I believe its because most of them do not know. We as heroes/villains know more of the bad part of the inhabitants.
If the populace knew that much about them or any group, would they be walking carefree and oblivious on the streets? I think not.
Same goes with most groups I think, even Arachnos. Also the game takes place in the US. Now this is not a comment spesifically against americans, but how many americans know much of the world that is outside the border? Of for that matter in the next state?
Same would go for us europeans, to some extent. 
Some gangs like skulls, hellions etc are know as just gangs I think. Ofc I have no doubt in my mind that every citizen KNOW that earth has been invaded by the Rikti (not 1 but 2 times, or just that there is a war it was just a long pause).
But back to Carnival (I've digressed enough), I think its because they are just a little group. Its only a "sect" of other invdividuals that are brainwashed (and then devoured by the leader (forgot the name)).
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http://paragonwiki.com/wiki/Carnival_of_Shadows
I think this sum up quite a story, they manipulate the mind of people, to eventualy get their soul consumed by Giovanna (in form of Vanessa). To the outside word they are happy acting clowns.
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Because Giovanna is a very very naughty young lady, besides... no-one ever suspects a clown.
I swear there's an arc from Harvey Maylor where you, the player, are sent to educate civilians on the fact that the Carnies are bad people.
I guess they have great parties.
I think there should be a carnival circus area in one zone - like those circus maps that are available - they're a major Villain group, so they should have someplace to call their own 
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There a bit like Crey we know there bad and evil to the core but the general populace just see this multinational company that makes all the cool stuff or in the carnivals case happy clowns.
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I meant in a proper zone
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You could always try Carnival Town - its just that the local villain groups in Paragon have discovered they get out of the Zig in 5 seconds flat (including the time to steal the Warden's lunch) that the PPD are seen as ineffectual and so the tents got stolen years ago.
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villain groups in Paragon have discovered they get out of the Zig in 5 seconds flat (including the time to steal the Warden's lunch)
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You sir, have just made my day 
Carnival are evil bad people, we all know that but my question is why dont the public know that? Tried looking it up but cant find a concrete reason as to why
Do they think that heroes fighting them is all part of the act or are brainwashed into believing them?
Just a bit curious really thats all.
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