Ever since Zeek Rewards hired a bunch of lawyers to pursuit ensuring compliance within the company, much blame has been directed by the company at its members.

Troy Dooly over at MLM Helpdesk and credited at the last Zeek Rewards “Red Carpet” event last week as a”training consultant” even went so far as to state a few weeks back that  it wasn’t Zeek Rewards or their business model that would make or break the company, but rather its members.

This was in response to Zeek Rewards members running around singing the praises of the daily returns they were earning on their investments with the company.

Aside from an investment scheme being the simplest way to explain how affiliates earn money with Zeek Rewards, today we go one step further and analyse where this initial concept came from.

It’s well-known that Zeek Rewards initially launched guaranteeing a 125% ROI on all money invested into the company by members (or customers they convinced to purchase bids), with members having to do nothing more than submit a daily classified ad.

Following changes to this model in mid-2011, Zeek Rewards systematically began eliminating all evidence of this initial business model and these days not much is left showcasing the origins of the Zeek Rewards business opportunity or how it was marketed.

I’ve touched on this topic briefly in the past but never before have I had anything that portrays in such detail how Zeek Rewards initially marketed themselves prior to their 2011 launch.

Our source material for the following analysis comes from none other than Zeek Rewards itself and is a marketing call hosted by Zeek Rewards’ Sales Director, Darryl Douglas (photo right).

The training call is available to listen to in full at the end of this article and all timestamps included hereafter can be manually tracked to when listening to the call for verification.

For reference, the call was hosted by Douglas on the 26th of January 2011, with Zeek Rewards having just launched their “compounder” compensation plan on January 21st, six days prior.

On the call Douglas introduces himself as living in Orange County, California and being cousins of singers Brandy and Ray J. He also claims to have ten years experience in the network marketing industry quoting his last downline (organisation) as being made up of “four million people”.

After initially going on about traffic and Zeekler’s penny auctions, the real meat of the call is discussed – that being Zeek Rewards’ “compounder” compensation plan and how affiliates earn money.

[10:03] (You) log into your backoffice, you’ve already written all the ads (well, the company has), I choose one of them, and then I choose one of the places you suggest we run the ad, I place my ad there, I’m done, I go back to the back office and let you guys know I’ve placed my ad, and tonight I earn a pay-day.

This is every 24 hours.

[11:02] Zeekler has created Zeek Rewards. Why? So we can introduce the compounder.

Back when everyone wasn’t pretending Zeek Rewards wasn’t an investment opportunity, their compensation plan was called the “compounder” and revolved around affiliates purchasing “compounding bids”, earning a daily return and re-investing in more compounding bids. For each compounding bid purchased, Zeek Rewards guaranteed a 125% ROI on the purchase price paid, frequently quoting an average return of 2% a day.

[1:13] Each day profits are generated and you earn a pay-day. Can you imagine getting paid seven days a week starting today? Yes I did say starting today.

That’s exactly the potential we’re going to empower you with, with our new and incredible compensation called the 24 hour compounder.

We’re the only place on the internet that we know of, that has this 24 hour compounder rewards system.

As is the case today, whether the bids were used or not was inconsequential with the company guaranteeing a 125% ROI regardless.

[18:20] Let me give you an example of how the compounder works. It doesn’t matter whether you have 10 credits, a hundred credits, a thousand credits – it all works the exact same way.

So let’s assume just for the sake of this example to show you how this thing can create literally three thousand, four thousand, five thousand dollars a month PASSIVELY.

It (the “compounder”) can do a whole lot more than that. This thing can do that in a week, this thing can do that every day, this thing can do a lot more than that every day.

So let me show you how you can get to somewhere in the range of $3000 a month passively.

The bigger we get the more what we have? Profits. The more profits we have, who do we pay more? You.

Crazy isn’t it?

Let’s say for the sake of this example, at the end of the day, the company was able to pay, reimburse 2% across the board to every single member. Let’s say you got 500 credits in your
account. That would mean in your first 24 hours overnight, you generate $10.

Why?

Because 2% of 500 is $10 bucks. Well because of the compounded, you take the dollars that you generated in those 24 hours and you compound them into new bid purchases.

Watch what happens in day 2, because remember this is a compounder. Day 2 you don’t have 500, you have 510.

Why? Because the compounder compounded you overnight and rewarded you an income of 2%.

Let’s say it does it again the next day. Now you don’t have 510, you have 510 plus, let’s say it does it again the next day, you don’t have that it’s gotten bigger, the next day it’s gotten bigger still, the next day bigger, bigger, bigger, bigger, bigger, bigger every single day.

When you get to the point of generating between 4 or 5 hundred bucks a day (this is crazy isn’t it? Crazy isn’t it?), when you’re generating that kind of income, and we’ve got people close to doing that in 6 – just, and this is insane, 6 days, when you get to the point of generating 500 bucks a day, you change your strategy to 80/20.

That means you recompound 80 percent into new bid purchases, you cash out 20% that’s $100 a day, that’s $3000 a month.

Now why would you want to do a strategy like that? Let me show you why.

Remember the company is going to reimburse you 125% of whatever is in your compounder account. So if you cashed out every single day, guess what? You earn a 125% of whatever was there.

The strategy isn’t to stop your income, the strategy is to grow your income so that it never stops.

How do you do that?

Let’s say it takes you 42 days at 2% to earn 125%. Let’s just say that. In 42 days you’d be done if you cashed out every day. However, if you recompound, then you’re never done.

Why am I not done DD (Darryl Douglas)?

Because on day 2, it too is going to need 42 days and you’re recompounding a higher amount. Same thing on day 3 and day 4. That’s the reason that when you get this thing to the point where it can substantiate and sustain your lifestyle, then you go to a strategy of compounding at least 20.

What happens to the 80% you’re compounding each day? It too is growing, bigger and bigger, bigger, bigger, bigger, bigger. That’s the reason so many people are on this call.

You grow bigger, bigger, bigger, bigger, bigger, bigger and you recompound 80% and you cash out 20%.

This of course is the origin of the much quote “80/20 investment strategy” where Zeek Rewards affiliates aim to withdraw 20% of their daily return whilst re-investing 80% of it. Zeek Rewards banned affiliates from discussing or promoting this methodology a few months ago.

Going on to further simplify the Zeek Rewards “compounder”, Douglas explains that,

[10:03] (You) log into your backoffice, you’ve already written all the ads (well, the company has), I choose one of them, and then I choose one of the places you suggest we run the ad, I place my ad there, I’m done, I go back to the back office and let you guys know I’ve placed my ad and tonight I earn a pay-day.

This is every 24 hours.

[11:02] Zeekler has created Zeek Rewards. Why? So we can introduce the compounder.

[16:05] The company reimburses you 125% of whatever you have in your compounder account.

[16:40] The company starts you, you sign up absolutely free. From there you go and you place your ad… the compounder says you’re ready to earn cash rewards today, this happens tonight by the way.

By midnight tonight people are going to see it in their compounders. we give you $100 in credits to start, at midnight tonight.. the system says whoop it shares profits with you for the day. It does it again tomorrow, next day, next day, next day, seven days a week, every single week, every single month of every single year, 365 days a year.

[17:52] So we put 100 compounding credits in your account the instant you sign up free and post that free ad.

[18:05] So what happens from there? Tonight the company is going to post profits and they going to share those profits with every account in the system.

Pre-emptively brushing off concerns about the business model, Douglas explains that

[25:52] 97% of the individuals who get involved with anything fail. That’s the truth. Why?

Because it involves a sale. It involves you closing a sale, with you actually speaking to people or you actually driving traffic and you closing the sale from the traffic you drove.

With us, you don’t have to do either one. With us you place a free ad.

[33:12] People can’t sell, people don’t wanna sell. Hasn’t that been proven for 50 years of failing?

People are sick of it, they want to rid themselves of this loss. They want to earn extra income, they don’t want to have to sell anything to do it. So this company makes you a partner.

But Douglas’ explanation only ends up raising more concerns. I can put money into this company, don’t have to sell anything and still earn a guaranteed 125% return on my money? Why, that’d make me nothing short of an investment partner would it not?

According to Douglas the entire premise of why Zeek Rewards works is that it’s passive income with no selling or recruitment required. This trait is shared with Ponzi schemes, where funds to pay out existing investors is derived via new investments by new and existing members (or the purchase of compounding points (known as VIP points today) in this case).

Much is made of the advertising Zeek Rewards force their affiliates to undertake in order to be eligible for investment returns however at the same time Douglas states:

[14:32] You place an ad, absolutely free, that ad doesn’t have to draw a thousand people – we don’t know what that ad draws.

[26:25] This company reimburses you as if your ad worked. Your ad may not have worked. Your ad may not have, but here’s the philosophy. You get enough people doing that and collectively the ads will work.

Your ad didn’t have to work, you generated income anyway.

The single most important point here is that Zeek Rewards see the whole ad placing and subsequent revenue generated by Zeekler auctions as a philosophy. Yet at the same time they guaranteed a 125% ROI on all compounding bid investments made by affiliates.

How do you guarantee a 125% investment on a philosophy?

The answer of course is you don’t, raising the question of where did the money that makes up the daily profit share actually come from back in 2011 and where does it come from today?

Zeek Rewards to date maintains that this is “proprietary information’. On a recent broadcast of Aces Radio Live, Zeek Rewards’ training officer Troy Dooly stated that

no network marketing company pays out from the acquisition of affiliates, period.

On the same call when Zeek Rewards’ COO Dawn Wright-Olivares was asked ‘of that (the daily profit share) how much of that is taken from the acquisition of new distributors and new reps?‘, Dooly interjected before she could answer, implying that should Zeek Rewards answer the question, they would be out of legal compliance.

If affiliate money isn’t being used to fund the daily profit share though, it remains a mystery where the hundreds of thousands of dollars a day Zeek Rewards are paying out is coming from. The company claims it’s from Zeekler but the fact remains that for each bid purchased by affiliates or customers, Zeek Rewards have a greater than 100% liability they need to pay back to affiliates.

This was the case even back when Zeek Rewards launched,

[27:40] “DD, since it’s obvious that I’m earning based on the compounding credits in my account, how do I get more of them in there?” The company is going to give you 100 to start.

“DD If I’m going to earn on those credits you guys are giving us, how am I gunna get more of them?” There are four ways to do it:

[29:31] Number 1: You take those credits (the 100 the company give you as a free affiliate) and compound them daily.

Number 2: You can always purchase compounding bids… no limits, no hurries, no yanking your chain, you can do that every single day.

[30:30] Ok? You could also purchase. When you purchase you get more of them right? Well the more of them you have, guess what?

2% is bigger on a thousand credits than it is on a hundred isn’t it? (laughter).

Right. You’re gunna get to 500 bucks per day quicker with more credits than you will with fewer. That make sense to you?

[30:58] 3rd way, how do you get more credits? 3rd Way, in your advertisement, people are being driven to your website. People are being driven to your system. When our system closes a sale for you, you get credits.

So let’s you sponsor John Doe and John purchases 1000 bid credits, you get 10% in your compounder. That’s 100 bucks for you immediately and you decide what to do with it.

“DD I want to recompound it and keep it growing or I want to cash it out and put it in my pocket,” that’s totally up to you. That’s your decision.

Now here’s the neat thing from signing up John. He’s gunna recompound every single day because he wants to get to the place of creating 5 grand a month, 10 grand a month. He wants to be able to do that weekly if he can, so he’s recompounding every day.

What happens when he recompounds and purchases bids every day? You get 10% of what he recompounds, every single day.

I told you it was crazy (laughter).

[32:00] Okay, second level. John introduces Suzy through his ads. Our system does the close, you get 5% of that. Every single day.

Can you imagine having 5 or 10 people doing that every day?

The fourth way is a little unclear, but appears to be related to a 2×21 matrix, which as you fill with recruited Zeek Rewards affiliates, the company pays you out more compounding credits to add to your balance.

The point though is, ever since Zeek Rewards launched, the company has been paying out more than the purchase price of every bid purchased in Zeekler. This wholly destroys the whole ‘the revenue comes from the penny auctions’ explanation, as even with the winning price paid on an item, each auction is running at a loss when you consider the bid liabilities owed to affiliates as above.

In the above case Zeek Rewards guaranteed a 125% ROI on money invested in bids either by affiliates or purchased by customers,10% and 5% referral commissions paid out down 2 levels and matrix compounding bid commissions.

Today things work a little different with the whole VIP bids and points scheme, but Zeek Rewards still pay out on average 1.5% a day on purchased VIP bid points, matching VIP points are given on customer bought bids, the matrix commissions are still in place and the company pays out a 10% referral commission on bids bought by level 1 of affiliate downlines.

With every bid purchased in Zeek Rewards attracting a >100% liability in commission and return payouts against it, where on Earth is the money coming from if not from continued investment today by affiliates in VIP bids and retail bids bought through dummy customers (for the matching VIP point and referral commission).

To get a concrete answer on where the money comes from you’d have to ask Zeek Rewards but apparently that’s “proprietary information” with the answer, according to Troy Dooly, putting them out of legal compliance.

Given all the above, it’s a little hard to take Zeek Rewards’ blaming of affiliates for compliance issues seriously when this is how company management advertised the scheme for months.

Today Zeek Rewards’ management are all about compliance and perhaps this is the most worrying thing of all. Firmly keeping in mind the above marketing call is hosted by the Sales Manager of Zeek Rewards, it’s worth noting that most, if not all, of Zeek Rewards executives are participating as affiliates in the scheme.

That is to say, they profit directly via the investment scheme from the continued investment in VIP points by new and existing affiliates (the points are generated by the purchase of VIP bids (or compounding bids back at launch) purchased by affiliates and/or customers).

When Zeek Rewards launched, these executive members were placed at the top of the scheme and now in all likelihood have downlines (direct and indirect) in the hundreds of thousands. Being executive management they have access to tracking statistics (money coming into the company via bid purchases (investment)) that regular affiliates do not.

And this has been going on since 2011.

Why is this important?

If you look particularly at the way Zeek Rewards launched, that is guaranteeing a 125% ROI with company management marketing an average 2% a day passive ROI to new affiliates to get them to invest, the beginnings of Zeek Rewards are firmly grounded in a scheme that guaranteed a higher return than the money pumped into it.

For all the compliance talk today and even the change in business model back in mid 2011 (the initial 125% ROI Ponzi scheme lasted a bare 6 months before changes had to be made with 90-day retiring VIP points to slow the rate of effective returns paid to participating investors), the fact remains that Zeek Rewards Executive Management, along with all of their top earners are participating in today’s scheme with points generated in the initial 125% guaranteed ROI scheme. A scheme which operated for roughly six months prior to the initial launch of Zeek Rewards.

Talk about the mother of bait and switches…

Paul Burks starts Zeek Rewards (it’s unknown whether he has an affiliate account himself), places company management at the top of a scheme guaranteeing a 125% ROI, has management and top members advertise the income opportunity as an investment scheme and then removes the ROI guarantee (despite paying out close to it daily for a year since), with members who generated their vast VIP point balances under a completely different scheme using these point balances to lure in new affiliates for over a year now.

Oh but Oz, affiliates aren’t allowed to use their point balances to lure in new affiliate investors!

We could sit around winking at eachother and pretending this isn’t how Zeek Rewards is marketed today, or we could just cut the crap and admit it is.

Set for release on July 4th 2012, “Zeek Remote” is a smart phone application designed to make it easier for Zeek Rewards’ affiliates to publish their daily ad as part of their daily ROI requirements.

The domain ‘zeekremote.com’ is registered to a ‘Jean Gaudreau’. The Zeek Remote website currently contains nothing more than a link to a Facebook group.

On this Facebook group (which currently has 144 members), published just four days ago by a ‘Eurico Alves’ is a file labelled Presentation Zeek Rewards in English’:

The Presentation is a series of slides designed to recruit new affiliates into Zeek Rewards. Sure enough on pages 23 and 24 of the presentation are screenshots of an unnamed affiliate’s backoffice, along with highlighted daily ROI averages (note I haven’t added anything to the slides, they are presented as is):

When you look at the history of Zeek Rewards and dubiousness with which Zeek Rewards management marketed the opportunity to new affiliates, is it really all that surprising that members with just under 80,000 VIP point balances who most likely joined early on are still advertising Zeek this way?

Let’s face it, whether you’re guaranteeing a 125% ROI or a 90 day ROI, fundamentally you still need to be paying out >100% than the money your members are paying in, however you want to dress up these payments (VIP bid purchases, retail bids via dummy customers, compounding bid purchases etc.), otherwise people aren’t going to keep injecting new money into your scheme.

At their May Red Carpet event it was announced that Zeek Rewards had roughly doubled their affiliate account and exceeded affiliate membership of over 700,000. I’m not aware of what the current membership count is but sooner or later it’ll slow down and coupled with everyone’s point balances continually growing… someone has to be left holding the bag at the end.

Of course it won’t be company management, with their executive status within Zeek Rewards and the access it brings, they’ll be able to spot a decline in new money a mile away and adjust their “withdrawal strategy” accordingly.

 

Footnote: The Darryl Douglas 26th January 2011 official Zeek Rewards marketing call can be streamed or downloaded directly from the Zeek Rewards website (click the image below, link working January 26th, 2011 – June 19th, 2012):

 

Update 21st June 2012 – Within 48 hours of this article going live Zeek Rewards nuked the above back office call, despite it being available for over a year prior.

Here’s an alternative mirror: