Frustrate Network Marketer-ZEEK Rewards: Legitimate Business Or Gambling

Zeek Rewards, which is the “MLM” arm of Zeekler, is creating a lot of discussion and backlash. Is Zeek a legitimate Business or  gambling? Fun?  Profitable? Or considered illegal in some countries? Read Rod Cook’s announcements, updates and alerts here:  http://www.mlmwatchdog.com/MLM_Watch_list.html

According to MLM Watch Dog, Rod Cook he is receiving a lot of questions and concerns about  penny auction site ZEEK. Distributors are making some wild claims that Zeek members do not have to sell or recruit and are making huge amounts of money.  Not exactly what you would consider to be in compliance with the FTC.

Apparently Zeek  has brought on board a compensation plan expert to create a system that does not make Zeek look like gambling. Buying of points or credits for the purpose of an auction to me is questionable.  

Many people love auctions, off line and online.  Though the concept of penny auctions is  appealing as a great deal and huge money maker, most do not see what is really happening behind the scenes.  There is also a question of legality in some countries.   Apparently for some legality or integrity is a non issue as long as THEY are making money. It is of no consequence that others might be losing their shirts.

Familiar Auctions We Recognize-the concept:

eBay….Let’s say you have a  designer hand bag that retails for $150.  For the purpose of this article, let’s say you paid $50 for the hand bag that you found at a flea market and then put it on eBay  as the seller– high bid reaches $100 and the auction time runs out.  The winning bidder received $150 hand bag (a $50 savings off retail). The seller got a good deal because they bought the hand bag for $50 and received an additional, let’s say about $40 on the sale (after fees for the auction).

What did the losing bidders pay?  Nothing.  This is the way a normal auction works. Someone wins, but not everyone loses their hand bag.  Pun intended.

Penny Auctions – the concept: Wikipedia-  “A bidding fee auction, also called a penny auction, is a type of all-pay auction in which participants must pay a non-refundable fee to place a small incremental bid. When time expires, the last participant to have placed a bid wins the item and also pays the final bid price, which is purportedly significantly lower than the retail price of the item. The auctioneer (company) makes money in two ways: the fees for each bid and the payment for the winning bid.”  http://en.wikipedia.org/wiki/Bidding_fee_auction

How it WorksBidders pay a non-refundable fee to purchase bids. Each bid increases the price of the item by a small amount, such as 0.01 and also extends the bidding time of the auction.

Once the auction is over, the auctioneer (Company  i.e Zeek Rewards) collects the final cost of the item plus the money already collected from selling bids.

EXAMPLE: if a hand bag worth $1,000 sells at a final price of $80, a bid of $1 raises the price of the hand bag by $0.01, the auctioneer (Company) receives $8,000 for the 8,000 bids and $80 as the final price, a total of $8,080. That is a mega profit of $7,080 for the auction site. Assuming the winning bidder used 150 bids in the bidding process, they would have paid $150 for the bids and $80 for the final price, a total of $230 and a savings of $770. This means that there were another 7850 $1.00 bids by bidders of this item. 

So lets assume that there were 50 other bidders on this item.  50 bidders would have each placed 157 bids at $1.00 each.  That means that these 50 losers just lost $157.00 out of their hand bags. But hey someone won a very inexpensive designer hand bag and the company just made HUGE money to boot.

OBSERVATIONSome members of penny auctions like Zeek do NOT want to hear criticisms and observations from the outsider looking in. Saying the outsiders know nothing of business and should pick on real scams, since there’s plenty of them and outsiders should be more selective of which company to slander.

Look members are spending a lot of money, money which in many cases they just don’t have and still LOSE the auctioned item. In some cases bidders pay more than the retail value of an item up for bid that they do win.

Directly from Wikipedia…”some analysts have criticized the model or compared it to gambling.” 

After some investigating there have been some penny auction sites that have been shut down by state government authorities.  Penny auction website Wavee US, LLC, negotiated with the Governor’s Office of Consumer Protection in Georgia and agreed to shut down its web site after complaints about merchandise not being shipped to winning bidders in a timely fashion.

Penny Biddr out of Washington state was closed for good after a lawsuit that accused them of “shill bidding”… “a person who publicly helps a person or organization without disclosing that he has a close relationship with that person or organization.” ~Wikipedia.  The original complaints were from Penny Biddr members.

Also note there have been several auction sites which claimed to be Better Business Bureau “Accredited”, but upon further research had poor ratings with the BBB or never were members of the BBB. 

Unlike an eBay auction, in a penny auction, you have to pay a fee to be a bidder. Then you need to buy bidding credits.

Compare this to purchasing lottery tickets where you purchase a “hope” to win something and if you lose you do not get refunded, that is where the question of legality comes in.  Again members do not want to hear that there are groaning’s that penny auctions are a form of gambling (gaming to some), which is illegal in some countries.

There was a lot of money in pure profit that our penny auction site made from that hand bag, where did all the funds the Company make go?  Where is it banked.  Many penny auction companies are setting up their bank accounts (offshore) in countries where other countries like the US can not freeze their bank accounts and/or assets should the company be investigated and proven to be a form of illegal gambling.  

Now for a little watch dogging by Rod Cook…the following is a Zeek announcement to it’s members as of 29 May 2012

ANNOUNCEMENT –  Zeek/Zeek Rewards is currently in the process of moving to a bank that can handle our growing needs and while in transition will be closing our old accounts with both New Bridge Bank and BB & T,” (both FDIC Insured) Zeek said on its news Blog. “Please be sure to deposit or cash any commission checks immediately so they clear before June 1st, 2012 or they will be returned to you with ‘account closed’ and will need to be reissued.”  No reason was given and a new bank was not named yet.

 

According to Rod Cook, Zeek international  uses AlertPay (now Payza) and SolidTrustPay for transactions outside the U.S. Did you know that AlertPay and SolidTrustPay are watched by FEDS (and Interpol)  for being friendly  to  scams such as HYIPs (High Yield Investment Programs), autosurfs and cycler matrices.

It takes a very long time before an investigation can get underway … sometimes 2-3 years from the first complaints. Plenty of time for a company to rake in LOTS of money before the FEDs catch up.  And because the banking is being done offshore, the FTC may shut down a company; however, there will be no restitution for the victims.

One thing to keep in mind…. If you are being told that the credits you buy are the actual product- RUN!  Product cannot be an exchange of cash for tokens which are another form of cash.  Money is not a viable PRODUCT according to the FTC.  Rod Cook of mlmwatchdog.com says, “THE WORD CYPRUS = RUN!”

You, the reader, ultimately have to decide if the penny auction is really a business or is it Fun and Profitable for a few. “A penny saved is a penny earned.” For those who have read the Slight Edge you will understand that quote.

Commit To Success Today
Dave and Darlene Mills
Leadership With A Vision

“You cannot teach a man anything. You can only help him
discover it within himself.” — Galileo


Ms. Dorfman’s Lawsuit With Melaleuca

I would like to first thank Bob and Anna Basset of http://togethertothetop.com for providing much of the input to this article. It is highly recommended that you take a moment to  read the lawsuit between Ms. Terry Dorfman and Melaleuca.  I know lots of reading.  But this stuff goes on everyday in network marketing and we seem to continually turn a blind eye o the fact that MLM companies have one guy in mind (usually) themselves.  Thanks to Rod Cook at MLM Watchdog for supplying the post!

Lawsuits are very unpleasant, but there sure can be lessons learned in between the lines.  Below are just a few lessons that can be learned from Ms. Dorfman’s experience:

It is never in anyone’s best interest to join a company  more focused on  “vexing” or “stomping out”  other companies  than “standing up” and “championing” their own distributors. 

It is never in anyone’s best interest to  join a company that delights in legal bickering. Investigate  the company’s track record to see for YOURSELF how often they have been involved in lawsuits, especially those involving their own  distributors.  It’s one thing to engage other companies looking to protect the establishment of the company and reps – quite a different story to be at odds and constantly in litigation with  the most important people of the organization and the survival of the company, the distributors.

Never join a company that plays “Let’s Make A Deal!”  Unless everyone is treated the same, you will never know what’s going on in the boardroom.

Never accept a deal.  If you accept a good position, you will never be able to tell your prospects or team that this is a level playing field.

Never offer a deal.    You are setting yourself up for huge problems – conflicts, resentments and lawsuits.

Read your policies and procedures.  It is of no consequence to the company which clause you are in violation of.  What is of consequence is the length of the contract. The longer the policies and procedures, the more clauses are at the companies disposal to use against YOU – relevant or not.  It is in the companies [sole discretions]. They do what they want when they want.

Read your policies and procedures.  This will shock and surprise many of you to know that you  are responsible for monitoring and supervising the activities of your downline.  You did not sign up to supervise or monitor the activities of others, but you may have signed a contract which makes you legally responsible for the actions of hundreds or thousands of people in your downline.  There is no way this can be achieved, but the company expects you to perform this duty…or you are fired if you fail. 

Read your policies and procedures.  You may not feel the affect than not reading your policies and procedures will have on you as you just start out in network marketing, But rest assured as you begin to make a name for yourself, you start to show up on the company radar.  Look there is “Johnny”, look at him rock and roll he is recruiting and bringing in lots of volume for the company.  We may just need some of that money we are paying out to him and the other top earners to pay for our legal team, the leer jet and the shareholders.  We may need to use “clause 18.1.3″ against him. 

Never make an income claim or guarantee to  anyone of any amount of income.  It is illegal and it is called ‘enticement’, it can land you and your company in legal troubles.  As distributors all we can do is present the compensation plan and any income disclosures provided by our company.

Never join a company that violates its own policies and procedures.  If corporate is allowed to ‘cross-recruit’ distributors in other companies, but forbids you from doing the same, there is something wrong.

Network Marketing is just another way to deliver goods and services to the end consumer. It’s a business just like any other.

Just be sure of whom you’re doing business with.

Thank you  again Bob and Anna Bassett  for the inspiration to draw more attention to these situations and the ongoing education you provide to anyone willing to learn.

Commit To Success Today
Dave and Darlene Mills
Leadership With A Vision

“You cannot teach a man anything. You can only help him discover it within himself.” — Galileo