Phishing Equilibria in Silicon Valley: Google Maps and Fraud

By Lambert Strether of Corrente

I’ve always been a big fan of Akerlof and Shiller’s concept of a “phishing equilibrium,” which they developed in Phishing for Phools: The Economics of Manipulation and Deception. Since 2015, when they published the book, the concept hasn’t really caught on, perhaps because it was a foundational assault on mainstream economics, perhaps because it cuts too close to the bone. Now a new article from the Wall Street Journal, “Millions of Business Listings on Google Maps Are Fake—and Google Profits,” gives me the opportunity to revisit phishing equilibria. First I’ll review the concept, then I’ll look at the Journal’s article on Google, and finally I’ll look at our own article on Facebook (“Facebook: Mark Zuckerberg’s Fake Accounts Ponzi Scheme“).[1]

“Phishing Equilibrium” Defined

Quoting Akerlof and Shiller from my review, “Angling for Dollars: A Review of Akerlof and Shiller’s Phishing for Phools“:

The fundamental concept of economics is … the notion of market equilibrium. For our explanation, we adapt the example of the checkout lane at the supermarket. When we arrive at the checkout at the supermarket, it usually takes at least a moment to decide which lane to choose. This decision entails some difficulty because the lines are — as an equilibrium — of almost the same length. This equilibrium occurs for the simple and natural reason that the arrivals at the checkout are sequentiallly choosing the shortest line.

The principle of equilibrium, which we see in the checkout lanes, applies to the economy much more generally. As businesspeople choose what line of business to undertake — as well as where they expand, or contract, their existing business — they (like customers approaching checkout) pick off the best opportunities. This too creates an equilibrium. Any opportunities for unusual profits are quickly taken off the table, leading to a situation where such opportunities are hard to find. This principle, with the concept of equilibrium it entails, lies at the heart of economics.

The principle also applies to phishing for phools. That means that if we have some weakness or other — some way in which we can be phished for fools for more than the usual profit — in the phishing equilibrium someone will take advantage of it[2]. Among all those business persons figuratively arriving at the checkout counter, looking around, and deciding where to spend their investment dollars, some will look to see if there are unusual profits from phishing us for phools. And if they see such an opportunity for profit, that will (again figuratively) be the “checkout lane” they choose.

And economies will have a “phishing equilibrium,” in which every chance for profit more than the ordinary will be taken up.

“Every” really meaning every. To put the idea in simpler terms with a more limited use case: “If fraud can happen, it will already have happened.” Now let’s look at our Silicon Valley behemoths.

A Phishing Equilibrium at Google

The Wall Street Journal gives the following overview:

Google’s ubiquitous internet platform shapes what’s real and what isn’t for more than two billion monthly users…. Google handles more than 90% of the world’s online search queries, fueling $116 billion in advertising revenue last year. In recent years, it has extended that dominance to local search queries, emerging as the go-to source on everything from late-night food deliveries to best neighborhood plumbers[3]. [But Google Maps] is overrun with millions of false business addresses and fake names, according to advertisers, search experts and current and former Google employees. The ruse lures the unsuspecting to what appear to be Google-suggested local businesses, a costly and dangerous deception….Online advertising specialists identified by Google as deft fraud fighters estimated that Google Maps carries roughly 11 million falsely listed businesses on any given day, according to a Journal survey of these experts.

We think of maps as representing terrains, but with Google, the Maps service is itself a terrain: of battle. Over pushpins. Since Google annihilated the local advertising market — the Yellow Pages, classified ads — many local businesses have sought customers by registering with Google and getting their pushpin onto Google Maps. But the fraudsters can outweigh the legitimate businesses. The Journal ran a query for plumbers in Manhattan. Their results:

Type a search query and Google will post at the top of the screen as many as six businesses that bought Google ads. The adjacent map that pops up is supposed to pinpoint bricks-and-mortar businesses in the neighborhood.

A search for plumbers in a swath of New York City found 13 false addresses out of the top 20 Google search results. Only two of the 20 are located where they say and accept customers at their listed addresses, requirements for pushpin listings on Google Maps.

People don’t put fake listings on Google maps out of the goodness of their hearts. Fake listings enable consumer fraud:

[Nancy] Carter had pulled into her Falls Church, Va., driveway and saw the garage door was stuck. The 67-year-old searched Google and found the listing of a local repair service she had used before. She phoned in a house call.

A man arrived at Ms. Carter’s home in an unmarked van and said he was a company contractor. He wasn’t. After working on the garage door, he asked for $728, nearly twice the cost of previous repairs, Ms. Carter said. He demanded cash or a personal check, but she refused. “I’m at my house by myself with this guy,” she said. “He could have knocked me over dead.”

The repairman had hijacked the name of a legitimate business on Google Maps and listed his own phone number. He returned to Ms. Carter’s home again and again, hounding her for payment on a repair so shoddy it had to be redone.

Fake listings enable extortion:

Google’s failure to eliminate phony listings puts legitimate businesses at the risk of threats and blackmail by competitors or con artists.

Anas Abuhazim, who runs a cash-for-junk-cars operation in the Chicago suburbs, learned firsthand. His two businesses, Smart Tow Inc. and Cash for Junk Cars LLC, field calls from people looking to dump useless vehicles. His phone operators offer callers around $300 for their wrecks and retrieval within an hour. That leaves Mr. Abuhazim reliant on Google searches.

Last year, he was approached by a marketing firm that offered to lift his business listings on Google Maps for a fee in the tens of thousands of dollars.

Mr. Abuhazim agreed to the deal. In March, he said, the marketing firm tightened the screws: Hand over half your revenue or else. The firm threatened to bury Mr. Abuhazim’s Google listings under hundreds of fictional competitors unless he agreed to the onerous terms.

Mr. Abuhazim refused, and the agency carried out its threat. It unleashed an avalanche of new listings under such names as “Chicago Auto Brokers.”

Mr. Abuhazim tried reaching Google to explain his dilemma, but he was repeatedly routed to an offshore call center. Operators, he said, “treated me like I’m stupid.” With his businesses pushed off the first page of Google Maps results, incoming calls halved. He said he was on the verge of closing.

Fake listings enable unfair business practices:

Google Maps in March dropped all six offices of personal injury attorney Ian Silverthorne for unspecified “quality issues,” he said. Out of suspicion, he searched Google and counted 108 suspect listings in and around Orange County, Calif., where Mr. Silverthorne has an office.

He started calling the listings, he said, and found they went to a competitor, Oakwood Legal Group LLP, which operates a single Orange County office. Oakwood didn’t respond to requests for comment.

Google profits, naturally, from advertising on Google Maps:

Once considered a sleepy, low-margin business by the company and known mostly for giving travel directions, Google Maps in recent months has packed more ads onto its search queries. It is central to Google parent Alphabet Inc. GOOG -1.39% ‘s hope to recharge a cresting digital-advertising operation.

And from Google’s perspective, no doubt, the more pushpins, the more traffic, and the more time spent onsite, all translates into profit. And they are also profiting from the fraudulent pushpins, who pay Google to get to the top of the listings.

So Google, naturally, isn’t doing anything about the problem. Probably the best way to understand this is by checking in with the CEO that’s in the business of creating fake pushpins:

One prolific listings merchant is Mark Luckenbaugh. From a basement smelling of cigarette smoke in Hanover, Pa., he runs a business that can place as many as 3,800 fake Google Maps listings a day.

A self-described high-school dropout, Mr. Luckenbaugh manages 11 people who, he said, “mostly” follow Google rules to help clients get better visibility on Google Maps. A separate staff of 25 in the Philippines employs unsanctioned methods to fill orders for fake listings, he said….

Mr. Luckenbaugh charges $99 for a single made-up listing and up to $8,599 for a 100-pack. The listings are aimed at businesses that want to pepper Google Maps with faux locations to generate more customer calls. Subverting Google’s verification system, he said, wasn’t hard.

His employees submit fake business listings to Google, scraping real addresses from commercial real-estate listings and creating such search-friendly names as best personal injury attorney. He also buys phone numbers, available cheap online, to attach to the listings.

When Google automatically calls the newly purchased numbers, Mr. Luckenbaugh’s employees retrieve the code to activate the listing. The Google Maps pushpins appear soon after. The listed phone numbers can be routed to Mr. Luckenbaugh’s clients.

I know Google knows,” Mr. Luckenbaugh said. The method leaves “a huge footprint, and they’re just letting it happen,” he added.

That’s it? Google built a ginormous multi-billion dollar global system that can be cracked by anyone with a burner? Apparently so. I just searched my own area for plumbers. Ludicrous. “If fraud can happen, it will already have happened”

Conclusion

It’s worth asking what the human weaknesses are — besides greed in the C-suite — that enable the phishing equilibrium in Google Maps. For Nancy Carter and Anas Abuhazim the weakness was desire: for Nancy, to have her garage door fixed; for Anas, to own a profitable small business. Paraphrasing the Buddha, the cause of suffering is desire; that’s why they were “on the hook,” preyed upon by the fraudsters and extortionists that Google’s desire for profit enables. A secondary weakness was trust, as illustrated by the fable of the frog and the scorpion (“It’s my nature“). But what kind of society have we built where wanting your garage door fixed is an exploitable weakness? Or trusting a map? Why don’t we simply expropriate Google, turn it into a public utility, eliminate advertising, and eliminate the occasions of sin?

NOTES

[1] Another, simpler example from NC: Potential Phishing Equilibria Under Neoliberalism in the U.S. Medical Coding System.

[2] Readers will be reminded of the “dark patterns” concept.

[3] I can’t imagine hiring a plumber without a personal recommendation, but perhaps that’s just oldthink.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

29 comments

  1. Summer

    Who would have ever thought that TV commercials may become more watched and actually needed???

    A company that pays for that has to at least pass through other gatekeepers who will want to collect their money.

    Reply
    1. Harry

      Not as reassuringly expensive as one might hope. Either that or these house flipping courses are insanely profitable to run.

      Reply
  2. Adam Eran

    I’ve been defrauded by Yelp! contractors too. The guy I hired did the work, but left about $200 worth of damage. He agreed to let me hire someone else to do the $200 in repairs, and promised to reimburse me. He dragged his feet about the reimbursement until I posted an insulting review. Then he paid up, doing so only after I reassured him I’d withdraw the bad review. I did withdraw the review, but the hassle to get reimbursed wasn’t fun.

    Reply
  3. Tim

    My guess is Google’s solution to the complete breakdown of this “service” and loss of customers will be to integrate a feedback rating similar to what Amazon and Ebay have. Maybe they will buy Yelp (if they haven’t already?) and integrate it into google maps.

    Reply
    1. Oh

      Knowing Google, they will include false 5 star feedback rating to bolster the listing and while you check the ratings, they’ll be busy farming your IP address and other info and cross reference it to their bulging database so they can sell more advertising and all your info to the nefarious agencies of the USG.

      I agree that Google should be nationalized and turned into a public utility and made free of ads. and other revenue producing activities. The excutives have to serve jail time for prying on us.

      Reply
  4. Fiery Hunt

    Can’t tell you the number of people I’ve had into my shop looking for a cash-loan-on-car-title “business” that uses a fake similar address with their on-line advertising. Google is nothing more than than the vampire squid of the interwebs, total bullshat in terms of accuracy and just playing the “pay-to-play” business model.

    Reply
  5. Another Amateur Economist

    This is a symptom of the dying throes of Capitalism. It has become more profitable to ‘re-allocate’ value than to produce it. Therefore, Capitalists will/have stopped producing value, and merely ‘re-allocate’ it. Finance, corporate buybacks, healthcare billing, techno-fraud, pollution for profit, war without end, lobbying for corruption, forever copyrights: None of these activities actually produce value, but merely ‘re-allocate’ it. And all these activities re-allocate resources away from the real producers of society. America’s farmers are merely one (very important) class of victims.

    This can only go on for so long, of course. Be warned.

    Reply
  6. John Zelnicker

    Lambert – I tried the same experiment with a search for “plumbers near me”. After some sponsored ads at the top and a couple of regular ad listings there is a map with three plumbers listed. The first one I know to be fake because I am very familiar with the address; it’s less than 2 miles from me. It’s a half million dollar+ house in a totally residential neighborhood. Ain’t no plumbers there. The owner appears to be a wealth manager with a local bank.

    The Duck Duck Go results were topped with local businesses with which I am familiar so I know they are legitimate.

    This is really a bad situation. The fraud potential is truly unlimited.

    I wholeheartedly agree with you that hiring a tradesperson is best done through a recommendation.

    Reply
    1. ChrisPacific

      I tried the same experiment in my current region as well as a couple of others where I’d lived in the past. I was able to find at least one in each case that was clearly a fake (no online presence or reviews, no evidence of presence at that address from Street View, etc.) That excludes legitimate businesses that might have had their identity stolen for Google purposes, although if they had a Web site listed and it looked genuine then I considered that unlikely. DuckDuckGo did not show any obvious fakes but also missed a number of genuine ones.

      I’m not sure I would conclude that Google is looking the other way on this – it will certainly harm their reputation as a source of reliable recommendations, which is not something I’d trust them particularly with in the first place. I think it’s much more likely that they just aren’t looking at all. Google, Facebook and the like generally perform poorly at “things that need to be done on an individual basis by a person,” because they operate at an incredibly large scale at very low cost (or ‘free’) and therefore need almost everything to be automated in order to make the business model work. It’s why Facebook took no action (and has no plans to take any action) in response to the live streaming of the Christchurch shooting video, for example.

      Reply
      1. Clive

        I cannot believe this. This is all absolutely correct, my results were similar to yours — it is a huge scam. and certainly here in the UK, some aspects are illegal. For example, to work on gas installations of any kind you need to be compulsorily licenced. The licencing scheme is national, referred to as “Gas Safe”. The licencing permit mandates the engineer show a proof-of-licencing card which must, by law, contain the registered address of the company and their trading title. This can then be cross-referenced with the list of licenced engineers and their registered premises. The whole purpose of the regulatory regime is to stop cowboys and fly-by-night con artists doing unlicensed work — if dangerous work is done, you have to know who did it and where to find them (before they blow up another house)

        So it was very easy to look on Google Maps for my town for “gas installers” or similar. I quickly spotted an obvious fake, it had a generic image rather than a picture of their office or industrial unit, and while the post (zip) code checked out as that of a registered licenced engineer, the phone number listed differed from that which was on the Gas Safe Register. The address wasn’t correctly formed either (UK addresses have a prescribed format and it is easy to tell when some key details are missing, like a premises or house number, as the fake Google Maps listing’s was). So the address wasn’t that listed by the licenced gas contractor — and there is no licenced gas engineer at the address given on Google Maps in the Gas Safe Register. So it (the Google Maps entry) is a phony whichever way you look at it to check it out for being valid or not.

        I suspect a legitimate trader who is licenced is being hijacked by a rogue operator, as per the lady who had a broken garage door in Lambert’s post. Even best-case, someone is trying to steal someone else’s business. At worst, an unlicensed contractor is operating and Google is enabling this illegality — and also enabling their untraceability.

        Reply
  7. Bugs Bunny

    A very well educated doctor friend of mine had a few bad reviews on Google. These were disgruntled patients with chronic conditions that she could only treat but not cure. Of course it was linked to her multiple practitioner clinic address, and pinned on Maps, which sent her into a total panic. Try getting Google to do anything about it. They won’t.

    Long story short, she had to beg her other patients to add reviews to bring up her star rating. We’re all slaves to the G.

    Reply
    1. Bill Carson

      I’m in exactly that same spot with my law practice. Try being a divorce lawyer without having disgruntled clients—if they weren’t disgruntled, they wouldn’t be getting a divorce! Most clients are very pleased, but they naturally don’t want to post positive reviews because of privacy concerns. But boy, when you get a client with some cray-cray and you get sideways with them—look out! They will post reviews all over the place. Oh and get this—you have to be very careful not to violate client privilege in your response to the bad review. It’ll make you want to chuck it all and go to truck driving school.

      Reply
    2. Arizona Slim

      A few years ago, I was cyber-bullied on Facebook. One of the main reasons why I finally logged off that site a year and a half ago.

      Any-hoo, some of those lovely people left bad reviews of the business I had at the time. I’ve never heard of any of these negative Google reviewers, and I haven’t done a lick of business with any of them.

      But those reviews live on, and there’s nothing I can do about them.

      Reply
      1. Stephen Gardner

        Funny story about fake reviews: a year or so ago I was idly perusing the reviews for a Vietnamese restaurant that I often visit. One of the reviews was from this person who claimed to have walked there from her hotel. That was the clue. The restaurant is in a mixed residential and commercial area miles from the nearest hotel. Then the coup de grace for the plausibility of the review, she claimed to have enjoyed the steak and mash potatoes immensely. This place is very authentic Vietnamese, the best cha gio in the Metroplex, but don’t ask for mashed potatoes. And the closest thing to steak is bo luc lack. A friend and I then went on a hunt for obviously fraudulent reviews and found a lot with the words used to describe several businesses. We were amazed because we couldn’t figure out why Google’s vaunted big data couldn’t find and eliminate these fraudulent posts. Now we know why.

        Reply
  8. vlade

    Basic assumption is that there will be always people who try to profit by doing as little work as possible, regardless of legality (which is what A+S say, really).

    The problem with Google (and internet in more general) is that effort to generate tons of “hits” is trivial. By a hit I mean getting a scam (as those are scams) to a person. Nigerian scams could not really work 30 years ago, as postage from Nigeria to any first-world-country would be prohibitive for mass mailings. Now you get to “hit” hundreds of millions for a very small, fixed costs.

    Same with business ads on Google. The problem here is that Google disclaims any responsibility for the correctness of the ads (as to avoid any liability). Now, you could think that it would be better for Google if it did accept some liability and so checked the businesses more thoroughly to have a good defense, as it would, at the same time, make the listings more valuable to the business.

    Except it’s very likely that Google did the maths, and came up with an answer that fake ads with no liability are better (amongst others, because I suspect Google is already charging as much as it can, so it could not raise prices much for better validation cross-the-board).

    Doing a half-arsed job (pay for validation, and we’ll give you “trusted business” mark or something) is not really that great, as unless the validation is very very thorough (and thus possibly unachievable for new businesses), it’s just added small fixed cost to the scammers.

    Reply
    1. cnchal

      > . . . there will be always people who try to profit by doing as little work as possible, regardless of legality (which is what A+S say, really).

      That describes Google itself. Google takes all the advertising money and then does nothing to ensure only legitimate business are shown. No money is spent policing their snake pit, and were they to do so, the money they get from the fakes would disappear.

      Would Google even be profitable if they ran their business with integrity?

      Reply
  9. PlutoniumKun

    Not quite connected to the post, but I found a minor example of crapification on google maps yesterday when using it and google translate when looking for accommodation in a valley called ‘Iya’ in Shikoku. The Japanese word for ‘disgusting’ is ‘Iyana’. ‘of’ in Japanese is ‘no’ and guesthouse is ‘ryokan’, therefore the name was Iya No Ryokan. A combination of the japanese tendency not to use spaces between words and google translate had therefore turned the ‘Iya Guesthouse’ into the ‘Disgusting Hotel’.

    Reply
  10. Ignacio

    Thank you very much for this post that rhymes very well with the concept that I learned in NC saying that if your business depends on a platform you don’t have a business. My question is for how long and how profound must run this phishing equilibrium to make authorities agree with your last paragraph?

    Reply
    1. diptherio

      “if your business depends on a platform you don’t have a business.” And everybody’s business now depends on Google (or very nearly everybody’s business) for visibility and advertising…not a fun line of thought to go down….

      Reply
  11. Carolinian

    Thanks for the post. While I rarely use Google Maps I had assumed that the business listings were neutral information rather than paid ads like the Yellow Pages. There are truth in advertising laws are there not–even for online? If Google is providing a platform for crooks they are putting themselves in a precarious legal position.

    Reply
    1. Oh

      They’re too big with oodles of money and it would be hard to bring a lawsuit against them let alone win one. They’ve successfully greased the skids in federal, state and local governments to make it that much harder.

      Reply
  12. Bill Carson

    Google to Business Owners: That’s a nice business you have there. It’d be a shame if something happened to it.

    Reply
  13. Off The Street

    Phishing awareness becomes one more painful lesson for all. Think of how much time and effort are expended on that, ahem, learning curve, and how anyone, aside from fraudsters, would probably choose to do virtually anything else.

    A+S says: “If fraud can happen, it will already have happened.” Thinking about another aspect of that leads to “Your equilibrium use of time and life is subject to forces outside your control.” Is that how people would be forced to go through life, fending off one scam after another? Some decide to go off that type of grid by disconnecting from the Googles, Facebooks and similar vectors of the world. Others fight that power to retain some human dignity. YMMV

    Reply
  14. Olivier

    Methinks this says more about the state of US society and in particular of its business culture than about Google. When the prevailing business culture is one of fraud and predation über alles it is very difficult for any platform to avoid being taken advantage of: it’s a game of whack-a-mole.

    In other words, to echo @Another Amateur Economist above, we are experiencing the degassing of a necrotic body: that of the US.

    Reply
  15. George Black

    In California businesses are locally licensed and can be verified with a phone call. Google should be doing this, but individuals can do it too.

    In Texas it is the law of the jungle in this area.

    Reply

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