Is This Not a Pyramid Scheme

14 years ago

[It IS a pyramid scheme. Perhaps 7 years ago a "marketer" fell down HARD after the FTC sued him for JUST that sort of thing! People were to buy his kit which told how to sell the kit. The PREMISE was a tried and true easy to start self contained business. the PROBLEM is that each customer reduced the market and increased competition and the FTC said he couldn't live up to his claims.

Steve

Thanks
2 replies

{{ DiscussionBoard.errors[1763543].message }}

theultimate1

14 years ago

Originally Posted by seasoned

[It IS a pyramid scheme. Perhaps 7 years ago a "marketer" fell down HARD after the FTC sued him for JUST that sort of thing! People were to buy his kit which told how to sell the kit. The PREMISE was a tried and true easy to start self contained business. the PROBLEM is that each customer reduced the market and increased competition and the FTC said he couldn't live up to his claims.

Steve

I think I know who you're talking about

Thanks
1 reply

Signature

If Content Is Your King, Then This GhostRider.. err.. GhostWriter Is Your Knight!
My Sample Articles

{{ DiscussionBoard.errors[1768267].message }}

seasoned 14 years ago

Originally Posted by theultimate1

I think I know who you're talking about

Surprisingly, some made it known not too long ago. But he at least was, I believe, a member here, and I am reluctant ANYWAY. when I recently spoke of another person(Joe Kumar), I almost removed HIS name from the post. maybe I did on one attempt anyway, because I had database errors here.

Steve
- Thanks
{{ DiscussionBoard.errors[1768298].message }}

Super_Vendor

14 years ago

Originally Posted by seasoned

[It IS a pyramid scheme. Perhaps 7 years ago a "marketer" fell down HARD after the FTC sued him for JUST that sort of thing! People were to buy his kit which told how to sell the kit. The PREMISE was a tried and true easy to start self contained business. the PROBLEM is that each customer reduced the market and increased competition and the FTC said he couldn't live up to his claims.

Steve

Wow I didnt know that. That's scary. Watch out for the FTC.

Thanks

{{ DiscussionBoard.errors[1769452].message }}

Malachi Kelly

14 years ago

Although I would promote a product like that it still Is a sound stratergy for newbies to learn.

You can double your revenue by giving away quality content on the front to them upsell on the backend.

I would suggest if any newbies find themselves in this situation just learn the system and incorparate it into your marketing system but make it better.

Thanks
1 reply

Signature

Marketing on the Go Podcast Series

FREE Marketing Audio Books

Learn How To Make Ethical Income Online

{{ DiscussionBoard.errors[1763551].message }}

Heidi White

14 years ago

Originally Posted by Malachi Kelly

Although I would promote a product like that it still Is a sound stratergy for newbies to learn.

You can double your revenue by giving away quality content on the front to them upsell on the backend.

I would suggest if any newbies find themselves in this situation just learn the system and incorparate it into your marketing system but make it better.

---------
(prologue - I knew you meant 'I woudn't' ) :rolleyes:

---------

In the example I'm referring of, the originators of the product are doing all the backend upselling for the leads the newbie generates to get their 'basic' commission.

Thanks

{{ DiscussionBoard.errors[1764354].message }}

Malachi Kelly

14 years ago

For some reason I can't edit my last post. I would not promote a product like that...again would not

Thanks

Signature

Marketing on the Go Podcast Series

FREE Marketing Audio Books

Learn How To Make Ethical Income Online

{{ DiscussionBoard.errors[1763571].message }}

Alexa Smith

Banned 14 years ago

[DELETED]

{{ DiscussionBoard.errors[1763588].message }}

Heidi White

14 years ago

Originally Posted by Alexa Smith

Definitely.

That's flat-out illegal.

They don't last long. As soon as a few reports go either to a state's Attorney General or to the FTC, there's threatened regulatory action and they steal away into the night (and relaunch the following week under a new name, typically).

If the only product is "information/advice about the business opportunity", then that's a pyramid scam - the law just couldn't be any clearer about this: they have to have retail customers who are buying the product for the value of the product with no business opportunity attached. It's absolutely black and white. (I can quote as many legal references as you want, given a bit of notice!).

Thanks Alexa -

In my original description, I'm describing was I believe the essence of the program is, however, as Dennis points out - there are more wrinkles to it.

This product that I'm thinking of could be the one Dennis described or could be something very similar. The digital downloads and other elements may excempt it from the FTC strict definitions.

I actually bought this product - in a weak moment - and stopped trying to promote it after a short time, not because it didn't work - but because it didn't feel right to me.

Thanks

{{ DiscussionBoard.errors[1764250].message }}

Dennis Gaskill

14 years ago

You may be talking about a different product, but I know of one product that loosely fits the description you offer, but it's more like this:

1. Give away a free ebook.
2. The ebook teach a marketing method without using search engines.
3. You are given the opportunity to buy a "special link" that is your affiliate link.
4. Along with getting an affiliate link, you get several products, many or maybe most (I forget) come with master resale rights.
5. You promote your special link and anyone that downloads the free ebook through your link, who then buys their own special link, you get all the money from the sale and the original marketer builds a mailing list.

So, the free ebook is not the only product involved. If that sounds like the same product that you're describing than it's no more an illegal pyramid than master resale rights products.

1) you buy the product the ebook is selling
2) you promote the product - which basically is - giving away the ebook so people buy the product

Actually, if that's your definition of a pyramid scheme, wouldn't any master resale rights product be a pyramid scheme?

Thanks
1 reply

Signature

Just when you think you've got it all figured out, someone changes the rules.

{{ DiscussionBoard.errors[1763735].message }}

Heidi White

14 years ago

Originally Posted by Dennis Gaskill

You may be talking about a different product, but I know of one product that loosely fits the description you offer, but it's more like this:

1. Give away a free ebook.
2. The ebook teach a marketing method without using search engines.
3. You are given the opportunity to buy a "special link" that is your affiliate link.
4. Along with getting an affiliate link, you get several products, many or maybe most (I forget) come with master resale rights.
5. You promote your special link and anyone that downloads the free ebook through your link, who then buys their own special link, you get all the money from the sale and the original marketer builds a mailing list.

So, the free ebook is not the only product involved. If that sounds like the same product that you're describing than it's no more an illegal pyramid than master resale rights products.

Actually, if that's your definition of a pyramid scheme, wouldn't any master resale rights product be a pyramid scheme?

Miiiight be the same, but the concept of affiliate threw me.

In the example I'm thinking of -

After reading the free eBook, you have the opportunity to purchase your own website (you buy the domain) which is then hosted by the product originator. You also get for your money access to digital products and training videos. These digital products - once delivered - render your product NON-REFUNDABLE according to the product originator.

You then have some rather interesting and potentially useful tools and training which focuses on how to promote this product by getting people to your version of the "This Free Ebook will Start Making You Money by Tomorrow" Site.

The person who get's this site is supposed to receive 100% of the sale for anyone who buys into this concept at the basic level (they read the ebook, then decide to get the same thing you just got which is some training and a site to promote the free ebook.) The product originator has many upsell opportunities for you and anyone you sign up inside their training website (including a SQUEEZE PAGE package that you can buy for yourself (extra $50), and if anyone who buys this system through you decides to get any of the upgrades, you still only get 100% of their original purchase (basic system).

The commissions (potentially another $100) and the mailing list data remain with the product originator.

They encourage using forums to promote your site (including Paul Myer's, Willie Crawford's to name just a few,) they stress the importance of learning how to write effective ad headlines for Safelists, Craigslists and other free classified services.

And apparently - the methods do work - and you'll find a lot of people posting on other forums about how much money they are making using this system.

-----------

Thanks

{{ DiscussionBoard.errors[1764205].message }}

Mr.Williamstn

14 years ago

Wow that is crazy .You have to watch out for scammers and people trying to get over on you.I would never promote any thing like that lol!! People will sell thier souls for money

Thanks

{{ DiscussionBoard.errors[1763758].message }}

seasoned

14 years ago

The FTC does NOT care about digital downloads or physical products. NEVER HAVE, NEVER WILL! It is the Federal TRADE Commission. What they care about is do you get what is promised. So NOPE, digital downloads do NOT exempt you. That lawsuit I talked about? Just HAPPENED to be ALL digital products! The FTC WON that case!

BTW Affiliate products, by their nature, if that is the ONLY income talked about, would be exempt from this type of claim TO THE AFFILIATE because they are generally "You sell this, we give you ...". As long as you give them what you claim, you are in the clear, for that. Of course, CHARGING for the privilege could entangle you in many other things because of things like MLM laws. Frankly, I don't think any lawyers could say, with certainty, how they would be treated. In that FTC case I spoke of earlier, the guy said "I made ... selling this and YOU CAN TOO"! The FTC showed that was impossible, since there just aren't enough people on the planet.

That IS, after all, the definition of a ponzi scheme, and why many call it a pyramid scheme. Each level needs more people to support it. Once there are no longer enough people, the last group finds they fail and failure keeps going up the pyramid until finally the whole thing falls apart. It doesn't matter if the product is a Bugatti or a few bytes on the internet.

Steve

[ 1 ] Thanks

{{ DiscussionBoard.errors[1766914].message }}

Heidi White

14 years ago

OK - Thanks for the responses everyone.

I have another question. Considering that the model of this business has MANY people giving away the same free ebook (even though it points to their own "site" and not a true affiliate link,)

...do you think that it's OK for any one person (or perhaps any number of people) to also give away that free ebook IN THIS FORUM, either by promoting it in their signature or in one of the Free Ebook sections?

Thanks

{{ DiscussionBoard.errors[1767248].message }}

Heidi White

14 years ago

I'm soooooo tempted to post a link to a discussion about this product from scam.com, but

a) don't know if I want to give it link juice (since so many in the thread praise it and talk about how much money they are making)

and

b) don't want this thread to get removed if it turns into something that might be considered libelous (or is it slander) if actual individuals (product creators) are named?

Thanks

{{ DiscussionBoard.errors[1767629].message }}

Obilex

14 years ago

noob here, with a dumb question probably, but how are these things different then "resale rights"?

[ 1 ] Thanks
1 reply

{{ DiscussionBoard.errors[1768098].message }}

Heidi White 14 years ago

Originally Posted by Obilex

noob here, with a dumb question probably, but how are these things different then "resale rights"?

The person signing up is ONLY able to promote the program and make a sale (commission) if the person reading the eBook decides to buy the program. The the individual who gave away the free eBook get's a one-time commission, 100% of the cost of the program, paid immediately to paypal, or whatever account.

The only product they have rights to deliver is the free eBook. But after they get their commission check, they have nothing to do with providing the product.

I don't think you can have resale rights on something that's already free?
- Thanks
{{ DiscussionBoard.errors[1768177].message }}

JackPowers

14 years ago

Actually you could argue that people selling any kind of make money online products WITHOUT themselves making money with it would be a pyramid scheme. Lots of shady stuff in this business.

Thanks

Signature

{{ DiscussionBoard.errors[1768266].message }}

Jordan JD

14 years ago

Thanks for starting this thread, I have wondered about the same thing as well. And what I believe is, it all comes down to Marketing. What do you say your product is. Because the selling dynamics in the virtual world for different kinds of business models may look very similar. In the end, it's all in the wording.

PLRs work alot like MLM. But do you operate in a way that is trying to scam people or are you actually selling a legit, honest product. To me, MLM is simply selling subscriptions.

I would love to actually find out where the FTC draws the line so that I can be 100% certain that I am in the clear.

Thanks

{{ DiscussionBoard.errors[1768324].message }}

Heidi White

14 years ago

Another thing I just thought of....

They charge you an extra $10.00 to buy the domain name, (you get to pick it out) so ostensibly it's your site. But then THEY do the hosting and even renew your domain for you.

Basically, you have ZERO control over the site's content, so technically - it's not your site.

Which should make it more like an Affiliate link (in terms of the Forum rules) and thus Against the Forum Rules, but I'm still seeing these products promoted in several places here.

Thanks
2 replies

{{ DiscussionBoard.errors[1768334].message }}

Jordan JD

14 years ago

Now that I think about it, I think I got Banned from the warrior forum a while back for promoting a product that I paid for which told me to promote the very product that I bought on my signature.

Thanks
1 reply

{{ DiscussionBoard.errors[1768358].message }}

seasoned

14 years ago

Originally Posted by Jordan JD

Now that I think about it, I think I got Banned from the warrior forum a while back for promoting a product that I paid for which told me to promote the very product that I bought on my signature.

Yeah, one requirement here is to NOT use affiliate links, etc... and only advertise your own, or public sites.

Thanks

{{ DiscussionBoard.errors[1769396].message }}

seasoned

14 years ago

Originally Posted by MostlyHarmless

Another thing I just thought of....

They charge you an extra $10.00 to buy the domain name, (you get to pick it out) so ostensibly it's your site. But then THEY do the hosting and even renew your domain for you.

Basically, you have ZERO control over the site's content, so technically - it's not your site.

Which should make it more like an Affiliate link (in terms of the Forum rules) and thus Against the Forum Rules, but I'm still seeing these products promoted in several places here.

OH, one of THOSE! Yeah, I saw one of those. Basically, they made it look like you were 100% responsible, and you did EVERYTHING with the promise that they would pay you a percentage back. Frankly, I never did it. It seemed like too much risk and too little benefit.

steve

Thanks

{{ DiscussionBoard.errors[1769392].message }}

Dennis Gaskill

14 years ago

Just to clear up what I wrote earlier, after exchanging PMs with Mostly Harmless, the product I was referring to earlier is a different product. It may be a *******ization of the product I was thinking of, which was developed by a Warrior. I don't think the owners of the product Mostly Harmless is referring to are Warriors. I've never seen their names, anyway.

The thread on another site that she refers to starts with a complaint about the product, with the product owners showing up to defend themselves, then several new people - all with one post - defending the product. That all of a sudden several new people would join that forum and make their first post in defense of the product in question is very suspicious, at the very least. My guess is that the product owners were creating new accounts and posing as customers.

Whether it's an illegal pyramid I don't know. That may depend on how it's being promoted, and I haven't seen that. What I would say is the income claims are likely impossible to achieve, so eventually their no refund policy is probably going to result in complaints to the FTC or state Attorney Generals or other consumer protection agencies -- then they will find out how many illegalities they are committing.

Thanks
1 reply

Signature

Just when you think you've got it all figured out, someone changes the rules.

{{ DiscussionBoard.errors[1768414].message }}

Tina Golden

14 years ago

Which should make it more like an Affiliate link (in terms of the Forum rules) and thus Against the Forum Rules, but I'm still seeing these products promoted in several places here.

For the record, affiliate links are not against the forum rules in every section. You can't use affiliate links in your signature or promote affiliate products in the WSO section. You are allowed to put them in the free ebook (Make Money Online) section and the Classifieds section.

Tina

Thanks
1 reply

Signature

Discover how to have fabulous, engaging content with
Fast & Easy Content Creation
***Especially if you don't have enough time, money, or just plain HATE writing***

{{ DiscussionBoard.errors[1768482].message }}

Heidi White

14 years ago

Originally Posted by TMG Enterprises

For the record, affiliate links are not against the forum rules in every section. You can't use affiliate links in your signature or promote affiliate products in the WSO section. You are allowed to put them in the free ebook (Make Money Online) section and the Classifieds section.

Tina

Why do you say it's OK to put Affiliate Links in the Make Money Online section? This looks like the section where you post the free eBooks and the statement in the sticky seems clear enough?

Regarding the Classifieds section - that's a whole different story, because it requires payment. The threads and posts I'm thinking of are getting traffic to what could be considered an Affiliate type link and are not in a paid section.

Thanks
1 reply

{{ DiscussionBoard.errors[1768916].message }}

Tina Golden

14 years ago

Why do you say it's OK to put Affiliate Links in the Make Money Online section? This looks like the section where you post the free eBooks and the statement in the sticky seems clear enough?

Oops, my mistake on the Make Money Online section. I had thought it was allowed there because I had seen so much of it.

Tina

Thanks
1 reply

Signature

Discover how to have fabulous, engaging content with
Fast & Easy Content Creation
***Especially if you don't have enough time, money, or just plain HATE writing***

{{ DiscussionBoard.errors[1768960].message }}

Heidi White 14 years ago

Originally Posted by TMG Enterprises

Oops, my mistake on the Make Money Online section. I had thought it was allowed there because I had seen so much of it.

Tina

LOL - it's like the Wild Wild West in that forum.
- Thanks
{{ DiscussionBoard.errors[1768974].message }}

silvervixen

14 years ago

I've seen the free e-book offer a couple of times and in both instances, I did end up buying the "offer" at the end. I was actually able to make some sales by giving away the e book. One of the companies disappeared but the other is still around.

I stopped marketing them when I really thought about what it was that I was selling, which was pretty much nothing, and not really a sustainable model for making money in the long term.

I'm not sure if you can classify it as a pyramid or ponzi scheme, but it does appear iffy in that the products offered at the end aren't the reason you're buying. You're buying for the right to give away the same e book in the hopes that the people you give it away to will do the same thing you did.

The other variation of this that I've seen is the $20 website that sells itself. You pay $20 and you get an exact duplicate of that site, except that the payment link goes into your Paypal account. You can either pay them to host it for you, which they say is the preferred option, or you can find your own hosting.

These schemes are, at best, iffy. There is a certain market for them, mostly complete newbies, and as long as there are people willing to buy, you'll see various permutations of this around.

[ 1 ] Thanks

Signature

Need High Quality Content? Visit: http://www.articleright.com

{{ DiscussionBoard.errors[1768563].message }}

Jill Carpenter

14 years ago

Originally Posted by MostlyHarmless

it being, give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product....

Is that record playing over and over in your head every day too?

Been playing in my head for 3 years now.

Can anyone stop it?

Thanks
1 reply

Signature

"May I have ten thousand marbles, please?"

{{ DiscussionBoard.errors[1769010].message }}

Heidi White 14 years ago

Originally Posted by avenuegirl

Is that record playing over and over in your head every day too?

Been playing in my head for 3 years now.

Can anyone stop it?

Not until it's so illegal we all get rewards for reporting it.
- Thanks
{{ DiscussionBoard.errors[1769072].message }}

PatriciaJ

14 years ago

Originally Posted by MostlyHarmless

Hey All You Poor and Ready To Make Money Newbies

it being, give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product which teaches them how to give away this free ebook which get's people to pay for a product....

From what you describe it sounds similar to the old offline place cards in shop windows or adverts in newspaper scam where people pay for information on how to make money at home and all they get is instructions on how to place the adverts and scam others out of money. There isn't a real product and certainly in the UK there has to be a product or service deemed worth the asking price, if not it's illegal.

Pyramid schemes are basically illegal money games where joiners are promised pie in the sky earnings for introducing others without a product or service usually. They are often also referred to as gifting programmes.

They usually have several levels and participants supposedly make money from introductions several levels deep. Those at the top may make money but this type of scheme is never sustainable so those who come in later always lose their money.

MLM or multi level marketing payment shemes are similar to pyramid schemes but there is usually genuine products (sometimes over priced). MLM is legal as long as the companies provide the correct legal terms and contracts for the country they are operating in.

Thanks

{{ DiscussionBoard.errors[1769534].message }}

Heidi White

14 years ago

Update: I'm really dissapointed that the offending thread which prompted my creation of this topic, is still intact.

It looks like another newbie has decided to sign up today.

I reported the thread along with a copy of this thread and the thread on scam.com discussing the product in question - back on the 18th (or so.)

Guess the moderators didn't think there was any problem with the product, even though another free book giveway has resulted in yet another sale from a newbie with less than 10 post, or that the OP didn't have to pay $20 for a classified ad like the rest of us would if we're simlpy promoting a product, or that the link to the free book might be considered an affiliate link (depending on how you look at it...)

I'm not sure if I'm just stymied wondering why WF mods think it's OK for this to go on, or if I'm just jealous...cause someone else is making easy money and I'm not.

Oh well . . .

Thanks

{{ DiscussionBoard.errors[1779785].message }}

Is This Not a Pyramid Scheme

Trending Topics

Are Solo ADs the Most Cost Effective Way to Promote your Product?

How do I effectively build and nurture an email list for affiliate marketing purposes?

Are billboards still effective in driving customers?

Been a while! Any of you Old Timers here?

How much does the rebranding affect CR ?