International Law

Fraud Links for Thursday

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Tracy Coenen, writing at Walletpop, about the YTB lawsuit, notes the similarity between YTB and Shop to Earn.

"Mutli-level marketing companies like this pop up all over the place. Their defenders claim they are legitimate business opportunities because there is a product or service being offered. Yet those involved with the schemes soon realize that recruiting is the real name of the game, making these "business opportunities" appear to be more like pyramid schemes.

One recent player in the multi-level marketing game is Shop To Earn, a program which recruits "brokers" who each pay about $448 to become a member.

As a member of Shop To Earn, they can be paid a small percentage of sales when they and others shop online using affiliate links. The real focus of Shop To Earn, however, is recruiting in new members who will pay the $448 fee to join (plus an annual renewal fee of $119).

This doesn't seem all too different than that YourTravelBiz.com program that California is going after.

Schemes like this really only benefit the owners of the company and a handful of people at the top of the recruiting pyramid, usually the ones who get into the program early.

In terms of real money to be made from shopping online, it would take thousands of dollars of shopping just to recover the membership fee.

The payouts are skimpy, often less than 5% of purchases. Even at 5%, it would take $9,000 of shopping just to recover the initial sign-up fee."

Perhaps Shop to Earn is on some State's AG hit list?

Ed Dickson, writing at Fraud, Phishing, and Financial Crimes, has a good overview of some new laws regarding online auctions.

"While stories of individual people getting scammed on auction sites are legendary, individuals aren't only ones victimized on these sites. Large retailers and brand owners are victimized when their stolen or counterfeit merchandise is sold on these sites, also. 

In response to this, two bills are being introduced to combat this problem in the halls of Congress.

The reason this has become a growing issue is that criminals can net 70 percent of the value of stolen merchandise on an auction site versus the going 30 percent received on street corners, flea markets and pawn shops.

So far as all the knock-off (counterfeit) goods being sold on auction sites, it's hard to put a dollar loss to it, but many believe it's substantial."

So what are the new laws?  You have to read Ed's blog on auction scams.

Full post as published by Misleading Advertising Law on August 07, 2008 (boomark / email).