GroobLi the deceptive internet gambling pyramid launches
Groobli’s scam and its many loopholes
Take a look at their new cancellation terms on their new “U.S.” site:
Paraphrased due to copyright claims:
§ 9
[If you pay for GroobLi credits we won't refund them.]
Since I speak Groobli, allow me to translate, again.
(2) If you manage to cancel, we refund your money. If you used any Groobli credits, you can’t get a refund. You can only pay in Groobli credits, so you can’t get a refund.
However, if you have been scammed by GroobLi in the United States, you should know that you can call the FBI (202) 324-3000. GroobLi is engaging in fraud, and these legal loopholes are meaningless if part of the transaction is happening in the United States and you are being deceived.
First of all, GroobLi deceives you into gambling away your money. Second, you are bound to pay up to 1000%, or 10 times the actual market price of goods, which is unreasonable everywhere in the civilized world.
Comment by John Wright | October 16th, 2008
Thanks for this information it will help me with my decision on joining GroobLi.
If you dont mind me asking, what do you do for a living?
Jason
Comment by eaglescout | October 19th, 2008
Jason, I am a private research consultant.
Comment by grasshopperDublin | October 21st, 2008
Thanks for the work eaglescout.Keep us informed of good and bad from droobli. It will be interesting how they do and how long they last.
Comment by Dublin Truth | October 21st, 2008
Eaglescout,
How bad is your earnings at ebay that you have to keep trying to take down Droobli? First, once again you are wrong!
You quote the $5000 “Gift Card”, funny the website states the following (Walmart $5000 Gift Certificate). That would be “CERTIFICATE”, not Gift Card. They do not offer a $5000 “gift card”, however, upon calling Walmart myself they give a gift certificate in any denomination that someone would purchase.
Secondly, the operator placed me with a supervisor who stated that they have ahd several calls about this. And that “YES” let me state it again “YES” they are afilliated with Droobli.
Read that last paragraph again in case you missed it. Anyone that actually reads the crap you are dishing out is being taken for a ride.
I love this one, since you guessed it. I am an associate for Droobli. I got an email stating that they saw my craiglist ad for Droobli and was reporting me to the Attorney General for Georgia. Funny, called the office and they told me they had never gotten a report, but they would check into the site. Two days later I got a return call stating that they saw nothing wrong with the droobli.com site or it’s partnership program.
You must be one of the 10% laid off from ebay.
Beware, the nay sayers are stopping at nothing now. And by the way… in the last 30 days I have made $5800 on Droobli!
But yes Eaglescout. I’m being scammed. You ought to be ashamed of yourself!
Comment by eaglescout | October 22nd, 2008
“Eaglescout,
How bad is your earnings at ebay that you have to keep trying to take down Droobli? First, once again you are wrong!”
If I was selling items on eBay and doing poorly, why would I want to take down GroobLi? Quite the opposite, I would simply pay for a GroobLi license and sell on eBay and GroobLi.
There’s no reason why I couldn’t do both at once.
“You quote the $5000 ‘Gift Card’, funny the website states the following (Walmart $5000 Gift Certificate). That would be ‘CERTIFICATE’, not Gift Card. They do not offer a $5000 ‘gift card’, however, upon calling Walmart myself they give a gift certificate in any denomination that someone would purchase.”
And GroobLi uses the word “Voucher”. Don’t you think Walmart would be more careful about saying it is not affiliated with GroobLi?
“Secondly, the operator placed me with a supervisor who stated that they have ahd several calls about this. And that ‘YES’ let me state it again “YES” they are afilliated with Droobli.”
I’ll believe it when they issue a press release on Walmart’s web site.
“Read that last paragraph again in case you missed it. Anyone that actually reads the crap you are dishing out is being taken for a ride.”
Not really. I publish my sources, so that readers can easily confirm or disconfirm what I write about.
“I love this one, since you guessed it. I am an associate for Droobli. I got an email stating that they saw my craiglist ad for Droobli and was reporting me to the Attorney General for Georgia. Funny, called the office and they told me they had never gotten a report, but they would check into the site.”
I don’t know what that proves, but go on.
“Two days later I got a return call stating that they saw nothing wrong with the droobli.com site or it’s partnership program.”
I guess I’ll have to take your word for it.
“You must be one of the 10% laid off from ebay.”
That’s a false dilemma. I could also enjoy outing scammers and exposing lies. Besides, if I had been laid off from eBay I wouldn’t blame GroobLi. The models are completely different.
For example, eBay doesn’t sell “virtual stores” which consist of single page sites. While GroobLi sells these at $249 and $1595, you can get more value for free elsewhere.
Domain name registration should cost between $8-$25.
Anything else is a huge mark-up.
Hosting itself costs between $3-$9 a month for a decent host.
Additionally, GroobLi doesn’t allow you to use their name as a subdomain. So if I were a GroobLi associate, I would not be allowed to create a site like droobli.thespinfactor.com or thespinfactor.com/droobli/
The reason for that is because they don’t want your affiliate site to be featured near the top of search engine results when people search for ‘droobli’. This way they can ensure that their site will be clicked first, and they can reduce the number of commissions that are paid out down the line.
“Beware, the nay sayers are stopping at nothing now. And by the way… in the last 30 days I have made $5800 on Droobli!”
How many people did you scam?
“But yes Eaglescout. I’m being scammed. You ought to be ashamed of yourself!”
If you are making money on GroobLi, the most reasonable conclusion is that you are the one doing the scamming.
Comment by Dublin Truth | October 22nd, 2008
well eaglescout I guess this conversation will just have to be to the consumer. Just as you say you will believe it when you see it. I guess everyone else has to as well. Because you have never shown one single bit of proof. Sure you go and post pasted sources from their websites. But then you go and give your personal opinion on the information. Until a press report or cnn breaking news comes on proving your personal view, I guess the burden of proof remains on you
Droobli is here and wether you agree with it or not; their website is now in the US. And its growing very fast. When you stop living in a state of denial, contact me. I’ll sell you a Droobli associate license!
Comment by eaglescout | October 22nd, 2008
“well eaglescout I guess this conversation will just have to be to the consumer. Just as you say you will believe it when you see it. I guess everyone else has to as well.”
That’s not quite what I said. I was referring to your assertion about Walmart being affiliated with GroobLi.
“Because you have never shown one single bit of proof. Sure you go and post pasted sources from their websites. But then you go and give your personal opinion on the information.”
There’s a difference between personal opinion and inference and fact.
For example, it is a fact that Droobli claims to operate in the U.K. It is a fact that their disclaimer makes you waive your rights to the UN Convention on Contracts for the International Sale of Goods.
It is a fact that Droobli has changed its General Terms and Conditions multiple times.
When you compare Droobli’s General Terms and Conditions with other businesses, it is obvious that they are unusually unclear and badly written; that’s an inference.
By reading the entire set of General Terms and Conditions and looking for internal inconsistencies one can see that the language and structure used is either intentionally misleading or very badly written. That’s another inference.
If you want me to explain in more detail how I arrived at a particular conclusion, let me know. In general, I assume that my readers are resourceful enough to check my sources and determine whether what I said is true.
“Because you have never shown one single bit of proof.”
What kind of proof do you want? Do you think people without CNN are unable to make decisions?
“Sure you go and post pasted sources from their websites. But then you go and give your personal opinion on the information.”
I give you facts, inferences and opinion. Just because I give an opinion does not mean the inferences are wrong. If you think they are wrong you should provide some proof. If not, you should just admit you disagree but can’t explain why.
“Until a press report or cnn breaking news comes on proving your personal view, I guess the burden of proof remains on you”
What personal view? I’m not presenting personal views as facts, so it shouldn’t matter.
By the way, by your own reasoning, shouldn’t you wait to trust GroobLi until they show up on CNN?
“Droobli is here and wether you agree with it or not; their website is now in the US. And its growing very fast. When you stop living in a state of denial, contact me.”
I didn’t claim it was or wasn’t growing fast, but that’s somewhat irrelevant. I also didn’t claim that they were or weren’t in the U.S.
“I’ll sell you a Droobli associate license!”
They’re worth very little to me, since I don’t intend to go around selling lotteries or advertising for GroobLi.
Comment by VIPjd | October 24th, 2008
I am curious about Droobli and what they could really pull off? I mean seriously, I have been involved in MLM full time for almost 7 years and have seen a lot of “scams”, legit businesses, and great compensation plans. Do you think that a company that big could really pull off a “scam”?
Would they really be able to just take our money and run? Seriously, it’s a big company, for that to happen would take a lot of law suits, heavy hitting people ready to take someone down, and a whole lot of wasted money by investors wouldn’t it?
I am just trying to find some truth or reason behind the company, but so far, it doesn’t seem feasible for a company of this size with our judicial system to be able to get away with running a scam now a days. One can think of Enron, but I mean lets be real. No one would try to pull that off again. You never know I guess, but still for a company like this trying to get exposure and the way a MLM company works would not make sense for it to be a scam. The long term money would be to high of a risk of losing if Droobli was just planning on taking our money and running.
How do you feel about that? Thanks for the opinion.
Comment by eaglescout | November 3rd, 2008
To VIPjd, It’s not that big of a company. They can get away with it because they market themselves as a huge corporation.
Honestly, the website is clean cut and well designed. They actually appear to be bigger than eBay, but that’s only because they are using the same type of photography and layouts that huge companies like Accenture and Dell use.
Take a look at this, and see whether it looks familiar:
http://www.dell.com/
They also use several images of professional men and women in their business associate portals. This is a false front.
Another important thing that is very telling is the other “products”/companies that the GroobLi promoters are advertising.
For the most part they are selling scams. If just about every GroobLi promoter is advertising or has previously advertised multi-level marketing schemes that turned out to be deceitful, that’s pretty strong evidence against GroobLi as well.
Everything is hyped-up and characterized as “huge”, “explosive”, and so on.
Also, if you want to sign up as a GroobLi associate, first you have to buy a credit package: bronze, silver, or gold at 550 Euro, 1250 or 3000.
Then you have to pay a start up fee depending on your package of choice, 150.00, 499.00, 999.00 or 1,999.00 in Euros (plus any additional bank charges in regards to your payment).
Finally, to get your Droobli package, you can purchase one for 249 dollars, or 1595 dollars.
But GroobLi makes you go to two different websites to figure out the prices. Also, The prices on the first site (startup fees) are listed in Euros.
The prices on the advertising package page are listed in dollars.
“I am curious about Droobli and what they could really pull off?”
The thing is, they don’t have to run away with your money because they get it from the start.
They make you think you can sign up for as low as 150 dollars, but in reality you have to pay,
692+628+249 dollars for the cheapest package ($1569)
and
3777+2517+1595 dollars for the largest package ($7889)
(For reference, see http://www.droobli-network.net/default.aspx?ID=2082 and http://www.droobli-network.net/Page-2004.aspx)
By taking you to a final page that lists one of the prices in dollars, they mix up the conversion rates.
They use the same conversion rate tactic when they sell GroobLi credits at $.80.
Think about it: what purpose does it serve to use a different exchange rate on a fictitious currency?
There is no practical purpose, except to change the way you think about your money (namely, to confuse you).
In psychology and finance the illusion they are using is called anchoring, and they have cleverly used it in multiple ways.
“The long term money would be to high of a risk of losing if Droobli was just planning on taking our money and running.”
Yes, but they’ve registered their domain names in the UK and Germany instead of the United States. So the U.S. government cannot seize the domain names as property for the online gambling elements.
They also do not use U.S. banks to transfer money; this prevents their accounts from being frozen.
Finally, law enforcement sometimes has enough evidence to make arrests, but if the threat can be isolated and monitored, it pays off to wait and collect even more evidence.
Comment by laquita | November 5th, 2008
hello eaglescout,
i want to comment on your last post about the fees to join droobli network. you don’t have your facts right.
to join droobli as a licensed business associate(remember this is a franchise)
bronze-$795
silver-$1595
gold-$3195
there is an annual renewal fee, but you can renew which ever package you choose.
yes, there are bank fees associated with your package
(maybe 1% fee by your bank for international transaction), but once they have the office set up in the usa , that will change.
as far as the package prices you spoke of, that is for organizations that would like to partner with droobli for fundraising opportunities, and that partner organization makes 10% or 30% commissions off of droobli customers they sign up for their cause/organization. and if you are the business associate that signed that organization up for the partner program you earn a commissions as well. customers are yours for life. you really can not beat that.
anyone that would like more info on this unique business opportunity please contact me, thank you.
http://www.drooblinetwork.com/6504321
laquitaagg@aol.com
Comment by eaglescout | November 5th, 2008
“i want to comment on your last post about the fees to join droobli network. you don’t have your facts right.
to join droobli as a licensed business associate(remember this is a franchise)”
Then you are a victim of franchise fraud. Get help.
“and if you are the business associate that signed that organization up for the partner program you earn a commissions as well. customers are yours for life.”
GroobLi won’t be around that long.
Comment by Jackson | November 7th, 2008
Eaglescout. Please reply to Laquita’s posting. You are completely erroneous in your description of how Droobli’s fees work, she points it out, asks you to clarify, and you ignore her. It makes you seem less like a valid source of info and more like a curmudgeonly reprobate who has nothing better to do than attack Droobli with a personal agenda. I’ve noticed several times in these postings that you fail to explain your information when the erroneous nature of it is pointed out to you. So, really, what is it that has you attacking this business model. In my mind, everyone who has a job is being “scammed” because they work 40 hours a week for something they usually care nothing about, they can never take ownership of it, and they can be fired unceremoniously whenever soeone else decides they’re done, which has happened all too often in the recent past,tragically, to many people. 9-5ers are the most scammed people in our country in my opinion, but I don’t sit around all day discrediting employers and bending facts when it suits me to make my point.So, honestly, what’s your real agenda. Forgive my candor,but you seem way to bitter to be interested in just helping people.
Comment by eaglescout | November 7th, 2008
Hi Jackson, I double-checked the information and it is correct. The references are there for you to see. I’m not interested in debating whether the cost of joining is
$3000 or 3538.98; the business model is the same.
Additionally, people like you and laquita are trolls and sockpuppets in danger of losing your opportunity to scam people. In less than one month!
I’m not interested in your non-sequiturs about 9-5ers getting scammed. That is not relevant to whether GroobLi is deceiving you.
Finally, laquita could get the facts if she put forth some effort; at this point there’s little I can say to help her.
Comment by robert | December 21st, 2008
This debate is useless. It will end up no where, everone angry and still holding their opinions. The government should invest some time and effort and discover the facts and truths about this case. Then and only then can any actions be taken. Stop flapping your lips(thats to everyone regardless of your side on this issue). Really, is bashing the others information gonna help you? not really, so shut it. Leave it up to my fellow Democrats(and Repubs etc) in congress(and other gov. branches)to sift out the truth!
alrighty then!
rob
Comment by robert | December 21st, 2008
IDGARA …(i dont give a rats ass)about either side. Not any of my business, fraud and other criminal acts/torts is the responsibility of the government/law enforcements. So i bid you adeu (spelled wrong I know).
Rob
Comment by Dennis Murray | December 26th, 2008
As the founder of one of the leading GroobLi Teams I am bombarded with nonsense like this posting every day. It’s funny that we never hear from a GroobLi Associate, only those bitter few that attack what they don’t understand or like. The fact is GroobLi is quickly becoming a significant shopping destination. It has already become a leader in Europe and will soon be visible to millions of online shoppers in America.
In fact, my team, The GroobLi Eagles, has members from Europe who missed out on GroobLi’s European launch by sitting on the sidelines and criticizing it. Those same individuals are jumping on the American band wagon in a hurry. Do you think they know something this blogger doesn’t know? Go Figure!
If you’re serious about GroobLi, JOIN SOMEONE NOW. Droobli is creating fortunes for many Americans. You can be one of them or you can stand by and complain by blog about something you know little about. It’s your choice.
Comment by eaglescout | December 27th, 2008
Hi Dennis.
Is this a case of bad plagiarism?
How did you determine these “bitter few” didn’t understand GroobLi?
Those are vague and meaningless statements, Dennis.
“It has already become a leader in Europe”
A leader of what?
“will soon be visible to millions of online shoppers in America”
You mean like everything else on the internet?
I’m told by various people from Germany that GroobLi is not popular there at all. But I don’t have to rely on their word, because most GroobLi sites in Germany are awfully outdated. GroobLi promoters like yourself rely on vague misleading statements.
Probably not. If they know something that important about GroobLi, wouldn’t they benefit from mentioning it? Wouldn’t you benefit from mentioning what that is? If the answer is yes, why don’t you tell us what it is?
Another vague statement. How many Americans? Which ones? Are they associates or real contractors?
Because based on GroobLi’s revenue from actual product sales to distributors and non-distributors, there can only be 3 associates total earning 3,000 a month each and that’s a very liberal estimate. Take away the earnings from purchases made by distributors, and GroobLi would have a hard time sponsoring a starving child.
Or you can inform yourself and complain about things that you know a lot about.
Seems to me, Dennis, you are complaining by blog about something you know little about!
Comment by Dennis Murray | January 1st, 2009
Dear Eaglescout,
You are certainly welcome to your own opinion on GroobLi. For the rest of us GroobLi represents a fantastic opportunity. Have you seen the FOX/CNN stats for retail sales in 2008? Everything is in the tank except for online shopping. Chances are we’ll see the collapse of brick and mortar shops (big and small) this year and an explosion in online shopping. I choose to be part of tomorrow. How about you?
Either way, I wish you success in 2009.
Dennis
Comment by eaglescout | January 2nd, 2009
Dear Dennis,
I guess you couldn’t answer a single question, because it’s not on your GroobLi cheat-sheet.
That wasn’t my opinion on GroobLi. I was simply pointing out how your comments are misleading and deceptive.
Who is “the rest of us”? You, Bobby Jensen, and who else?
Yes.
This doesn’t apply to GroobLi, because online gambling is a separate category.
Also, MLMs like GroobLi have a 99% fail rate.
It doesn’t matter what the economy looks like because GroobLi is guaranteed to fail in good times and in bad times. And with dishonest (or clueless) promoters like yourself, we can expect GroobLi to fail even faster.
Everybody is going to “be a part of tomorrow”. But at least I won’t be scamming people throughout 2009.
Thanks. You too.
Comment by Happy GIrl | January 4th, 2009
Think of all of the Health drinks and shakes that are out there today, Isageniz, Shaklee. How did Starbuck’s find its way, Mary Kay find thier’s, it is all in the S curve of any new idea, get in on the ground floor, work it to your benefit.
It isn’t like all of the associates had to put up tons a money to have a store to sell a 2 dollar cup of coffee, or buy a ton of product and keep it in a closet and hope that you find someone that wants to buy makeup. The auction site is a tip of the iceberg and the Ecommerce portal that is open is the base of the entire website. The auction is only part of it. There are actually several parts to the entire site.
THis is not a MLM, any business out there if you work for someone, men at the top, that is a MLM. This entire country is based on free enterprise and we are all able to see the benefit of living in the US.
I do hope that all of the negative words stop, I will be reporting this guy to the website in hopes that the guy gets booted off off. This website is not ment for just one guy to sit back an bash one Company.
Happy New Year, and hats off to all of the Networkers out there., it is the prime beneficiary of the robust home-based business boom and it will be a major contributing force in the creation of new millionares over the next ten years, quoted by Paul Zane Pilner, World Known Economist.
This is an extraordinary oportunity.
Comment by Don Short | January 5th, 2009
I’ve been following this “conversation” for some time now and I would like to ask a couple of direct questions, if I may?
1. Are you for or against the concept of network marketing (MLM, if you wish)?
2. I noticed that you said that products are paid for by GroobLi credits. I thought that the products were purchased with credit cards and not GroobLi credits?
3. I have seen the words “scam” and “Ponzi” and “pyramid” mentioned over and over again. I thought that a Ponzi scheme or a pyramid had no products; just the churning of money with the promise of extraordinary gain.
If GroobLi can make money with a commodity like the “credits” why is that a problem? It would appear that those credits allow one access to the products as well as to the network marketing component, which seems to have a clearly defined path of achievement.
4. I have a problem with people making large sums of money through just the recruiting of other marketers but it would appear that a person who does not choose to participate in the business opportunity involving the recruiting of other marketers can do quite well just getting customers. Do you agree or disagree?
So, as you can see, I am not accusing you of anything…just asking some questions with respect. I would appreciate your replies.
Many thanks!
Don
Comment by Don Short | January 8th, 2009
It has been three days with no response.
*sigh*
Comment by eaglescout | January 8th, 2009
1. After researching the major MLMs, such as Quixtar, Herbalife, I have found that their business models are largely based on fooling their distributors. So if that’s what you mean by network marketing, then, yes.
2. To the best of my knowledge you can’t bid on products without GroobLi credits, and you cannot purchase their distribution licenses without also purchasing bundled GroobLi credits.
3. GroobLi’s business model is obscure enough that it may be a Ponzi or a Pyramid scheme, and it probably operates as such to a large extent.
The credits function as gambling tokens, but are not advertised that way.
The credits also function as distribution licenses.
Because the credits are worth little as gambling tokens, because GroobLi distributors are the only ones spending GroobLi credits, the product is clearly not in demand as a gambling token.
The only remaining function of a GroobLi credit is as a distribution license, when purchased as a package.
I strongly disagree. The items are overpriced even when “discounted” by other gamblers. The items are largely being won by the distributors themselves, which means there isn’t much of a clientele, and GroobLi makes very little from actual product sales, which means GroobLi distributors make even less.
Comment by Ryan | February 18th, 2009
Hi all. Read the whole thread and I have to say, eaglescout argues his point so well that the rest of you seem like primary school students. He refrains from attacking your poor spelling, grammar, or flawed arguments except where it is relevent to his point. several times reading a droobli response, i wanted to choke the person who posted it. but eaglescout just responds with logic and even-handedness.
my experience with droobli has been brief and ridiculous. my aunt spent some 3200 dollars on a droobli associateship a few months ago. she has been on me ever since to “join up.” it’s amazing the things that come out of her mouth: all reprinted on the comments above. i immediately dismiss “get rich schemes,” but owed it to my mom to watch a webinar last week. man. it was a beating. the first thing they discuss is how they know how much you’d like to provide for your family…and spend time with them. yikes! one of the slides on the webinar showed the rise in internet users over the last ten years. wow! they are clearly marketing to the ignorant.
your article and subsequent responses have been the most helpful information i’ve found so far. well, your responses and the insubstantive input from droobli reps.
thanks again.
ryan
Comment by Rolf | February 18th, 2009
I just finished listening to a GroobLi webinar; I was “recruited” through a Craigslist posting for ‘Regional Sales Manager’, by Dave who I now understand to be a GroobLi Sales Associate. It did not take long for me to recognize that this is not a legitimate business but a version of a gambling swindle. If the webinar information was not plain enough, the repeated urgings to “get onboard now before you lose the opportunity” was enough of a flag for me to disconnect.
It was my web research during the pitch that lead me to this thread, and as I was reading the rants from those who drank the GroobLi pitch I too was impressed with eaglescout’s logic and well researched responses to the same verbiage I was listening to during the webinar.
Ryan, you summed this up well and if after reading these comments, someone wants to join the GroobLi scam. Go for it! You only have yourself to blame.
Comment by Jason | February 26th, 2009
Martin D. Owens, Jr.
Attorney ? Consultant
Ph: (916) 391-8113 ? Fax (916) 422-5045
372 Florin Road #309 ? Sacramento, CA 95831
Email :mowens@trade-attorney.com Web page: http://www.trade-attorney.com
??????????????????????????????????????
December 29, 2008
Mr. Andreas Kusche
Chief Counsel
Droobli UK Ltd.
Valley Farm Cottage, Parkside Road
Adel, Leeds LS16 8EZ
United Kingdom
LETTER OR OPINION RE: LEGALITY OF GROOBLI ONLINE REVERSE-AUCTIONS
UNDER U.S. GAMING LAW
Overview
Droobli.com offers reverse auctions online for such items as cameras, XBox 360
game stations, and iPods. Each item begins with a pre-set price. There are three
auction programs, called Xpress, Zero and Unique Bid.
Common to Xpress and Zero s the purchase and use of the Droobli “credits”,
sold online for $.80 USD each or in various-sized packets. Droobli credits are not used
as a substitute for currency. A member must buy credits in order to participate in an
auction, and uses up one credit each time he/she checks the price ( in the Xpress
and Zero Bid versions) or makes a bid (in the Unique Bid version). The act of
checking also drives the item’s current price down by $0.25 – for every participant in the
auction, and successively- each time someone checks. Droobli credits are
non-refundable once expended in the bidding/checking process. They are not
transferable, hold no monetary value and cannot be used on any other site or in any
other auction enterprise.
In the Xpress version, participants keep checking until the price reaches a level
that one of them finds agreeable. At that point the participant is allowed to formally
purchase the item in question by clicking a “ buy now” button on the screen (first come
first served). The item is then paid for separately. Credits cannot be used for this
payment.
Letter of Opinion
Droobli.com
p 2 of 8
In the Zero version, participants successively use their credits to check/lower the
item price until one final participant lowers it to zero. That participant is the
purchaser and the item is his. Although any of the participants can see when the price
is approaching zero, none of them can precisely predict when the price will reach zero,
because no participant can know how many other participants there are, come or what
any of them will do.
In the Unique Bid version, participants use Droobli credits to place bids during a
set time window, again charged one credit per bid. In order to be valid however, a
given bid must also be a unique bid. That is, there must be no other bid placed by
anyone else for the same amount. If someone else does place with an identical bid,
both bids are invalidated. Participants are informed by e-mail when such invalidation
occurs. At the conclusion of the set time period, the lowest unique bid is the winner.
If there is no such bid, the auction is invalidated and Droobli retains the item. Multi0ple
bids may be placed except during the last five minutes, when each participant is
restricted to one bid only.
Droobli wishes to confirm that its auction programs do not amount to gambling or
lotteries under US state or federal law. But if it turns out that any of them are in
doubtful territory, Droobli needs to know what to do about that.
QUESTIONS PRESENTED
I. Can any of the three Droobli online auctions be considered a gambling
enterprise? Do any of them violate U.S. state or federal laws against
lotteries, raffles, or similar forms of gambling? What can be done to
minimize any such liability?
A. Gambling generally. In order for a given transaction to be identified as
gambling, three distinct elements must be present together:
consideration, chance, and prize.
1. Consideration: in contract law generally, the term “consideration”
may mean practically anything of value, including giving up the
right to some future act or obligation. In American gambling law,
however, consideration means money. This money must be
risked- that is, the player gets nothing else for his money but the
opportunity to win a prize , determined by chance. Just as
importantly he stands to lose that money permanently for no
Letter of Opinion
Droobli.com
p 3 of 8
gain, goods, or service in return.
a. Standard auction model: in a traditional auction,
“consideration” in the gambling sense does not exist. The
highest bidder gains the right to buy the item(s) on offer.
So long as he can actually pay, the matter is resolved. The
same is obviously true of the” ordinary” reverse auction
.
b. Droobli models: on the one hand, a participant expends one
credit merely for the chance to check the price. From this
point of view it may be said that he is not actually
purchasing any chances to buy. On the other hand, each
time the price of the item on offer is checked in the “Xpress”
and “Zero” models, the act of checking forces the price
down $.25. In the ““Unique Bid”, a participant must also
expend one credit to make his bid. In that sense, and
because credits once utilized to make a bid or price check
are not refunded, it is clear that participants purchase the
means to affect , or least enter, the contest. Therefore I
conclude that the element of consideration is present in all
versions of the Droobli online reverse actions.
2. Chance: there is some element of chance in everything human
beings do. For the purposes of U.S. gambling law, however,
“chance” means that a given event is resolved, in regard to all
participants at the time, by a common random occurrence which
is not under the control of any participant. To give an example, if
John and Joe play chess against each other, the element of
chance is minimized if not eliminated. All things being equal, the
game will be won by the player with the most knowledge of the
game and the best moves. Chess is a skill game. But if, one the
other hand, they both purchase a lottery ticket, skill has nothing to
do with the outcome. Either a given number is picked or it isn’t.
This is pure chance.
a. Additionally it makes a large difference whether the bettor
is a participant. To take the chess example above, it is not
gambling if John and Joe agree that the loser of the chess
games must pay the winner $10. The conduct of game is
under the control of the two participants. However, if two
onlookers, Sarah and Sue, bet on which man will win the
chess game, that is gambling, because the outcome of the
Letter of Opinion
Droobli.com
p 4 of 8
game is not under the control of either woman.
b. In the case of Droobli, the element of chance does not rise to
the level required to categorize the activity as “gambling”.
(1) in the “Xpress” and “Zero” models, the resolution of
the event is not dependent upon some random
occurrence, but only on the conduct of the
participants. The price of a given item on offer is
decreased only by the actions of the participants. If,
for some reason, none of the participants decided to
check/decrease the price of the item, that price would
remain static unless and until one or more of the
participants chose to act. In fact, if no one chooses to
bid on a given item, nothing happens at all.
(2) “Unique Bid” is very much in the same vein. That
is, a participant’s success in placing a “unique bid”
does not depend on anything outside the efforts of
the respective participants. Two or more participants
may offer bids at the same price, but this is not
caused by any random agency. This coincidence
(once again, barring collusion) would be the result of
the respective participants’ independent decisions,
just as various runners’ independent decisions to run
a little faster or hold back in a race may lead to
different- but not random- results.
(3) For this reason I conclude that the element of
chance, as understood in American gambling law , is
minimal to nonexistent. While the outcome of any
given reverse auction is not solely under the control
of any one participant, the actions of the respective
participants are the only inputs to the final result.
There is no random dispositive influence acting
outside participatory control.
3. Prize: the definition of “prize” is essentially anything of value.
Since obtaining valuable items such as iPods at a reduced price is
the whole point of participating in Droobli’s reverse auctions, the
element of price is obviously present.
Letter of Opinion
Droobli.com
p 5 of 8
4. I conclude that since the element of chance, as understood in
gambling law, is not present in the Droobli auctions, these auctions
cannot be considered either games of chance or lotteries.
B. U.S. State Laws :
1. Gambling : Once we have established that Droobli is not a lottery,
the gambling laws of most states are not longer a worry. But not all
states: even playing games of skill online may be illegal in Illinois
and Iowa (720 ILCS 5-28-1(a) 12 and ISC 725.5, respectively). In
addition, eight states outlaw Internet gambling ( except , of course,
what they themselves choose to license). They would have to
stretch a point to call Droobli an Internet game of chance; further,
there is no indication of any particular benefit in doing so. [Note:
the text of each State law cited in this discussion is provided in
APPENDIX A.] Most importantly, since the reverse auction is
neither a sporting contest, a lottery, nor a game of chance, I
conclude that Droobli has nothing to fear from state gambling laws
2. Need for an identified auctioneer ? At least twenty-eight states,
however, require a license for an auction to be conducted.[ See
TABLE I]. Some require it at state level, some at county or city
level; others differentiate by what is being sold ( real estate, autos,
livestock). Some require large bonds to be posted and personal
background checks to be conducted as well. While the purpose
behind these laws is clear enough, the prevention of fraud, in many
states this has become a means to restrict competition and protect
the “home market” from other auctions and auctioneers.
3. Is it conceivable that Droobli might be subject to an injunction or
lawsuit for conducting auctions without a license issued by the
state or municipality where a certain bidder lives? This brings us to
the question of jurisdiction and the Internet. Does the transaction
take place where the bidder is, and therefore, under the jurisdiction
of the bidder’s home state? Or does it take place at the server of
the Internet establishment? There is no American law, as far as
gambling, which states this, and the case precedent is sparse and
unsatisfactory.
Letter of Opinion
Droobli.com
p 6 of 8
4. Outside of gambling, the rule of civil jurisdiction essentially centers
on how interactive a given web site is. If a site is merely passive ,
the equivalent of a billboard, a state could not assert jurisdiction
over that site simply because someone in that state had viewed it.
If, on the other hand, the site interacts with the customer- inviting
and allowing him to look through inventory and product lists, and
place orders, etc., it is not passive. The more business that is
transacted through that site, the more probable it is that the site
will be held to have purposefully directed its activities at that state
( Zippo Manufacturing Co. v. Zippo.com Inc., 952 F. Supp 1119 (
W.D. Pa 1997): Intercon Inc v Bell Atlantic Internet Solutions, 205
F.3d 1244 ( 10th Cir 2000)). And this means that it is possible for
that state to assert jurisdiction.
a. In the case of Droobli, since it will be actively soliciting
customers selling credits, taking and recording bids, and
then communicating which bids were “knocked out” by
identical bids making them non-unique, it is clear that the
Droobli web site will be very interactive. It would therefore be
technically possible for a given state to claim jurisdiction, if
Droobli bidders or participants reside there.
b. At the same time it would require an impossible
expenditure of time and money to check with every city and
county in the United States, find out if a license was
required, and then apply for one. As the saying is, life’s too
short.
c. But the difficulty cuts both ways: since Droobli’s reverse
auctions are not readily identifiable as games of chance or
gambling, they will not attract the automatic hostile attention
that attaches to the traditional gambling enterprises such as
sports betting. In other words, their content neutrality makes
them a poor target in the heavily politicized arena of
gambling law. Droobli need not worry about becoming a
“trophy head” anytime soon.
5. So if Droobli remains licensed and located only within the UK, it
would be much more difficult for state authorities to interfere
further than a cease-and-desist letter.
Letter of Opinion
Droobli.com
p 7 of 8
6. And Droobli, located abroad, might consider handling its
marketing and distribution programs through an independent
contractor in the USA- and any other countries where this difficulty
might arise.
7. At the same time the prestige and reassurance of a licensed
auctioneer might be very useful for de-fusing potential resentments
in advance. There is National Auctioneers association that also
has branches in Canada and South Africa, and they already
conduct auctions online. Perhaps it would save time and effort to
consult them about using their services, or at least displaying their
logo.
C. Federal law
1. Gambling laws : generally speaking, U.S. Federal anti-gambling
laws are activated when state gambling laws are broken. Since we
have established that state gambling violations are not on the
cards, Droobli therefore need not be concerned about violating U.S.
Federal gambling law.
2. Auctions: Auctions, as a form of sale, are governed by at the state
level by commerce laws. Those auctions which allow bids across
state lines come under the Federal Trade Commission, which is
mainly concerned that the advertising for such auctions is truthful,
and that the items sold correspond to their descriptions. Those
conditions being satisfied, there is little further cause for concern.
There is no such thing as a national auction license.
II. Conclusion and Recommendations
A. Droobli’s reverse auctions are obviously not gambling games, and do not
constitute a game of chance nor a lottery as far as the terms are defined
in American state and Federal law.
B. The only potential legal problems ( outside of tax issues) I can foresee
would be centered on the issue of local auction licensing. Clearly it is
not realistic to attempt to obtain licenses in every state, town, county or
Letter of Opinion
Droobli.com
p 8 of 8
city in the USA that might require them.
C. The best strategy would be to limit possible exposure to jurisdiction
claims by
1. working through third parties and contractors as much as
practicable;
2. ensuring that the terms and conditions specify
a. the participant’s sole responsibility for complying with local
laws, and
b. UK jurisdiction or arbitration in the event of dispute
D. It might also be possible to use, or gain the approval of, professional
auctioneers societies in the USA.
E. Finally, there is the matter of “ image”: since gambling is supposed to be
a social harm, associating with socially desirable goals is very good
preventive medicine. Droobli’s charity-only auction is a very good example
of this, and this should be a continuing standard practice, expanded
where practicable.
This letter of opinion is based upon my best understanding of applicable law and on
information supplied by Mr. Kusche.
Martin D. Owens, Jr.
Attorney at Law
Comment by Martin Owens | February 27th, 2009
I am the attorney who wrote that opinion.
I stand by what I have said- but it was NEVER intended for general distribution and should be regarded as the confidential property of GROOBLI. In plain English- back off.
I was asked to fax that letter to someone in the United States, who, unbeknownst to me, had no authorization to ask for it. If I had known that I would never have supplied the material.
I will stand behind any opinion that GROOBLI’s duly authorized representatives may make, based on my opinion.
But NOBODY ELSE’s.
Further inquries as to legality should be directed to Mr. Andreas Kusche, Droobli’s corporate counsel:
Anything else us has no support of mine.
Very Truly Yours,
Martin D. Owens, Jr.
Law Offices of Martin D. Owens, Jr.
372 Florin Rd. #309
Sacramento, CA 95831
PH (916) 391 8113 ( Pacific Coast time)
cell (916) 716 7274 ( Not a good idea- cell reception bad)
Fax (916) 422 5045
email mowens@trade-attorney.com
Web Page: http://www.trade-attorney.com
Comment by Matty | March 12th, 2009
Hi
I close to joining Droobli. This was one of my main concerns with Droobli regarding the Us Federal gamlbing laws. It sounds very promising and I like it. Eagle guy you are just one this people who can’t get over the fact that there are people in network marketing who are making a lot of money. Why the hell would Donald Trump and Robert K dedicate a part of there book to network markeitng?
THEN come out with another book called “why you should be in network marketing”
So get your facts straight, network marketing is the next boom. You should jump on the wagon and make some money.
Comment by eaglescout | March 12th, 2009
Hi Matty, you sound like a retard.
Comment by Preben Tonsager | March 25th, 2009
Hi,
I live in Spain and I am used to hear from ignorants that network marketing is a scam , fraud, etc…
But I could not believe my eyes when reading from americans that you still ignore the benefits of MLM. Having said this, many scams call themselves MLM just to operate under legalities they don´t deserve.
How do you – Mr. I Know Eevrything- explain that the President of the Chamber of Commerce of the United States ( for 7 times) was the founder of Amway? ( Mr. Rick de Vos / Jay van Andel ). I ignored that you americans were so stupid. Are you really stupid? I understand that an average ” spaniard” doesn´t know what MLM IS, but YOU americans?
Now talking about GroobLi.com, I understand that if you ignore what MLM is, you will not see anything else that a scam in Droobli, Herbalife, Amway, Oracle and so many other MLM companies listed in your Stock Exchange Market ( I assume you know what that is). So please explain your devoted readers, that take your shit, how it is possible that Bill Gates, Warren Buffet, Richard Branson, Donald Trump and others, own or distribute products and services through MLM “scam” companies listed in the Stock Exchange Market?
I cannot understand that still americans do not know how many hundreds of thousands of american families have achieved financial freedom through MLM in the past 40 years.
Even in Universities around the USA , MLM is studied as a subject in Marketing…
I supose the one who said that there were stupids everywhere was right.
Eaglecourt, check your info before stating ignorance.
Preben Tonsager
Comment by CU | April 30th, 2009
With respect to the zero and express auctions, since the outcome of a click is uncertain, there must some element of skill or chance. Since a participant has no knowledge as to numbers or activity of others, there is no skill that can applied to improve winning an item or obtaining it at a specific price. However, the element of chance within these auctions can be readily described by queuing theory.
I do agree, however, that, given sufficient numbers, the unique auction is not a game of chance. Indeed, given sufficient numbers, a participant has absolutely no chance of winning!
Comment by Jacob | May 16th, 2009
Anyone want to back up there comments and show some money that they have made from Droobli? Pretty ease to upload a video on you tube!!
Comment by Xray_vision | June 1st, 2009
Jonathan Gulla is head of their U.S. marketing effort and I can tell you first hand he is a crook from the word go. His entire career has been in MLM con schemes. I got suckered in the 90’s with this smooth talking liar and lost 1,000’s. He left everyone holding the bag and left town in a hurry with a lot of steaming mad robbed men and women. If Droobli picked this criminal they are either hard up or need a Big Liar Con to get their marketing off the ground. I would not touch this with a 15 foot pole!!!!
Ray
Comment by Ron | July 6th, 2009
I’ve known Jonathan Gulla (Trainer for GroobLi) personally for 30 years. I’ve never seen a man with more integrity. You can say anything you want in a blog, “Fact or Fiction”, but this is a BIG LIE.
Comment by Rakeback | September 7th, 2009
This is really a great news.I am sure this will really be a force to reckon with in the near future.
Comment by Gene Edwards | September 8th, 2009
Jonathon Gulla is a scumbag. He just wants to rip people off. All you droobli creeps are cut with the same cloth. Evil, greedy morons. You’ll get yours. I mean it, man. You’ll get what you deserve.
Comment by the Avenger | September 8th, 2009
Preban the Spaniard wants to lecture us about MLM companies. Hey Preban if MLM is such a good business why don’t you guys just keep it to yourselves? Stop bothering friends and family who don’t want whatever crap you’re peddling. Just keep it to yourselves and make your millions.
You know why that makes no sense !! Because your ponzi pyramid schemes relies on lots of people entering the scheme and losing their money so a few at the top can make lots of money.
Droobli is the same old scam. It will fall over and lots of people will lose their money. But you don’t care. It’s all dog eat dog to you. You have no conscience.
Comment by Boots for kickin' | September 8th, 2009
Droobli Business associates are weak creeps. Just send them around to old Boots’ place. I’ll give ‘em a greeting they won’t forget.
Comment by Questions | September 8th, 2009
Hey, why would that lawyer guy a few posts back give droobli sole use of the document and to interpret it as they wish? It doesn’t make sense. No real lawyer would do that. Sell their soul to a cheap two bit company like droobli? Even lawyers wouldn’t do that.
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