6 Elements of fraud in MLM “businesses”
This is a list of the top five elements of fraud and deception found in MLMs
6. Misrepresented products
Sell something worthless to avoid being called a pyramid.
5. Fictitious currency
Use weird point systems which hide the true cost of your “investment”.
Examples:
Market America and Quixtar/Amway’s Business Value (BV) point system
DubLi’s use of “Shipping Points” and the Fictitious DubLi credit currency.
4. Motivational materials
You will be invited to countless presentations.
3. Bundling materials and licenses.
Force your clients to buy your products and licenses together. This way you force them to become your customers.
In Cruise To Cash, you purchase your license to sell other licenses along with the right to “unlimited coupons” for up to $1,500.
In DubLi, DubLi credits (a fictitious currency) are used as both gambling tokens and in the aggregate as advertising packages (and you can only buy such advertising packages from other advertisers).
2. Extremely confusing business models
Apologetics found at scam.com:
“Yes, the comp plan is confusing at first. You need to find a local rep in your area to set down with you and explain it. Once you get the hang of it, it is really easy. Sorry I don’t remember the comp plan myself.”
1. Present the old as new.
Examples:
DubLi sells spread-betting and lotteries as new and exciting “reverse auctions”.
Market America calls its system “UnFranchising” which is equivalent to MLM via the web.
Comment by Brian | March 21st, 2009
If an individual wants to invest money, and does it willingly, knowing the terms/risk of the investment, how is it your “JOB” “BUSINESS” to tell them not to do it???
Where were you when I bought that 430K House for 350K right before the market shifted and I ended up losing 10K in the deal, how come you were not letting me know of the downside to a what look like a Great Deal…. oh, because it is Real Estate….OK…… Real Estate is not a business venture where you buy in up front with the hope of future equities based off projected performance…got it!!
I should give you my money and let you decide what moves to make…. because Dubli must have it all wrong…
What company would pay out dividends/commissions off of performance and profitability… Stupid idea Dubli
Comment by eaglescout | March 22nd, 2009
Hi Brian,
Look up “straw man”.
Comment by Peter Faber | March 24th, 2009
You must be living in a cave for years, and a very disgruntled ex customer, to put so much time into this.
If I have a pre paid phone here in South Africa I buy credits, same goes for my electricity, does that mean they too deal in fictitious currencies? A very popular game, maybe you have heard of it, called World of Warcraft uses Gold as a currency, it’s not real gold of course, but are they also scam artists?
Here in the real world reverse auctions is a very popular buzz word on the internet: http://en.wikipedia.org/wiki/Reverse_auction. And DubLi is not the only company doing it; http://www.google.co.za/search?rlz=1C1GGLS_en-GBDE319DE319&sourceid=chrome&ie=UTF-8&q=reverse+auction.
Also becoming a member of a web site through invitation is not an original concept: http://www.internations.org/.
Comment by Insidious | March 24th, 2009
Peter, Peter… fictitious currency is only one of the six elements of fraud listed in the article.
Is your prepaid phone company also misrepresenting its products? Do they send you motivational materials? Do they have an unnecessarily complicated business model?
If so, they may be scamming you. If not, I’m afraid you misread the article.
Oooh… Reverse auctions are popular? Maybe you should read your own link because DubLi’s “reverse auctions” are not real reverse auctions. You are a victim of their misrepresentation.
By the way, minutes and watts are standard units of measure recognized around the world. I can only assume that they recognize these in South Africa, unlike DubLi credits.
Comment by Peter Faber | March 28th, 2009
@Insidious
Hahahaha, you’re talking like one of those conspiracy theorists. So WoW is also a scam then? Any cell phone company is misrepresenting, why not write about that, that is something affecting everyday people? And yes you can say but people who want to sign up on DubLi.com are also everyday people, I don’t think I agree, it’s obvious it has a gambling aspect and I think this attracts particular people.
I stumbled upon this web site doing research on reverse auctioning for a business intelligence firm, even though I won’t ever be joining, I do think this site is taking this witch-hunt a little too far from a reality point of view, also who the hell is Ron Paul?
Comment by Insidious | April 23rd, 2009
No, Peter. I’m just saying you need to upgrade your reading and comprehension skills. It seems you are more interested in building straw men arguments than in accepting that what I wrote does not imply any conspiracy.
Is WoW a scam? Probably not, since they are not misrepresenting their product, as far as I know.
“any cell phone company is misrepresenting, why not write about that, that is something affecting everyday people?”
Probably, it’s called false advertising, and most businesses resort to misrepresentation to some degree; Cell phone companies charging more than they are supposed to is common knowledge, so it’s not all that interesting of a topic. Real conspiracies are covered elsewhere. For example, here: http://en.wikipedia.org/wiki/Accounting_scandals
There’s no value in telling you what you already know, so I prefer to present fresh content. Additionally, as you noted, cell-phone companies can be fraudulent, and some of the criticism in this article applies to fraudulent cell-phone companies.
“And yes you can say but people who want to sign up on DubLi.com are also everyday people, I don’t think I agree, it’s obvious it has a gambling aspect and I think this attracts particular people.” Well, then, it looks like we agree.
“I stumbled upon this web site doing research on reverse auctioning for a business intelligence firm”
I don’t think I would hire you in the field of business intelligence, since you have no idea what reverse auctioning is, even after you posted a source with that very information.
“I do think this site is taking this witch-hunt a little too far from a reality point of view”. Please explain your analogy, since what you mean is not obvious. Witch-hunting is the “religious” practice of killing people because they don’t fit-in with your religion, or because they have “special evil powers”.
I don’t think these businesses have magical powers, nor do I think there is any conspiracy.
“also, who the hell is Ron Paul?”
He is a politician with libertarian leanings.