Warning!!! Paypal is Permanently Limmiting Legitimate Accounts. Here's why!

And I can see where that might be attractive - but to a newbie who has never done any, or very little, affiliate marketing. Anyone with experience should know better. And really when you think about it, even newbies have no excuse for not reading the PP TOS before using the service.

This is where I have a little bit of a problem with the merchant. This merchant has been around for a long time and knows the rules. I'm struggling to understand why anyone who knows how to create and sell legitimate digital products would enter into this arena and take these kinds of risks. I would think there would be absolutely no need, or want for that matter.

While I agree with you 100% that the affiliate is responsible for the programs he/she chooses to promote, the merchant also shares responsibility for putting a product out there that is known to be risky and considered a violation of the payment processor's TOS. It doesn't matter which payment processor it is -- if a product is against their TOS, then putting it out there for anyone to promote is not exactly what I would call honest marketing.

And, I have to even go as far as to say that the affiliate network also shares some of the responsibility. There is a good reason why you don't see products like that on top affiliate networks.

I'm not one to name names, so all I'll say is that I've always been a little bit skeptical of the affiliate network hosting the offending product. They seem to allow people to sell anything and everything completely unchecked.

I agree. It's basically a site that makes it easy for marketers to network and trade funnel clicks AKA "download page clicks."

And therein lies the problem. You stated that:

Then you stated:

That is buying in to make 100% instant commissions right there. That is the definition of an MLM.

I agree the product itself is not an MLM. However, the way the affiliate commissions are set up makes it one.

I'm afraid that is not going to matter. The problem is that there is an upgrade being sold for the sole purpose of allowing affiliates to earn 100% commissions instead of 50%. That makes it "multi-level."

The product should be fine if he simply cuts out the upgrade and just pays all affiliates 50% across the board. While the FE product is completely legit, the upgrade is solely selling the opportunity to earn 100% commissions. PP sees that as an MLM, well, because it is one.

All he needs to do is cut that component completely out of the product and just sell the funnel click or "Thank-You Page Connection" product and pay affiliates 50% or 75% across the board, and the product will be fine.

If he wants to add an upgrade to the product, then maybe he should break it down into levels like the FE product lets you have 1 ad, and the upgrade allows you to post 3 ads, etc.

Just changing the way he pays his affiliates and not changing the structure of the product will not change anything, IMO. He must stop selling the opportunity to get 100% commissions as an upgrade completely.

If he wants to leave it the way it is, then I would suggest finding another payment processor to run his system on. There are many other payment processors that allow MLMs.

Furthermore, it took me about 2 minutes to come with a much better system for a business model like this.

It would be so much easier to set up a membership site and charge the members a monthly rate to belong, and just let them network with each other. Now you don't have to worry about controlling the code on everyone's pages, and you have set up a recurring income system. All you would need is to set up a forum based membership site and for a certain amount each month the members could belong and set up their own funnel swaps, as many as they'd like and as many different funnels as they like.

You could even run an affiliate program. You could pay out 30% per month for every new member that a regular member refers. Let's say you charge $9 per month for the membership. When a member refers 3 new members, that will end up covering their membership every month. This gives people the incentive to refer new members and it completely eliminates the "multi-level" aspect.

If you wanted to take it a step further and had some money to pay a developer, you could integrate click tracking and make it kind of like the "Safe Swaps" model, where you can set up funnel swaps for certain amounts of clicks, etc. Once you had those features in place you could even raise the monthly membership rate.

There is absolutely no reason to make people pay extra to get a higher affiliate commission rate. It makes no sense with this type of product. I really feel badly for the people who are still blindly promoting this without realizing what they are actually promoting.

I really feel terrible for the OP. I know it must be a terrible feeling to have that happen.

The thing is, though, with the way that it's currently set up, PP saw the OP as the merchant.

If Frank continues with the site the way it is and he starts paying people every week out of his own PP account, I don't think it will take long before they yank his. I hope it doesn't happen, because I don't like to see that happen to anyone, but man the way that site is set up now is just a recipe for disaster.

Sid, I agree with you for the most part. What I'm trying to say, though, is that it had to have been something to do with the way the site is set up and worded that would cause PP to think it's a "pyramid" type product.

There are thousands of products listed on JVZoo and Warrior Plus that pay 100% commissions on the FE product and then usually 50% on the remaining products in the funnel, and I've not heard of anybody losing their PP account over running their products on those two platforms, and I know a LOT of vendors who do it.

Since we don't know what kind of site it was, what kind of product the site promoted, what the buyer received, etc, then it's hard to really understand why PP did what they did.

Also, I'm thinking that W+ and JVZoo would not allow vendors to set their products at 100% commissions if they are aware that causes people to lose their PP accounts. I would think they would even be afraid to lose their own PP accounts.

As an affiliate myself, I'd love to know what kind of product this site sold. I know that PP doesn't like "products" that basically just sell the right to promote the "product" to others.

You've probably seen some of these scammy kits that sell for a few dollars, and all the buyer gets is the same exact sales page he bought from and instructions on how to sell the sales page to others.

I can totally understand why PP would hate that. I hate that myself. It's a shoddy product. Actually, there is NO product.

However, as long as it is a legitimate digital product, such as a video course or ebook, or a piece of software, I can't see them having a problem with people offering 100% commissions on those.

The only reason I say this is simply because of the thousands of vendors who do it. There are many "big name" marketers doing launches like this once or twice a month, and they even include a link to the JV page on the sales, in effect promoting their own affiliate program. Many vendors even promote their affiliate programs using Facebook ads.

Maybe you're right. Maybe PP just hasn't caught up to all of them. I don't know. I certainly don't have all the answers and I could be wrong. Lord knows I've been wrong plenty of times.

Like I said, when you open a PP account, you agree to their TOS, so it's not wrong for them to shut down any account at any time for any reason they wish. I don't think they are wrong for doing that when they feel have good enough reason. After all, they have a business to protect, and they are not going to put themselves at risk for one account. I get that. It's just proper business.

Again, as I said earlier, I guess that's why it's important to always have a backup plan and to not "put all your eggs in one basket," so to speak.