There is a major scam taking advantage of the upward trend of online shopping. The company is growing very fast, but many people do not realise the whole setup is a scam yet.
A major red flag is the location of the headquarters of this company – it is located in the same place as several other fraudulent operations. I won’t mention the company name, because I don’t want to upset anybody, I just want to help you avoid being deceived.
It’s an online shopping portal where people can go to buy just about everything from laptop computers, to iPhones, to gift cards, to vaccuum cleaners. This company’s aim is the make shopping fun with reverse auctions – where people bid down the price of an item until it’s right for them.
But the company’s product are not the items their selling on their portal. The company’s product is – get this – credits. Specifically, “bidding credits”.
Let’s take a look at how this reverse auction thing works when buying a pair of jeans…
If you were to buy a pair of jeans at a retail outlet for the recommended retail price $100, let’s say $50 would cover the store’s cost of buying the jeans at wholesale and $50 went to the store as profit. No problem. You are happy because you got yourself a new pair of jeans and the store is happy because they made a profit.
Now let’s say you won the pair of jeans under a conventional auction at $80. The seller still paid the wholesaler $50 for the pair of jeans, so he makes a profit of $30 and he’s happy. You’ve made a saving of $20, so you’re very happy and all of the other contestants are happy because they risked nothing by competing against you in the auction.
This reverse auction merchant, would pay the same wholesale price for the same pair of jeans – $50. Just like the retail outlet, he marks it up to the recommended retail price of $100. One hundred dollars is the start price of the reverse auction.
Each time an auction contestant makes a bid, the price of the jeans is lowered by 25 cents ($0.25). The bidding process continues until a bidder likes the price and buys it, but for the purposes of this example, let’s say the auction goes down all the way to its theoretical limit of $0.00.
Here’s the kicker, it costs a bidder 80 cents ($0.80) each time he makes a bid to lower the price of the item by $0.25. You purchase these bids as “bidding credits” in packages of 20, 50 up to 5,000 bids at a time.
If I’ve done my math correctly, it takes a total of 400 bids to take the final price down to zero ($0.00) and it has cost the bidders as a whole at total of $320. The lucky last bidder got the jeans for free so she’s very happy. The company is laughing all the way to the bank with a huge profit of $270 on a pair of jeans that has cost them $50!! But what about all the OTHER PEOPLE who lost? Well, they as a whole, paid for item that they didn’t get. I don’t think they would be too happy.
And that wasn’t enough for the company. The executives have egos so big that they want to compete with the big boys – the likes of Amazon and eBay. They’ve put a compensation plan behind this whole thing and they’re inviting people to become sales reps for their product, “bidding credits”, and build a downline organisation selling bidding credits to their friends and family.
Please understand that bidding credits is NOT A PRODUCT and that people are LOSING MONEY if they do not win an auction. And since there can only be one winner for each item at auction, many, many innocent people are going to lose money playing this game.
There is a way that this company can be legal. And that is if they promoted themselves as a casino, or a gambling site and they were upfront about the risks to their customers. But the way they are currently going about business, they are going to rob a lot of innocent people of their money.
To your MLM success,
Wayne Wu
P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.
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