Foreword: Following the SEC shut down of Zeek Rewards in August 2012, Bidify abolished the compensation plan detailed below and relaunched with a more “traditional” MLM compensation model.

You can read BehindMLM’s analysis and review of the new Bidify compensation plan here (version 2.0).

A third Bidify compensation plan was released on August 28th introducing some further additions, documented as v3.0.

In the interests of preserving the company’s history, I’ve left the information below on Bidify’s original compensation plan intact, but please be aware that they are no longer using this plan. /end foreword

 

I first looked at Bidify back in February 2012 to compare it to fellow penny auction MLM company Zeek Rewards.

Back then Bidify’s penny auction site, called Bidsson, hadn’t launched yet and effectively affiliates of Bidify were just recruiting new affiliates and earning recruitment commissions ranging from 5 to 25 Euros ($6.75 – $33.50 USD), depending on which membership a new affiliate purchased.

I’d previously held off updating my previous Bidify launch since without a penny auction site you pretty much had a pyramid scheme (recruit new affiliates = get paid).

After months of delays, earlier this week Bidsson finally launched and with it the greater part of the Bidify compensation plan has kicked in. With Bidsson’s auctions now live and supposedly generating revenue for Bidify, read on for a full review of the Bidify MLM opportunity.

The Company

Back in February there was ambiguity as to who owned Bidify with ‘Larus Palmi Magnusson’ appearing on the domain registration for ‘bidify.com’ with an address registered in Seychelles, an offshore tax-haven.

There was also some initial confusion as to the level of involvement of Frode Jorgensen after Rod Cook from MLM Watchdog came out and claimed Jorgensen was the owner of Bidify.

Today Bidify list Larus Palmi Magnusson (photo right) as the company CEO and owner, stating that he operates out of Iceland:

Larus lives in Iceland with his wife and children. This is also the main reason Bidify is building its headquarters here.

Despite this however, I couldn’t see an address for Bidify’s headquarters based out of Iceland. Instead, the company provides two addresses, Bidify LLC in the US and Bidify Europe Ltd. in Ireland:

Bidify LLC.
427 N Tatnall St #15902
Wilmington, DE 19801-2230
United States.
EIN: 45-5440622

Bidify Europe Ltd.
GBW 88 Lower Leeson Street,
Dublin 2, Ireland.

I wasn’t able to find any information on the connection between Bidify Europe LTD, Bidify and Ireland so for now that relationship remains unclear.

It’s worth noting too that Magnusson is listed as the founder of Bidify but also only as a co-owner, with Bidify providing no further information as to who the other co-owners of Bidify are other than ‘Bidsson and Bidify are privately held corporations, owned by several entrepreneurs from different parts of the world‘.

On their website, Bidify also name Frode Jorgensen (photo right) as their Chief Creative Officer with Jorgensen having a history with business opportunities that strongly resembled Ponzi schemes in the past.

Bidify state that Jorgensen lives in Norway and no other owners or staff are listed, indicating that Bidify’s US address is some sort of remote satellite office.

No other company addresses are provided, however the domain ‘bidify.com’ still lists the original Bidify LTD. address in Seychelles:

Bidify Ltd.
Larus Palmi Magnusson ([email protected])
Unit 117, Orion Mall, Palm Street
Victoria, Mahe, K1S5P5, SC

Despite the addition of addresses in the US and Ireland, it appears not much has changed with Bidify still being primarily registered and operated out of the offshore tax-haven of Seychelles.

Apart from the owners not having to pay tax if they don’t do any business in Seychelles, back in February I noted that Seychelles business law meant that ‘it’s extremely difficult to obtain any information about the company and/or take any action against the owners‘.

It is unclear whether or not Bidsson actually have any executive staff located in the US or not.

Both the Bidify and Bidsson websites are hosted offshore somewhere in Europe.

The Bidify Product Line

Bidify’s products are penny auction bids, sold through their penny auction website ‘Bidsson’.

In a nutshell, penny auction bids are purchased and can then be used to bid on auctions that feature on the Bidsson website.

Bidify classify bids into two varieties, ‘Sample Bids’ and ‘Retail Bids’.

Sample Bids

Sample Bids cost 1 Euro ($1.26 USD) and are purchased by Bidsson affiliates to give to Bidsson customers. Customers then use these bids to bid on any Bidsson auction.

Retail Bids

Retail Bids are purchased on the Bidsson website by Bidsson customers, cost .80 Euro ($1.01 USD) and are able to be used to bid in any Bidsson auction.

The Bidify Compensation Plan

The Bidify compensation plan revolves around the sale of bids and giving away of sample bids to generate bonus points which a daily commission is then drawn on.

GV and PV

Sales volume in Bidify is measured in Personal Volume (PV) and Group Volume (GV).

Personal Volume is calculated off your own personal bid purchases and those of your directly recruited customers. In calculating PV, 1 Euro spent on bids equates to 1 PV point.

Group Volume is calculated off the purchases made by affiliates you’ve recruited and their customers. In calculating GV, 1 Euro spent on bids equates to 1 GV point.

Qualification

In order to qualify for commissions, Bidify affiliates must have a minimum of 50 PV and have paid their 20 Euro a month membership fee.

Mandatory Account

Bidsson withhold 20% of all cash commissions paid out via Bidify in what they call a “mandatory account”.

Fund in your mandatory account cannot be withdrawn as cash, instead it must be spent at the Bidsson website.

No explanation is given as to why Bidsson force their members to spend 20% of their earnings back into the company.

 

Update July 10th, 2012 – In early July 2012 the Bidify “mandatory account” was renamed to “Frequent Sales Credit”.

The Frequent Sales Credit functions in the exact same manner as the mandatory account did and appears to be nothing more than a cosmetic change. Frequent Sales Credit is still referred to as the mandatory account in the rest of this review.

 

Update July 20th, 2012 – Bidify have finally clarified explicitly the changes they’ve brought on board in the renaming of the ‘Mandatory Account’ to ‘Frequent Sales Credit’.

Frequent Sales Credit is paid out on sales commissions earnt on the sale of purchase of bids by a Bidify member’s downline (customers and affiliates). It is paid out as a 25% credit and is only able to be used to

  • purchase retail bids
  • pay for won auctions
  • buy products from the Bidsson website
  • pay for monthly membership

In the long-term I’m not sure how sustainable this artificial 25% credit injection into the business is going to be, given that retail bid purchases do attract a rolling liability for Bidify in the form of commissions.

Essentially the credit is created out of nothing and wholly counts as a rolling expense for Bidify that will only increase over time, both in terms of bid sales increasing and raw affiliate numbers the credit has to be paid out for.

 

Update July 22nd, 2012 – Bidify affiliates are still reporting that functionally the FSC is the same as the old mandatory account:

Can anyone tell me if Bidify still takes out 20% when you turn repurchasing off?

Confirmed, it is deducted and credited to fsc. When I turned off my re-purchase, the amount should be on the cash available balance is off 20% and that difference was added to my fsc amount.

In the transaction history it will show that 100% of the leadership bonus is withdrawn, but it doesn’t reflect on the cash available funds.

As I currently understand it, if you re-invest your daily earnings nothing it taken out. However if you withdraw your money, Bidify keep 20% and force you to re-invest it back into the company.

Why Bidify continue to present the FSC differently on their website as to how it works functionally is unknown.

Affiliate Purchases

Bidify offer commissions on the purchases of recruited affiliates. There are two types of affiliate purchase commissions offered, a one-time purchase commission and a residual monthly purchase commission.

The one-time purchases available to affiliates are available as follows (note that all purchases attract 50 PV):

  • Prepaid Mastercard – 100 Euro
  • Prepaid Mastercard + 50 sample bids – 150 Euro
  • Prepaid Mastercard + 150 sample bids – 250 Euro
  • Prepaid Mastercard + 500 sample bids – 550 Euro
  • Prepaid Mastercard + 1000 sample bids – 1000 Euro

The residual purchases (monthly) made available to affiliates are as follows:

  • 50 retail bids (50 PV) – 50 Euro
  • 100 retail bids (100 PV) – 100 Euro
  • Prepaid Mastercard (one per affiliate, 50 PV) – 100 Euro

Commissions on these affiliate purchases are paid out via a unilevel commissions structure that extends down 15 levels.

A unilevel commissions structure places you at the top with legs branching out to any affiliates you personally recruit. These affiliates form your level 1 and any affiliates they recruit form your level 2 and so on and so forth.

Commissions paid out on the affiliate purchases above are dependent on which ‘bonus tier’ affiliates fall under, as outlined below:

  • Tier 1 (5o PV) – 5% on level 1, 3% on level 2, 2% on level 3 and 1% on level 4
  • Tier 2 (50 PV + 100 GV) – 5% on level 1, 3% on level 2, 2% on level 3, 1% on level 4, 5% on level 5 and 1% on levels 6 to 9
  • Tier 3 (50 PV + 200 GV) – 5% on level 1, 3% on level 2, 2% on level 3, 1% on level 4, 5% on level 5, 1% on levels 6 to 9, 5% on level 10 and 1% on levels 11 and 12
  • Tier 4 (50 PV + 300 GV) – 5% on level 1, 3% on level 2, 2% on level 3, 1% on level 4, 5% on level 5, 1% on levels 6 to 9, 5% on level 10, 1% on levels 11 to 14 and 5% on level 15

Retail Bid Purchases

When a customer you refer to Bidsson or an affiliate you’ve recruited purchases retail bids, you as the referring or recruiting affiliate earn a 25% commission on the price of the bids purchased.

Sample Bid Purchases

If you recruit an affiliate and they purchase sample bids, you earn yourself 5% commission on the purchase price of the bids.

This extends down a further 2 levels on the purchases of bids made by affiliates recruited by the affiliates you recruited (your level 1).

  • Level 2 (must have 100 GV) – 5%
  • Level 3 (must have 200 GV) – 5%

Leadership Bonus

When Bidify affiliates purchase sample bids and give them away to customers, upon use of the bids by the customers, the Bidify affiliate who gave the bids away earns 1 point in the Leadership Bonus.

This can happen in two ways:

  • you yourself can give the bids away (1000 per customer)
  • you can give bids to Bidify who then give the bids away to customers who sign up on Bidsson

In both scenarios once a customer uses a bid you’ve given away, you then receive a bonus point.

Bidify claims to reserve up to 50% of its daily revenue from Bidsson and at the end of the day calculates how much of this revenue is then to be shared with qualifying affiliates, with each bonus point qualifying as a share in the revenue share.

Each point generated via the giving away of sample bids has a life span of 120 days, after which it expires.

Bidify Dream Weekend

Each quarter Bidify picks 10 affiliates at random (must be qualified for commissions) flies them to an undisclosed location for a weekend holiday (Bidify pay for airfares and accommodation).

Bidify Champions Getaway

Each quarter Bidify select their top ten GV producing affiliates and award them with a ‘7 day, 6 night getaway for two, to a luxury destination in the world‘. As with the Dream Weekend, Bidify pay for airfares and accommodation.

Joining Bidify

Membership to Bidify costs 100 Euros ($126.7 USD) and then 20 Euros ($25.30) a month thereafter.

Conclusion

When it comes to MLM business opportunities, details like who owns the company are important and quite frankly when we’re talking business registration in the tax-haven of Seychelles and involvement of Frode Jorgensen (who has a questionable history), naming anonymous co-owners is nowhere near good enough. Least of all it certainly doesn’t inspire confidence in the company.

Looking at the business model, Bidify’s biggest positive is that bids are actually only credited as bonus points once they are used. It’s still entirely possible to create dummy accounts (submitting an email appears to be all that’s required to create Bidsson customer accounts), but unless the people who control those accounts actually login to Bidsson and use the bids, the affiliate that dumped the bids on the account doesn’t get any bonus points to earn commissions on.

That in itself goes a long way to ensuring that even if dummy accounts are created, the bids are being used rather than just turfed after a set amount of days because points are awarded on them the moment they are transferred to customer accounts from affiliates.

With the use of bids required before bonus points are paid out to affiliates, you can’t just reduce Bidify to “the more money affiliates spend on sample bids = the more they earn in the profit share”, so this is definitely a crucial plus in the compensation plan.

 

Update 22nd July, 2012 – I’ve been informed that use of the bids is not required to receive credited points, the purchase of bids is where the points are generated.

This means that affiliates are wholly able to invest in bids and dump them on customer accounts, with what happens to the bids not having any bearing on the daily ROIs paid out.

Still, analysis of the Bidify compensation plan is not without concern. First and foremost is the unexplainable ‘Mandatory Account’ that Bidify retains 20% of all cash earnings into.

This quite frankly has all the hallmarks of similar “forced re-investment” clauses  put on earnings in today’s typical Ponzi scheme business models. With these schemes paying out the entirety of their commisions from member’s money (both new and existing), they force members to re-invest some of their earnings to boost the payout pool and keep the scheme afloat longer. More money kept in the system is directly related to (temporarily) boosting sustainability.

Bidify claim the profit share is made up only of 50% of the daily revenue generated by Bidsson. If this is the case then either the daily revenue generated by Bidsson is sufficient or it’s not. Forcing members to spend a percentage of their earnings doesn’t exactly lend the impression that Bidsson’s auctions are generating the profits needed to sustain the Bidify compensation plan.

Fair enough that the auctions have just started but as I understand it, Day 1 of the Leadership Bonus returned a 5.8% profit on purchase price of sample bids purchased, given away and used in the auctions.

Obviously this isn’t indicative of regular daily percentage payouts but the need for mandatory account seems completely unnecessary. To be honest I can’t see any reason for it other than to prop up the penny auctions (and by proxy the Bidify compensation plan) which, by rights should be generating enough revenue to sustain the compensation plan without forced spending from affiliates.

My other major concern is typical of these kind of profit-sharing schemes and it’s that for each affiliate participating Bidify needs to pay out a >100% return on the purchase price of each bonus point generated.

This return needs to be paid out within the 120 day expiration and guarantees a constant requirement of growth in the Bidsson penny auctions.

With no business having infinite growth, this creates a problem of long-term sustainability and viability of Bidify.

Supporters of schemes like this will tell you that if the profits dip then so too will the payouts, but they leave out the inconvenient fact that if Bidify are paying anything less than a 100% return come the 120 day expiration date of bonus points, nobody is going to bother with the scheme.

Logically this shouldn’t have an impact on Bidsson and affiliates can still make commissions on retail bid purchases. However with the Leadership Bonus profit share being the biggest marketing drawcard of the Bidify compensation plan, I’d even go so far as to say that without it, nobody would bother trying to earn commissions in Bidify as an affiliate.

Then of course you need to factor in that with the 120 day expiration, affiliates also need to be able to generate enough money (sans 20% which is confiscated by the company to be re-invested back into the company via bid purchases and what not), to sustain their bid balances and ideally grow them.

Not only to Bidify have to pay out >100% on the cost of each bonus point generated, they also need to pay out affiliates enough to buy more bids to generate more bonus points then they started with in any given rolling 120 day period.

With every affiliates’ bonus points growing indefinitely, this is simply mathematically impossible as there is always going to be a theoretical fixed cap on the revenue Bidsson generates (penny auctions don’t generate infinite revenue).

All in all I think Bidify is definitely a step in the right direction with the use of bids being required before bonus points are generated however the concerns above are also very visible red flags that I think need to be addressed.

The company owners coming out from under the curtain and clarification on the legal status of the company location wise wouldn’t hurt either. Bidsson state in their ‘policies and procedures’ that

Jurisdiction and venue of any matter not subject to arbitration shall reside exclusively in Wilmington, Delaware.

Yet  with known executive management operating out of Iceland and Norway, other unknown owners based “all around the world”, company registration in Seychelles and website hosting offshore somewhere in Europe, I think there’s a bit of a question mark on just how much weight that claim really carries.