Tim Whiston is a network marketer who lives in the south eastern U.S. He works hard, meets new people, has fun, and makes some extra money in the process. Since joining his first affiliate program in the spring of 2003, Tim has learned numerous valuable lessons, and has come to realize that, quite often, things are not what they appear to be here in cyberspace.
The high point of 2005 was without a doubt the No Limits event in Charlotte, NC. I not only got a chance to learn from guys like Mike Filsaime and Gary Ambrose, I was able to meet some of my online friends in a face-to-face forum.
The whole experience was awesome, and has done wonders for my bottom line.On a personal note, 2006 is going to be bigger and better than any previous year. I look forward to releasing numerous products and services that will improve the internet marketing arena for those within my reach.
I also foresee 2006 as being a huge year in terms of joint ventures between some of the big hitters. There are going to be a lot of big info products released this year, and there are some very innovative changes in store for the traffic exchange community as well.
I also expect to see more pod-casting in the net marketing sector, and a continued emphasis on the value of live interaction like web conferences, tele-seminars, offline events, etc.
Net Marketing Exposed Focus4TheFuture Email Aces Doctor Traffic
The inception of the world wide web has proliferated the pyramid scheme in the same way the fast food industry has exploded the production of french fried potatoes. Millions of dollars are lost each year by victims of these multi-level “business opportunity” scams.
According to a report published by the FTC, over 1.55 million U.S. citizens lost money to illegal pyramid schemes in 2004. The total incidents of such loss exceeded 2.55 million, indicating that many consumers were duped more than once by this type of scam.
Over 90% of all acknowledged cases involved either an email communication or a print reference (newspaper, magazine, etc.) to a web site where consumers were exposed to an income opportunity that turned out to be a fraudulent, multi-level marketing plan. It is clearly safe to say that the internet has become the number one courier for this particular form of deception.
So what exactly is a pyramid scam? It’s a fraud model that generates revenue through the exponential recruitment of opportunity seekers, all of whom are required to pay a fee for joining the organization.
The majority of these membership fees are collected and divided among the new recruit’s upline. The higher an individual is positioned within the pyramid structure, the more income he or she will receive as a result of the recruiting efforts of those on the lower levels.
Ultimately, the pyramid system will collapse as the market for new members is saturated. Those at the top will walk away with considerable profits, while the overwhelming majority of participants will have lost their entire investment.
Criteria set forth by the FTC to define an illegal pyramid scheme is based on the following primary consideration: Is the consumer required to pay anyone for the opportunity to operate a work from home business and, if so, is the consumer led to believe that most of the money earned through the opportunity will be from recruiting others to the business model and/or from purchases made by these recruits?
For good reason, pyramid schemes have been made illegal in most countries. Sadly, this legislation has done little to curtail the problem, and the constant resurgence of unethical, multi-level confidence tricks can be observed daily via the internet.
Many of these programs attempt to obscure their true nature by centering their program around a product. However, it’s not very difficult to see past this thin disguise if you apply a bit of sound judgment.
For instance, many of the products attached to pyramid scams are nothing more than brochures, audio tapes, or e-books that instruct new recruits as to how they might refer others to the opportunity. A collection of names and addresses, represented as a list of potential referrals, or “leads”, is another bogus product offered by many pyramid scams in exchange for their membership fees.
Some multi-level income plans, broker more substantial products, such as vitamins or functional PC software. However, when these products are sold at well beyond fair market value, and the majority of retail activity is actually the result of new recruits buying from their upline, there is a fair chance the business model is an illegal pyramid scheme.
As a new opportunity seeker, how can you avoid becoming a victim of illegal pyramid systems?By keeping it simple.
There really is no reason to complicate the process of doing business. You sell a product or service and, in doing so, you collect a prescribed amount of currency.
Maybe you own the product you are marketing or maybe you are an affiliate marketer who promotes other people’s products in exchange for a percentage based sales commission. Either way, there is no need to involve a forced matrix, a three tier referral network, a power leg, or any other superfluous gathering of people who are willing to surrender a portion of their earnings to their upline structure.
Honestly, why bother with a system that uses a complex, referral based compensation plan to obscure the simple process of profiting from direct sales? You are far better off looking for an affiliate program that is based on a quality product, and compensates you through a straightforward commission plan.
Allegedly, not all multi-level marketing systems are pyramid scams. I’m not a lawyer, so I lack the acuity required to validate or debunk such an assertion.
What I can say with confidence, however, is that the majority of multi-level payment plans I have encountered bear a startling resemblance to pyramid models. For this reason, I have personally decided to steer clear of any affiliate program or income opportunity that functions from a multi-level platform.
I’ve often wondered when in human history the concept of the scam originated. At what point in civilization did the first man or woman decide to broker an exchange of currency and goods on a deceptive premise?
Was it a corrupt Egyptian chariot dealer who sold poorly refurbished vehicles at top market value? Or perhaps an unscrupulous Babylonian alchemist who sold colored water in the guise of powerful love potions? There is no clear historical indication of when the act of cheating an individual out of their money, wares, or other assets was pioneered.
The American Heritage Dictionary cites the origin of the word “scam” as unknown. Some scholars have suggested the word derives from ”scamp”, which is the 19th century British slang for cheater or swindler. Other sources indicate the word first enjoyed common usage in the 1960s. I have yet to find a study that actually pins down the coining of the term.
Despite the ambiguous background of both the word and the practice, one thing is certain. Scamming, swindling, hoodwinking, and duping of all kinds does not by any stretch appear to be a short lived phenomenon.
We are warned on a regular basis about some kind of shady operation that has cheated victims out of x amount of dollars. For confirmation of this, just tune in to the evening news or click on over to your favorite news site.
Regrettably, it is common knowledge that cyberspace is brimming with identity thieves, con artists, ponzi schemes, email phishing, and an endless array of unethical “business opportunities”. Millions of dollars each year are lost by victims of such scams.
If you’re like me, you probably get angry when you hear about a life insurance scam that targets senior citizens and disappears into the night with thousands of dollars, or a false charity that solicits massive donations from middle to lower class households before vanishing without a trace. I mean, it’s appalling to think of these crooks who, for whatever reason, feel they don’t have to work an honest job like the rest of us.
How can these people call themselves human when they go to such despicable lengths to steal from people who probably need every dollar they have just to pay the light bill and feed their households?
On the other hand...Life is a two way street. We can’t push all the responsibility for the outcome of an interaction onto only one party.
Clearly, I’m not justifying the actions of those who operate scams at the expense of the innocent. I am saying, however, that “it takes two to tango”.
In many cases, a little common sense, or some time spent on careful investigation of the circumstances, would dispel the efforts of a would-be scammer before any money changed hands. All too often when people are conned, they are hoping against hope, and buying into an idea that is obviously too good to be true.
I’m sure you’ve received at least a couple of emails that fit into the “Nigerian Scam” category. These messages usually run along the lines of:
DEAR SIR,
CONFIDENTIAL BUSINESS PROPOSAL
HAVING CONSULTED WITH MY COLLEAGUES AND BASED ON THE INFORMATION GATHERED FROM THE NIGERIAN CHAMBERS OF COMMERCE AND INDUSTRY, I HAVE THE PRIVILEGE TO REQUEST FOR YOUR ASSISTANCE TO TRANSFER THE SUM OF $47,500,000.00 (FORTY SEVEN MILLION, FIVE HUNDRED THOUSAND UNITED STATES DOLLARS) INTO YOUR ACCOUNTS. THE ABOVE SUM RESULTED FROM AN OVER-INVOICED CONTRACT, EXECUTED COMMISSIONED AND PAID FOR ABOUT FIVE YEARS (5) AGO BY A FOREIGN CONTRACTOR. THIS ACTION WAS HOWEVER INTENTIONAL AND SINCE THEN THE FUND HAS BEEN IN A SUSPENSE ACCOUNT AT THE CENTRAL BANK OF NIGERIA APEX BANK.
These emails then go on to explain how the recipient can receive this enormous transfer of funds within a few business days. All that is required is a routing number so the money can be easily wired into the correct account, and an advance fee of between $1,000 and $10,000 for “administrative purposes”.
Let’s see. An email from someone you have never met, who claims you are entitled to 47.5 million dollars, if you’ll just shoot them your bank account info, complete with wire access number, and an administrative fee of up to $10k.
Could this be a scam of some sort?Would you believe the “Nigerian Scam” model had resulted in losses exceeding 6 billion dollars by 2002? Absolutely incredible that anyone could be duped by such a transparent ruse.
Another point of interest is that, according to an FTC study conducted last year, nearly 20% of all consumer fraud victims were scammed on at least two occasions, and almost 10% were duped a third time.
Impressive learning curve for a twelve month period, eh?If so many people weren’t allowing themselves to be robbed blind by anyone with a trick up their sleeves, maybe there would be less scams to worry about. Without victims who are (apparently) willing to buy into even the most absurd pitches, I imagine many con artists would be forced to get day jobs.
I’ve been a little coarse in an effort to make a point, but now I’ll be honest. I’ve been scammed myself on multiple occasions.Granted, I’ve never fallen for anything quite as ridiculous as the “Nigerian Scam”, but I have done my share to fund the scam industry by taking risks despite my better judgment. During the first eight months I spent in the net marketing arena, I blew more money than I care to admit on stuff that I knew deep down would never pay off.
Why did I do it? Because I wanted to believe that I was in the right place at the right time, or that I was somehow entitled to a lucky break.
I’m not ashamed to tell you this, because I know I’m not alone. I know quite a few intelligent, successful people who have allowed themselves to be fleeced on at least one occasion.
The important thing is that we learn from our bad decisions, and accept at least part of the responsibility for our loss. It seems personal accountability is not a popular ideal in our society, but pointing fingers and laying blame has historically done very little toward creating a real solution to any problem.
As the saying goes...Fool me once, shame on you. Fool me twice, shame on me.