Bidify Review: Offshore concerns & forced respends
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: 45-5440622Bidify 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 (admin@bidify.net)
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.
Didn’t Troy Dooly said that Bidify had hired Kevin Thompson as their MLM lawyer? Mr. Thompson is a straight-shooter not afraid to criticize the industry when he thinks it needs the criticism.
FYI, that 427 Tatnall address is a mailbox
http://www.earthclassmail.com/Delaware-Address
And the Irish address is that of a company registrar
http://opencorporates.com/companies/ie/484129
Thank you for spending the time doing this very well articulated review on Bidify/Bidsson.
The problem I see is twofold:
1) The forced reinvestment *and* 120-day expiration? They really really want to keep the money in the system instead of paying out.
2) This *still* has the *smell* of a Ponzi scheme where you buy bids (generate profit), then share in the profit. It *tries* to remove itself from the ZeekRewards model by requiring the bids to be USED before you get the points, but we don’t know what sort of verification will be used.
The affiliates should be paid on “sales” (i.e. sold bids to customers), not for their own purchases of bids. The smell is much less intense than ZeekRewards, but there’s just that bit of a whiff…
This *may* or *may not* pass the Howey Test. I haven’t had a chance to analyze it.
About the Mandatory account, it can be used to purchase consumable *virtual* products (autoship) such as the monthly admin fee and pv packages (50-100 retail bids w/ equal pv)…for now.
I know that amount will be miniscule once the bonus points balance is in the 5+ digits. Early webinar presentations I’ve attended mentioned an expanded use of it, possibly using it to purchase retail merchandises instead other than retail bids in Bidsson, it’d be nice too see that happen.
There was an interview on MLMHelpDesk with Kevin Thompson interviewing Frode Jorgensen. If I was a prospective Bidify investor, watching that interview alone would make me run away.
back about a month or so ago, biddson’s website was pretty much a carbon copy of zeeklers (content wise). it even had on there the average savings of auction winners (ie average savings 65% off retail or similar), as well as stating the average daily payout return for affiliates at 1.5% per day.
I found this odd that they would have either of these numbers, since the auction site hadn’t even been running yet.
The one point I don’t quite understand is when you mention both of these auction companies have to pay >100% on bids affiliates buy. Can you elaborate on this point?
If affiliates have to buy bids for $1, and their value is only 0.50 cents or 0.65 cents, doesn’t that cover the comissions etc paid out on the bids purchased by affiliates? Thanks
@Crush — I *think* Oz was referring to how the points entitles the affiliates to MORE money (over period of time)than what they put in, thus “pay > 100%”.
In other words, this also smells like an INVESTMENT, instead of WORK or a BUSINESS.
@vermillion
Whatever you spend it on, the mandatory account still forces affiliates to re-invest 20% of their earnings back into the company one way or another. I don’t see any need for it if the auctions are supposedly sustaining the business.
Sample bids are bought for 1 Euro by affiliates and once given away and used turn into a point. The affiate then has to make back >100% of the cost price (1 Euro) on their point over 120 days. Otherwise nobody would participate (you’d effectively lose money in the Leadership Bonus profit share).
Now retail bids in the Bidify model could cover this but remember there’s an automatic 25% referral commission and 15% referral commission on all sample bid purchases that also need to be covered.
The problem isn’t so bad as in Zeek where each retail bid purchased by customers generates VIP points that need to be paid out on (retail bids in Bidify don’t generate bonus points), but it’s still a considerable expense to cover.
I had a look at Bidsson and sample and retail bids seem to be clumped together in the auctions. That means there’s virtually no incentive for customers to purchase retail bids, just get free ones from affiliates (create a new email account when you reach your 1000 cap). A lack of retail bids means the money has to come from somewhere as sample bids alone create a loss for the company rather than profit.
The 20% forced respend offsets this somewhat but is evidence of a sustainability problem system rather than a viable solution (it’s a mathematical delay). And remember, these guys are claiming no commissions are paid out of membership fees or signup fees.
The auction item winning prices are so negligible they’re not worth factoring in. Let me know if this needs further explaining/clarifying.
I haven’t studied Bidify/Bidson, but ZEEK has 4 types of bids:
* Free bids, $0.65 as the claimed “value”
* Retail bids, price $0.65
* VIP bids, $1.00 as claimed “value”
* Sample bids, price $1.00 (ZeekRewards)
Sample bids bought in ZeekRewards converts to Free bids in Zeekler, when affiliates give them away for FREE to customers. So they will generate $1.00 per bid in gross revenue, when affiliates pay for them with MONEY (not points). Sample bids will also generate commission to the affiliate’s upline, 10% and 5% of the dollar value.
Retail bids are meant for paying customers. They buy the retail bids as bid packs from the auction/referral link to the affiliate. They will generate a gross revenue of $0.65 per bid, minus a 20% commission to the affiliate.
I haven’t studied VIP bids. Each affiliate will receive a number of VIP bids each month, in return for their membership fee.
So, in short, the sale of bids will generate gross revenue and profit for Zeek, enough to cover commissions. However, it won’t generate enough revenue to cover ROI, the daily Reward points in the system they have today.
BUYING BIDS
A new affiliate buying 1000 sample bids will earn 1000 VIP Points when the sample bids are converted to free bids. Those 1000 VIP points will generate a 90 day ROI in “reward points”, until the VIP points retires after 90 days. Zeek will only generate a small fraction of the revenue needed to pay out the rewards in money.
A customer (or an affiliate) buying 1000 retail bids will generate a gross revenue of $650, with 650 matching VIP points and a $130 commission for the affiliate.
THE AUCTIONS?
Using bids in an auction is NOT a monetary transaction. The revenue is generated when the bids are SOLD, not when people are spending them in auctions.
So spending 1000 bids (retail or free bids) will raise the price of an item with $10.00. And that’s the only kind of “revenue” the bids will generate in the auctions. They will force the winner of the auction to pay a higher price for the item he has “won”.
VIP POINTS AND REWARD POINTS?
– SOLUTIONS OR PROBLEMS?
These points are highly needed as a motivational factor. They will give investors the feeling of making money, and they will also generate lots of ACTIVITY.
The VIP points and the reward points are needed to make people interested in becoming affiliates, and to put new money into the system. New money coming IN will allow Zeek to pay money OUT, making it easier to attract more new money.
But the point system will also create lots of trouble. When affiliates are reinvesting POINTS they won’t add new money to the system. And most of the sample bids bought in ZeekRewards will be paid for in points, generating commissions to uplines and VIP points to affiliates, without generating revenue for Zeek.
To make people reinvest MONEY they have withdrawn, Zeek has a method for that too. Affiliates can create their own family/friends customers, and buy retail bids instead of sample bids, as a “cheat your upline for commission” method.
When buying retail bids, the affiliate will both make VIP points and a 20% commission. In addition he will also get “real bids” to spend in auctions, making it possible for him to win something.
But affiliates buying retail bids will also create some problems. They will make the auctions become less attractive for REAL customers, people who normally would have bought bids because they are interested in the auctions. Affiliates’ main motive for buying retail bids is the extra 20% commissions they can get in addition to the VIP points, and the feeling of cheating their upline and doing something “smart”.
THE CONCLUSION?
You can ask any affiliate how many paying customers they have, ordinary customers buying retail bids, not including family, friends and fake customers generated by the affiliate himself?
The money coming IN to Zeek derives from the affiliates themselves, not from real customers. So Zeek is using money from new investors to pay money OUT to old investors, via a system that pushes money upwards to the first affiliates with huge VIP point balances and huge downlines.
Sorry for the “Wall of text”. I would normally prefer to divide an answer into smaller parts, but here I first had to confirm your theory before I pointed out the weaknesses.
A thought just occured to me. What happens if an affiliate buy sample bids, gives them away to the company or a customer and they aren’t used?
Effectively the affiliate spent money on the bids and doesn’t get to participate in the daily profit share? Seems like a bit of a gamble to me given they can’t make people use bids.
That’s what separates it from ZeekRewards.
In ZR, you are PAID on the purchase (by affiliates) of bids. This violates the the Koscot test as you can only be paid on RETAIL of product (which the Omnitrition case clarified to be “to outside customers”)
In B, you are paid on the CONSUMPTION of the bids, which satisfies the “pay on RETAIL” (albeit the price is “free”) and the Amway safeguard rules that prevent inventory loading (which Jimmy and I had long discussions).
The only question now is how are they going to “prove” if regulators come calling that the customers are actual customers, not shills created just to dump bids on, but then, if they only get points when bids are USED, then shill accounts becomes too much work, as they have to create the account, then actually control the account to bid on stuff to generate the points).
The mechanism itself MAY be able to convince regulators that they discourage shill accounts and the points are rewarded for “real customers”, not just bid purchases.
As I said before, the stench is much much fainter than ZeekRewards.
It would be best if they ONLY pay on SALES of bids to customer who needs to be referred by an affiliate (no-affiliate customers are assigned randomly?) but then the comp plan wouldn’t look as cool. *sigh*
I wrote Mr. Thompson and invited him over to give us a few comments. We shall see.
As far as I know, the only experience they have is Network marketing, pyramid schemes and Ponzi schemes, where the so called legal business only acts as a disguise. So the main focus will be on the parts where they have experience and skills.
A quick look at their marketing will tell you that this is yet another scheme trying to look like a real business. Their main focus is on the recruitment of investors rather than attracting real customers.
Look at some of the details, like why would a business professional invite his legal advisor to Thailand instead of meeting him in his office? The method makes both the advisor and the client look less professional. So instead of creating confidence in the project, they created lots of doubts. The first impression was “I wouldn’t trusted him taking care of MY money”.
Professional business meetings will usually be “in my office or in your’s”, or in other similar frameworks normal for the business you’re in. So if lunch meetings is a normal standard, then they are acceptable as “professional behaviour”. The meeting in Thailand looked partly more like a “paid vacation” rather than a professional meeting in business. And business professionals should know the difference.
The professional part of that meeting was in following the rule “If you do something strange, do it OPENLY” (avoid having some skeletons in the closet, popping up randomly).
You all act as if you have inside scoop. Until FCC says otherwise, all you have here are opinions that ring hollow at best.
AMWAY is the model for all companies that are selling a product through MLM. Because of that reality, we have companies selling salt water and other products that people are buying and enjoying the income.
Time will tell. Won’t it? I bet these companies will be out there for years to come.
Bit early to work out the average yet but here’s the first few days ROI on sample bids:
Day 2: 2.8%
Day 3: 1.8%
Day 4: 2%
Uh?
http://www.fcc.gov/our-work
They seem to be a communications regulator and aren’t concerned with anything else.
In anycase, what – you think the authorities aren’t going to ask the questions and examine the issues raised here? Investigation and analysis isn’t some mystery game, they’ll want to know the answers to issues raised same unanswered questions being asked here.
Only they won’t take ‘we can’t answer that or we’ll be out of compliance’ and ‘sorry, how much affiliate money we put into the daily profit-share is proprietary information’ for answers.
Amway don’t allow members to compound profits in an investment scheme style compensation plan, so comparison is irrelevant.
I think John got his letters mixed up. I think he meant the FTC, the main Fed agency that goes after pyramid schemes.
Mr. thompson sent me a reply. I am seeking a clarification from him before posting it here.
Mr. Kevin Thompson’s reply is as follows:
So, there you go, straight from… uh… the attorney’s mouth. 😀
So in other words, without an office and some sort of corporate structure based in the US it’s merely a token gesture right?
Having a US corporate structure means it can be sued under US laws and is subject to all US regulations. That means something. 🙂
But who are you suing, a PO Box?
A corporation in the US must have a “process server” authorized to receive subpoenas and notices of lawsuit. That can’t be a PO Box, but can be an agent.
Better than suing someone in Scandinavia, or Cyprus, or Seychelles or whatever, right?
I guess it’s somewhat of a concession.
Hi guys,
Awesome article.
I’m totally new to this penny auction thing and have a newbie question. I was introducing it to a friend and they had a good question.
Question: How are affiliates buying retail bids and receiving matching VIP points and 20% commission without getting caught?
Example: John the Affiliate creates a retail customer account and buys $5000 retail bids. Since John “referred” this “customer” he gets 5000 matching vip points + $1000 commision posted to John the affiliate’s account.
When he uses the customer account to buy bids using his OWN credit card doesn’t zeek know it’s John the affiliate creating the account and therefore is an “inside job”? Does zeekrewards verify? Wouldn’t they close John the affiliate’s account?
Anyone have experience with this?
Thanks.
@S. Krueger — if the question is about Zeek, you should ask in one of the Zeek topics. This is about Bidify.
I honestly don’t see why you would need to do so in Bidify as you *are* allowed to purchase bids to be used by yourself.
“Self-Consumption” is a hotly debated subject in MLM, but as long as you are buying the stuff to be used, not merely to qualify for commission / rebate / whatever, then it’s legitimate.
Bidify apparently only gives you VIP points if the bids you give away are CONSUMED by the customer (i.e. used).
Sometime in the last week Bidify ditched the Mandatory Account and started up “Frequent Sales Credit”.
The marketing spiel is a bit ambigious but as I understand it when an affiliate or customer in your downline purchases bids, 20% of the commission is held in this Frequent Sales Account.
Like the Mandatory Account, Frequent Sales Credit has to be respent in Bidsson and kept in the company.
So in effect, I believe all that’s happened is they’ve removed forcing members to respend their daily profit share and now it’s just bid purchase commissions right?
It looks like it, I checked my transaction history and found that the fsc is 20% off of retail bid sales bonus(25% on direct) and sample bids repurchase bonus (5% on the uni-level).
Also turned off repurchase yesterday and found today that 100% of the leadership bonus was credited to the cash available balance instead of 80% previously due to the mandatory account.
Thanks for the clarification vermillion.
Correction, I was wrong. FSC is also deducted off of the daily leadership bonus as well.
So nothing changed. More bullshit ‘psuedo compliance’ wordsmithing from the MLM industry.
I remember reading that the same point generates income every day for the 120-day period, but I can’t find that reference. Is that correct?
@Michael
Yeah, you earn a ROI for 120 days on your points then they expire. The idea is that you re-invest your ROI to grow your balance to cover the expiration of points.
(Ozedit: thanks for the correction M_Norway)
@Michael
Oz meant 120 days where he wrote 90 days. We have had too much discussions about ZeekRewards, so some details can be mixed up from time to time.
I haven’t studied Bidify/Bidsson, but I clearly remember the 120 days daily ROI.
Update: Bidify appear to have again changed the definition of their Frequent Sales Credit so I’ve amended the review to include the definition of their Frequent Sales Credit as it currently stands.
I’ve also included a brief rundown and opinion of it. As far as I can see it’s an artificially introduced liability for the company and long-term I don’t really see how they’re going to be able to sustain it.
“Frequent Sales Credit” *could* be the equivalent of group volume, or “GV” in a regular MLM.
I was surprised to read that bids have to be used before points are given. I received bonus points as soon as I purchased sample bids in Bidify.
So what is described to affiliates doesn’t match what actually happens?
Despite the most recent changes to the Frequent Sales Credit, I’m still hearing that functionally nothing has changed in the back office.
Could a Bidify member confirm if this is the case? If so I’ll need to update the review to reflect this.
Apparently the daily ROI from Bidify is underperforming so one affiliate decided to clarify what the problem was, along with their solution:
So affiliates currently think that winning on Bidify’s auctions is too hard (due to bid inflation caused by affiliates), which also means customers aren’t going to be buying retail bids (they no doubt think the auctions are too hard too).
So the solution to all of this is to encourage affiliates to flood the auctions with even more bids and make them even harder to win.
Yeah, that’ll attract retail customers…
Let’s face it, who wants to play on penny auctions where affiliates grossly inflate the bids being used, making it near impossible to win?
Ah well, I suppose there’s always affiliate money to pay people out with… oops sorry, that’s a proprietary secret.
Well, it’s LEGAL to “encourage” self-consumption… but it’s iffy.
Not when you’re just shuffling that self-consumption revenue and paying it out as a daily ROI.
Actually I’d rather not get into the legalities of it, that’s for the courts. Sustainability wise it’s obviously not going to work as a business model.
i’m in zeek, we deliver our money in person when we add an affiliate, how does bidify accept money and where do you take it to, delaware?
FYI, Kevin Thompson interviews Frode Jorgensson…
https://plus.google.com/111222342884614305536/posts/GvLnCu1r1hT
I can see the precent of the daily Compensation Plan are getting lower, what do you think about that?
I think it probably reflects a lack of affiliates investing in bids to give away. Most likely due to Bidify operating in Euros and being based in Seychelles.
Bidify is hurting despite the cheer leading that you read on the forums. Not only has the rate been going down, but other oddities are cropping up.
For example, there was recent scheduled maintenance to the penny auction, and after it game on line, many of the high priced items were won with 1-2 bids and for a very low price. Shill bidders? (Thought you think if Bidsson had shill bidders, they’d raise the price a little bit.)
Biddson lost money on most of these: http://postimage.org/image/72j5uwa2j/full/
Here is the deal..someone I know just invested a lot of $$$ he brought in $$$$ (people); they are saying they are going to be millionaires in 2 years or less. Apparently, the time to get in is now.
IDk; i am scared that they will lose $ but they are “crunching the numbers” and saying that its like being an owner of a casino. For every person who is bidding, its like a gamble they don’t know if they are getting the item or not, they are gambling.
If a person bids and gets and item for 70 bucks that means that the “company” just made $7000. everytime someone bids it goes up a penny but the bid cost $1.
You can sell the item back to the company and they will buy it at retail cost. (i don’t get it) and apparently, if I bid $100 but didn’t get the product they will still sell it to me for $400 and the $100 dollars I just bid will go towards the purchase…but again if I just made a $100 bid (that means that I just spent $10,000??)…is that right???
help me out here… The bids go up 1 cent but each time I bid cost me a real dollar to place the bid…where’s the freaking savings?? Again, this is where the $ is coming from… a lot of different people gambling…so we are betting off one another.
lets say I am bidding and another person is bidding for same product: if we buy the item at $4 dollars the company just made $400 off the two of us. right??
again, can someone please respond. thanks.
No money is generated when bids are used, only when purchased. When you use a bid, you’re not paying any money, as the bids have already been bought. The only money generated from an auction is the final selling price.
In a traditional penny auction yes, the company earns revenue as you describe but MLM penny auctions have to pay these amounts back via the comp plan to affiliates. In Bidify this amounts to an expectation of >100% of the money paid for the bids paid out to the affiliate over 120 days.
In this sense every bid sold through bidify is a loss. If they pay out less than 100% of the money paid for the bid over 120 days, affiliate’s point balances go into decline and if that happens nobody participates and cashes out.
MLM penny auctions using point investment business models all revolve around an implied guarantee of paying out a >100% ROI on the money paid for bids over a fixed period of time. What has thusfar typically happened is this money is mostly affiliate money with affiliate’s buying bids to dump onto customer accounts (for points).
One way to verify this is not the case in Bidify would be to ask these “millionaires in 2 years or less” people how many genuine customers they have who are buying bids with their own money on a regular basis with non-affiliate money.
A complete lack of these customers is a strong indication this is yet another mostly affiliate funded venture that, when you consider the mechanics of investing in points, amounts to nothing more than a convoluted Ponzi scheme.
Does anyone think this company is worth investing in?
Now that Zeek reward is closed down, one less competition for this bonzi scheme.
It seems Bidify is MOTS: more of the same.
Whats the analysis of the legality of bidify in light of what’s happened to Zeek Rewards by SEC???????
One key difference with Zeek vs. Bidify is that Zeek being in the US means the SEC was able to preserve some of the new money to return to victims.
If you put 5k euros and it gets shut dowm, as a US citizen your odds of getting $ back is slim.
Didn’t change, Bidify is 95% similar (at least) to ZeekRewards, and that remaining 5% is mainly window dressing.
As I understand it (and I’ll get around to looking at the pre-launch/launched MLM penny auctions comparitvely to Zeek at some point), Bidify’s great ‘we are not Zeek Rewards’ change immediately following Zeek’s closure was capping new investment from US affiliates to 5000 Euros.
The rest of the points investment scheme has been left intact.
All penny auctions that have launched using a points scheme are up shit creek now as far as I can see. These things can’t be paused for evaluation because you have the penny auctions running and a daily ROI expected by affiliates.
If they get shut down for being ponzis, it’s game over. If they try to shut down the penny auctions or comp plan themselves, affiliates will sue the balls of them because commissions are owed (and in the legal process they’ll also get exposed for being a ponzi scheme).
It’s lose-lose if you’re running a MLM penny auction based on a points investment scheme. If Zeek Rewards was 98% funded by affiliate investments after Zeekler was launched in 2010 (as predicted based on analysis of their comp plan and the auctions themselves), none of these newly launched penny auctions are providing any significant amount of retail money compared to affiliate money being pumped into the schemes for points.
Just a footnote, BehindMLM does not analyse the legality of schemes, only how they work. When terms like Ponzi and pyramid scheme are used in an article, from myself this is only ever applied in a practical sense based on the mechanics of a given compensation plan.
I am a former ZK affiliate and like the overall business model of the penny auctions. After spending the last half hour reading this entire blog, not one person has made mention of the one thing that would NOT make ZK or BDFY a Ponzi.
The $ paid to affiliates is commensurate to how much revenue was generated by the actual items that were bid on and purchased from the auction site. If the compensation is truly profit sharing for the up to 50% of the revenue generated from each item, who wouldn’t want to participate?
(Ozedit: Yeah I’m going to cut you off there. The SEC clearly stated 98% of the money paid out as a daily ROI in Zeek was new affiliate money. Auctions had nothing to do with it and I suspect using the same business model that similar figures were true for Bidify.)
Perky-
It is not based on your perception or even the Zeek legal team’s perception of, “what is a ponzi”. It is based on what the SEC feels they can prove.
If there hadn’t been an overwhelming amount of information to convict Paul and other corporate leadership…they wouldn’t have been so quick to relinquish the helm.
If you are looking at Bidify or other similar sites….you better run. The question isn’t if they get shut down or go out of business…but when.
well said chris!
Well folks, please go read the “Bidify revised business model” post and comment over there instead.
Let’s try again, I deposited money with bidify, I was enlisted by a trusted friend, I have tried to get my money refunded and have never gotten a response from customer support other than they sent my request to management.
When I went to log on 2 weeks ago to see what my balance was – my user name did not exist. You are right, it is not ‘if’ it is shut down but ‘when’. Kiss that money goodbye and learned a lesson!
All of these penny auctions are frauds, if they are so profitable they wouldn’t need your money, they need your money so they can keep this ponzi going until they fill up there pockets.
It’s just a matter of time before bidify and or any other MLM penny auction gets shut down. Once a victim twice a volunteer.
Therese after the meltdown of ZEEK I’m sure you and every one else is wanting there money back. You’re “trusted friends” are only your friends until you run out of money.
@ Therese:
Sorry about your loss; But when you hand over your money to a pyramidster and convicted criminal, that is basically what you can expect. You will find the Norwegian pyramidster & ponzimeister Frode Jørgensen, who is the real boss of the scheme, on Bidify’s “About us” page.
Frode Jørgensen has been involved in a number of pyramid and Ponzi scams (T5PC, WGI, PIPS, Plexpay, AmityFunds, JuuGo), but his main claim to infamy is as CEO of the combined pyramid/Ponzi scam PlexPay Network.
PlexPay was raided and shut down by Norwegian police in September 2005, and Frode J arrested. After a lengthy investigation, trials and appeals, Frode J was finally sentenced to 2 1/2 years prison (plus confiscation of assets) by the Norwegian Supreme Court in December 2009, for operating an illegal pyramid scheme.
Additionally, Frode Jørgensen was issued Cease & Desist Orders by two US states, and fined 50 000 $ by the Kansas authorities.
The demise of Plexpay, including arrest, trials and sentencing of Frode Jørgensen, has been well published on the internet.
@theresa, bidify had reset all their password weeks ago, that’s probably why u can’t log in. Just press the forgot password and they will mail u a new password.
Saw today that a new Bidify CEO has been announced, some guy called Albert Liske from Vancouver, Canada.
Liske announced the following to Bidify affiliates yesterday:
No idea what happened to the previous CEO, Frode’s mate Larus Palmi Magnusson (I didn’t even know he’d stepped down!).
Maybe Magnusson abandoned ship when they got rid of the Ponzi points?
Liske seems to be avoiding publicly mentioning his involvement in Bidify for the moment. Here’s
Not sure if this means a shopping merchant system is coming to Bidify. From the press release above it almost sounds as if Bidify has been wholly purchased by Liske (who credits himself as the inventor of penny auctions, lol?)
Seems to be a bit of a flavour of the month thing at the moment, as if adding a merchant shopping network to a MLM company is some kind of new idea, despite them having been around for years.
Albert Liske is the new CEO of Bidsson, not Bidify. They are 2 separate companies. Bidsson operates the penny auction, and Bidify runs the MLM opportunity to make money by promoting Bidsson.
Fair enough then (despite the obviousness that they are run by the same people).
Out of curiosity do Bidify members have a seperate account for Bidsson?
Liske is probably bullsh__ing about invented penny auctions. Supposedly it was invented in 1970’s.
In fact, I can’t find Liske mentioned anywhere.
Just more bullony as seen when they first “duped” the membership in believing they were compliant because their so called MLM lawyer Thompson was on board.
Then the dupe of telling members they were going to implement the “BUY NOW” feature, then the dupe of adding better pay processors, then the dupe of having better customer support, then the dupe of having lower shipping fee’s, then the dupe of ??? (Can you name a few?)
I think the biggest dupe in the beginning was when they fooled the crowd into believing someone actually won a car! Geez who actually won that?
Perhaps Bidify should actually be called BidiFly or BeenDuped.
Bull… Oh, you mean baloney! 🙂
http://dictionary.reference.com/browse/baloney
http://bidifyupdates.com/2012/11/20/bidify-2-0-update/
We will be rolling out a concept for “Customer Acquisition Points,” which accrue only when customers purchase and use bids.
Oh does this mean that all the customers to date were only affiliates? Hmmm what does Bidify mean by the word “concept”?
I guess they are working “around the clock” on that one.