How a $29 Marketing Scam Turned Into a Master Class on Behavioral Economics

As a marketer who frequently thinks about understanding high and low-friction behaviors, I’m very fascinated by social psychology.

So many of our emotional biases, decision shortcuts, and mental models come into play around choices we make every day — it makes it that much harder to pause and rationalize every single choice.

Walter White bobblehead? Salt Lamp? Keychain Notebooks? Why not!

As someone who constantly questions me having full agency over my income, I fall into the trap often — the trap that many marketers consider a blessing — the trap of irrational choice.

It didn’t hit me just how far I had gone into the hole until the fateful day I saw an ad on my Instagram a few months back for something I didn’t know I needed in my life — the warm, aesthetic brilliance of a fleece blanket with the decorated pattern of a perfectly crispy flour tortilla.

The Burrito Blanket. I just had to have it.

I hopped on the website and purchased it for a mere $29. What I found at the end shouldn’t have been a shock — the purchase was a complete scam. It turned out the actual burrito blanket was nothing more than a glorified tablecloth.

Unraveling the Scam

After a few hours of grumbling and venting on social media, I decided to pivot and put my marketing cap on. I went back to their landing page and observed it carefully — I realize it was a perfect social experiment for irrational users.

Last chance. Flash sale. 98% reviewers recommend. Sold on Macys.com.

The architect of this scam knew exactly what he was doing.

The first thing I did was go to Macys.com and check this out on their site. Of course, zero matches for the burrito blanket. Then, I looked at their reviews. 107 reviews. Five stars across the board. I tried to submit a negative review of my own to no avail — only positive reviews allowed by the burrito blanket overlords. I traversed the constant urgency — 48 hour flash sale. Even though, I had bought it months ago, the site today still holds a flash sale. What gives!?

Behavioral Economics

So how did this burrito blanket website take me and supposedly 17,000 customers (according to their Instagram) for a ride?

The explanation isn’t actually a novel idea in marketing — it comes down to simple principles around behavioral economics:

• Anchoring — We tend to rely too heavily on one piece of information (usually an initial piece of information) when making a decision. The first thing you see on the landing page is ‘Sold and Loved by Macys’ — it doesn’t matter if it is. The lens with which you see the rest of the page now gives it the credibility of a beloved Macy’s product. Another example of anchoring? The initial price of $79.95. There is no evidence that a Burrito Blanket would sell retail at $79.95 — yet given that price as the anchor, the price of $29 suddenly seems much more attractive.
• Random Reward Scheduling — People tend to be highly engaged and respond strongly when they receive reinforcement at random. A fun technique deployed by Burrito Blanket in the form of a 10% discount through random pop-up.
• Present Bias — People put an unrealistically high value on the present and low value on the future. All orders shipped within 24 hours is an incentive definitely targeted towards those with harder self-control.
• Social Norms — We are motivated to behave in similar ways to others, in an attempt to match the right behavior to the situation. The 98% reviewers recommend on the Burrito Blanket website is an immediate indicator that people, en masse, love the burrito blanket. You can’t go wrong. It also leads to the Overconfidence Effect — people overestimating the accuracy of their judgements.
• Scarcity Bias — When resources are scarce, people have tunnel vision that prevents them from focusing on anything else. 48 hour flash sale. Last chance: only a few left. While there is no evidence that either of these are real, it gives your brain only one signal — Get this. Quick.
• Messenger Effect — The weight decision makers give to information depends on their perceived credibility of the messenger source. The Burrito Blanket site immediately puts in a call to credibility by listing publications where it has gone viral: Buzzfeed, People, and Business Insider. How detailed were the articles about it? Who knows. But simply seeing those names activates the bias of social influence — this is a site to be trusted.

So, while I unfortunately didn’t enjoy my burrito blanket as much as others on the Internet have claimed, it’s opened my mind to the red flags that exist everywhere on the Internet. While a majority of them aren’t scams, the ones who execute scams at scale do so with an unfettered command of social psychology.

Even marketers, with our consistent focus on what makes humans tick, can fall prey to our own biases.

So a fun new perspective: A scam can ultimately just be an investment in further education — and who wouldn’t turn down a masterclass in marketing for only $29?

Kushaan is a growth associate at Livongo based out of the Bay Area and enjoys sharing insights around Growth, careers, and personal anecdotes. He also likes meaningless controversies (check out ranking of the best fast food fries) and spending his days finding the best Super burrito in San Francisco. All opinions are his own. Get in touch here or via @kushaanshah on Twitter.