Revisiting Arthur Leff’s Swindling and Selling
Published as Chris Jay Hoofnagle, The TechCons, 37(1) Loy. Consumer L. Rev. 1 (2025)(Hein)(local)
Yale Law Professor Arthur Leff wrote a powerful, market-structure analysis of consumer fraud in his 1976 Swindling and Selling. That work is more or less lost to history. Leff explained that con artists attempted to impose a false economy on marks. In a perfect congame, such as the Spanish Prisoner, this false economy was a bilateral monopoly. But in other, less perfect congames, the con artist moved the mark into some otherwise undesirable market relationship, such as an oligopoly.
Regular selling is sometimes difficult to distinguish from swindling, because selling often incorporates minor deceptions. But the difference is that those deceptions occur in ordinary, competitive consumer marketplaces, where consumers have more choice among sellers, and in turn sellers are making offers to all consumers rather than to a targeted individual.
This article contributes to Leff’s work by placing modern, internet-based congames in his market structure framework. It argues that most congames have been refactored into advanced fee email schemes, and that these are much more powerful because con artists can easily target people worldwide, because they can lead marks into a long con without ever encountering the mark in person.
Ponzi schemes still exist on the internet, despite the availability of information that might help marks see them as such. Bubble logic and the claques of early investors who win in Ponzi schemes still make these cons profitable. As an example, cryptocurrencies share the character traits of earlier Ponzi schemes, right down to Leff’s claim that they must offer a “grey box” business model to swindle people. The blockchain is a perfect grey box—technically transparent but actually inscrutable to the retail investor.
Finally, online behavioral advertising has been critiqued for many reasons. This article adds a new way of thinking about OBA: if we want to realize the promises of OBA, we have to place consumers into a monitoring environment characterized by monopoly, a complete one where nothing is secret to the advertising platform. That is, OBA requires a bilateral monopoly market structure.
Recognizing that OBA has the same fundamental dynamics as the Spanish Prisoner or the bait and switch might cause use to decide to reject OBA, or to subject OBA to rules similar to those imposed on other monopoly actors.
Abstract as published:
Selling sometimes involves trickery. How should we decide what trickery is “swindling” versus ordinary “selling”? One method is elucidated in Yale Law Professor Arthur Leff’s curious, lost-to-history book. In “Swindling and Selling: The Story of Legal and Illegal Congames”, Leff showed how market structure is a powerful factor for distinguishing illegal confidence games (“congames”) what he called “swindling” from legal “selling.” Leff demonstrated how con artists weave narratives to convince marks they have a monopoly over some desirable asset. Con artists then manipulate marks to mistakenly believe they possess a monopsony over its capture.
This essay revisits Leff’s mostly forgotten approach and applies it to internet swindling techniques: the TechCons. Leff’s 50-year-old, pre-internet framework provides a powerful rationale for why internet frauds still exist, despite the revolution of information availability brought by the Internet. A market structure analysis also explains how the internet makes ordinary cons more powerful. TechCons are different from pre-internet cons in important ways; the internet enables con artists to cast a wider recruitment net, but also to deepen injury to fraud victims caught in it.
Finally, this essay applies Leff’s framework to three controversial internet activities: phishing, cryptocurrencies, and online advertising. Application reveals that market structure interventions may be effective tools in deterring swindling while allowing selling. It also highlights a critique of the law and economics movement. Leff’s thinking was profoundly influenced by law and economic approaches. Yet, he also believed that lawyers’ focus should be on real, individual consumers rather than notional ones with perfect rationality. Leff’s focus on transaction costs and the roles cast by businesses for consumers to play offers a rich, realist, and entertaining method to understand technology sales and cons.