Yesterday North Carolina’s Channel 2 WMFY News ran both a printed and video segment on penny auctions, citing local company Zeekler as an example.

The print article, titled “Popular Penny Auction Website Based in the Piedmont”, was a general rundown of how penny auctions work and, using Zeekler as an example, attempted to break down the auctions and associated costs to bidders.

Reporter Liz Crawford wrote the piece and as part of her research for the story contacted the North Carolina Attorney General’s office, noting that

The North Carolina Attorney General’s office told News 2 they have received a handful of complaints when it comes to Zeekler and their sister site, Zeek Rewards.

A court has not yet ruled whether this operation is legal or illegal.

On the accompanying video broadcast however, the filming of which Zeek Rewards described on a promotional press release  as “a reporter from Channel 2 popp(ing) by home office”, Crawford threw in a somewhat of an ambigious line towards the end of the broadcast:

I did get in touch with the North Carolina Attorney General’s Office, just to do some fact checking.

They told me they have received a handful of complaints when it comes to Zeekler, as well as their sister site Zeek Rewards – however Frank, it is legal.

Out of context, it does appear as if Crawford is stating that the Attorney General’s Office has certified that Zeek Rewards is legal, but given the report was about penny auctions and the use of the singular “it” (in reference to “penny auctions”) rather than “they” (in reference to Zeekler and Zeek Rewards), I maintained the AG’s Office were solely referring to penny auctions:

The report was about penny auctions citing Zeekler as a local example. It wasn’t about Zeek Rewards and the MLM business model.

Here’s the opening paragraph:

“Lexington, NC– What if you could use a penny to buy an iPad? Turns out, you can, if you use an online penny auction. However, placing your bid will cost you more than pennies.”

And the video segment opens with the anchor referring to a “penny auction craze”.

Penny auctions are currently legal in the US. Maybe they’ll do a followup in more detail specifically going over Zeekler/Zeek Rewards maybe not.

Furthermore “it” is singular, referring to penny auctions, not two separate companies and/or the MLM business models. Also there’s a segment at the end about addiction and gambling, again reaffirming the story was on penny auctions.

Nonetheless, seeking further clarification I sent off an email to the NC Attorney General’s Office seeking explicit clarification on the matter. To date I haven’t heard anything back but Patrick Petty over at PP Blog did, and the response he got from the AG’s office makes for some interesting reading.

Pretty contacted the AG’s Office this morning and was told “it never said the Zeek MLM or auctions programs were legal“.


The agency said it had asked a local television station to issue a corrected report, and the station has removed (the offending) video report.

Indeed if you click on the video link on the Zeek Rewards News blog,

you are presented with a server application error from WFMY’s video hosting provider ‘DigTriad’:

Possibly more interesting than that however was the elaboration from the AG’s Office on the aforementioned complaints the office had received on Zeekler and Zeek Rewards.

As detailed by Patrick Pretty,

“We do have concerns about [Zeek],” said Noelle Talley, a spokeswoman for Cooper. No determination that Zeek is operating legally has been made, Talley stressed this morning.

Cooper’s office supplied the PP Blog with a list of complaints the state has received about Zeek.

(Note: The paragraphs below do not take into account all of the complaints Cooper’s office has received about Zeek. There are at least 10 complaints on file.)

One complaint that originated in Utah on May 16, 2012, alleged that a customer had given Zeek $20,000 in April but never received credit and was unable to get any satisfaction from customer service.

“The customer service is non-existent and I am beginning to think Zeekler is a pyramid scam,” the customer told Cooper’s office.

Zeek responded to the complaint by informing Cooper’s office that it believed the Utah complainant wasn’t actually a Zeek customer.

Rather, according to Zeek, the complainant was the father of two sons who were Zeek affiliates and had contacted the attorney general out of “personal curiosity.”

This particular complaint stood out as a bit strange given that it appears Zeek Rewards are trying to brush off the concerns of the father because he’s not a member himself.

I know I’d certainly be “personally curious” if my sons invested $20,000 into Zeek Rewards and ‘never received credit’ on my investment nor was able to ‘to get any satisfaction from customer service‘.

Another complaint received by Cooper’s office from a Florida man in November 2011 was forwarded to the Securities Division of the North Carolina Secretary of State’s office for review, according to the correspondence trail. No final outcome is noted.

Another complaint Cooper’s office received on May 8 originated in the District of Columbia after being sent to the Office of the Attorney General of District of Columbia by an individual in Oregon four days earlier.

The District of Columbia forwarded the complaint to Cooper’s office, which opened a file.

“This is a Huge Ponzi scheme,” the sender complained. “If not [looked] at carefully and stopped by the US AG, [t]his would be a tremendous task to [sort] out to pay back the consumer. This is [n]o different tha[n] AD Surf Daily ([i]f you remember the [c]ase).”

Meanwhile, a Zeek customer in Miami contacted Cooper’s office and told the agency that he had sent U.S. Postal Service money orders totaling $1,000 to Zeek in April and that the sum never was credited to his Zeek account.

Yet another Zeek customer — this one from California — told Cooper’s office that he had wired more than $2,000 in March from his account at Bank of America to Zeek’s account at NewBridge Bank in North Carolina.

Although the complainant said he’d confirmed both through his bank and NewBridge that Zeek had received the money, the money never got credited to his Zeek account.

The California customer also told Cooper’s office that Zeek closed his support ticket without providing a resolution, a circumstance that forced the aggrieved customer to open a second ticket.

Shortly after the WFMY news broadcast went live I identified the “it’s legal” line from WFMY’s Crawford and outlined concerns over the quote being taken out of context and used to promote Zeek Rewards:

The reason I mentioned ‘out of context’ because I can see it being used as a marketing point by affiliates:

‘The NC AG said we’re (Zeek Rewards) legal! Invest, invest invest!’

When the AG hasn’t stated anything specific about the whole compounder/VIP point investment scheme behind Zeek Rewards.

On the other hand, nothing will get the AG actually going over Zeek Rewards’ compensation plan faster than a few hundred thousand affiliates running around the internet claiming the North Carolina Attorney-General’s Office said Zeek Rewards is legal…

And sure enough, within hours of the broadcast going live BehindMLM began to receive spam comments from Zeek Rewards affiliates proclaiming that the AG’s Office had indeed declared Zeek Rewards legal, with a link back to WMFY’s video broadcast,

Jane: Oz, I thought this website would be a balanced website about MLM, but even when the reporter says that they have contacted the Attorney General Office, there have been some complaints regarding Zeekler and Zeek Rewards – it’s legal.

Ironically the North Carolina Attorney General’s Office aren’t the only authority Zeek Rewards affiliates are claiming has “signed off” on the legality of Zeek Rewards and Zeekler.

Buried in the mountain of recruitment spam comments left by Zeek Rewards affiliates on the WMFY article was this comment from ‘Tony Terborg’:

Is it legal? ABSOLUTELY.

Has SEC and FTC signed off on the company to date? ABSOLUTELY.

I’m currently unaware of either the FTC or SEC signing off on Zeek Rewards. That said, I’m happy to give Zeek Rewards affiliates the benefit of the doubt on their claims and welcome the submission of any evidence to the contrary.

Meanwhile another Zeek Rewards affiliate, Becky Gibbons Simmons, proclaimed the success of her return on the investment she has made with Zeek Rewards:

Simmons appears to be more than happy with the return on her Zeek Rewards investment and by attaching her Zeek Rewards affiliate signup link, seems keen to recruit others into the scheme and get them to invest too.

At the time of publication of this article, I was unable to find a “corrected report” over at WFMY News that the North Carolina Attorney General’s Office has asked for.


Update 22nd June 2012 – It seems that by the time I saw the print article it had already been updated, here’s how the original article ended:

The article now closes with:

The North Carolina Attorney General’s office told News 2 they have received a handful of complaints when it comes to Zeekler and their sister site, Zeek Rewards.

A court has not yet ruled whether this operation is legal or illegal.

Followed by a link to a North Carolina Dept. of Justice website on pyramid schemes.