Incredibly detailed look at Internet marketing scams

The Verge's Joseph L. Flatley delves into the world of Internet marketing scams (those stupid spam pitches you get for "lead generation" and such) in eye-watering detail. Fundamentally, these things are exactly what they appear to be: con artists who suck money out of desperate people by lying to them about the money they can make with "work from home" businesses. They're pyramid schemes. But Flatley lingers on the personalities, the histories, the motivations and the unique innovations that the Internet has given rise to, providing insight into the feel of being inside one of these desperate, sweaty scams.

If anything, Internet Marketing is a form of "pure marketing" that exists often without the complication of an actual product. Rather than develop something useful, Internet Marketers create something out of thin air: likely a worthless e-book, or some sort of coaching session that consists of a semi-regular phone consultation.

"Well, yeah," Dillon Miles said, a little uncomfortably, when asked about this. "I think there's a lot of that going around. There's a lot of people that will teach you how to make money. It's just, the thing is, like, an information product in that niche, is, I mean, how tangible is that information? What is someone going to do with what you tell them. Most people won't do anything with it. You know, 90% of the people who get that information product, really aren't going to do anything with it. It's no different than when our country tells people to go to college for, you know, eight years, four years, like I did and expect a job when they come out. And then there's no job.

It was hard to get him to stay focused. I couldn't tell if he was talented at deflecting this kind of criticism, or if he just couldn't follow a train of thought. Or maybe he felt bad about the whole thing and refused to think about it. When pressed, he would either offer a variation of the "it only works if you work it" language of Alcoholics Anonymous, or express his frustration at not being able to get a job. He repeatedly positioned his Internet Marketing materials as a replacement for college, or said that college is the real scam.

"I just want to make sure we're clear," I said towards the end of our conversation. "You said that this was no different than going to college, but then you said college was a rip-off. Is this [Internet Marketing info-products] a rip-off? Is that what you meant?

"Well, it could be. I mean, that depends on what the person thinks. I mean, the products we sell, you get a sixty-day, money-back guarantee. I don't remember the last college that gave me a money back guarantee. But I mean, it's all relative. Like, I try to put projects together that people find valuable, but information is such an intangible asset that it's hard to qualify."

Scamworld: 'Get rich quick' schemes mutate into an online monster (via Waxy)

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    1.  Worse. These guys form cartels to create networks generating fake “social proof” to make it look like they are credible. These manipulative cartels make it difficult for the average person to determine the truth or validity of what these hucksters are selling (which is hot air).

    2.  Kind of /sometimes.  Sometimes what happens is the new fangled Internet Marketers sell their new “clients” emails to existing telemarketing/boiler rooms.  Other times, the Internet Markers just keep selling larger and larger “info products” to their “clients”.  Either way, it winds up operating a lot like Amway–the more deeply you commit money to it, the more these IM “gurus” are re-programming your brain.  Before you know it, you’re paying out a couple grand here and a couple grand there to go to all these seminars.  All they really do at the seminars is teach you to buy… Even More Crap.

      In a few Worst Case Scenerios, this has resulted in Death:
      http://www.cbsnews.com/8301-504083_162-5378668-504083.html

      For my part, I never gave any of these losers any of my money.  But I was (once) listening to a pair calling themselves “Sterling and Jay”.  They had me convinced that “you can too!” make a fortune online and alls you’d have to do is learn all this snazzy stuff.  I was dumb.  I’d feel more self-conscious about it, except I know I am not alone.

      Scammers suck.  Don’t quit your day job.  Unless you have an actual good reason.

    1. Yes, he was suspended from Twitter, from Youtube, and from BlueHost (his first web host). Why? None of them will stand up to legal threats from scammers with cash for bully attorneys. Ultimately, he found a non-profit free speech server, and you’ll find his blog at saltydroid.info

  1. When a relative of mine lost his job as a high level manager at a major retail chain and was having trouble securing a new job these amoral euphemisms attacked.  It was disgusting.  We’re talking about a man they drool over.  Trusted, hardworking, with a large group of social connections, and most importantly floundering and desperate in a bad job market. 

    The scam was Fortune High Tech Marketing (no link, they don’t deserve the traffic.)  The pitch is easy, “For services you already use make money!”  It’s a classic pyramid with a small twist.  You subscribe to a set of selected service providers such as security systems providers, satellite providers, vitamin stores (are you seeing the product cartel yet?)  Each month you get a referral payment from them (a tiny amount compared to the price on a contracted service.)  But if you get your friends to buy in, you also get a a cut of their referral payments as well and on down the line.  You could make thousands a month!   And you get free video and voice conference calls with tips to grow your business! Not to mention your own horribly designed web portal to sell these junk services just like the other several thousand they have right on the same domain!

    I had to buy in with him.  He was family, down on his luck, and they had him believing (or at least wanting to believe) it was legitimate.  It was pity.  It was the worst in my emotions fueling their machine.  It took him forming his own service business in landscaping and pool repair to kick the disease.  I’m glad he did.  He got more confidence back from those days in the sun than he ever did on any inspirational call.

    I still have their materials and I believe there is a class action going on against them right now.  But don’t worry, the a-team will settle for a fraction of the business profits and then start a new company with a new name in a couple of years.

    If you ever hear this kind of pitch in your life do what my awesome friends did when they heard the pitch.  Listen, smile, and then remind me that they new what I already did: “This shit is a scam.” 

    1. This sounds so similar to the MLM companies like Amway and Melaleuca, both of which I attempted at different times in my life. I have come to realize the a large majority of the Big Earners, ie. those who make low six figures in this industry, have become Opp Hoppers. Many of them started in Amway in the Eighties, building large organizations that bought their marketing advice as well as products. Then when an group got too profitable, Corporate would change the comp system to deny the Top Earner quite a bit of bread, so said Top Earner would migrate to another “opportunity” and take his Top Earners along with. Then they would repeat the process with the latest New Deal. It took me a long time to realize what crap it all is, but then again, I never really got in deep. I spent 6 months and thousand$ trying to replicate their successes but failed miserably. Not a pleasant experience.

      1. Honestly read my reply below.  Said friend has never talked anyone into “getting” under him.  The website profile he allows me to use would show if he had any “IBOs”.  He doesn’t.  Energy drinks, the skincare from Artistry which is Miss America’s premier skincare they use in competition, and several other things including random customer clicks on Best Buy’s site through Amway.  Increased his account statement by 2,000.  This month it’s only by 200. And he doesn’t think he’ll get more than 300 more by the end of May. It’s a slow month. He has his ups and downs.

        I think he said the price he paid to activate through it was 200, several years ago. Before Amway went internet. Even if he made nothing till last year, he’s paid himself back on activating, and keeping the website services through a yearly 30 dollar fee.

    2. Forgive me if my question sounds accusatory or suggests that you and the rest of your family didn’t support and help him, as that’s not what I mean, but since I don’t have any other information I’m afraid that’s kind of what it’s going to sound like.

      Instead of buying in, why didn’t you instead pull him out and see about getting some financial support from family while he could get his affairs lined up? (I don’t mean to presume that he didn’t receive any help from family–you just didn’t volunteer that information, so I have no idea.) Granted, that can quickly become a tremendous amount of money, yes, so if that was part of the problem (assuming there wasn’t any financial help, since I don’t know either way), that’s understandable, and some people are too proud for charity. But anything’s better than being manipulated by those scumbags.

      The local job market was very bad for people of my skillset when I was home during the summers in college, and my dad was on my case for me to find a job (while recognizing that it was difficult; he wasn’t merciless). He only ever directly told me not to take two jobs.

      One was a job opening for sealing driveways. He bluntly told me not to apply for it, since he’d rather me sit at home and do nothing than work with those chemicals. The other was a very Amway-like scheme selling kitchen knife sets (I won’t dignify them by naming them, because they deserve to be entirely forgotten once they’re dead) that I was sucked into completely during the pitch. After I got home and was telling my dad about it, he figured out what was going on and asked me one or two questions that pushed the house of cards over, and I never looked back at them again.

      Looking back at it, it’s one of the most clever things my dad’s done. With two simple questions, he saved me a chunk of money (because you had to buy into the whole program to start) as well as my dignity.

  2. “It’s no different than when our country tells people to go to college for, you know, eight years, four years, like I did and expect a job when they come out. And then there’s no job.”

    This.  Yes.

    Not to mistake this grain of truth with support for these scammers… because B is true does not make A true also, but college is now equivalent to a high school diploma, it’s like a box you have to check off, but the actual value it provides to a potential career is negligible at best. Nobody I work with learned software development in school, they almost all self taught to get in the door and then learned on the job. The only friends I went to school with who are working in their field of study had to go to grad school, and half of them also never worked in their field (Harvard bio-mechanicas PHd is programming Java now…).

    I don’t know the solution, but with the rising cost and privatization of education, I don’t think college is the answer.

    1. “but college is now equivalent to a high school diploma, it’s like a box you have to check off, but the actual value it provides to a potential career is negligible at best.”

      The Social Signalling that college gives off to employers is arguably one of the best, most reliable ways to boost your career and lifetime earnings.  Especially if the college you go to has name recognition, employers will notice. Not only will they notice, they will instinctively trust you more because you share an important characteristic with them; you’ve both gone to college.  This is obviously not always the case, but the rare manager or HR person hiring who has not gone to college is the exception that proves the rule.

      Now in terms of economic efficiency this whole system is pretty awful.  It’s almost built to misallocate resources; it wastes your time and money, and the provides the firm with a bad set of standards to base hiring on.

      The problem with this situation is that there is no good fix.  Like most societal-level problems, this vortex of credential-signaling exists because of many reasons; it’s very simple, statistically better than many methods (you will hire bad people but on average you will get some good ones), and perhaps the most important is that the US has worked this way for a really long time.

    1. The real problem is that the feature’s author is trying to dig down to a genuinely malicious vein of evil in a certain business niche but then decides to TNT the entire mountain.

      There are scammers and scumbags in that field, no doubt, but innocent parties are getting caught up in it too. This happens all the time when people set out on witch hunts that “rational” people can buy into (see McCarthyism). Most rational, geeky types are against advertising and “marketing” from the off and are happy to dispel their rationality if it comes to raising the pitchforks against anyone making a buck.

    2. The real problem is that the feature’s author is trying to dig down to a genuinely malicious vein of evil in a certain business niche but then decides to TNT the entire mountain.

      There are scammers and scumbags in that field, no doubt, but innocent parties are getting caught up in it too. This happens all the time when people set out on witch hunts that “rational” people can buy into (see McCarthyism). Most rational, geeky types are against advertising and “marketing” from the off and are happy to dispel their rationality if it comes to raising the pitchforks against anyone making a buck.

      1. “a genuinely malicious vein of evil in a certain business niche”

        And? What’s your point?

      2.  Wrong. He is very specific, and YOU are the one being dismissive by trying to make it a generality. THAT is how the scammers do it: they make everything vague and general (“internet marketing”) so people will not question WHAT it is specifically that they are talking about. People like you HELP scammers by enabling that lack of accountability!

      3. Peter, you troll! I just discovered your boot-licking comment on slickster Frank Kern’s facebook wall. You’re just one of his sycophants. Apparently he’s getting people to shill for him in an attempt to spin the truth exposed here. So typical of these characters. Shame on you!

        1.  Yes.  It’s the “fake social proof” part.  There’s a lot of people that really believe Frank is a great and successful guy in spite of Franks run-ins with the FTC.  Crazy.

    3. Frank Kern is SPINNING it. “Irwin Frank Kern” got in trouble with the FTC a few years back with something called “Instant Internet Empires.” Then, he claimed he was super successful selling “dog training ebooks.” (Baloney.) From that, he claimed he was an “internet marketing” expert. In other words, all built on b.s. As he says in that video – it’s all how you manipulate people into thinking you are “the bomb.” He uses his cohorts to generate false social proof to sell outrageously priced infojunk. Like all hustlers, he comes across as charming. That’s all he really offers though – charm.

  3. This, and casino gambling that exploits the sunk-cost fallacy, are the two examples that spring to mind when I despair of capitalism ever working. The social psychologists and situational psychologists have documented that there are built-in limitations of human cognition, points of vulnerability that can be hacked via proven methods, and it increasingly looks like fewer than a quarter of us CAN learn, let alone ever will learn, how to armor over those vulnerabilities.

    It’s fashionable to call the lottery a tax on people who are bad at math. And it is, because it exploits most people’s flat-out inability to imagine a number larger than 1,000, it exploits the fact that once you get past 1,000 most people conceptualize the numbers logarithmically. (To most people, 10,000 “feels” like it’s about twice as big as 1,000.) Lotteries, like most forms of gambling, also exploit the sunk-cost fallacy, the sense that it’s “giving up” to quit before you earn your sunk money back, even if it’s impossible to do so. It ought to be possible to educate people out of slot machines, lotteries, etc … but most people will nod along with you, take notes, paraphrase it back to you, and then go right ahead and fall for it next time anyway.

    I bring up that example because multi-level marketing is just as much of a tax on people who are bad at math. You only need to learn one simple rule to keep from falling for MLM scams: if the only way to profit from a “business opportunity” is to recruit other people into it, if the only people making any money are the people running downlines and not the people who are actually doing the business, then it’s a scam.

    This can be demonstrated with simple math, showing that (depending on how many people you have to have in your downline) every pyramid scheme HAS to crash when it gets to around 9 layers deep, because there aren’t enough people left on the planet to make up the 10th layer down. At that point, everybody who is still invested in it, everybody who hasn’t cashed out, which is to say everybody below the first or at most second layer, loses everything. Every time. It has to happen that way. It’s simple math. And you can show this math to someone, and they can take notes, and they can paraphrase it back to you and demonstrate that they understood it … and then they’ll fall for it again the next time, most of them.

    If three quarters of the people on the planet cannot learn not to fall for these scams, then there will always be a Syndicate of scammers who are rich enough to buy political parties outright, so you can’t keep the scams illegal. So unless someone finds an actually effective and highly infectious memetic cure for scam vulnerability, this is our fate: most people dead broke, some people not currently clipped all the way to death, and a couple of dozen fabulously wealthy scammers. That’s late-stage capitalism, that’s what it’s just plain going to have to look like.

    What is there that can be done about this?

    1. ALL capitalism is owners running downlines and sucking up cash, while down the line is vanishingly less capital.  MLM just takes this concept to its digital, intangible extreme.  Sure, it’s a scam.  It’s ALL a scam.

      1. “ALL capitalism is owners running downlines and sucking up cash, while down the line is vanishingly less capital.  MLM just takes this concept to its digital, intangible extreme.  Sure, it’s a scam.  It’s ALL a scam.”

        I really wonder what the MLM-addled people have actually done for work, because I’ve never ever worked at a job that’s like a pyramid, and I’ve worked at some of the larger tech companies out there.

      2. There are plenty of relatively efficient markets that disprove your hypothesis.  

        More importantly, even if your statement were true, we would run up against the problems that capitalism is still the least terrible system for societies to allocate resources and motivate work.

        Oh god three econ classes and I’m turning into a hack monetary person.  Please someone kill me quickly.

        1. I didn’t say it didn’t “work.”  But I did say it is a scam, which it all is.  Socialism is just a different scam.  Communism is yet another one, and so on.  Capitalism *cannot* exist without some version of class or rank order.  And in capitalism, the top controls the capital, and the bottom fuels it.  There’s nothing to disprove.  Facts are facts.

          1. “Capitalism *cannot* exist without some version of class or rank order.  And in capitalism, the top controls the capital, and the bottom fuels it.”

            I agree.  I took your initial comment to mean that all such systems were comparable in results and outcome. But obviously that’s not what you meant, my apologies.

  4. I went to high school with a guy who tried to recruit me with a similar line: “Why waste your time at college when you can make millions now?” – with some sort of motivational-tape reselling gimmick.

    Years later, Facebook indicates he’s still bouncing around, and recruiting for, various MLM scams.  College was probably less effort, overall, than those schemes.

  5. *blinks then looks at the multiple customers a friend has, and does not share out with anyone else. Since that would remove his profit from said customers*  Well, one would think a retail specific site linked to an owner number would cause a person to be the only one to receive the bonus checks. 

    Oddly enough, he decided to never try to talk to anyone about making a profit through the company, and just sells to people.  His last bank statement had increased by 2,000 dollars due to his end of the month total profit check.

    So the next question is.  Do these people sign up first or work with someone who provides start up products in something called a “grand opening” or something similar.  Anyone deciding to order immediately, orders from said “upline’s” retail account.  Money from the sales opens the wholesale account, then the retail profit is transferred over.

    I’ve been introduced to 2 like that. 

    The next thing is, call the Better Business Bureau direct and tell them what company it is and what they’re doing.  Either a) They’ll tell you they’ll get after the company immediately or b) tell you that after several years and several presidents (democrat and republican) the company has stood firm as being legal and above board.

    After that, find out which sub-groups the company disowned for breaking the rules laid out by the Better Business Bureau.  Then see if the ones that weren’t are any good.

    1. “call the Better Business Bureau direct”

      What the fuck does the BBB have to do with a business’ legitimacy?

      The BBB is not a Government agency.

      1. There are also allegations that the BBB takes bribes for good ratings so…there’s that.

  6. Well, how else are the bleating citizen-sheep going to achieve that holiest of all  American myths; the proverbial oft-used “American Dream” pile of BS that a multitude of non-Dream attainers continue to buy into?

    1.  Well hell, if it delivers, it’s easier than working 40 hours, then 30 more at a second job to increase the money in your bank account enough to where Social Security will be a nice addition, instead of the end all be all “You live on this or nothing” that some people seem to treat it as.

      1. The idea that our society requires approximately 70 hours a week of hard work + commute to retire comfortably…. makes me want to listen to My Chemical Romance and slit my wrists.

    2. That’s why they call it The American “Dream”.

      Zing!

      Seriously though, it could improve.  What do I propose?  It’s simple; we kill the Grover Norquist.

  7. My wife’s dentist and her husband set up a meeting to talk to me about a business opportunity.  I assumed they had some dentistry-related plan that needed my IT skills.  The couple showed up dressed in their Sunday finest.  Strange, I thought, figuring they must be stopping by on the way to a wedding.  The first 15 minutes were scarily nebulous as the husband talked about networks, connections, synergies, etc.  Growing wary, I jumped right to the point, “Will this business opportunity leverage my professional skills in any way whatsoever?”  “No,” they replied.  “Then I’m not interested.”  “But you haven’t even heard the proposal,” they protested.  “I don’t need to.”  Turns out they were Amway freaks …

    1. A friend of mine invited me to his house for a presentation. Magical blueberry juice distributorships. At least the huckster was cute.

      1. Half the antioxidants as green tea, 1000x the cost, drop-shipped in 2lb packages every week!

      2. Half the antioxidants as green tea, 1000x the cost, drop-shipped in 2lb packages every week!

      3.  I don’t get it, you used to infuriate me with every other comment.  Now they all seem hilarious, cute, perceptive or all of the above.

        What happened???

      4. But “your friend” probably didn’t tell you it was a presentation. A friend of mine showed up for his friends offer of “dinner at my house” and thought it was an intervention. 

        My dad would do this with his Amway dreams. I would run away, I couldn’t stand the trapped look on peoples faces. Yep, I was an exceptional 12 year old, anti-authoritarianism to the bone. 

        1. No, I knew that it was going to be a presentation. I just thought that it was going to be on the stock market. I mostly went so that I could get drunk with his mother-in-law. So….mission accomplished.

        2. My grandma bought Amway dish soap when I was a kid.  I remember after she went on and on about it, I washed my hands with some of it and remarked, “seems thinner than regular soap.”  She stopped buying it, LOL.

  8. Falling wholesale for this sloppily written report shall make one seem as intelligent and objective as the people who immediately buy all the propaganda pushed by their political party of choice (Obama is “evil?” Please..)

    There are surely many scammers and scumbags in that world but the author paints with a wide and sloppy brush and has caught folks who are doing good work and running an honest business in their net. But, sure, if you don’t want to be objective, support ethical journalism, etc, then go ahead, fall for every word of this “report.”

    1. “the author paints with a wide and sloppy brush and has caught folks who are doing good work and running an honest business in their net.”

      Sounds like someone’s still got hope for his MLM to take off!

      Sorry guy, some business models ARE exploitative.

  9. Here is how to get rid of these scammers when they want to sell you their crap, lets use a real life example: Internet Marketing Scammer Shane Natan.

    Looks like “Scammer Shane Natan” got rid of the pictures that
    exposed him as a scammer and bogus seller, nevermind. Here is the same
    post with “new links” just for you, Shane:

    This is “how to get
    rid of the scammer Shane Natan” when he tries to sell you crappy fiverr
    clones that “could make millions” OMG! :

    Step1: Recieve the offer
    http://i54.tinypic.com/bfrztl.jpg

    Step2: trick him and make him think you actually believe he is a great guru and stuff like that
    http://i51.tinypic.com/1zcl1r7.jpg
    http://i51.tinypic.com/n1sagy.jpg
    http://i54.tinypic.com/2qaid7o.jpg

    Step3: When he tries to get your credit card number through the gmail chat tell him to f*ck off.
    http://i51.tinypic.com/2nqbndx.jpg

    Rinse and repeat with the next WSOs seller, guru etc.

    Just in case you wanna see a copy paste of the chat between the scammer Shane Natan and me go to:

    http://saltydroid.info/the-greatest-douche-in-the-world/

    In
    the comments section you will easily find it along with some discusions
    between Shane Natan the Scammer himself and some posters of Salty
    Droids blog. BTW: Shane Natan Scammer, thanks for digging you own grave
    by using such ridiculous answers.

    See it for yourself:

    http://saltydroid.info/the-greatest-douche-in-the-world/

  10. In 1972 my brother answered an ad in the employment section of our local paper. The ad was simple:

    ~Want to learn the secret on how to make free money? Send $1 for instructions immediately to…..~

    What he received back was simple:

    ~Post the same ad you responded to in as many newspapers you can afford.~

    He shared his experience with all of his young friends, I’m sure most of them aren’t fooled today with all this fancy internet stuff. I know he’s not and neither am I.

  11. I’m glad to see this topic hitting the mainstream, although I do suspect it will color people’s perceptions of honest marketers that also use methods like an email list, for example. Having an email list isn’t bad… its the syndicate/cartel style preying on the wallets and emotions of the people on the list that is bad, and deserves public attention just as would happen if this were the auto industry, or the steel industry, or something else.

    I got suckered for some big bucks by these guys a few years back, though thankfully ended up tossing it all aside and eventually still built a successful business despite their best efforts. More on me getting suckered here: http://www.jonathanboettcher.com/stores-online-ripoff/

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