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Today I came across two Google adverts offering ‘Free XBOX 360’s - a tempting offer which I’m sure gets many clicks, I for one was curious to see what it was all about. It turns out that a form of Pyramid Selling is doing the rounds online, instead of receiving commission on referrals however, electronic goods such as Xbox 360s and Apple iPods are sent to the successful originating participants ‘free of charge’.

These ‘free gifts’ are sent in exchange for the immediate purchasing of goods from the likes of Coral, TalkTalk, AOL or other vendors - followed by the successful follow-on purchases by ten friends or contacts. Some bright sparks have realised that all they needed to do was set up pay per click adverts in Google or Yahoo! in order to find their ten pyramid friends and receive their free gifts.

I looked at an offering from ‘Give away network’ who were advertising on Google - they have the following terms and conditions for registrants wishing to receive their ‘free gift’:

1. Complete 1 offer which is approved and credited by the offer provider.
2. Refer at least 10 unique people (”referrals”) who properly sign up and complete 1 offer as specified by the terms of this agreement.

Their offers were from:

• easycinema DVD rental
• Coral betting
• SmartStamp (Royal Mail)
• Deal or No Deal
• AOL Broadband
• FastHosts
• GreenFlag
• LoveFilm
• TalkTalk
• Yahoo Personals

This all seemed quite similar in a way to the word of mouth marketing company BzzAgent which I wrote about recently, the twist being that it’s not just proving you recommended products that counts towards your earnings, but actually ensuring that sales go through.

Essentially this is affiliate marketing on the part of ‘Give away network’ who will make money out of all eleven transactions that take place by charging the vendors - presumably enough to make it worth their while in sending out an Xbox 360 (£265) for free, the costly marketing is done by the participants.

Another Google advert I came across for freepay.com seemed quite misleading:

Free XBOX 360 - UK Only
Answer our 5 question survey and we’ll ship you a free Xbox 360!

On closer inspection it wasn’t just answering 5 questions that lead to the shipping of a free Xbox 360, it was the same format as ‘Give away network’ - buy something, then get fifteen other people to buy something too.

As far as I’m concerned this is a form of Pyramid Selling scheme, instead of participants receiving a cash reward per transaction they receive electronics. I’m sure that those companies offering such services call this ‘Multi Level Marketing’ but from the definition of Pyramid Selling I found on the Lincolnshire Police website it’s clear what this is all about:

This is how a pyramid scheme works: As a potential member, you are asked to make an investment (buy from AOL) and then you have to recruit other people to the scheme (please buy from AOL). These people then make further investments into the scheme and you are supposed to be paid out of their investments (Free Xbox 360).

Seem familiar?

Technorati Tags: Trading Schemes, Multi-level marketing, Pyramid Selling, Chain Letters, Gifting Schemes, give away network, easy cinema, yahoo personals, aol, talk talk, lovefilm, green flag, Multi Level Marketing

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