ProfitAdz Review: Combined Ponzi pyramid hybrid
The domain ‘profitadz.com’ was registered on the 31st May 2012 however the registration information is set to private.
The ProfitAdz website claims that
ProfitAdz is owned by Thomas Sullivan and was developed along with his business partner Robert Scott.
Thomas Sullivan has been a successful affiliate and program owner for many years online. Robert Scott is a successful online affiliate who has collaborated with Thomas Sullivan on many of his programs and marketing campaigns.
As a result of their successful collaboration they have now created Thomas Scott Enterprises.
I was unable to find any further information on either Thomas Sullivan, Robert Scott (too generic a name) or Thomas Scott Enterprises.
Typically when the owner of a MLM opportunity doesn’t want you to know who is running it they use made up generic Christian sounding names and pending any further information (such as company location or further information on Thomas Scott Enterprises), this appears to be the case with ProfitAdz.
Update 6th July, 2012 – BehindMLM reader ‘Gabe‘ found a Thomas Sullivan on Youtube promoting ProfitAdz (no referral link but the actual opportunity itself), as well as another website called ‘A Better Relationship’:
The WHOIS registration for the domain ‘abetterrelationship.net’ reveals Sullivan is operating out of Heathridge, Perth in Australia.
Previous MLM opportunities run by Sullivan include:
- Power of 3 (powerof3.org) – a matrix based pyramid scheme (recruitment based)
- Adzpays (adzpays.com) – $10 Ponzi scheme that offered a 200% ROI. Started in late 2011 and appears to have slowed down (Sullivan used the email address ‘firstname.lastname@example.org’ to register abetterrelationship.net with)
No doubt the pending collapse of Adzpays has prompted Sullivan to start ProfitAdz, which appears to share an extremely similar business model.
The ProfitAdz Product Line
ProfitAdz have no retailable products or services. Instead, members sign up to ProfitAdz and then make investments with the company.
Each investment costs $10 and comes with a series of advertising credits that can be used on an in-house advertising network that features on the ProfitAdz website.
The ProfitAdz Compensation Plan
ProfitAdz guarantee their members a 200% ROI on each $10 investment made with the company.
Additionally each investment also doubles as a matrix position buy-in and places the investing member into a 2×2 matrix.
A 2×2 matrix has you at the top with two positions underneath you. In turn these two positions have two additional positions underneath them for a total of six positions.
When six new investments have been made after your initial investments, the matrix is full and you cycle out.
Members who cycle out earn their initial $10 investment back, as well as a new $10 investment/matrix entry buy-in and entry into a ‘Gold Matrix’.
This Gold Matrix is a 6×6 matrix (you at the top, 6 positions under your, six positions under them down six levels) with a position capacity of 55,986.
Commissions are paid in the Gold Matrix as each position fills up. $1 is paid out per member that is placed on levels 1 and 2 (42 positions) and $2 on levels 3 to 6 (55,944 positions).
Note that these are one time payments only made when a position on the Gold Matrix is filled, they are not ongoing monthly commissions. That said, it is a company-wide matrix able to be filled by your downline and upline (as their investment positions cycle out of the initial 2×3 matrix they are placed into your Gold Matrix).
Membership to ProfitAdz is free, however if you want to earn anything you have to make at least one $10 investment with the company.
Typically in a pyramid scheme memberships are purchased by people and commissions are paid out and depend on new members joining the company.
With ProfitAdz they slightly vary this formula by adding a Ponzi element and allowing member investments to count as traditional Pyramid scheme membership sales.
The commissions are generated when members cycle out of the initial 2×3 matrix and here’s how ProfitAdz break down the cycle money:
$10 goes to a re-entry for that member as a new ad package.
$10 goes into an entry into the Gold Matrix.
$10 goes into revenue share.
$10 is returned to the member as cashback.
This $40 routinely comes from the baseline of each matrix (level 3) as each other level is shared amongst multiple matrices as they build. The bottom of a matrix is the only true new money coming into the system at any given time.
As per the break down above, effectively what happens is you put in your $10 and after six other people have invested after you (with new or existing money), you get to play again.
Or as ProfitAdz put it:
We share revenue received from a cycled position from a members initial matrix. The revenue is shared to a random group of members who have purchased ad packages.
100% of the commissions paid out here are via new investments by new or existing ProfitAdz members which equates to the mechanics of a Ponzi scheme.
The matrices ultimately rely on new members seeing as there’s always going to be a cap of investment money existing members are going to be willing to pump into the system.
Ultimately without new investors, once this cap is reached everything stalls and the Ponzi and pyramid scheme hybrid ProfitAdz are running will collapse.
Despite this however ProfitAdz insist they aren’t running an investment scheme:
Member (sic) understand that we are not an investment opportunity. We offer a marketing service which provides a non-guaranteed return.
While it is true no time limit is guaranteed on the 200% return, a 200% ROI is still guaranteed on every $10 investment made with ProfitAdz.
Additionally if members were indeed purchasing advertising and not simply making investments with the company, surely they’d be entitled to a refund on unused advertising.
This however is not the case, as per the ProfitAdz refund policy:
We have a strict NO REFUND policy. This is due to ad package revenue being shared with other members immediately upon payment.
You invest money with ProfitAdz and they immediately redistribute this money to pay off owed returns on existing investments.
Or in other words, a textbook definition of an unsustainable Ponzi scheme where those who invest last lose all their money at the expense of those who invested earlier.