International Law

Why do people fall for these scams?

Tracy Coenen writes:

"I was just reading on TechCrunch about a scam called Bux.to that looks poised to fold. Members are complaining that they are not being paid the money they've earned. The site shows some comments from supposed members who say they've been paid, but it's sketchy whether or not that's real.

Bux.to is your typical Ponzi Scheme (or pyramid scheme, if you prefer). The scheme offers you one cent each time you watch a 30-second advertisement. You also get one cent each time someone you recruit into the scheme watches a 30-second advertisement.

Basic math leads us to the first hint that this might be a pyramid scheme. You could watch a maximum of 120 ads in an hour, netting you $1.20.

Not exactly a living wage. So it's made abundantly clear that the only way you could really make money in the scam is through recruiting others to watch ads.

But can you imagine how many people you'd need to recruit and how many ads they'd need to watch in order for you to make any money? Laughable!

This scam is so silly! And they're offering sign-up bonuses of five cents.

Hello!"

This is not a scheme designed to make anyone money - it is designed to enable money laundering.

The low payouts are designed to keep it under the radar - until millions are transferred, almost untraceable.

The basic idea is to have the mules sign up for a massive number of accounts, which by their nature are small.

These accounts are aggregated by the scheme, allowing significant transfers of money without alerting any of the regulatory authorities.

Full post as published by Misleading Advertising Law on April 10, 2008 (boomark / email).