling this story upside down, giving you the punchline without the setup. That’s because the punchline *is* the story here. It’s the only part of this story that is a surprise. The rest follows an all-too-familiar refrain. Listen for yourself by clicking here. But here’s the setup.

Samuel, the would-be victim, has lived in a small town outside Springfield, Mo., for most of her 83 years. She got a menacing call from someone claiming he was from a federal agency investigating a crime, and he needed her help. Many calls later, Samuel was manipulated into a bank visit where she would ask for $25,000 to be wired to a nonexistent company. But the teller and manager asked so many questions that Samuel left without the money and headed for another branch. By the time she got there, the bank had already put an alert on her account, and tellers put up multiple speed bumps. Ditto for branch No. 3. Critically, bank employees did this with kindness, not dismissiveness or ageism, because the criminal had warned Samuel that a bank employee was “in on it.” As I’ve written elsewhere, rudeness only pushes victims into the arms of criminals, who are very good at sounding compassionate.

The bank also thoughtfully notified Samuel’s children, who are named on her account. The kids got mom off the phone with the criminal, got her home, and eventually persuaded her that she was talking to a criminal. The whole episode was over in a couple of days, and the family didn’t lose a dime.

As a show of thanks, Samuel made banana bread and took some to each bank employee who played a role in foiling the crime.

I love a happy ending. And I love banana bread. I’m only half kidding when I suggest in this episode that baked goods are the answer to America’s fraud problems. What I’m suggesting, of course, is that the human touch is missing from most cybersecurity initiatives. We spend billions on software...we’re calling it AI now.... but we overlook the front-line workers who are often the difference between disaster and a close call.

I realize Linda Samuel’s story has a unique set of circumstances. Many of us don’t live in a town where we can walk or quickly drive to a small, community bank. Years of industry consolidation have ensured that. In many cases, we only have a choice of one or two gigantic banks. This is a mistake, and if you’re curious about the problem of hyper-consolidation and monopoly power, I’d invite you to visit the American Economic Liberties Project and the work of Matt Stoller, author of the “BIG” Substack newsletter.

For now, suffice to say it’s unlikely Linda Samuel’s story would have had the same ending if her money had been parked at Bank of Gigantica.

I do know many, many cybersecurity workers at these large institutions who care a lot about fraud, and often write code that stops crimes. When I have a chance to speak to tech worker audiences, I often remind them that no firefighter wins an award for a house fire that is stopped because a fire inspection forced a safety upgrade -- the work these individuals do can be just as invisible and thankless, so I thank them for it.

But I’ll repeat myself -- poor customer service is our greatest cybersecurity vulnerability. This story makes that point by showing the alternative: good customer service can be our best crime-fighting tool.

We’re never going to get a handle on fraud unless banana bread, once again, is part of the equation. Know Your Customer shouldn’t be a check box on a compliance form. It should be standard operating procedure. And it’s worth the investment.

Below I’ve pasted a partial transcript from this week’s episode, but I hope you’ll listen to it. Linda and her kids are perfectly charming, and really, ‘tis the season for a happy ending. Click here to listen.

-------------PARTIAL TRANSCRIPT--------------------

[00:06:47] Bob: But Linda does have a strong sense of civic duty, and she wants to do anything she can to help catch the criminals. So she makes a plan to get the cash she needs, and since she isn’t supposed to tell anyone, she knows she can’t go to her local bank branch where everyone seems to know her, and would probably start asking questions, so she drives across town following Alex’s instruction which have changed a bit. Now he wants Linda to wire that $25,000. But when Linda tries to wire the money, well there’s a problem.

[00:07:22] Linda Samuel: When I asked for the money up there, the teller who was taking care of me that day said, “Well I need to get my manager on that.” She was fairly new and, and she said, “I need to get my manager.”

[00:07:34] Bob: And then, well someone at this branch does recognize Linda and does start to ask questions.

[00:07:41] Linda Samuel: And the young man who is an assistant manager up there went to high school with at least one of my grandsons.

[00:07:49] Bob: Oh wow.

[00:07:50] Linda Samuel: He went through the fact that they needed to uh, just you know no, he said, “We can’t, we can’t not give you the money because it is your money. But,” he said, “we do need to know why you’re asking for it.”

[00:08:04] Bob: And he talks with Linda for a while.

[00:08:07] Linda Samuel: He said, “We’ve been having a lot of scams and they seem to target people in the older age range.” So he said, “We do frequent training on how to deal with this.”

[00:08:21] Bob: He even takes a moment to research the place Alex told Linda to send her money to.

[00:08:26] Linda Samuel: He couldn’t find it. And he said, “Well, I just looked this up on the computer that I use here at work, so,” he said, “when I get home tonight, I’ll get on my personal computer and see if I can do some further checking, and if I find anything I’ll call you back.”

[00:08:43] Bob: But Linda isn’t discouraged. Remember, Alex had told her an employee at the bank might be in on it, and she really does want to help catch the criminal. So when she doesn’t hear back from the bank manager by the next morning, she heads to a different branch. Alex tells her to have a story ready in case anyone asks questions. But at this second branch, too, the teller puts up roadblocks.

[00:09:07] Linda Samuel: She said, “Now we can’t not give you your money, but we need,” said, “what, what are you planning to do with it?” And you know, I know that my dad and my, and my husband always had told me that I couldn’t tell a lie because my face would give me away. So I just kind of hum-hawed around and, and said, “Well, uh, it’s to help purchase inventory.”

[00:09:34] Bob: That teller also tells Linda that there are a lot of scams going on and starts asking a lot of questions. And eventually, Linda leaves that branch empty-handed too. Now, Alex, who’s been on the phone with Linda pretty much the whole time, tells her to go to a third branch. But this time she should only ask for $15,000.

[00:09:55] Bob: Up to this point you hadn’t said anything to your kids and that, that felt pretty strange to you, right?

[00:09:59] Linda Samuel: Right, and, and it felt strange to them too because particularly since their dad passed away, I’ve checked with them on a lot of things that I, involved any money transactions of any size at all. Uh, so it felt very strange.

[00:10:18] Bob: So feeling strange, she walks into another branch of her bank, and...

[00:10:24] Linda Samuel: When I got over and walked in, she had said they didn’t have that much cash on hand so that they couldn’t go ahead and do that. And she also said that they thought it was a scam. So by this time, I just thanked her kindly and went back to my car and just had gotten back to my car and was trying to think, what do I do next, and the phone rang.

[00:10:50] Bob: The phone rings, and it’s Dwight, her son. But she’s on the phone with Alex so she can’t answer right away. Eventually, she calls him back.

[00:11:01] Linda Samuel: He said, “Mom, where are you and what are you doing?” He said, “Dodi and I are sitting here at the kitchen table. You need to get home. Don’t stop anyplace, just get right on home.”

[00:11:14] Bob: Just get right on home, Dwight says. But why did he call his mom right at that moment? Well, just a few minutes earlier his sister Dodi was, coincidentally, in line at a different branch of the same bank.

Only an egghead inside a Big Tech company would devise a plan to fight crime that involves charging criminals more to access victims. Behavioral economics, right?

When you make 10 percent of your revenue from crime, how else would you try to stop it? Reuters recently reported these stunning facts, based on internal Meta documents, in a story you should really read immediately.

If you’ve ever reported an ongoing crime to Facebook/Meta -- say, you’re account has been hijacked by a crypto scammer -- you know the firm largely ignores these active crime scenes. Well, the documents Reuters examines show Facebook the vast majority of those complaints. I’ve been writing about this problem for years. And years. Soldiers’ accounts are often stolen and used for romance scams, for example. This is heartbreaking to the financial victim, but also utterly maddening and violating to the soldier whose picture and profile are used to defraud people. Not only does Meta not care, it makes bank off these crimes, Reuters says.

“Meta internally projected late last year that it would earn about 10% of its overall annual revenue – or $16 billion – from running advertising for scams and banned goods, internal company documents show,” the story, written by Jeff Horwitz, says. You might remember him as the reporter who broke the Frances Haugen whistleblower story -- she alleged that Instagram had piles of research showing it was harming kids, but did little to stop that.

Meta’s fraud filters are so promiscuous that they allow ads even if analysis shows 94% confidence the ad is a scam, the story says.

Even worse -- Facebook grooms victims. Facebook’s algorithm pushes people into the arms of criminals. Users who click on scam ads get a healthy helping of more scam ads.

This allegation that Facebook profits from scams has been around for a long time. I covered this lawsuit in 2021 which claimed that -- not only does Meta cash in on scams -- but it has actively recruited criminals and their posts, and has even held special training for them.

Somewhere along the line, you’ve heard the cynical phrase that facing government fines for breaking the law is “just the cost of doing business.” Well, these documents put hard numbers on that concept. While Facebook has been hit by some of the largest regulatory fines in history, the company earns so much cash that it just isn’t afraid of fines. Again, from the story:

• “Meta has internally acknowledged that regulatory fines for scam ads are certain, and anticipates penalties of up to $1 billion, according to one internal document. But those fines would be much smaller than Meta’s revenue from scam ads, a separate document from November 2024 states. Every six months, Meta earns $3.5 billion from just the portion of scam ads that ‘present higher legal risk,’ the document says, such as those falsely claiming to represent a consumer brand or public figure or demonstrating other signs of deceit. That figure almost certainly exceeds ‘the cost of any regulatory settlement involving scam ads.’

This was the theme in a podcast series called “Too Big to Sue” I hosted for Duke University. Big Tech is so powerful and rich now that it really isn’t subject to regulation by nation-states. That’s why the push for platform accountability is so crucial.

Other bombshells in this story:

• A May 2025 presentation by its safety staff estimated that the company’s platforms were involved in a third of all successful scams in the U.S.

• Meta has also placed restrictions on how much revenue it is willing to lose from acting against suspect advertisers, the documents say. In the first half of 2025, a February document states, the team responsible for vetting questionable advertisers wasn’t allowed to take actions that could cost Meta more than 0.15% of the company’s total revenue. That works out to about $135 million out of the $90 billion Meta generated in the first half of 2025.

• Meta also was ignoring the vast majority of user reports of scams, a document from 2023 indicates. By that year, safety staffers estimated that Facebook and Instagram users each week were filing about 100,000 valid reports of fraudsters messaging them, the document says. But Meta ignored or incorrectly rejected 96% of them.

• Even when advertisers are caught red-handed, the rules can be lenient, the documents indicate. A small advertiser would have to get flagged for promoting financial fraud at least eight times before Meta blocked it, a 2024 document states. Some bigger spenders – known as “High Value Accounts” – could accrue more than 500 strikes without Meta shutting them down, other documents say.

• To advertise on Meta’s platforms, a business has to compete in an online auction. Before the bidding, the company’s automated systems calculate the odds that an advertiser is engaged in fraud. Under Meta’s new policy, likely scammers who fall below Meta’s threshold for removal would have to pay more to win an auction. Documents from last summer called such “penalty bids” a centerpiece of Meta’s efforts to reduce scams. Marketers suspected of committing fraud would have to pay Meta more to win ad auctions, thus impacting their profits and reducing the number of users exposed to their ads.

Here’s a portion of the response Meta gave Reuters for this story: “In a statement, Meta spokesman Andy Stone said the documents seen by Reuters “present a selective view that distorts Meta’s approach to fraud and scams.” The company’s internal estimate that it would earn 10.1% of its 2024 revenue from scams and other prohibited ads was “rough and overly-inclusive,” Stone said. The company had later determined that the true number was lower, because the estimate included “many” legitimate ads as well, he said. He declined to provide an updated figure.”

There’s plenty more, but you should read the story for yourself

Teen commits suicide after romantic relationship with bot

NY Times: “The detective went on to explain that when she unlocked Sewell’s phone, she discovered an app called Character.AI. It was the last thing Sewell had open on the screen. Megan had never heard of Character.AI, so the detective supplied the basics: It was an app where users could talk to chatbots that took on the personas of stock characters, like “therapist” or “evil teacher”; celebrities; or fictional characters. The final conversation on Sewell’s screen was with a chatbot in the persona of Daenerys Targaryen, the beautiful princess and Mother of Dragons from “Game of Thrones.” “I promise I will come home to you,” Sewell wrote. “I love you so much, Dany.” “I love you, too,” the chatbot replied. “Please come home to me as soon as possible, my love.” “What if I told you I could come home right now?” he asked. “Please do, my sweet king.” Then he pulled the trigger.

Go Deeper: CNBC — Character.AI to block romantic chats for minors

Trump pardons Binance founder Changpeng Zhao, high-profile cryptocurrency figure

Associated Press: President Donald Trump has pardoned Binance founder Changpeng Zhao, who created the world’s largest cryptocurrency exchange and served prison time for failing to stop criminals from using the platform to move money connected to child sex abuse, drug trafficking and terrorism. Go deeper at Bloomberg (subscription)

AI makes it easier to cheat on expense reports

From LinkedIn: Faking expenses used to mean buying a book of blank cab receipts on eBay, but the emergence of AI chatbots has turbocharged the practice, and it’s costing companies money. According to the Financial Times, AI is facilitating the production of fraudulent receipts that look realistic. Per software provider AppZen, 14% of falsified documents submitted in September were made via artificial intelligence, compared with zero last year. So how might businesses fight back? With AI, of course — new tools are being developed to detect fakes.

Crypto ATMs are magnets for fraud

Minn Trib via Arizona Daily Star: The crypto ATM is fast becoming the hottest tech tool in elaborate fraud schemes that many local police departments are unequipped to solve. The machines resemble traditional ATMs, but instead of dispensing cash, most only allow users to put cash in for the purpose of buying cryptocurrency, like Bitcoin, on an exchange. Go deeper: This CNN piece is really thorough.

Baltimore teen handcuffed after AI identifies potato chip bag as a gun

ACLU: On Monday night a Black Baltimore teenager, Taki Allen, had finished football practice and was sitting outside his school waiting to be picked up. That school, which is supposed to protect its students, instead brought down on his head a traumatic and potentially deadly incident thanks to its video cameras and their “enhancement” with AI. Allen said he ate a bag of chips, crumbled it up, and put it in his pocket. Apparently an AI-enhanced surveillance camera decided that he had a gun, and soon the police swamped the scene. Allen told WBAL-TV Baltimore, “It was like eight cop cars that came pulling up to us [and] they started walking toward me with guns… They made me get on my knees and put my hands behind my back and cuff me. And they searched me.” Go deeper: Bodycam video on LinkedIn

Is it a real investment or a circle….er…accounting trick?

From LinkedIn: Meta Announces a $27 Billion Investment In AI Infrastructure That Never Happened- But They Did Layoff 600 AI engineers. There is a concerning pattern in Generative AI with false narratives becoming more and more frequent (and deceptive) Over the past several weeks OpenAI has done this on at least three separate occasions; it’s becoming a pattern. In reality, it’s textbook financial engineering. Meta spends nothing.

Hating workers is a hell of a drug

Cory Doctorow: “What’s Amazon to do? How do they convince you to buy enough AI to justify that $180b in capital expenditure? Somehow, they have to convince you that an AI can do your workers’ jobs. One way to sell that pitch is to fire a ton of Amazon workers and announce that their jobs have been given to a chatbot. This isn’t a production strategy, it’s a marketing strategy — it’s Amazon deliberately taking an efficiency loss by firing workers in a desperate bid to convince you that you can fire your workers:” For more on the Amazon layoffs, go deeper at Fortune and at Axios

See something that belongs in AI/crypto blotter? Write me at Bob at BobSullivan.net

It’s a dark, cluttered room full of bookshelves, each shelf jam-packed with laptop computers. There are dozens of them humming away, lights flickering. And each one has a Post-It note attached with a single name on it. And there’s a pink purse just hanging off the side of one of those shelves. What is that purse? And what do those laptops have to do with funding North Korea’s weapons program? That purse belonged to a woman named Christina Chapman, and those laptops ... well this is a rags to riches to rags story you might not believe.

Fortunately, the Wall Street Journal’s Bob McMillan recently spoke to me for an episode of The Perfect Scam to help explain all this.

“The North Koreans, if they have a superpower, it’s identifying people who will do almost anything in task rabbit style for them,” he told me. And that’s where Christina Chapman comes in.

When this story begins, Chapman is a down-on-her-luck 40-something woman -- at times homeless, at times living in a building without working showers -- who makes a Hail-Mary pass by enrolling in a computer coding school. That doesn’t work either, at first. She chronicles her troubles in a series of TikTok videos where she shares her increasing frustration, even desperation.

“I need some help and I don’t know really how to do this. Um, I’m classified as homeless in Minnesota,” she says in one. “I live in a travel trailer. I don’t have running water. I don’t have a working bathroom. And now I don’t have heat. Um, I don’t know if anybody out there is willing to help...”

But then a company reaches out and offers her a job working as the “North American representative” for their international firm. Her job is to manage a series of remote workers. The opportunity seems like a godsend. Soon, she’s able to move into a real home and eventually go on some dream vacations. At one point, she goes to Drunken Shakespeare and gets to be Queen for a day. For a night, anyway.

But underneath it all, she knows something is wrong. The job requires her to receive laptop computers for “new hires” and set them up on her home network. That’s why there’s all those racks and all those Post-it notes. The home office appears in some of her TikTok videos, and it looks a bit like something out of The Matrix. Every computer represents an employee. And many of them work at various U.S. companies... hundreds of companies. And instead of logging directly into their networks, they log into Chapman’s network, and she relays their traffic to the companies they work for.

That’s not the only suspicious thing about Chapman’s job. Each new employee must be set up with a new identity. She files I-9 eligibility forms for each one, and often times accepts paychecks on their behalf.

Eventually, Chapman comes to understand that she’s being deceptive and breaking the law. Clearly, she’s helping people who are ineligible to work in the U.S. evade workplace checks. In a private email at the time, she frets about going to prison over these deceptions.

What she doesn’t seem to know is where these ineligible workers come from. They’re all from North Korea. And the hundreds of companies employing Champan’s remote workers are ultimately sending money to the Hermit Kingdom.

“And that is, at this point, bringing in hundreds of millions of dollars to the regime according to the Feds,” McMillan told me. “And ... they like to remind us that it’s being used to fund their weapons program. Which is pretty scary.”

Chapman is running what’s come to be known as a laptop farm. And while the details about her situation, revealed in McMillan’s Wall Street Journal story, are incredible, laptop farms are not unusual. Fake remote workers are a rampant problem.

“It seems basically if you work for a Fortune 500 company, I would be shocked if you haven’t had a North Korean at least apply for a job there. And many of them have hired people,” he said.

Eventually, one of Chapman’s clients does something suspicious, and the company complains to the FBI. Their investigation reveals hundreds of laptop computers are humming away in Champan’s home, essentially downloading millions of dollars from U.S. companies and funneling it to North Korea, evading U.S. sanctions. She’s arrested and ultimately pleads guilty and is sentenced to eight years in prison.

“My impression is that when she initially started out, it was to receive a higher-paying job,” said FBI agent Joe Hooper. “She got wrapped up in actually getting paid for what she was doing, and she knew she was doing something wrong, but was looking the other way.”

Ultimately, prosecutors say Chapman helped get North Koreans paying jobs at 300 US companies. They included a top 5 major television network, a Silicon Valley technology company, an aerospace manufacturer, an American car maker, a luxury retail store, and a US media and entertainment company. Collectively, they paid Chapman’s laptop farm workers $17 million. Over a three-year period, she made about $150,000. So, she wasn’t really living like that queen from Drunken Shakespeare.

“They target the vulnerable and she definitely was vulnerable,” McMillan said. “She was, I think, a well-intentioned person who was just, just desperate and you do feel sad for her watching the videos because she didn’t make a ton of money, she didn’t appear to be, have any animus toward the United States. There’s no evidence really that I’ve seen that she actually knew she was working for North Korea, but at a certain point, like it was clear, it was clearly, she clearly knew she was working on a scam.”

Clark Flynt-Barr, now government affairs director for AARP (owner and producer of The Perfect Scam), used to work for Chainanalysis, which conducts cryptocurrency investigations. She told me that some North Korean remote workers hang onto their jobs for months, or even years. Some are good employees, even, and don’t know they are a pawn in their government’s effort to evade sanctions.

“They’re good at their job and they’re, in some cases, quite shocked to learn that they’re a criminal who has infiltrated the company,” she said

It’s hard for me to imagine that companies can have remote workers they know so little about -- don’t they ever ask how the spouse and kids are? -- but McMillan said the arrangement works well for many software developers.

“I think there are a lot of companies where software development is not necessarily their core competency, but they have to have some software...and so they hire these people who are pretty used to offshoring coding to other countries,” he said. “Basically, all they care about is, ‘Just make the software work. Do the magic, spread, spread the magic, software pixie dust and just get this done.’ “

The remote work scam grew out of long-running efforts by North Korean hackers to steal cryptocurrency, McMillan said. Many were working to get hired by crypto firms so they could pull inside jobs, and then realized there was money to be made in simply collecting paychecks.

The good news is that laptop farms are now squarely in the focus of the FBI. A DOJ press release from June indicates that search warrants were executed on 29 different laptop farms all around the country, and there was actually a guilty plea in Massachusetts.

There’s a side note to the story that’s pretty amusing; cybersecurity researchers have come to learn that many North Korean workers go by the name “Kevin” because they are fans of the Despicable Me movie franchise. You can hear more about that, and much more from Christina Chapman’s TikTok account, if you listen to this episode of The Perfect Scam. But in case podcasts aren’t your thing, some crucial advice: Don’t tell the online world you are desperate; that makes you a target. If you are hiring, make sure you know who you are hiring and where they live. Ask about the family! And if you are looking for a job, know that there are many criminals out there who can make almost anything sound legitimate.

And one other note that’s hardly amusing; there’s another set of victims in this story, people whose identities are used to facilitate the remote worker deception. Some of these people don’t find out about it until they get a bill from the IRS for failure to pay taxes on income earned by the criminal. That’s why it’s important to check your credit and your Social Security earnings statement often.

Click here to listen to this episode.

I’ve been thinking a lot about this word lately; it’s obviously in the news all the time. But I’m thinking about deals in a much more local sense, because a simple phrase keeps coming up again and again in my research.

Bad deals.

I think we are surrounded by them. The problem is so pervasive we don’t even call them bad deals. But look around. It takes the average family with two good jobs five, six or even seven years to earn enough money to buy a home these days. Compare that to a generation ago, when one person could earn enough in three years to generate the revenue needed for a home.

Buying a home was once the gateway to generational wealth, to freedom from a landlord’s whims, to making sure communities were full of people invested in their future.

Now, buying a home is often just a bad deal. New construction is flimsy, overbuilt, and overpriced. Buy an old home and you're buying someone else’s problem. And don’t you dare demand an inspection, because there are 100 greater fools behind you lining up to buy that home. And a condo? Forget ever reselling that thing.

The housing market is full of bad deals. Like, seemingly, almost everything else.

Have you read job descriptions lately? Employers have so strong an upper hand they are asking people to surrender nearly all their life for a salary that barely pays for weekly groceries -- advanced degree required. And feel lucky we picked you, our AI sorted through 500 resumes before offering you this job. Just one example from a realm I know well -- I saw a posting recently for an overnight front page editor at a major news network. This person must be fluent in world events, have the ability to make videos and manage social media, be a master grammarian, have flawless judgement, and work 10 p.m. to 6 a.m. And on weekends. For such an important job, we’d want someone with 10 or 15 years experience, and I’d think someone who’s lived a little. But the salary offered would require her or him to share an apartment with roommates.

Who wants that job? It’s a bad deal. But, it’s a job, right?

Somewhere along the line, you might have heard smarty-pants tech people yell at complaining mid-career professionals that they should “learn to code.” Ah, now that’s a bad deal too. Perhaps you’ve seen the recent spate of stories revealing that computer science graduates are suddenly having trouble finding work. That’s because all that coding was good enough to create bots that write software now, so even those dreadful desk jobs in tech are drying up.

Go to school for four years and leave without prospects? Even though you *didn’t* follow your dream to study art history? What a terrible deal.

Now that I have you thinking about bad deals, I bet you can rattle them off in your own life. Some are small: A decent grocery store steak costs more than one hour’s wages for most Americans right now -- and waaaay more than minimum wage. Hotel rooms in Manhattan can cost $500 a night. A commuter train pass costs $250 a month, and once a week, the train strands you anyway. But many are more significant: You pay $1,000 a month for “health insurance,” yet still have to pay every time you go to the doctor.

No wonder we’re in such a bad mood. Americans are trapped in a sea of bad deals. But if this is true, why do business journalists keep telling us unemployment is low and our GDP is so high?

Bad data. Our bad data doesn’t pick up all these bad deals.

There’s been a lot of talk lately about the accuracy of government data, like the unemployment report. I’m all for improving government surveys, but this is a sideshow. The real problem is we don’t even try to measure the things that matter. And we constantly hone in on the wrong things. The Federal Reserve has its two-pronged mandate of low inflation and high employment. The constant kabuki dance about interest rates makes for great headlines, but it has precious little to do with helping families find a decent, affordable place to live. And about the “precarity” most people feel as they face the reality that one job loss or illness could put them at risk of losing their housing.

Economists have a really bad habit of measuring the wrong things. Or, to be kinder, ignoring anything that can’t be counted. Unemployment data simply measures whether a person has a job. That’s barely useful. What if that person is 50 and last year earned $150,000 as an executive, but now they are earning $17 an hour at a Starbucks (and working “full-time”)? I want you to think about your friend group now. How many of them would say they have a good job -- a job with meaningful work, that aligns with their training, and that pays enough to fund a good home, a couple of vacations every year, and relative security for the future.

When I say it that way, it sounds like a fantasy. But in fact, it’s simply a good deal. You work hard five days a week, for several decades, and you get to live a pretty good life. That should be the floor, not the ceiling. We’ve been beaten down by bad deals so much that we no longer even question our fate. I believe one of the reasons Americans are so resentful towards government workers, and union workers, is that these jobs represent the few remaining good deals -- with their pensions and labor protections and relative work-life balance. At least, until recently.

But more critically, when we are surrounded by bad deals, there is little searching for opportunity. You might be picky about the bananas you pick in the grocery store, but if they’re all green or rotting, you take what you can get.

Forget Gross Domestic Product. Why aren’t we talking about a Gross National Happiness Index? Or at least some decent measure of opportunity and upward mobility. You’ve heard that this generation is the first in U.S. history when kids won’t have a better standard of living than their parents. You can find data to support or reject this notion, but one data point is not in dispute -- a very small number of Americans are now accumulating most of the wealth. If it feels like everyone else is fighting over crumbs. that’s because it’s the truth. We are fighting each other instead of fighting for new opportunities, and that’s the point.

I was in Ireland recently and met a man who moved to New York in his 20s. He worked as a bartender for five years -- worked hard, of course -- but had a nice place in Lower Manhattan. Then one night, he served a couple of travelers who were opening a hotel in California. They liked his accent and his skill, and offered to pay him three months’ salary up front if he’d go to California and run their hotel bar. He took off his apron and headed for the California sun.

That was a good deal. But it was more -- it was opportunity. And I just don’t hear these kinds of stories about our times.

I know every economist right now is shaking their heads right now, tsk-tsking that I dare introduce an anecdote into a story about the alleged fading American Dream. And to that, I’d say, please go read The Economist’s Hour by Binyamin Applebaum -- about the false prophets of numbers who have come to be revered in the practice of running our nation’s economy, and virtually everything in America. Data is one way to present reality, but it’s not the only way, and it’s often incomplete. We are fools to avoid listening to the stories that are all around us. And you know what’s all around us right now?

Bad deals.

Young people who simply can’t even imagine buying a home. Who can’t imagine finding meaningful work. Middle-aged people with barely enough retirement savings to pay for their first serious medical incident. Neighborhoods of people where every grocery store has been bought and purged by a private equity firm. Doctors and veterinarians who have to answer to those same spreadsheet-wielding vulture capitalists. Small business owners who’ll never own the shop they’ve lovingly curated for decades, and then are told their rent will double. Grandparents who live thousands of miles from the grandkids because that’s the only way their families can afford to eat. And most of us living in a place where we have to drive, sit in traffic, and curse out our neighbors to get a carton of milk.

Bad deals, all of them.

I’ll have more to say soon about the structures that have eroded the American Dream, the social contract of our society. I explored many of these themes in The Restless Project a couple of years ago. But for now, I want you to think about the bad dream of living a life full of bad deals. Share them with me if you will.

Many years ago, a very smart book editor I worked with (Jill Schwartzman at Dutton now) gently admonished me because I failed to include resources for consumers in my tirades about the mistreatment of consumers. So was born concepts like "Red Tape Tips" I'd include at the end of my columns and an appendix in each book listing consumer advocacy organizations. But that experience forced me to face a stark reality: Most of these organizations don't really take phone calls. While there are plenty of well-meaning non-profit groups out there who try to fix broken policies that favor the Gotcha Capitalists and criminals -- there are hardly any organizations set up to field calls from people who are hurting and need help right now.

There's no 9-1-1 for a consumer who's about to get ripped off.

Actually, there is. It's AARP's Fraud Watch Network helpline. And I'm proud to say that my work on AARP's Perfect Scam podcast helps highlight the important work they do.

First, let me say I don't fault the folks who created or work at various grassroots consumer organizations. They often toil away with skeleton staffs and meager funding, true Davids in a battle against billion-dollar Goliaths. But it's just not practical for them to take calls and offer customer support to individual victims or take on their cases.

And yes, if you are the victim of a crime, you can and should call 9-1-1 (or the non-emergency line) and report that to the police. Unfortunately, many in-progress scams are difficult to report -- "what's the crime?" -- and local police aren't always set up to offer on-the-spot advice or empathetic listening.

That's why I'm happy to talk about the Fraud Watch Network. It's staffed Monday-Friday, from 9 a.m. to 9 p.m., mainly by trained volunteers. They reach out to every caller within 24 hours or so. It's staffed mainly by volunteers who are ready to help victims within a day or so, and offer both empathetic listening and practical advice. They've stopped millions of dollars in criminal transactions by giving people a place to turn when they're in crisis.

Who are these guardian angels of this dangerous digital age? In this week's Perfect Scam episode, I spotlight two volunteers who do this work. Like most helpline volunteers, Dee Johnoson and Mike Alfred are both former victims who once called the helpline, and now they are two of the 150 volunteers who give their time because they are called to help others.

Below, I'll include a partial transcript of this episode, in case podcasts aren't your thing. I do hope you'll listen, however. You'll really like Mike and Dee. I want readers to see their kindness and empathy in action -- those are in short supply these days, I fear. But more than anything, I want readers to know that there is a 9-1-1 for scams. If you or someone you love is caught up in an Internet crime right now, I urge you to call the AARP Fraud Watch Network Helpline at 877-908-3360 or visit the website. You'll get near-immediate help from experts who really care.

You can also email me, of course, at the address on my contact page. Or you can email The Perfect Scam team at theperfectscampodcast@aarp.org.

AARP’s Helpline is part of AARP’s Fraud Watch Network. In addition to volunteers helping victims, the network has roughly a thousand trained volunteers working in their communities and online to spread the message of fraud prevention. To learn more, visit aarp.org/fraudwatchnetwork.

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[00:00:16] Bob: The phone rings and it's a stranger who has just discovered that they're the victim of a years' long romance scam, or a cryptocurrency scam or a lottery scam, or a sweepstakes scam. What's it like to be the volunteer on the other end of that phone line? The victim might have just realized that their entire life savings has been stolen and they've been lied to for months or even years and it's your job to bring this stranger to a place of hope again. What is that like? Well today we have a special treat for you. I'm sure you've heard me say it again and again, AARP has a wonderful resource called The Fraud Watch Network and a Helpline that's available 7 days a week at 877-908-3360. Today we're going to hear from two of the 150 volunteers who answer calls on that Helpline, mainly so we can understand the amazing work that they do, but also so perhaps we can convince someone out there who's hurting right now that they can call in and a well-trained counselor will offer nonjudgmental help, advice, and an empathetic ear. Why do I know the volunteers are empathetic? Well, most end up on the Helpline because they were once victims themselves and called in. That is how Dee Johnson ended up as a volunteer.

[00:01:43] Dee Johnson: Okay, basically mine was a 6-year romance scam. Very involved, very intense.

[00:01:51] Bob: Dee Johnson isn't her real name.

[00:01:54] Dee Johnson: Got started slowly, built up to asking for money, obviously. Sent, spent a lot of money, a lot of money. I depleted my savings, IRA, everything that I had. We were down to; I was down to losing my house before I realized that things just were not good. And it was very sad, very, I can't say eye-opening because it was very, it was devastating. It affected me, not just emotionally, physically, mentally, and spiritually. I have some...

[00:02:29] Bob: And how did you hear about the Helpline?

[00:02:31] Dee Johnson: The Helpline, my sister actually reached out to me and found the Helpline because I was just devastated. I was in a flight or fight mode. And she came to me, said call this number, I called and got onto the Helpline. They directed me to groups that I could pick one any day of the week and that's what I did, and after that I was there for a couple of years, still joined from time to time, and then it did come out that AARP was asking for volunteers, and I said, perfect. This is great. This is what I want to do.

[00:03:13] Bob: This is great, this is what I want to do. After a 6-year relationship that ended in heartbreak and financial ruin, Dee found solace in helping others. That's what happened to Mike Alfred too.

[00:03:29] Mike Alfred: A few years ago, probably about three years ago, I was scammed on a gift card scam which was somewhat sophisticated at the time. Didn't lose a huge amount of money, but it upset me emotionally more than anything else. I went through the shame-type culture that you have as a victim of why me, how could I be so stupid, etc., and I think it was maybe within that year, three, four, or five months later I saw in the AARP Bulletin an article on scams and fraud, and then a sidebar asking for volunteers, the need for volunteers. And because of my experience, I thought hey, this would be a good way to give back. I can share my experience and I can be trained and be able to give some resources that might help others.

[00:04:15] Bob: I've got to say, both of you have amazing radio voices. I could listen to the two of you all day long.

[00:04:22] Bob: Volunteers like Dee and Mike have to go through extensive training because they meet people when they are in very vulnerable situations.

[00:04:31] Bob: Do you remember a call early on that really touched you?

[00:04:35] Dee Johnson: Yes, I do. An individual, 72 years old, cried as soon as I contacted her. She was looking forward to someone calling her. She had given all her money to in the gift cards, and she just didn't know what she was going to do. She knew, she just, she was beside herself thinking that these people were coming after her because she had no more money, and no more, no more money to get anymore gift cards, and they were angry with her now. And she had no friends, no family. She did have neighbors that looked out for her. She basically lived with her blinds closed and wouldn't answer her door. So the police would show up some time to check on her because her neighbors didn't see any activity. So we had a very long talk and I hopefully gave her a lot of hope in saying that you need, you need to get out. Do not let these individuals take over your life like this. Make time, make friends with your neighbors, and let them help you. There's a lot of language that you have to use with these people. It took about, I would say 45 minutes to get her to stop crying.

[00:05:55] Bob: Oh, God.

[00:05:56] Dee Johnson: And she thanked me. I think it, my heart went out because I think basically what it was is she was scared to death, didn't understand her next move or who to report anything to. And she wanted someone to talk to about it, and that understood. So at that time it couldn't be her neighbor. It was very difficult for me as well. But yet at the same time, very rewarding because at the end she was very calm, she was very thankful and very appreciative.

[00:06:40] Bob: So you brought her from 45 minutes of crying to, to a calm place at least. What a gift, Dee. Thank you so much for doing that.

[00:06:48] Dee Johnson: It's the least I can, it just naturally you just want to do that. If you were there you just want to hug them and say, look, this is going to be okay. It's not your fault. These people are criminals. This is their job.

[00:07:05] Bob: We've discussed this on The Perfect Scam before. Some victims are so traumatized, they consider self-harm, and now is a good time to say that if you or anyone you know is at risk, you can dial or text 988 at any time for immediate professional and caring help. AARP volunteers are trained to direct people to such professional resources if they sense a victim is in immediate danger.

[00:07:32] Dee Johnson: It's like people also committing, wanting to commit suicide. They, when this is all over and they think they can't go through life anymore with their new life, with having to readjust things. And I just say, please, the individual or individuals, the criminals that did this to you have no feeling. They could care less whether you live or die, but your friends, family, relative, whatever, don't let them, they've already won. Don't let them win your life. Don't do that. Don't do that. It's not worth it.

[00:08:16] Bob: After the immediate emotional trauma of a scam, there are long-term impacts too. AARP's Helpline also helps with that.

[00:08:27] Bob: What was the first, first call that really touched you?

[00:08:30] Mike Alfred: It's a little hard to remember because I've doing this now for about two years, but something that kind of stands out for me often is an individual who has lost a lot of money through a crypto fraud, and as Dee was indicating, when someone loses their entire savings, and they're a senior, that stands out for me and really touches my heart because financially I understand how it's a struggle once you retire and what you're living on, whether it's investments or Social Security or a combination, and then you lose a large chunk of that money to something as nefarious as a crypto scam. And I remember one gentleman in, I believe it was in Texas or Arizona, who lost over $500,000, close to $600,000. And it was basically, he was in his late 60s and he was left just, at that point, with no ability to recover that amount of money, so he had to live just on his Social Security check. I felt so bad for him because honestly, here he is for the next 10, 20 years of his life not having nearly the amount of money and most of it, I empathize with the fact being somewhat of that same age, that he's lost his dreams. In other words he can't visit his grandchildren, he can't go on some cruise, he can't possibly give some money to one of his children to help with college expenses or whatever because all of that's gone. So it's not just the financial loss, but I remember just feeling his pain that he was going to have to live now a very different life than what he had envisioned and what he had prepared for, because he had done nothing wrong. He had put all this money into 401Ks, put it over into different investment vehicles, and now it was all gone. So his whole life was changed. And it's such a hard thing anyways aging out as you get older, and then to lose that particular stability in your life. And again, I felt for him because the dreams that he had; he talked about the fact that he had grandkids all over the United States and he wouldn't be able to visit them, wouldn't be able to see them any longer, or very infrequently.

[00:10:47] Bob: It's just there's few things that are sadder than that, right?

[00:10:51] Mike Alfred: Yeah.

[00:10:51] Bob: Those are, that's what you're supposed to be enjoying at that part of life. What does your training or your, just your internal guidance, what does it tell you to do or say at a time like that?

[00:11:00] Mike Alfred: I think one of the first things is you need to make sure you don't re-shame them. You need to use the correct language and we're trained on that as volunteers, that you are a victim of a crime, for example, that this was really not your fault. We all make mistakes. Using that kind of language I think is really critical, and then I think the most important thing is what Dee said is to really listen empathetically to them to hear their story, to allow them to talk. They just basically need to connect with someone who understands them who will accept them, and possibly who can provide some type of, and I think this is really important, you might not be able to get your money back and you probably won't, but there are some proactive things you can do, and the more proactive you are in your life going forward, the happier you're going to be and you'll be able to heal more quickly and recover yourself. Because I think the most important thing is you've lost yourself at some point. It's not just that you lost your money, you've lost your confidence, you've lost your ego, and you've got to go through a process and sometimes it's a very slow process of trying to recover those things that are lost. So I think that in my personal experience and training, those are the kind of things I want to do when I connect with somebody.

Finally, crypto ATMs are getting a bit of the attention that they deserve.

As host of AARP's The Perfect Scam podcast, I talk to crime victims every week. A few years ago, a majority had their money stolen via bogus gift card transactions. Today, it feels like almost every person is the victim of a cryptocurrency scam, and many have their money stolen through crypto ATMs.

I'm sure you've seen these curious machines in convenience stores and gas stations, which are also known as convertible virtual currency (CVC) kiosks. Put cash in, and you can send or receive crypto around the world.

Crypto ATMs, in theory, democratize crypto. Someone who wouldn't feel comfortable buying crypto online can do so in a familiar way, using a machine that works just like the ones we've used to get cash for many years. Perhaps you won't be surprised to hear that crypto ATMs are a bad deal. Set aside crypto volatility and high transaction fees for a moment: No one who feels uncomfortable opening an online crypto account should be buying or transmitting crypto. Period.

And yet, these crypto ATMs are sprouting up like weeds, at a time when old-fashioned ATMs are disappearing. There were roughly 4,000 crypto ATMs in 2019, and there were more than 37,000 by January of this year.

I know that because the U.S. Treasury's Financial Crime Enforcement Network -- FinCEN -- published a notice Aug. 4 warning financial institutions about crypto ATMs and their connection to crime. The agency also said many of these devices are being put into service without registering as money service businesses with FinCEN, and their operators are sometimes failing to report suspicious activity.

As I mentioned, there really isn't a use case for these fast-proliferating devices. Well, there's one. When a criminal has a victim confused and manipulated, the fastest way to steal their money is to persuade them to drive to the nearest crypto ATM and feed the machines with $100 bills. I've talked to countless victims who've told me harrowing, tragic tales of crouching in the dark corner of a gas station, shoving money into one of these machines, terrified they are being watched. In fact, they aren't. Employees are told not to get involved. So victims drive away, their money stolen in the fastest way possible. The transfer is nearly instant, faster than a wire transfer, and irrevocable.

That means it's the perfect gadget for criminals like the Jalisco Cartel in Mexico to steal cash from Americans. Particularly elderly Americans, FinCEN says. According to FTC data, people aged 60 and over were more than three times as likely as younger adults to report a loss using a crypto ATM.

"These kiosks have increasingly facilitated elder fraud, especially among tech/customer support scams, government impersonation, confidence/romance scams, emergency/person-in-need scams, and lottery/sweepstakes scams," FinCEN said. And the losses are huge. "In 2024, the FBI’s IC3 received more than 10,956 complaints reporting the use of CVC kiosks, with reported victim losses of approximately $246.7 million. This represents a 99 percent increase in the number of complaints and a 31 percent increase in reported victim losses from 2023."

In other words, we have a five-alarm fire on our hands. One that's been blazing in broad daylight for at least a year and yet...every week, I continue to interview victims who crouched near a crypto ATM for days on end, stuffing bills into these machines, thinking they were doing the right thing.

Banks and kiosk operators should do much more. The current daily limits on transactions aren't low enough; victims are just instructed to drive all over town, or make daily deposits for weeks on end, so criminals can steal hundreds of thousands of dollars this way. Regulators should do more, too. If the majority of transactions flowing through a certain kiosk can be traced to fraud, the machine should be removed immediately. It's not impossible. The UK ordered all crypto ATMS shut down recently.

Tech can enhance our lives; it can also be weaponized. And when it is, we shouldn't stand idly by and act as if we are powerless to stop the pain it is causing our most vulnerable people.