Avoiding fraudulent offers
It’s very unlikely that you don’t know about sites whose sole purpose is to get you to buy something, on your email system that beg you to do the same or even to extort personal data such as passwords, bank accounts, street address or credit card number.
Over the Internet Marketing business, there are other methods to more effectively and directly take money away from the unsuspecting.
They usually take advantage out of desperate or curious people. Scammers don’t limit themselves to the basic means of illusion. Some of them are very well known even on the outside world and have no qualms going the extra mile to create a very convincing video of a major opportunity.
But it is, without a doubt, that the most typical form of online scam is…
Which is often erroneously mistaken with Multi-Level Marketing layouts (we’ll tell you more about these terms later).
Those companies/people rely on basic layout sites that look either abandoned, with old dates, information and static payment proofs. In case of “Get Paid To” websites, it’s very common to see the said information right on the main page regarding [fake] payments. They also guarantee you’ll earn money within the “next couple hours”, or you simply need to pay upfront in order to join.
Yes, it’s true, some legit companies need you to pay for the membership before becoming an affiliate and yes, some others happen to have a poor looking website, but how many of them guarantee anything? No reputable company will guarantee anything.
Fortunately for the average user, there is a very friendly tool called “Reviews” and all it takes from you is are a few searches in several non-related sites to learn if the opportunity is a fraud or not.
But first let’s begin depicting these schemes:
Ponzi or HYIP
With the Internet made available for almost everyone in the world, it consists on an upfront payment from you and members willing to join and you are promised an even higher return. As new members join and give their money, the scammer’s funds increase and he gives the money promised, that he has received from newer members back to the oldest investors, without starting any sort of business or profit that would occur if one were created. The Ponzi scheme is sustained by new “offers” where you must invest again, and that “investment” is returned to the newest members, thus closing the cycle.
This type of scheme is condemned to failure because all it takes is a member to refuse an “investment” for the Ponzi promoter lose money and fail to deliver what was promised. Also, when the scammer has attained the amount of money that he had set, we can simply leave, letting the investors without any return.
The Internet “version” of it is called High Yield Investment Program, and while there are some people who try their luck on them we highly don’t recommend them. Absolutely not for the average user.
Nowadays is possible to trade in the Foreign Exchange Market without having the required formation for it or without being a Wall Street “fat cat”. With the appearance of online brokers, we have the opportunity to actual turn our investments into a solid income source.
You see, the problem is where you put your money, literally. You need to find a good broker because you’d be working with money, so people are obviously targeting your own to get themselves rich. There are many brokers out there with a rotten reputation and some of those sites simply don’t even provide a trading platform after you deposit the funds in your account.
Another problem are the “bonuses” you get from depositing. On average brokers, such bonuses tie your money to the account: Brokers earn money through a process called Profit & Loss Management. The more you trade, the more they earn, doesn’t matter if you win the trade or lose it. Naturally, your losses will make them earn more money.
By accepting a bonus, you have to trade more, which also increases the risk of losing the invested money each trade you do.
Before signing up for a Broker, be sure to check reviews and see if it is a trusted site. Forex can be a good source of income but you need to be careful not to let turn into a gamble.
More information can be found about FOREX in BinaryOptionsThatSuck.com.
The most widely used format of scamming throughout any program network. It mainly consists on recruiting new people for a program that also requires an upfront payment, where, the more people you recruit, and have the new members making payments for the fake product, membership or whatever is involved, the more money you’ll earn.
But as with the Ponzi, the most amount of money goes to the higher-ups, while the newcomers get screwed, and since the object or membership are fake, of little worth or sometimes not even existant, they usually put on a splash page or a banner with false information, such as payment proofs, testimonials, campaigns, special discounts, referral contests, etc., to pose as a normal website would.
All of this leads people to believe that sites that involve recruiting new members are pyramid schemes, since the starting payment is low, so they discredit the normal, non-scam sites. But such argument can be determined true or false with proper research of the site in question.
Once more, this does seem complicated to avoid and people are very suspicious about buying something online from non-branded sites, which is why, and I stress, you MUST DO YOUR *OWN* search. Don’t rely on what an enraged fellow says, search for yourself on different forums, chat rooms, reviews…
As opposed to Pyramid Schemes, the most common and highest paying way of earning money online and earning a passive income online is called “Multi-Level Marketing”, MLM for short.
It consists on receiving commissions for a service that an affiliate (say Affiliate A) sells to a customer, and also, if the Affiliate A refers Affiliates B and C and they sell products to other customers and refer people themselves, then Affiliate A would receive commissions for:
- Products that A sold himself
- Products that B and C sold
- Products that referrals from B and C sold
…and then on.
The income model presented in this example is called “Residual (or Passive) Income”, because the small commissions you earn over time are accumulating into a bigger slice. Now you can see the resemblances between a Pyramid Scheme and an MLM Program.
What will determine if this is one or the other is what company you decided to join, what they are selling or which services they are providing.
Whether payment is required to have your account started has little to do with it. There are many trusted companies that have this requirement.
Only search makes it possible to determine this. People who were unhappy with results from a MLM will obviously classify it as a Pyramid scheme. This is letting their emotions interfere as one joining a program and making money with it while another joining at the same time and fail to achieve success has to do with knowledge, experience, persistance, tactics, marketing aggressiveness and countless other factors or their complete lack of.
Another thing is, sometimes you see a lot of splash pages that have a very long description with the aforementioned: payment proofs, referrals, projected sales, saying that they have limited positions or discounted values, and since almost any entity or company uses them.
It appears like yet another scam. Most of the time they’re just affiliate programs being promoted by someone else, meaning, they’re not exactly scams, though you’re better off making sure of it.
More often that not, it just means the affiliate is too slothful to change theme/appearence of the page.
Those splash pages can be easily obtained in Private Label Rights websites.
I recommend you search (as an example Company 1) for reviews on sites that have nothing to do with Company 1, check on many different sites for reviews, if the majority of the reviews say “Oh noes! Company 1 is such a scam, don’t join” then it would probably be a good idea not to sign up for Company 1.
Always check for discrepancies and if it really is what you were looking for. If Company 1 doesn’t have anything you want, then there is no point joining it. Some reviews are also a scam, but other people commenting will easily detect that for you.
Other than that, identifying scam sites is relatively easy to do. New sites are a bit tougher because people haven’t gathered any information about them yet.
Further information regarding Pyramid Schemes is available at the United States’ Security and Exchange Commission.