Following the aftermath of the collapse of Zeek Rewards, much attention has now been focused on the MLM penny auctions still standing.
With the money rolling into Zeek it didn’t take long for a slew of copy-cat competitors to spring up. Grab a penny auction script, engage some drop-ship suppliers (or just use Amazon) and off you went.
The MLM penny auctions in the article above are all currently in pre-launch and following recently development, it remains to see whether they will indeed proceed to launch. I have read a statement from Global One for example reassuring their members that they are going ahead with their point based compensation plan, regardless of what happened to Zeek.
Looking at the penny auction MLMs that have already launched, Bidify has undoubtedly received the most attention. I myself continue to receive email requests daily asking for a review on Bidify, despite the fact I already published one back in late July.
As a points based MLM penny auction that fundamentally works in the same manner as Zeek Rewards, I have no doubt that the same Ponzi scheme mechanics exist within Bidify.
Having kept track of the daily ROI the company was paying, I’d observed that after kicking off with an initial 5+% ROI pay out, this steadily decreased to regular payouts in the low 1%s, with the daily percentage rate even dropping to as low as 0.8% over the last few weeks.
Naturally the first few days of Bidify members investing in new bids shortly after launch skewered the daily ROI rate average but by all indications, even with 120 days to recover their bid purchase investment, the continuously dropping daily ROI rate wasn’t painting a pretty picture.
In any case, any planned analysis of the ROI Bidify was paying out are now dashed with the company informing members that they have scrapped the points compensation plan they were using.
Initially (as in within 24 hours) Bidify announced they were reducing the maximum investment US-based affiliates were able to invest down to 5000 EUR.
Quite obviously with this having no impact at all on the whole investment style points compensation plan, I saw this as nothing more than the continued cosmetic dressing of a Ponzi scheme compensation plan we’d witnessed over at Zeek Rewards for months.
Indeed this of course appeared to be nothing new to Bidify, with the company previously announcing the scrapping of their “Mandatory reinvestment account” for affiliates, which ultimately wound up being nothing more than a name-change to a “frequent sales credit account”.
In their announcement scrapping the points sytem, Bidify write
We understand that many of you want to know specifically
what factors distinguishes us from Zeek.
Well, for starters, we’re not lying to you about the numbers. We publish our earnings daily. Those earnings drive the daily profit rewards.
Mechanically, despite the fudging of the Zeek Rewards daily ROI percentage by Paul Burks constituting fraud, of far more greater concern was the fact that this money was 98% affiliate money.
In their press release Bidify fail to address the question of “how much affiliate money are you paying out”. A moot question now that they’ve scrapped it, but one that if they provided the answer to, would have proven without a doubt they weren’t just running a similar Ponzi scheme to Zeek Rewards under a different name.
Second, our bids are actually being used. With Zeek, it has been alleged that only 0.25% of the bids purchased were every used.
It clearly shows that the bid purchases were merely token purchases designed to conceal a money transfer from late investors to early investors.
On Bidsson, the bids are actually being used.
Now this I have a problem with. I initially took Bidify at their word that bids had to be used but after publishing my review, it wasn’t long before Bidify affiliates contacted me to confirm that they were being awarded points in the daily ROI pool upon giving the bids away (the same as Zeek), as opposed to the customers they were giving the bids away actually using the bids in auctions.
I’m not 100% certain if this had since changed but after publishing a correction prompted by affiliates claiming they were not being given ROI points upon the use of bids but rather upon giving them away, nobody has since requested any further corrections. Given the attention Bidify has received, I can only assume that despite Bidify’s claims, bids being given away converting into ROI points was still the case right up to Bidify scrapping the daily ROI.
Looking forward, Bidify are claiming that because ‘there’s so much profit generated on the penny auction side of the business‘ and ‘after having countless meetings between management and our legal counsel‘, that they will be working towards ‘a new bonus plan based more on a traditional MLM‘.
Under this new compensation plan, Bidify will create a much smaller bonus pool (most likely made up of a percentage of the company’s profits), and distribute shares in this pool according to their members existing ROI points. These shares are capped at the point balances available at the time of the termination of the ROI points-based compensation plan, and there will be no way to increase an affiliate’s share in this pool.
Whilst I applaud what appears to be a shift towards a more traditional (why Bidify even bothered to entertain the notion that capping the initial investment amount affiliates could make changed anything I have no idea), I’m not entirely sure their suggestion that their penny auctions are so wildly popular are grounded in reality.
Zeek Rewards had 1.2-1.8 million members (depending on who you talk to) and their penny auctions were garbage revenue wise.
Bidify identify that
no matter how hard we try to force affiliates to move sample bids to customers, it’s going to be nearly impossible to prevent people from promoting the program as an investment,
however, and I’m repeating myself, the problem with a Ponzi investment scheme isn’t what your members are calling it, it’s the fact that your running a Ponzi scheme itself.
And regardless of how succesful they claim their Bidsson penny auctions are or whether they award points for customers using bids or not, at the end of the day if they’re paying out a daily ROI largely consisting of affiliate money, like Zeek Rewards they too are ultimately running a Ponzi scheme.
If we disregard Bidify’s provided reasoning of ‘we can’t stop people calling our scheme an investment’ as mere smoke and mirrors, that only leaves the conclusion that, like Zeek Rewards, their penny auctions weren’t/aren’t bringing in enough revenue compared to affiliate investment in bids to convert into investment points.
Of course Bidify can’t themselves admit this (not right now as the implications would cause an instant implosion given recent events surrounding Zeek Rewards), and I suspect that the deliberate non-addressal of claiming they paid out more retail revenue in their daily ROI as opposed to affiliate money confirms this.
Without further clarification from Bidify I of course might be wrong, but hiding behind “we can’t stop our members calling it an investment” seems a pretty weak reason to shut down a compensation plan. In fact it’s pretty much just more of the same psuedo-linguistic compliance Zeek Rewards was full of, that ultimately constituted two fifths of bugger all when the maths and figures behind the scheme were revealed by the SEC.
Pending the release of their new compensation plan (which will of course be reviewed in full), it’d be prematurely unfair for me to assert with any certainty that the Bidsson penny auctions will not be viable without an attached ROI affiliate funded Ponzi scheme model.
Infact, one of the major changes in eliminating the Ponzi points investment scheme will be that Bidsson no longer has to provide projected continuously increasing revenue to cover affiliate’s ever-increasing point balances.
Assuming Bidify will re-launch with a compensation plan that involves affiliates selling bids to customers and earning a commission on the sale of said bids, that would mean should Bidsson be a flop on its own, it would mean that it did so because affiliates weren’t earning commissions not because new members stopped investing, but because they were unable to sell bids to customers.
Affiliates buying bids en masse daily would of course no longer be viable because in scrapping the Ponzi side of the business, Bidify would no longer be offering an implied guarantee over 120 days that they’d pay affiliates more than the money used to purchase the bids to begin with.
Despite the claims of penny auctions being so wildly popular contrasting with the SEC stating Zeekler’s revenue was insignificant until they attached a Ponzi scheme to it (‘in 2010, Burks created Zeekler.com… the penny auctions were not particularly successful until Burks launched ZeekRewards in January 2011‘), it seems that one way or another we’re going to be given an answer to the question of profitability in a penny auction attached to a retail sales based MLM compensation plan.
From what I understand, Bidify’s daily ROI percentage payout plummeted well below the 0.8% I quoted earlier (that was the lowest official figure I’d seen prior to Zeek being shut down). One would think if Bidsson’s revenues were as wonderful as Bidify are claiming they are, that what happened to Zeek Rewards would have little to no bearing on the penny auction side of things, begging the question as to why the daily ROI percentage paid out suddenly plummeted.
The only logical answer I can come up with is because new members stop joining and investing. Bidify thus saw the writing on the wall and subsequently pulled the plug.
Bidify’s announcement on the scrapping of their points based compensation plan can be viewed over at the company website.