Zeek Rewards confirm $100,000s in fraud occurring
One of the sticking points in discussions of the legality of the Zeek Rewards opportunity has always been whether or not the company actually generated actual users to give bid points away to, or if they just create dummy accounts.
The former would lend large amounts of credibility to the company and quash the commonly held suspicion that Zeek Rewards is merely an investment scheme. With actual customers being generated by the company to give the bids it receives from its members away to, it’d be hard to argue that the money being invested by Zeek Rewards members was what the daily profit share was based on.
As it stands though Zeek Rewards pay out a ROI without any certification that a member’s bids have actually been given away to real customers. Furthermore oftentimes member’s bids are put into a queue (as Zeek Rewards claim to not have enough customers to give the bids away to) but ROIs are still paid out regardless.
Zeek Rewards do not disclose what the current point balance is they’ve accumulated or whether or not they are giving points away faster than they are receiving them.
Because of this noted disconnect between VIP bids and points being given away by the company, rather than profits being generated by the spending of bid points, the profit share is a mere re-distribution of real money invested by Zeek Rewards members on a day-to-day basis.
As of late the daily profit share has started to decrease and with this decrease has come a series of delays in payouts. One user sent an email asking about the delays and here’s the reply received from Zeek Rewards support:
Hello,
The delay in paying commissions through STP or AlertPay this week was due to the company trying to prevent paying out hundreds of thousands in commissions to thieves.
These thieves have used hundreds of stolen credit card account numbers to create fake customers. They then those stolen cards to purchase retail bids to earn the 20% commission.
They request to be paid the commission by STP or AlertPay. By the time the owners of the stolen credit card number contact us or their bank, the commissions have already been paid to these thieves.
We have no recourse to recover the funds. We have to refund the charges on the stolen cards and we also lose the extra 20% above that is paid in commissions.
We understand that you want to be paid your earnings. After the email was sent out the majority were willing to wait for the extra fraud detection measures to be put in place, to prevent paying out to these thieves.
Some affiliates did not want to wait for the updating to be completed, which we understand. It is their earnings and they have aright to be paid promptly.
As a result admin processed all STP and AlertPay payments today. The chargebacks and commissions paid out to the thieves can be deducted from future profit sharing.
Thank you,
Support
Apart from the actual alleged fraud being committed, what’s most alarming about this email is Zeek Rewards admission that they have ‘no recourse to recover the funds’ paid out as commissions.
Hundreds of thousands of dollars have been generated as commissions via Zeek Rewards and ultimately all of this money has been paid out fraudulently.
And mind you, this is the fraud Zeek Rewards knows is taking place. The above email only mentions 20% referral commission but should the company look closer into their investment scheme (by far the most profitable side of the business), I’d be willing to bet they’d also find large amounts of fraud going on too.
That is of course if the company itself isn’t in on it.
With the only requirement to receive a daily ROI being to either give your bids away to the company or to customers, what’s to say these fraudulent accounts weren’t also used to give thousands, if not hundreds of thousands of bids away to so that their creators could earn the associated returns in the investment scheme?
Obviously the company itself (I hope) wouldn’t be stupid enough to steal people’s credit cards, but with access to the backend and no regulation on their part, what’s stopping them?
With the company choosing not to make public exactly where member’s bids go after they are given to the company, or exactly how and the number of customers are generated by the company, the overall lack of transparency and revelations that the company has been used to conduct fraud are not confidence inspiring at all.
Currently Zeek Rewards claim to be implementing “fraud detection” measures but the company has not specified what these measures are or how many accounts were affected.
Furthermore the company has only mentioned the 20% referral commission as being part of the scam, I suspect if there was higher level fraud involved (that of the investment scheme itself, which seems highly likely due to the inclusion of bid commissions), the company would not go public with the news as it would be devastating to the credibility of the Zeek Rewards program itself.
Worse than the admission that already $100,000s of dollars have been made fraudulently as a result of the company’s negligence in the operation of the business.
Personally I believe no matter what “fraud detection” systems the company puts in place, the problem still ultimately lies with the Zeek Rewards business model itself.
If I can invest money into Zeek Rewards for VIP bids, give the bids back to the company, receive VIP points and earn a ROI based on the points received, before the company has even given the points away – then that is and always will be a system wide open to abuse.
Technically speaking, all companies are prone to abuse such as this, but Zeekler (not ZeekRewards, technically) is especially vulnerable in that the money is going toward buying BIDS, so it is the victim, whereas in places like eBay it’s the individual sellers that get the shaft, and any places that has the equivalent of virtual currency is vulnerable.
One can imagine someone can “buy” Lindens (currency in Second Life) with fake credit cards, then immediately buy items, then sell those items and convert them back to real $$$ through some other account. One can do this with almost ANY virtual currency or ANY system that pays real commission on virtual purchases. Such problem is not unique to Zeekler.
However, as pointed out before, ZeekRewards rewards purchases of bids with 20% commission. Being a “bid seller” and origin of most of the merchandise, Zeekler made itself vulnerable to abuse by concentrating most of the risk on itself rather than spread among all the sellers like eBay.
One more point to make: Don’t know if it’s true or not, but TVI Express at one time claimed it was also plagued with fake credit card scammers who apparently joined with fake cards and cashed out before the fraud was realized. This sounds a bit fake to me but not impossible.
And you have to admit there’s a certain irony to it.
I think they’re just trying to downplay the fraud by stating it’s just a 20% commission.
I mean think about it, if you were going to go to the effort of using stolen cards you’d go for the most profitable venture, that being Zeek Reward’s investment scheme.
Now obviously stolen credit cards being reported makes it hard to wait for an investment return at only a few percentage points a day, but what’s stopping you using the 20% commission payout in cash to purchase VIP bids with other legit looking accounts and use the funds to bankroll your investment into the scheme?
Nothing.
Zeek Rewards would have to be massively naive to think this wasn’t happening.
One other thing. The company’s email is very deliberate in referring to the Zeek Rewards members involved in this behaviour as thieves, but let’s not forget that they are Zeek Rewards members.
What kind of bullshit registration process do Zeek Rewards have that hundreds of thousands of dollars can be paid out and the company has no idea who the identities of their members are?
The Zeek Rewards member uses a fake identity. They they create a fake retail customer and buy retail bids using a stolen credit card. The Zeek Rewards member receives 20% commission on the purchase that can be cashed out immediately to AP or STP.
The irony here is that AP and STP are both a big pain to deal with as a customer in that you cannot dispute anything and the customer owns all the risk – if you send money to a scam, it’s your fault. This also works in reverse, if Zeek Rewards sends money to an AP or STP account, they have no recourse.
I predicted this on one of my earlier comments about Zeek. They claimed that they stopped taking credit card transactions for VIP bids due to fraud, and my rebuttal was that it was baloney because if I was a fraudster, I’d just switch from buying VIP points to retail bids.
The only difference is that with VIP points a total of 15% commissions is paid (10% to referrer, and 5% to his referrer) and there is a $10k limit with VIP points vs. $1k limit with retail bids. But how many stolen credit cards have $10k available credit? $1k makes perfect sense for the scammers to keep charging $1k per card. A $1k may go detected later because the user’s card isn’t getting declined immediately.
As for the investment scheme itself, what is probably happening is the fake Zeek Rewards account that received the 20% commission has its daily repurchase amount set to 0% (100% cash out). But it takes 90 days to convert all of the virtual points to cash so odds are they take the 20% commission and never use the account again, or best case for the fraudsters is to cash out a few days out of 90 before the account is closed.
All this fraud is easily solved and I’ve replied to earlier posts on how this could be done. Zeek corporate is either
1) in way over their head and do not know how to operate a large internet business (look at how completely dysfunctional the Free Store Club retail site is, or a variety of other problems such as when you send money via STP you have to send it to Paul Burks directly with his email address showing and not the corporate account), or
2) know the money game will end eventually and just don’t care.
The answer could be both.
Okay…gotta ask. I was given 500 “credits” by a friend. I started to place my “bids” (wagers..whatever).
As I am placing them…2 seconds go by and my bid iz replaced by another. This goes on for 2 freakin hours. Same person!
Come to finx out…it is not a person…but an automatic bidder that is meant to outbid anyone who places a bid.
How is this fair?
Is this a real person…or a company generated robot meant to increase bids? Where is the regulation? Who regulates it? How do we know its not a secret employee of the company?
Also…what it is also some person with a LOT of extra spending cash…who wants stuff cheaper…just put on AP till the other guy quits.
Heck…that could be where the Zeek Rewards are being used.
Hmmmm…
Questions, questions, questions…
The automatic bids are real people. You can do the same thing. Look on the left pf any auction for ABE (Automated Bid Executive). You set the price range and number of bids you want use, up to 500.
The real issue is that the free 500 bids you were given can only be used for the less desirable prizes. After trying to use your 500 bids and realizing that it is almost impossible to win at the penny auction, you don’t bother to spend real money to buy premium bids.
So the actual revenue that is generated by retail customers is very suspect, and Zeek Rewards won’t reveal it, leading us to believe that a significant part of the revenue being used for the daily profit share is from the “investment” that each “affiliate” uses to buy VIP bids.
What happens if Zeek Rewards actually reveals the ratio? It will confirm (or deny) that they are a true ponzi. What if the ratio is 95% distributor money and only 5% auction? What if the ratio is even worse than that, such as 99% distributor money and 1% auction? Legitimate MLM distributors would run away if they knew the program was illegal.
I suspect they have some elaborate legal theory that says the VIP bids being purchased and given away is somehow now calculated in the “70% rule” and is classified as a marketing expense.
But regardless of whether Zeek will get into trouble with the government on ponzi scheme classification, the reality is as soon as the number of incoming distributors slows down, the daily profit share will decrease and there will be a giant rush for the exits.
A lot of people who have been sold this investment scam thinking this is the answer to their prayers and they envision 6 figure incomes. Let’s get serious here… if you compound everyone’s daily profit share continuously for 1-2 years, and add in all the incoming new money, and consider that some people will switch to an 80% reinvest and 20% payout at some point (not everyone will keep it at 100% reinvestment forever), then the money game has to collapse eventually.
Anyone doing business on line knows the “thieves” are pretty good at what they do, so the possibility of good people not being able to think like a thief is valid.
On a separate issue, I thought I heard several prominent MLM attorneys were either consulting or hired. Again, I am not sure the relationship. If this was a scam, would they risk their reputation? Just asking.
To be fair, eBay lets you do the same thing: you put in a maximum bid, like 200, even though the current bid is like 50. If someone puts in 55, your autobid goes up to 60. If they put in max bid of 150, then your autobid is 155 as it haven’t gone above 200. If their max bid is 250, then your bid stops at 200 and they go to 205.
Which brings up a good question: can Zeekler rig their own bids? Basically shill bidding to make sure nobody gets the really good bargains, and only let people win the cheap stuff? (I’m sure they can, but is there any evidence of them doing so?)
A couple of fundamental points that are being missed here… Paul Burks (founder) has been a networker for many years. His Company has been going 14 years and they bought iTickets which has become Zeekler.
So do you think an owner with huge amount of experience in networking, is going to put something together something that is not compliant? Amway had a run in with the legal’s 30 years ago ( they are still in business) the firm of attorney’s that represented Amway are in charge of the compliance for Zeek (in good hands).
As for people setting at 100%, everyone can set it at 80% and take out 20 % and the business still works fine. I can see the comments here, from people that are not involved in the business. I have people coming to my Zeekler website, to play the auctions, and they have taken advantage of the free bids over 50,000 so far (so it works well).
For the fraud, there will always be fraud when money is involved. Solid Trust and Alertpay was used to cut down fraud, because people need to verify accounts, however, people will always get around this. Zeek are putting their own eWallet in place so that they are in more control of fraudulent transactions.
I have a retail business online, and I get people using stolen credit cards to buy products from my website. Unfortunately, I have to suffer the loss. I’m charged by the credit card company for the transaction, I send the goods out, it’s found to be fraudulent, the credit card chargeback the transactions and I’m charged again for this transaction and I have also lost the goods.
So fraud with Zeek is a “Red Herring”. But people will all have their own opinion. Especially people that are not actually involved or understand business…
With any business you put in what you can afford to lose!!! And not your life savings.
This would work depending on how long it takes for the deposits on the stolen credit cards to be detected. It takes 90-days to fully drain the virtual points account. If you deposit $1000 fraudulently, the referrer can cash out 20% immediately ($200). To cash out the 1000 bonus VIP points means you could cash out only $15 per day. So you would have to to undetected for 14 days to make more than $200, and the withdrawals are processed once a week.
Zeek has been reversing charges when it receives a chargeback due to fraud, and since they have to do this manually on multiple levels in the matrix, they have significant amount of manual labor. Perhaps some better matrix management software is in order, rather than the home grown poor back office genealogy and management software they do have.
Presumably what the attackers are doing is cashing out near the weekly processing date to maximize probability of success without being detected. Most fraudsters don’t try and stick around to drain an account slowly – they usually hit and run.
Being “compliant” and a scam are two different things. If you remove the virtual points, Zeek Rewards looks exactly like all the other money investment scams.
Since their attorneys presumably told them the investment scams were illegal and people went to jail for it, they have spent an inordinate amount of effort the last 2 months on “compliance” in an attempt to stay on the thin edge of legal compliance.
That doesn’t mean that the business opportunity isn’t a scam to the new people entering the ponzi at the bottom of the pyramid.
What happens when new registrations slow to the point that the daily profit percentage drops? All who have been doing well up until now will have made some money, but what about the thousands that “deposited” money but will have a negative return?
What is more interesting is that regardless of what Zeek Rewards tells its distributors on “correct language”… everyone selling the opportunity is selling it exactly like an investment with compounding interest. You are not allowed to use the terms “investment” and “compounding” and “interest” but this is precisely how it is sold.
So what will be interesting is to see when the scam collapses in on itself and the regulators look at this, if all the money spent on “compliance” will shield Zeek from criminal charges or if the regulators will see through the virtual points veneer.
Oh, really? What happens when the rate drops? At 80% repurchase you won’t recover your original deposit.
What’s a few hundred k in fraud when Zeek Rewards is distributing millions in daily profit share? This is simply the cost of doing business like a retail store has to withstand some amount of theft.
Unless the real profits are part of the ponzi scheme “investments” paying off other “investors”. If the daily profits being paid out are truly profits and not the ponzi itself, the fraud is really a non-issue. I lose a few coins in the couch all the time and I don’t care about it.
This is the red herring in your reply. You should send this defense to Bernard Madoff, he could have used it in court. “It’s not my fault, they should have only invested what they could afford to lose, this is business after-all!!!”
His intelligence is not in doubt. His BUSINESS MODEL is.
The fact that he didn’t hire a MLM lawyer until very recently would suggest he never bothered to check.
Phew! All the negatives!!! Scam – means illegal. If they cross the T’s and dot the .’s it’s legal and therefore, can not be called a scam or ponzi.
Considering you are quoting “law” that’s the law.
I’m sure if it passes all the legal’s and is still going in 2 years, 4 years or 7 years, some people will still call it a scam or ponzi.
And the MLM lawyer is for Affiliates posting misleading stuff online and not the business set up. The business expanded very quickly and took everyone by surprise. Videos on youtube got out of hand, so a compliance was brought it to curb this, for the long term good of the business.
As with anything time will tell.
At 80% you do recover and make your money. I would look in to properly before you comment.
People were saying “investment” and “compound” that’s why the compliance course has been set up for AFFILIATES”
So they didn’t even BOTHERED TO CHECK whether it’s illegal or legal by hiring a MLM lawyer, until very recently.
Sorry, your logic doesn’t hold water.
So it was NOT a MLM until very recently. Which sort of throws the entire “experience” thing out the window, doesn’t it?
Scam means misrepresenting something. There are lots of “scams” that are not illegal from a criminal perspective, but they could result in civil liability.
Look at Wealth Masters International. They are a considered a scam by many past distributors but are unlikely to face criminal charges because they skirt the thin line between legal compliance and outright fraud. Look at Omnitrition which is the most significant case law on the 70% rule in past 20 years but no one went to jail.
“Scam” and “illegal” are not the same thing, though many scams are illegal. You can run a scam and only face criminal liability for deception without having to face criminal charges for fraud.
A “deceptive act” is the definition of a scam as used on this site. Listen to any of the weekly calls with Darryle Douglas. He portrays the penny auction model as the wave of future shopping. He constantly talks about “90% off retail” and “99% off retail” and shows many examples as if to convey to gullible prospect that the penny auction drives most of the revenue.
Darryle Douglas and many “affiliates” continue to portray the act of advertising on spammy free classifie sites as the main driver of revenue to Zeekler, and therefore, the primary contributor to the daily profit share.
These are the key concepts stressed continuously to prospects… these are also very deceptive. Very few people use penny auctions for more than a few days after realizing how difficult it is to “win”. The actual revenue Zeekler generates from the auction alone (not “affiliate” investments or virtual daily profit share) is a small percentage, and would violate the 70% rule.
The thing is if you which ironically has been heavily discussed in very articles by Grimes.
Then why did Zeek Rewards change their terms and conditions and the contract “affiliates” agree to after they brought on board Grimes?
Just because you don’t say “investment” or “compound” doesn’t mean that’s what is being portrayed. If the lawsuits that come when Zeek fails, they will will clearly point out that intent and implication is more important than technical wording.
Not using those words but using the same visual and contextual examples is like in Harry Potter where everyone refuses to say “Voldemort”… it is useless and not saying it doesn’t mean that’s not what you intended.
Try using a euphemism to buy drugs or sex and see if you can convince the court that you didn’t use specific words so therefore you have some sort of immunity.
Grimes was brought for one reason which is to minimize Zeek Rewards liability for lawsuits when the money game collapses. Grimes does this for other MLM companies focusing on two core areas: retail sales to satisfy the 70% rule and enforcement for compliance.
Look at all cases where Grimes was brought in and see what happened to the MLM company from that point forward. It was always downhill and is a defensive measure.
I don’t see how Grimes can show the 70% rule applies unless he is looking at establishing new case law to show that the act of giving product away does not equate to internal distributor consumption. In this case, the “product” is virtual so giving it away is simple. It would be a lot harder for traditional MLM products to be given away.
But regardless of the criminal vs. civil implications of whatever may happen to Zeek Rewards, the real question is what happens when no new distributors join? At that point, the money game dries up and thousands of people lose their money. That’s not a scam?
The same videos were circulating on YouTube for 10 months before Zeek decided to do anything about compliance. It was not like an entire new type of marketing arose all of a sudden.
You can see dates on videos and articles going back to first half 2011 with the same content that is now deemed “non-compliant”. Zeek’s own website used “non-compliant” sales language, so obviously it was not just the affiliates that Zeek was trying to rein in.
Perhaps the more likely explanation is that Zeek knew exactly how deceptive the “investment” sales pitch is and used it for as long as they could.
Once they started seeing high growth they realized they needed to invest in defensive measures to limit liability when they can no longer pay affiliates enough daily profit share for affiliates to break even.
I have read all of these and am so confused. Who are you all to qualified to say all these. And is there anyone of you work or speak for Zeek?
I am just so confused now. So overall, you’re saying Zeek is a Scam? My apology in advance, I do not intend to say anyone’s information here is incorrect or correct. But how do you all are so sure this is or will be a Scam?
Zeekler and Zeekrewards are here to stay for the long course. Every company has it’s bumps and hiccups and this company which has been in business for over 14 years and with a strong financial record and no debts is a winner in anybodies circle.
Others have seen this obvious success and now know with whatever they are involved with cannot even compare. Thus the idiots will always try to attack this and try to bring it down. Nobody in Zeek is even worried.
Sour grapes from other network marketing companies.You cant compete with Zeek.
If you want to compete with the automatic bidding ..you can use it too.
Is there a law that says that you must give the bids out the day you buy them?? I dont think so.
Is Zeekler allowed to give bids to prospects more than one time in order to convince them to buy? Yes, Probably. Do I get more than one “pizza” coupon a week? Yes!
The bids EXPIRE if not used, just like my pizza coupon.
First learn what Zeekler is all about before you say these things. We know what you are trying to do…
The SHAME is on YOU!
@Dave
Why not?
Burk’s past companies can’t have been hits as none of them are standing today as he originally launched them.
Also someone’s history might put a company into context, but it has nothing to do with compliance – that alone is decided over the business model. And Zeek’s business model (the whole giving VIP bids back to the company) throws a huge question mark over the legitimacy of the opportunity.
Why wouldn’t it work at 100%? And what, you think as everyone’s 20% balance gets bigger and bigger Zeek Rewards are magically going to be able to continue to generate more and more revenue to cover it?
If we entertain the unproven idea that Zeek Rewards pay out their investment return from penny auction sales, the fact remains that no company has infinite growth. Sooner or later a ceiling will be hit yet people’s investments and returns will continue to grow.
What do you think happens then?
What’s misleadng about it?
I can invest $x into Zeek for VIP bids, give the bids back to the company and earn a return. I can even re-invest some or all of this return back into my original invest to increase my return over time. The interest paid out on my investment is compounded daily.
What about the above is not an accurate description of Zeek Rewards’ business model?
You don’t need any qualifications to understand a business model. If you’ve read everything published on Zeek on BehindMLM you should have enough information to decide for yourself – or at the very least set you off looking for further information.
A good place to start would be to ask Zeek to clarify where the bulk of their revenue comes from.
Burks has catagorically stated this will never be released. This would be like McDonalds refusing to state they make the bulk of their profit from food…
The only reason Burk won’t state this publicly is because we all know it’s from the money being invested. Admitting that is a legal nightmare for him.
Sorry what, 14 years?
Might wanna check when Zeek Rewards started there buddy.
The only idiots are the people who join a business without understanding or clarifying how exactly it works and where the money comes from.
These same idiots are easily lured in by the success of others… and unfortunately they’re also the same idiots who usually cry the loudest when the scams they keep joining collapse on them.
What does that have to do with anything? The problem is that when you give your points back to Zeek, they pay you a return before they’ve even given the points away.
And whether they even eventually give the points away is unknown.
So it’s entirely plausible that Zeek Rewards take members bids, pay out an investment and just hold the bids till they expire – all the while paying out a daily profit share based on the money invested to purchase the bids in the first place?
Cheers. I hadn’t considered that and it brings up an interesting point. Given we don’t know how big or the rate in which Zeek Rewards are allegedly distributing member’s bids dumped on them, what happens when they have so many bids and not enough customers that the queue to hand them out extends past the expiry date of the bids themselves?
More proof the money is being paid out from the VIP bid investment money.
I thought YOU are speaking for Zeekler? We just analyze the company’s comp plan, conduct, and news. The conclusion are derived from the facts. You are welcome to poke holes in our logic, but if you can’t, then, well, too bad for you.
That would depend on your definition of “scam”. IMHO, Zeekler is fine. It’s ZeekRewards that is potentially illegal due to its matrix comp package, but you’d have known that if you actually READ all the comments and analysis.
Zeekler may be around to stay. ZeekRewards is doubtful as it’s in heavy suspicious of being a matrix recruitment scam, even though it was supposed to be a promotional program for Zeekler.
Why won’t it work at 100%? It does work at 100%, you repurchase bids at 100%, but you are not drawing money out then. At 80% repurchase and 20% cash withdrawal your VIP points grow and you take out 20% cash in Retail Profit Share.
I started 7 months ago, started with $10 worth of bids ( converted to points), this was set at 80/20. My bids (VIP Points) have grown to 53,000 which gives me approximately (varies) $960 a day “retail profit share”. I take out $192 a day (and growing) in cash. Then there is the “BID PACKS” that people buy to play the auctions (Commission to me). Commission from people joining and buying “Sample bids” to give away and commissions from the matrix.
So all in all a nice $3,000 – $4,000 a week in cash that I’m withdrawing.
Now as for all the people here that are not qualified to comment because they are not a member. The business is working just fine.
A few years back, 2008, I joined another networking system, exactly the same was said about that. And would you believe it, it’s still in business in 2012 and making a lot of residual income for people involved.
So to all the MLM, Networking, Money making slayers here, you will always be negative about any program or system.
The fact of the matter, whether you like it or not, money is being made, and time will tell whether ZEEK will stand the test of time.
In the meantime “Make Hay Whilst The Sunshines”
Because if it’s still here in 5 years time and people are making $10,000, $20,000 or $50,000 a week/month you will be kicking yourself!
And if I can do it with $10 bid purchase and $99 a month (Total Cost To Date $703) and I’m pulling out $3,000- $4,000 a week.
Then anyone can if they work it.
I like to surround myself with “Positive” people, I suppose that’s why you become successful.
So I let you “negative” people carry on.
Have a nice day!
@Dave
It was meant to be taken the other way around. If all these people with 10,000 plus VIP point balances set their cash outs at 100% or worse, withdrew everything Zeek Rewards would collapse within a few hours.
Of course the way its set up, that won’t happen as they’re counting on people’s greed and suspension of belief that a ponzi works to keep them re-investing and not cashing out.
Yeah, because you need to be a part of the scam to understand it works. You seem to have no idea (or interest in understanding) beyond ‘I invested $x, and not I get to withdraw $y a day – IRREFUTABLE PROOF THE SYSTEM WORKS AND ISN’T A SCAM!’
Ponzi schemes have to pay out, or people don’t invest. Where do you see these payouts from these massive VIP point balances in 12 months time?
What, you’re going to tell me Zeekler’s penny auctions are going to experience infinite growth to keep up? Please.
People like you who joined around the beginning running around telling people you’re taking home thousands a week is the sole reason the company is kept afloat today. As long as people keep investing the scam pays out.
Fortunately ‘making money’ doesn’t determine whether or not something is a scam or not, the business model does.
Something you appear to have no interest in.
And tying in with my earlier comment about greed, this is why MLM marketers have such a bad name. I mean hey, so long as you’re making money… fuck ’em right?
Oh and here’s what happened when one Zeek member dared to ask about transparency regarding what the daily profit share is made up of:
Furthermore, when publicly asked about it, this is Paul Burks’ response:
Disclosing where the majority of the profit share money comes from (not exact percentages) is “proprietary information”?
Horseshit! Burks just can’t disclose the majority is from member investments in VIP bids.
You keep calling it a “Scam” that means illegal.
It hasn’t proved the be “illegal” therefore can not be called a scam or ponzi.
“Innocent until proven guilty”.
What’s “Social Security” one big Government “Ponzi” “Scam”. But we can’t call it that because it’s legal.
So what are the legitimate MLM’s then?
The ones that sell over inflated priced products!
Actually,
Sounds pretty accurate to me.
Please don’t bother with the social security, the banks, your grandmother etc. are all ponzi scheme arguments. Heard them all before and they have nothing to do with discussing Zeek Rewards.
Next you’ll be telling me I work for one of Zeek’s rivals (I’d include you telling me that I’m not in the company so how could I understand it, but you already did that).
And if everyone set it at 100% to withdraw, then all the money would be taken out.
But that’s like saying “if everyone didn’t go to the football match” the stadium would be empty.
I don’t care who you are! I know you are not successful in business from your negativity
What do you think is going to happen the second member’s returns are so high that it causes the daily profit share to be negilible?
People are going to cash out en-masse and yes, the football stadium will be empty.
I’ll still be here of course, analysing the next big scam its members can’t wait to tell me is not a scam.
Cmon, now you’re just sounding like a nutjob.
“Negativity”… please.
You have no idea how this really works. Don’t forget that the Company are sitting on 80% of the money that people have used to purchase bids.
And you only earn money on those bids for 90 days. Then they retire, making the business sustainable.
Says who? Paul Burks has categorically stated he will never reveal where the profit share money comes from (percentage wise).
Are people’s investment returns growing over time? If so, how is that remotely sustainable?
Penny auctions businesses (or any business for that matter) don’t have projected infinite growth to keep up with payouts.
It’s ridiculous to suggest so.
Those are the facts! Not an opinion.
If I buy $10,000 worth of bids. They go to the Company, they give me 10,000 VIP points that earn a “Retail Profit Share” for 90 days. Then my original $10K retires. So if I withdraw 20% per day, the Company still have 80% of the money!!!
No it doesn’t. What, you think you’re Zeek Rewards only member? In the meantime they’ve used your money to pay out other members returns.
That and lets not kid ourselves, the 80% profit share you’ve been withdrawing is more than the 10,000 you lost. Otherwise nobody would be investing in Zeek.
It’s not an investment. It’s a purchase.
Then where does the return come from?
You don’t earn daily cash ROIs on purchases, you earn returns on investments.
Oh and VIP bids aren’t a product either… in that outside of the Zeek Rewards investment scheme (you have to give them away) they have no actual value.
You claim to have 53,000 VIP points so I would assume you have a much better understanding that who described above.
Your description of buying $10,000 worth of bids and setting it to 80% reinvest and 20% cash out leaves out a critical piece of information… what is the average daily profit share percentage?
Zeek has gone to great pains to disclaim any guarantees of a rate and has made it clear that any proof of income, hypothetical projections, spreadsheets, or anything implying what a rate could be is a compliance violation and grounds for immediate termination.
In other words, no one knows what the future rate will be. All the new distributors coming on board are doing so based on the observation that the rate has been averaging about 1.4 to 1.5%.
If the distributors are informed (and greedy), they are gambling on the fact that this rate will continue long enough that they can profit.
If they are misinformed (or naive) they are being misled systematically by the insinuation of corporate marketing and sales innuendo from distributors recruiting you to “do nothing, just deposit money, and the profits magically appear daily”.
But the harsh reality is that eventually the daily profit share rate will drop, and then there will be a massive panic as everyone scrambles to get their money out. But wait, you can only do that 1 day at a time. It takes 90 days to convert virtual points to cash, and by then the rate will be very low.
Those that have been profitable to date are what we call “at the top of the pyramid”. That’s why pyramid schemes are so enticing, because there is ALWAYS proof that the program HAS paid and is CURRENTLY paying. But there is no guarantee that it will pay out in the FUTURE.
When it does collapse, what will all of you Zeek supporters say to the thousands of people left holding the bag?
Probably something like this:
Oh please! It’s not an investment… it’s a “purchase” or a “gamble” or a “business risk” or insert euphemism here. Just because Zeek is training all the distributors to not use the word “investment” does not mean that isn’t the fundamental basis of the entire business model.
1) You have a balance.
2) You earn a profit share based on that balance.
3) You can “repurchase” or reinvest those profits and grow your balance.
The above is classified as an investment no matter how you try to relabel it.
The only reason Zeek’s new lawyers told them to stop using the term “investment” or banking terms is because they want to avoid being shut down for violation of banking laws.
You can tiptoe on the line of legality with MLM laws and the worse you usually have to pay is a settlement after a class action lawsuit. But if you are found violating banking laws, the government will come in and shut you down immediately.
Go back and look at all of the Zeek Rewards corporate marketing and contracts prior to the new compliance endeavors. Zeek clearly promoted this program as an investment model.
In fact, even before the switch in August to points expiring after 90 days, it was almost an exact duplicate of other investment schemes that have been found illegal with a cap on max return per “investment unit”.
Please, spare us with the “this is not an investment” marketing pitch.
When I joined the Retail profit share was 1.2% average per day. Now it’s 1.8% and in fact, it hit 2.2% yesterday.
Then there were 3,500 members, now over 43,000 members. Not sure why the daily “Retail Profit Share” is going up!
Could be that 43,000 ads a day are going out, and could be that 10000’s of people are now playing the auctions and buying “Bid Packs” which makes even more money.
No “PLEASE”. Paul Burk’s has been in networking for many years. They have put together this “Penny Auction” model. He knows, like I do, that you have to make sure it’s within the law.
An experienced person, that has a successful business for 14 years, is not going to put something together that is going to ruin his business or get him prosecuted.
Now we can argue this all day long. As I have said, I have heard all this before. This was said about another Company in 2008 when they brought in compliance, all sorts of comments like here. It is still going strong in 2012.
So the proof will be in time. If it’s still going well in 12 months, 2 years or 4 years time.
You will still be saying the same-thing even though it operates within the law.
Your numbers are off. The average was never 1.2% and it never hit 2.2% yesterday. Yesterday was 2.02%. You have to look at the average, but you know that. The average last 100 days is 1.48, the last 30 days 1.50.
The average is all that matters because the weekdays when it has been 1.8% or higher is balanced out by the weekends and Fri when the rate is usually below 1.0%.
Also your claim of 43,000 members does not match what Dawn or DD has said on any of their corporate calls. When you are sloppy with your numbers, it is hard to have a rational discussion.
I love how everyone cites Rex Venture Group’s 14 years of being in business as if it has any relevance. First of all, neither Rex Venture Group or Lighthouse America has a DNB record or is BBB accredited, if either of those litmus tests of corporate legitimacy matter to you.
Secondly, Zeek Rewards as a separate company could go bankrupt and there would be no liability from Zeekler, Lighthouse America, or Rex Venture Group. I have owned a bar for 22 years, if I put a ponzi scheme under my bar as a subsidiary, maybe I can claim 22 years of experience running a ponzi.
If you want to show some anecdotal evidence of historical MLM business legitimacy, find me the 3 million members of FSC or NewNetMail and tell me why they aren’t all over Zeek Rewards? You would assume Zeek Rewards sent emails to all 3 million members right? Where are there? Fool me once, shame on you. Fool me twice…
As for the “Company” are you talking Monavie? That was covered here. Monavie went downhill after compliance. Look at its published reports. Some 97% of distributors made $1 or less (don’t have it in front of me). Search the archives.
You can’t compare Zeek to an autoship product company. The business model, while both MLM, are vastly different.
An autoship product company can see zero growth and still survive. An investment scheme must maintain continuous compound growth or face collapse. There can be no peaks and valleys or slow and steady growth like with other product-based MLM’s.
I’ve been in business 26 years, full-time online for 9 years. If it goes bankrupt, oh dear! Then we go and build another business.
In my 26 years I have built many different businesses and sold them. Some are still going today, some are not trading! (offline and online businesses).
That’s a fact of life. Who knows what is around the corner, you don’t!
And no it wasn’t “Monavie”
As for the 2.2% sorry I missed 2.02% the zero. Still made me $1,079
@Dave
You seem to be only interested in your hip pocket and don’t care whether your participating in scams or not.
I’m more interested in analysing why businesses fail (or succeed) and sharing that information.
No I’m a realist! What business can you set up and say will be here in the next, 5 years or 10 years time or even longer?
You can’t, why? Because that’s business! Who knows what will be around the corner.
Can you guarantee that Zeek will be closed down? Can you guarantee that Zeek will be out of business in 18 months?
Can I guarantee that Zeek will be here in 8 years time?
No!
Whilst you are analysing, the rest of us are making money.
When the Government Authroities tell me that Zeek is a scam, I will listen, until then, I will keep building the business.
I think listening to the Government Authorities is a sensible approach. Rather than listen to people that call everything a “scam” even when it has not been proved.
The authorities determine the legality of an opportunity.
The business model itself will tell you if it’s a scam, primarily where the commissions come from and what you’re doing to earn them.
Yes, because it’s implausible that the penny auction side of the business will experience infinite growth (to match everyone’s VIP point balances).
Mathematically this is impossible.
Like I said before, so long as you’re making money, fuck em right?
So the business model will tell you if it’s a “scam”.
So if Zeek has no problem with the authorities in it’s current form, and still trading in another 12 months.
It’s still a scam right?
And no, not “fuck em right?” I joined like everyone else and have given it a go. I’m making money and people that I have introduced are making money.
So again, until it is proven that it’s a scam (fraud, illegal) I will continue to make money from it and promote it.
In the very same way that I wouldn’t listen to someone saying, train to be a Doctor, get yourself a trade, get yourself a 9-5 job. Instead of setting up a business because it could be risky.
There are two guarantees in life.
1. You will pay Taxes
2. You will die
I don’t believe the (US) authorities have looked into Zeek Rewards, do you know something I don’t?
If anyone wonders how scams like this propagate, it’s because of attitudes like this.
People understand the business model, accept it’s a scam – but unless the government shuts it down they’ll still happily participate. Knowing full well whoever invests last when it collpases will just lose their money.
What a sad reflection on the MLM industry and those that participate in it. It’s people like you (and other Zeek members who know it’s a scam but participate “because they make money”) who trash this industry’s reputation and credibility time and time again.
What utter rubbish!
If everyone listened to people like you there wouldn’t be any internet businesses.
How can anyone accept it to be a scam (again, fraudulent, illegal)until it has been proved by the Authorities?
You can call what you like, but if it operates within the law, no problem.
Or shall we all sit here for 12 month, 2 years to see if it is a scam ( in the real meaning). Then when it’s still trading, say I can’t believe that scam is still going.
It hasn’t collapsed, you don’t know whether it will nor do I
Because (and we’re not going over this again), the authorities establish the legality of something and the business model determines whether or not it’s a scam.
Anyone with a half a brain can look at Zeek Rewards and regardless of where the money is coming from, realise that indefinite increases in VIP point balances is not sustainable.
Period.
So if the authorities deem Zeek to be legal, then it’s still a scam in your eyes?
Aren’t you missing the 90 day retirement of bids/points?
There’s no products and it Zeek Rewards grossly violates the 70/30 rule so not gunna happen.
It’s not like the authorities use some other book of rules the rest of us aren’t using in analysing Zeek.
Irrelevant. Nobody would be investing in Zeek if they didn’t earn a greater ROI after the 90 day period than the initial investment itself.
The point balances infinitely increase and the delusional (or people who know it’s a scam but don’t care unless the authorities shut it down) people think that wherever the money is coming from will also infinitely increase.
Hi All,
As i was reading about zeek prog. and talking to people (members vs. attackers/skeptics, like we have here..), there are few questions up there hanging and one is very important to me personally:
If let’s say i decide to join Zeek’s prog. as a GOLD member (50$ monthly) and purchasing lets say 600$ bids to give, BUT (and this is a big BUT..) i decide not to / not able to persuade others to join as members under me, means that i’m the lowest leaf in the hierarchy (last in the pyramid base), will i still be able to make any profit after few months or so?
thank you in advance for your answers..
What Dave don’t understand is there’s a difference between a scam and a CONVICTED scam.
According to Dave on a convicted scam (i.e. one shut down by authorities) can be called a scam.
There’s your fundamental disconnect.
Every discussion on here leads back to circular logic that usually goes like:
1. People are making money, I am making money, therefore it must be legitimate.
2. The company has been in business for 14 years (not really) and Paul Burks is smart, so why would he do X.
3. It’s not a scam because it’s still operating. And people are getting paid! Goto #1.
I won’t address #1 and #2 as those rebuttals are fairly obvious. I will address #3 again… something does NOT have to be illegal in order to make it “scam” or be deceptive.
For example, listen to any presales call or watch the corporate approved marketing videos for Zeek Rewards. There is a huge emphasis on revenues from the penny auction. The “deception” here is the implication that:
* The act of placing an ad on spammy free classified sites has value.
* The penny auction brings is the primary revenue generator, if not the overwhelming significant revenue generator.
* Ergo, as an affiliate who advertises, you can share in the rewards of this net new revenue stream that is external from affiliate deposits and subscriptions.
Over 90% of the Zeek Rewards corporate “opportunity calls” and marketing videos focuses on emphasizing or reinforcing the above three points. Nowhere do they emphasize or disclose the fact that a significant amount of revenue, probably in high 90-percentile, is all coming from affiliates.
They also imply that half of net revenue is shared with affiliates. If that were true, Zeekler would be growing at over a million in net revenue per day. Have you seen any other 365-million dollar revenue company run such a poor operation?
In all likelihood there is not a true 50% split of “net revenues”. Further, the daily profit share cannot be based on a real, unchanging, stable formula. The variation in the returns are too tightly controlled.
Listen to any private opportunity call from the affiliate “leaders” and they emphasize the compounding interest and investment model even more overtly than the corporate calls. The positioning that this is not an “investment” is completely contrary to how it has been and is currently being sold, albeit now with word substitution so as not to be blatantly scammy.
Everything I just described in the last paragraph is the “deception”, and therefore the scam. Even if only part of the above is true, it is still a scam.
Whether Zeek is “illegal” is a much different issue. It could be illegal based on banking laws. It could be illegal based on MLM laws such as the 70/30 rule. It could be illegal based on lottery and gambling laws that would cover penny auctions. It could be illegal based on UIGEA. Or it could be illegal simply based on business tort laws around fraudulent misrepresentation.
This doesn’t mean guarantee or imply that Zeek would be shut down or its owners face criminal charges. Why there have been similar programs that have had criminal charges filed, many others have simply faced civil lawsuits or reached a settlement.
Whether something is a “scam” or “deceptive” can be analyzed based on its business model and marketing strategy. Being “illegal” is a completely different issue, that while there is overlap, claiming that “until this is found illegal it is legitimate” is a logical fallacy.
@ZZR
Yes you will, by giving your bids away to the company the company will then start to pay you a return on your investment for 90 days. No questions asked and they do this whether or no they’ve actually given your bids away or not.
That co-incidentally is pretty much one of the main indicators of Zeek Rewards being a scam though so be wary. They’re paying you a return before your bids have even been given away (meaning no money has been generated off them to share).
@ZZR
If you are trying to say that because one could profit without recruiting in Zeek by using just the daily profit share, therefore it is not a pyramid scheme, you are only addressing one aspect of the program. First of all, it is at least a ponzi scheme if the investment money from new members are being used to pay old members. It may look at pyramid for your particular matrix, but it is a pyramid as a whole if instead of building a pyramid based on your position in the matrix, you build a pyramid simply based on members that join over time. Say every “level” in the pyramid is one week on the calendar. Look at the growth in new members over time. The investment from the new members at the lower levels of the pyramid pays those on top.
Also, you do not need to enter as Gold and pay $50/month. If you are only investing $600 in bids, you could simply be Silver. Eventually you may want to upgrade when it will be easier to give away 500 bids per free customer instead of 100, but you can easily sign up 5-10 free customers that would allow you to give away enough bids to cover your first 3 months.
The real issue discussed on this site is not whether Zeek has paid in the past, or is paying today, but whether the business model is sustainable. If you look at the program rationally, you will realize it could not be sustainable for another 5 years. 4? 3? 2? 12 months? 6 months? There has to be a practical limit when the infinite growth stops and Zeek has distributed more in virtual currency such that they can no longer sustain the daily pay outs. Just think about it… there are people who are over 600k in points already. What happens if they keep doubling every few months? And what happens to the shared profit distribution when your 600 is competing with someone else at 600,000?
For what it is worth (perhaps nothing), I sent a query to the U.S. Securities and Exchange Commission last week asking about both Rex Venture Group and ZeekRewards. I received a response from a gentleman by phone and was told that my request for information had been addressed, and that his research concluded that there is no indication that either company has ever been the subject of an “enforcement action.”
Whether or not either company had ever been or is currently being investigated, the representative said he was not permitted to share. For what it’s worth.
Only 100 SEC “enforcement actions” have occurred in the last 2 years. Obviously only a small fraction of actual ponzi schemes result in any kind of action. Perhaps what is most interesting since you did mention the SEC is to review the SEC’s definition of a ponzi scheme:
The reason I quoted the above is to address Zeek supporters who claim that the “virtual points being given away” is not an investment or a deposit. Let’s avoid that discussion for now and go to the second question in the SEC’s description of a Ponzi scheme, and state the question another way…
What would happen to Zeek Rewards if when a large number of affiliates ask to cash out? (paraphrasing the question above)
I think you can cut & paste the SEC’s answer above and it applies to Zeek Rewards. Even Zeek supporters can’t see past the fact that their “purchase” is really an “investment,” they should at least look at the functional aspects of the entire business model which relies completely on:
1. New investor money to payoff existing RPP, that grows at an ever increasing rate to infinity
2. That investors are greedy and keep compounding rather than cashing out, because once the cash out wave hits, the entire program collapses.
How stable do you think Zeek really is? “14 year company… 3 million customers”… look at what was posted on Zeek Reward’s FB page in response to why they do not take PayPal:
How stable do you think Zeek really is? Do you trust the CEO’s judgement having locked so much money up with PayPal rather than placing operating cash flow in the corporate bank account? Perhaps the revenue at that time was not millions per day but at least tens to hundreds of thousands per day? There could not have been that many cash out requests that early on.
How much wisdom and experience do the people running Zeek have to do something so dumb as load up Paypal with such a large balance? Any of us who have used Paypal or read about know exactly how difficult it is to handle any type of grievance or receive customer support.
Are you comfortable that the CEO had to take out a 2nd and 3rd mortgage to handle a minor cash flow problem? Doesn’t that throw the entire arguments around stability of a “14 year old company” out of the window? Why could Rex Venture Group or Lighthouse America or Zeekler’s auction itself support Zeek Rewards?
The comment notes PayPal took 6 months to handle the dispute, but as soon as the account was locked, wouldn’t Zeek Rewards switch to processing by credit card directly (this was before they stopped taking credit cards as well)? So let me get this straight… a cash flow hiccup of a few days plus whatever balance was locked up by Paypal which required Paul Burks to take a 2nd and 3rd mortgage out? I wonder why a 3rd mortgage was needed when a 2nd wasn’t enough? And what about taking out a business loan based on the strong foundation of a “14 year company” with “3 million customers”.
So this occurred in 2011.
What happens when affiliates start cashing out. If Zeek couldn’t handle this Paypal issue, do you think they can handle a run on the bank?
Lots of people are trying to recruit me into this, at least 10 this week, they all say that it is simple and no recruiting required, if this is the case why are they ALL trying to recruit people?
The no recruiting line is being used by all of them in their pitch while they are trying to recruit you in the same breath.
Smells very fishy to me.
Burks made a big announcement either yesterday or the day before, it’s quoted above.
I’ve been massively busy the last few days so again had to put articles/comments on hold. Hopefully back into my routine tommorow so will go over the Zeek changes (and Ricochet Riches while I’m at it).
Because if you recruit you earn 10% commission from bids purchased. So if you joined me, bought $1000 worth of bids I would get $100 on top of the Retail Profit Share Award for placing a free ad.
So for the people that want to recruit can make even more money!
Check in the mirror if you have a stamp in your forehead? 🙂
“Gullible” or something similar?
A couple of people tryng to recruit you could have been “normal” or “coincidence”, but 10 people is way out of range. If you haven’t initiated this yourself?
Of course it may be related to something seasonal, like “hunting season” or something. Or to more permanent changes in Zeek’s recruitment plan.
Since you’re not Aunt Sally or co-worker Bob …
That announcement above is old. It was when they switched from guaranteed % return to 90 day expiration of virtual points. It is because Zeek was always an investment scheme.
The great lawyers they hired are simply disguising it to try and avoid being overtly illegal to “borderline legal”. If you think otherwise, just look at any advertising for Zeek prior to the Aug 2011 change.
It looks almost identical to every other adsurf program just substitute bids for ads.
PB’s announcement proves that ZeekRewards (as it was, not as it is now) was indeed illegal on many fronts. He formed the comp plan without consulting MLM experts and made a TON of mistakes.
I have previously pointed out that the ZeekRewards matrix and its qualifiers are problematic, as it’s NOT based on purchases of customers (whether through you or your downlines), which would make it a pyramid scheme (which is covered in some states under “lottery laws”).
Even now, the explanation they offered is, well, weird. They claim to be in the business to sell bids for Zeekler, but they are NOT rewarding ZR members for selling bids. See the quote:
This makes sense, but again, it’s still… off. Compensation should be tied to how many bids did retail customers purchase through the affiliate/ZR Member, not on how many bids he gave away, since he paid for the bids himself. It is STILL his money, and essentially, he IS still being paid for spending his own money. Front-loading is gone (no more accumulating bids and still get paid) but the pyramid-scheme concern remains.
I guess it’s a couple steps in the right direction. 🙂
To be clear of who is who, I’ll call the two “upline” and “downline”. Just to rewrite your sentence a little:
Agree so far? Here’s the problem.
This violates the 70% rule: 70% of sales must be to “ultimate users”, who are NOT in the company. (Established in “FTC vs. Omnitrition”) Both of you are in ZR, there is no “outside sales”.
If downline just buys $1000 bids based on upline’s recommendation/referral, but is NOT a Zeekrewards member, it’d be perfectly legit. it’s “outside sales”.
If downline sold someone ELSE (not in ZeekRewards) $1000 bids and you get a share of that, it’d be perfectly legit.
But as the way it currently is? Nope.
I don’t doubt they are a good MLM lawfirm. So good, that the TVI Express scam at one time claimed to have hired them to look into compliance issues in the US. That turned out to be a lie.
Heck, I quoted them many many times here. 🙂
@Jimmy
Thanks for that, I was on the road so didn’t have time to verify it. Due to the changes I saw when I skimmed through it I assumed it was new information.
Appears to have been published mid 2011 and is largely irrelevant. Well, except for the glaringly obvious admission by Burks himself that Zeek Rewards were offering a 125% capped on VIP points.
Zeek Rewards clearly started off as an investment scheme and still is.
I have a question I hope someone can address.
I was approached by a ZW affiliate. It was explained to me that after subscribing at any paid level, posting one ad per day and reinvesting 100% for the first 90 days and 80% thereafter, the accumulation of points would continue to grow (as well as the 20% taken in cash.
I tried to verify this using an Excel spreadsheet and an average daily point return of 1.5%. (I did not include subscription dues, bonus points or renewal points).
For the first 90 days I repurchased at 100%, and starting with day 91 I subtracted the initial number of theoretical bids purchased from the total number of bids, “X”, accumulated on day 90. Then I multiplied this number “X” times .015 times .8 (for the 80% repurchase) and added that amount to X again in order to get a new total for day 92. And so on and so forth for retiring points that were 90 days old.
The funny thing is, at some point between about day 120 and 170 (depending on if I repurchase/cash out at 80/20 or 90/10), point accumulation peaks and then begins to decline all the way down to zero. Zero occurs around day 353 or 565, respectively.
My potential sponsor and the two level above him have not been involved with ZW long enough to confirm that I have an error in my formula, and at any rate they all have a few people in their downline contributing to their points to skew their results anyway.
Nevertheless, it seems that “everybody” says that what I have unsuccessfully attempted to prove does in fact work – even though I can’t find any quantifiable proof anywhere, including my own spreadsheet calculations.
Can anyone tell me if my formula above is correct or incorrect? If it is wrong, can someone explain why? There are so many people on the internet claiming this works over the long-term, but as far as I can tell, it seems no one has bothered to prove it.
Any help?
@Zach calculating investment stuff like that does my head in, so I’ll let someone else who’s better with numbers go over your figures.
At 1.5%, an 80% reinvestment will continue to grow, albeit slowly. There probably was an error with your spreadsheet.
The risk is that you assume the average will remain above 1.1 to 1.3% forever. When the rate drops below 1.3%, people will start getting nervous and move more to cash. When it drops below 1.1% there will be a run on the bank.
How realistic is it they maintain a 1.5% average? Extend it out 2 or 3 years and there is not enough money to pay everyone. So obviously there is a fixed lifespan. Is it 3 months? 6 months?
There is nothing saying you can’t make money with Zeek. You just have to cashout before everyone else does. 🙂
@ Oz & Jimmy –
Thank you both, the thing is that everyone seems to agree that 80/20 works, but I want to see the proof in numbers. It aint rocket surgery, just a few spreadsheet calculations, but I can’t get things to add up.
I may be missing something fundamental about the method, but the simple way that it has been explained to me doesn’t seem to work. I can’t find a precise explanation of how the points accumulate and retire (for example, if the points on day x were compounded prior to, or after the retired points drop off on that day, it would have a significant impact on projections).
So, my formula might be wrong, but someone must know…
Jimmy, your points are well taken.
I hope someone can provide some specifics.
Funny, I’ve been in 7 months (so life span incorrect). 2% again yesterday.
I emailed my spreadsheet file to my potential sponsor last night. He promptly invited his sponsor over to go over my calculations, which aren’t so complex. They can not find and error and now they are concerned. Everyone says it works but no one can prove it mathematically???
I will be happy to share the file with anyone who wold like to analyse it and tell me what is different than the way ZW actually does it.
I have no money in the game yet, but I really want it to work. But I need to see the math and so far either no one can do it, or no one can explain the process correctly so I can write the formulas myself.
Any takers?
Any sort of “forced reinvestment” will get them into trouble as an unlicensed investment… again.
Furthermore, Oz just highlighted Ricochet Riches… force reinvestment is just a way to keep the money in the system, limit withdrawals, to prolong the scheme.
The only ways a Ponzi scheme collapses is
1) government action, or
2) people make a “run” for their money and withdrawals exceed available cash (incoming money).
Force reinvestment delays the second reason.
How is the lifespan incorrect? I said:
That was the “prediction” if you want to hold me to it. The 3 to 6 month question was just a question from today forward. Do you really think if you start withdrawing 100% of your money in six months that you can cash it all out?
If so, what are you waiting for? Why aren’t you mortgaging the house and buying as many 10k shares as you can using friends and relatives names and address?
Day to day daily profit share examples mean nothing. The pay is all vritual. If you start withdrawing your money today, you can probably cash out and claim success at this investment… but that is only because you are cashing out before everybody else.
If you wait “3 to 6 months” (to quote myself above), what is your risk? If everyone else starts cashing out the rate will nose dive.
@Zach
Try to use another METHOD? I’ll guess your formula is right, “X times 0.015 times 0.8 = Daily reinvestment”, but the method used can still be wrong.
I would have used a few more columns to be able to check details.
A1: Days
B1: Investment
C1: B1 * 0.015 //Daily profit
D1: C1 * 0.8 //Daily reinvestment
E1: C1 – D1 //Daily withdrawal (optional)
F1: B1 + D1 //New Investment
G1: Optional, Weekly or monthly withdrawal, “salary”
B2: = F1
B3: = F2
B4: = F3 etc.
Make sure you have the right numeric format in the cells too, like whether you should use currency with 2 decimals or a rounded numeric format without decimals.
Try only a few lines with different numeric formats to see if they make a difference, before you fill out 100’s of lines.
To make it more interesting you can add a column for weekly or monthly withdrawal, to see both how your salary and investment will increase. Having FRIDAY each week as a payday makes it even more interesting. 🙂
@M_Norway
When I worked the numbers I did include your suggested columns A-F. I didn’t do a periodic withdrawal except for the daily withdrawal of either 80% or 90% starting with day 91.
The columns show a running total point accumulation, daily earnings,amount reinvested according to a variable as well as the cash-out according to the inverse of the reinvestment. I did not include sign-up bonus points, subscription renewal fees, renewal points, compliance fee or 5cc fee.
I know there are lots of ways to schedule payments, but I wanted to verify the simplest method first before trying anything more tricky. Also, the way I wrote it DOES work for a certain amount of time and looks very convincing, but the points and cash-outs hit a peak and then decline.
I don’t know of anyone who has been in long enough to reach the peak, and in fact the few people I know of that are in this have several downline affiliates, so their data is no good for the proof I and trying to establish. Anyway I thank you for your response.
@ Dave,
Dave, I’m not sure if you were responding to me or not as well when you said you have been in for 7 months and so the lifespan is not correct.
But either way, I was wondering if you had any downline contributing to your points or if you ONLY place the daily ad. I understand that points accumulated from downline will bolster the total points and keep it going longer.
It’s just that I keep hearing from people that you don’t have to do that if you don’t want to, and the system still pays out and grows at 80/20 just by doing the ad. I can’t get it to work even at 90/10.
So far, no one can prove it really does work, despite the hype. Everyone says it works, but no one can prove it. I’m not saying it doesn’t work, but I can’t see how, and nobody else seems to know how either.
Again, I offer my calculations to anyone who wants to see them and I invite an explanation of how the system really works in case I am understanding it wrongly.
the 90/10 configuration doesn’t pay out
I suspect you are missing a key figure: how much money is Zeekler, the auction side, feeding into ZeekRewards to “reward” the participants. That figure is NOT necessarily related to the amount of “profit” 1 to 2% figure, they claim are sharing.
They explained the general concept, but conveniently left out the details, so you can’t check their work. Their numbers is simply whatever they say they are.
@K.Chang
I’m sorry I might not have been clear that in all of my calculations, I used the assumption of a daily profit pool earning of 1.5%. I know it varies, but I used 1.5% average for every day x the accumulated points on that day to arrive at the new total.
The 1.5% daily earning is what has been claimed to make the points grow, and there has never been any indication that ZW is contributing something in addition to the daily earnings. If they were, they would be foolhardy not to say so, so that people like you and me would understand it and give them our money.
I might be missing something else, but it shouldn’t be that bit. I think I explained my method in my first post on Feb 17, which is the way my potential sponsors as well as the ZW website have made me understand it. Thanks
From what I read, and the way I understand it, this “points” thing is a convention they adopted to confuse all participants. The question of how the profits will be divided up depends on
1) How much profit is there (A1)
2) How much of it will be shared with qualified associates (percentage) (A2)
3) How that will be divided up (distribution formula). (A3)
However, instead of telling you all this, ZR simply tells you this “daily profit share”, which for this purpose, we set at 1.5% though we know it varies.
First of all, this 1.5% figure has absolutely NO relations to
A1, A2, or A3. They have repeatedly said it’s some sort of proprietary formula and will NEVER be made public.
Second, due to the “reinvestment” thing, they can afford to make the payout look BIGGER than the actual profit payout. Ponzi schemes (such as Ricochet Riches) often ask you to reinvest, and this keeps the money in the system and delays the inevitable cash crunch.
It is this second factor that you cannot calculate (how much they “fudged”) and thus your figures will NEVER work out.
As a theoretical example:
Let’s say there are 1 million VIP points active in the pool.
Today, they decided to award 1.5% profit share. Total profit share is 15000.
Assume everybody reinvests, that pool just became 1.015 mil.
over 90 days, assuming compound interest, that 1 million points became 3.8 million points, assuming average is still 1.5% daily. This is confirmed by “rule of 72”. Takes about 48 days to double, 90 days to nearly quadruple.
As the end of the 90 days, Zeekler would have to be sharing 57,000+ dollars to maintain the 1.5% daily profit, as they don’t know how much of their members will choose to ‘cash out’.
So either Zeekler was already so ****ing profitable that they can afford to pay out this sort of profit sharing, or they are COUNTING ON the fact that people would “reinvest”, keep the money inside ZeekRewards, in hopes of future payout.
Which suggests they are constantly in fear of a cash crunch: if a majority of people choose to withdraw their profit instead of reinvest in more VIP points, they may face a liquidity problem unless they have so much cash reserves they can afford to pay everybody daily for more than a couple weeks.
The fact that PB claimed Paypal ****ed him when they froze his account adds to this observation. The math just doesn’t support the business model, as it relies on this “reinvestment”. The payout is basically a “made-up” arbitrary number that actually depends on the profit and amount of reinvestment.
Also concerning is when Paypal froze their account, the CEO has take out a 2nd and 3rd mortgage on his house to keep the business going.
If they were awash in profits, why would a Paypal account freeze hurt? Don’t they have enough incoming revenue to pay daily profit share even if they did have to juggle some cash flow around? Sounds awfully suspicious.
Zach – I think you have it figured out w/the spreadsheet.
I got recruited into it 2 almost 2 months ago and threw a small amount in to play with it. I’ve come to the conclusion that its basically a sham by not allowing you to instantly convert your VIP points to dollars.
They try to keep you in as long as possible by encouraging you to keep rolling over 100% of your points but if you do that you will rack up monthly expenses that will probably not be recovered.
Most of the people involved dont have any idea what an excel file is, let alone how to put together a spreadsheet and run the numbers. The common responses of “well I’m making money” or “you cant make money if you dont invest” are almost comical in their ponzi-esque mentality.
I’ve decided to go into run off mode and start taking the money in cash and get out.
As long as the rate stays above 1.25% average for 90 days you will be profitable. If your spreadsheet with an average of 1.5% does not show profits after any time period, after accounting for 90 day bid expiration, then your formulas are wrong. I have run the numbers many times and 1.2% is the magic average rate.
The only thing you need to worry about is if the daily rate will stay high enough for however long you want to keep your money in. Remember it takes 90 days to fully cash out, so those who think they will just wait for sign of trouble and then cash out may be too late.
As far as spreadsheets and calculations, there are a few floating out on the internet still. Compliance has made affiliates take them down but you can find some if you search.
@ K. Chang
I agree with your points 1 and 2 that they are wild cards. Just one wild card is all they need. As far as Point 3, I thought the amount of profit determined by your points 1 & 2 was dictated by the number of points an affiliate held. I appreciate your input.
@ BSO,
According to my calculations, which are unconfirmed, you can still come out way ahead by cashing out in full after 90 days, although I haven’t figured in credit card interest, monthly dues, 5cc fees or any other costs. Thanks
@ Jimmy,
Maybe I wasn’t clear, there is definitely a profit after 90 days, it’s just that a peak is reached when the points retiring exceed the points being generated and your balance gradually reduces to zero.
I know this SEEMS counter-intuitive (and maybe I have miscalculated), but that is what the numbers show. The day this peak occurs depends on your ratio of reinvestment/cash-out.
I have seem spreadsheet videos that my potential sponsor downloaded prior to their removal from Youtube. In my opinion, they are highly suspect and I do not trust a single one of them. Hence why I am performing the calculations myself. Thanks
I invite any and all to analyze my data for errors.
@Zach – dont underestimate the effects of the monthly interest. If you put in $500 dollars and are paying $50 a month in dues that is a 10% MONTHLY expense and blows the profitably up
I’m starting to think the wisest approach is to reinvest in full for 60 days, then once you get the Bonus VIP’s take all of your proceeds to cash w/0% reinvestment until those points expire after 90 days and get out, otherwise you will get just your point total gradually grinded down over time.
I think my point I want to make is that A1 and A2 shouldn’t change that much from month to month. Let’s assume that Zeekler is bucking the economy and their profit (not sales, PROFIT) is growing, say, 18% a year. That’s pretty **** good. How much is that per day?
If you work out the math that’s about 0.27%
There’s NO WAY they can pay 1.5% profit a day.
To pay that kind of profit, they have to grow their profit by 229% every year!
Geek equation follows:
(1 + DI ) ^ 365 = 1 + YI
DI = daily interest
YI = yearly interest
@Zach
With a 90-day bid expiration, even after you are past the first 90-days and hit the first big cliff from the initial investment, an 80/20 cash out (80% repurchase) will still be profitable with an average rate of 1.4% daily profit share.
1.4% is the magic number. If the average daily profit is below 1.4%, then 80% repurchase will result in slow decline of your balance.
However, the key is how far away from 1.4% you are. For example, with an average of 1.3%, after the first 90-days, your balance on day 455 (90 days + 1 year) has only declined 26% from the day 91 balance.
During that one year period you are collecting 20% per day (assuming Zeek is still in business and paying affiliates during this time).
Here are my assumptions:
1) Initial investment of $1000
2) Daily profit share average 1.5% first 90-days
3) Daily profit share average drops to 1.3% day 91
4) Switch repurchase from 100% to 80% on day 91
Net results: $2571 cashed out total after 455 days (no cash out first 90-days) with a balance on day 455 that has declined 26% from balance on day 91. During this 15 month period you have to be a premium subscriber, so at least $10/month for SILVER.
A lot of people don’t realize how long it takes to recover your initial investment at 80/20. If you begin cash out at 80/20 on day 91, you recover your initial $1000 on day 213, minus monthly subscription fees. I didn’t add the 100 to 200 bonus points that converts to VIP bids after day 60 in the above.
If you have been in ZR for a while you’ll scoff at the notion that there is any risk. However, if you are NEW to ZR, you have to ask yourself “will I be able to cash out on day X lasting until day Y”.
(Argh, why does my mind keep coming up with addendums?)
My REAL point is the points would grow faster than their profits. They have this cute trick of “expiring” points after 90 days, which helps keep it under control somewhat, but it’s just like that “forced reinvestment”: it keeps the money in the system, and it gives the impression that you need to keep doing things to earn points and keep your point balance constant or growing.
However, the only thing “growing” is that point balance, not your wallet.
You don’t know how many points are added and how many points are expired each month except for yourself, when you need OVERALL figures, and that’s variables A3 and A4. Without those, your equation won’t come out quite right.
yes, the 90 day point expiration and the inability to immediately convert points to cash are where you get screwed – plus the monthly fees.
i was trying to figure this whole thing out yesterday when i listened to one of the calls about point expiration and the chick on the call said “well if you dont like your points expiring just buy more points” translation “if you dont buy more points and send us more money the party ends” and thats when i realized it just didnt all add up.
That is a relative term. You are “screwed” in the sense that it takes 90 days to fully cash out your account and it is not an instant withdrawal like a bank or other equity investment. Also realize that once you switch to 100% cash out, you cash out most of your balance early (like a reverse interest amortization schedule).
For example, in the first 50 of 90 days you’ve already cashed out 75% of your possible cash out potential. So if the program dies on day 50 of your cash out strategy, you only lose 25% of the potential earnings.
Also consider if you joined early enough and have a large enough balance, it may only take a few days to cash out your initial investment.
We should separate the issue of profitability and risk vs. whether the program is overall a scam or not (i.e. a cleverly disguised Ponzi scheme that will eventually collapse).
Most impartial observers here will agree the business model is not sustainable, and it is extremely likely that money from new investors are being used to pay off existing investors, with very little revenue contribution coming from the penny auction itself.
That said, there are programs like JSS Tripler that despite issues highlighted here are still paying out after 1-year. We all agree JSS Tripler is clearly illegal, but it is paying. Two separate issues as far as analysis goes, and relevant because when the program collapses is when we will see the flood of complainers come out of the woodwork.
The fees shouldn’t matter for most people because it would be relative to account size. If you have 50k or 100k points then you are recovering your fees very quickly. 50k points at 1.5% is $750 in daily profit share.
As long as you get your money out before everyone else does, you will be fine. The question is how do you optimize based on knowing this is the key profit principle (that you are in competition with every one else for timing of cash out)?
Wait too long, your balance will grow but the rate could drop drastically with a run on the bank. Exit too soon, you make some money but not a lot. Enter too late and you’ll lose money.
Thank you all for your thoughtful contributions.
I have to agree with pretty much all that has been said on the matter in the last few days. I just don’t see how it can last. The profit growth just won’t be there as K. Chang points out. I don’t really know about that stuff, but it sounds very reasonable.
I’d like to point out that there are maximum contributions depending on subscription level as well. For example, if you plunked down $10K as a diamond affiliate, you can’t buy any more bids, ever. So (BSO), when the woman on the phone says to just keep buying bids – well, some people can’t.
The only way I can see to bolster a declining balance after that is through recruitment.
Jimmy, I’d sure like to know what is different about your calculation compared to mine. When I do it, even 90/10 is not sustainable and is exhausted by day 565 (1.5% daily earnings, 100% reinvest for first 90 days).
I did not factor in bonus points and such, but if those things are so critical to whether or not the system even works, well that sounds fragile to me.
At any rate, even if my estimates are correct (Not to say anyone else’s aren’t), a load of cash can still be made if the timing is ok and the profit pool keeps paying. For example, a $10K buy-in reinvested 100% for the first 90 days and taken 100% in cash after 90 days would still earn you over $10K, doubling your money by the time the funds became exhausted around day 180. Not too bad, but… The level of risk is unknown. At least to me.
I wrote a letter to the ZW Chief Op Officer (I think the same woman in BSO’s phone call), clearly defining my questions about all this and requesting clarification on the procedure. The automated response said to expect to wait a week for a response. We will see.
I will report back here with the corporate response when/if I hear from them. I’m exhausted from thinking about this for the last week and a half.
Thanks again everyone
I think you are nuts to put 10k into something like this. Way too much of a crapshoot.
Jimmy, why would you want to withdraw 100% when 20% a day can give you a nice residual income.
You seem to be getting excited lol. The maximum amount of bids you can purchase is $10,000. You can build your bids/VIP points from repurchasing and using commissions.
So if I wanted to mortgage my house and buy multiple $10,000 bids I can’t lol
Do you have a crystal ball?
JSS Tripler is a straightline.
@ Jimmy, the 90 days blah blah etc. It’s been 7 months since I joined, Thursday achieved 2.11%, so I have gone past the 90 days without a dip, problem, only growth.
I’ve pulled out $6348.83 this week in cash.
What I did, even before the 90 days was pull out cash to cover all costs, now everything is pure profit.
Like with any business, pull out your initial outlay, get a profit. Then everything else is a bonus.
Zeek will still be here in a few years.
We can argue this for as long as you like. But time will tell.
@Zach, I have a spreadsheet that works it lovely.
First rule of business. Make sure you are in profit first (which I am). No one has a crystal ball.
Look at “Kodak” just gone under after how many years?
Sure you can. You can setup as many LLC’s and get as many PO boxes as you need. You, your wife, your parents, you can all join.
In the US you can get a tax id from the IRS online instantly and file as a sole proprietorship; completely separate tax id and you can use a DBA that will cost $20 to $50 depending on your county. You can find more friends and relatives not already in it – and the ones who are in it are probably not maxed at 10k so you enter private contract with them to split the profits.
You put up the risk, they use their tax ID and have some tax liability if you profit, so you write up the contract accordingly.
There are many ways to post up as much as you want. But the cold hard truth is that Zeek limits max purchase to $10k because it is a scam, just like every other investment scheme limits the amount a single person can purchase.
Any legitimate investment whether a hedge fund, mutual fund, brick & mortar franchise, or any other business with an investment component does not artificially limit participation in the same manner as the ponzi investment schemes have done.
They do to limit one person being able to take out too much money from the pool, and also to limit the level of anger from ripped off investors. Someone who loses $10k is mad but someone who lost over $100k in a scam might go to the ends of the earth to find you.
Zeek has been paying out so far because it hasn’t peaked yet. JSS Tripler paid out for a year before it started having problems. If you think the money train will last for years and can build you a nice residual income then mortgage the house.
If you can’t because you say there is risk with Zeek, then you’re finally being honest with yourself.
If you honestly thought that you would not have pulled out any cash and left it in at 100% reinvestment. You’re lying already.
Jimmy lol, I make over $800,000 a year online as it is. I have a great life style, and I’m not greedy.
Zeek is building nicely giving a nice weekly residual income.
Jimmy, it’s building daily and I can pull money out.
So best of both!!!! So not lying…
I have worked the numbers again in Excel, this time including 60-day bonus points and points added from the monthly subscription dues every 30 days. It still doesn’t work.
The point accumulation peaks on different days, but still is not sustainable at 80/20 or 90/10.
BSO, you may very well be right. I don’t have a penny in the game yet, I’m just trying to prove to myself whether the system works, and for how long I think it might last.
That is, will is last long enough to at least get my investment back. I know someone with money in it, and I can easily see how he can come out way ahead if the 1.5 or so continues to pay out.
Dave, I’d love to take a look at the spreadsheet you did and compare it to my own. Any way I can do that? Also, do you have a downline to add to your point balance or do your calculations work on the “one ad a day” plan all by itself?
It is absolutely sustainable at 80/20. I have mine at 80/20 and have for over 5 months. I have a “correct” spreadsheet here that shows you exactly how it can up and withdraw money at the same-time.
Most people I know would have used a similar strategy, at least the experienced ones.
The unexperienced ones will usually prefer to be “all in” most of the time, “to maximize the profit”. Usually they will ignore any signs of trouble too, until it’s too late.
Dave,
If you don’t want to share the spreadsheet with me, can you read my post again from 2/17 and tell me what I am doing wrong in my calculations?
@Dave
I have no doubt that you are withdrawing money, as we all know that’ show ponzi schemes grow.
I was simply stating that your words are incongruent to your actions. You say that Zeek will be around for years to come and insist that any claims of risk or timelines of less than 1 year from now is all hogwash.
Yet if you really believed that was true, you wouldn’t be running at 80/20. If for the last 5 months you ran at 100% repurchase, you’d have 5x the balance you have today.
The problem with Zeek has nothing to do with what it is doing TODAY. The problem with Zeek is what it will do TOMORROW, knowing that it takes 90 days to cash out your points and Zeek can arbitrarily drop the profit share rate and screw all the newcomers.
I would think that if Zeekler was capitalizing Zeek Rewards there should have been a big bump in the daily profit pool when the 2012 Mustang was sold at $4,077.xx bids.
The company took in over $400,000.00 on top of their normal daily auction profits. That was last Thursday I think, did the Friday profit pool prove this out? Did anybody see a larger return than normal?
The company says that each day it calculates the amount in profits and shares it with it’s affiliates. Did they share the Mustang?
Probably not when you’ve got Zeek Rewards members with these sort of point balances:
And as time goes on these balances are only going to get bigger… yet some people still think penny auctions are an infinite growth industry and there’s nothing dodgy going on here.
(yes they haven’t cashed out yet but what happens if and when they (and other members with similar balances) do?)
Also looks like the IRS are in all probability going to sink their teeth into Zeek Rewards sometime in the next 12 months (taken from a recent Zeek blog post on tax):
With so many returns flagged for audit for the same reason, that’s bound to raise some eyebrows I’d imagine. The returns might be legal but hopefully the attention might kickstart a formal investigation into where the money came from (other member’s investments).
And read the latest ZeekRewardsNews post about the tax questions being answered by renowned tax accountant and attorney Howard Kaplan.
Read it and see how many hedge words are used in the answer. Zeek won’t or can’t make a stand on whether VIP bids are advertising because they are dancing a fine line between calling it like it is and not protecting the reality of the scam, aka ponzi repackaged as virtual points to make it “barely legal” from an investment perspective.
I still don’t see how Zeek passes the 70/30 rule?
Yeah I felt that too (here’s the post for anyone else reading).
Particularly this bit:
Why all the talk about theories, either you can or you can’t. It appears Zeek Rewards themselves aren’t sure of what exactly their business model is or how it plays out tax wise.
It doesn’t. The ponzi scheme requires VIP bid purchases by members. Even if said bids are given away (either to the company or customers or fake accounts) and written off as an expense, 100% of the purchases are still made by members.
You can’t claim the penny auctions the bids might be used in as they are seperate transactions (through a different registered company that itself is not paying commissions) from the original bid purchases (which dictates how much of a commission is earnt).
There only 3 people I know of who could have more than a million VIP points, and 2 of them work for corporate (yeah, conflict of interest there – new compliance policies optimized for those sitting on large balances).
Am curious what the source of the above is or just someone making stuff up. If there are more people with million plus balances, this will crash even faster.
As for cashing out, why now? Why not leave it in for 6 months and grow it another 6x?
Oh, wait, because those sitting on a million plus points know it is a scam dressed up with lawyers and accountants to look legal with virtual points, never mind the advertising the first 6 months of 2011… Pretend none of that “investing” or “compound interest” marketing ever existed so the Feds won’t shut us down.
The actual “profit” the company took was much less than $1 per bid. Firstly, most of the bids being used resulted in a lot less than $1 per bid. Retail customers have had the BOGO promotion going on for over 2 months now, where they receive 2x the bids. So the max profit right there is not $400k but $200k.
When a retail customer buys VIP bids, 20% in cash commissions is paid to the referring affiliate, plus an equal amount in VIP points (it was 2x VIP points during the Jan BOGO).
For example, you as a retail customer spend $400 and receive 800 VIP bids. Me as the referrer receives $80 (20%) commission immediately, plus 400 VIP points which I can cash out (over the next 90 days) or reinvest (over the next 90 days).
Any daily profit share I make from those 400 VIP points (over the next 90 days) rolls to my upline as well, 10% for my referrer and 5% to his referrer. Any daily profit share they make from their 10% and 5% commission rolls up in 10% and 5% increments as well, and so on.
So the actual revenue the company made on that $400 purchase for 800 VIP bids was at best $320 assuming all affiliates puts all VIP points back into the pool and will withdraw it at some future date.
In addition, affiliates receive VIP bids to spend in the auction for their monthly subscription. A Diamond subscription of $100 gives you 250 VIP bids to spend in the auction. Fro this $100, 20% was paid to the affiliate’s sponsor.
Some of the remaining $80 is used in a variety of other matrix earnings and bonus pools, so the actual revenue resulting from a Diamond’s $100 monthly subscription, which resulted in 250 VIP bids, is likely in the $50 range after all the fees.
In other words, all the analysis you see on the message forums and the corporate calls about the great revenue windfall from the penny auctions are not accurate because the revenue generated from a VIP bid is a lot less than $1, likely around $0.30 to $0.40 after all the commissions are extracted.
Ok, “so what” you say, instead of $400k revenue for an auction, Zeekler still made 40% of that or $160k. You now have to account for when affiliates with all those points from VIP bid sales start cashing out.
Let’s say somewhere between 250k to 300k in VIP points were given out for that $145k profit. AND there is daily profit share on top of those 250k to 300k VIP points. As soon as affiliates start cashing out those points, the value of a VIP point will drop very quickly.
And all this is using only a microcosm example of the VIP points purchased and expended for the Mustang. You multiple this times all the other auctions and you realize there’s no way this money game is sutainable.
There have been a lot worse unexplained inconsistencies. First, consider that if the Mustang was not running, other auctions would. So one big auction that runs for a week (or however long it ran) could be offset by lots of smaller auctions.
Second, why are the profits for Friday, calculated at 5pm EST on Fridays, always low like a Sat or Sun daily profit share?
If you take any retail or online business, the revenue from Friday is either higher than Mon-Thu, or lower (depending on the business), but distinctly different than Sat or Sun.
Most businesses have a “transition day” that is either Mon (for food, entertainment, hospitality and many retail business) or Fri (for most service businesses). They have a natural cycle throughout the week where you can see it start low say Mon, slightly higher on Tue, then peaks Wed-Fri or Wed-Sat, etc.
You see NONE of these natural cycles with Zeek’s daily profit share.
For example, consider when Zeek Rewards stopped accepting credit cards and everyone had to use AlertPay, and AP stopped accepting VISA and MC, then a few days later stopped taking AMEX. And SolidTrustPay had site problems for 3 days in Dec. And during Christmas, New Years, and the office move where they did not even have enough staff to accept non-automated payments.
Yet during this entire time there was no change in the daily revenue range. Now since I’ve raised this issue as well as a few others, I’ve noticed Zeek Rewards has been varying the daily profit share a little more, likely in an attempt to “prove” that the formula is based on something real and counter any observations on why the daily rate per day was almost the same for months going back to Sep.
The biggest issue I see is Zeekler just doesn’t run that many auctions. There is no way they can be generating enough revenue. It has to be coming mostly or almost all from affiliate “investors” no matter what the language Zeek is trying to use to disguise the scam.
As far as I could see, they have to pay taxes for all “rewards” in VIP Points, minus expenses. It means they have to pay income tax for the growth of their investments too, not only for the money they withdraw?
The exact words from Howard Kaplan was somehing like this:
“Since you are given the choice whether to reinvest or witdwraw money, the rewards are taxable as income. But you can deduct any expenses related to the income.”
If you’re investing $10,000 and let it grow to $20,000 before you start to withdraw any money, you’ll have to pay income tax for the $10,000 earned as growth of your investment? The $10,000 in this example is net growth of VIP Points, or total rewards minus expenses for buying bids.
The rule will be very unfair for most investors in ZeekRewards, at least if they’re U.S. citizens. They will have to pay taxes for money they never will be able to withdraw.
In a 33 minute call, Howard Kaplan spent approx. ONE minute explaining the most important part, while he spent 12 minutes or so on general advises and yada yada. I would have preferred a little less yada yada.
And that poster has now retracted that statement, now saying:
What will be interesting is if someone reports him to the Zeek Squad compliance team. Talking about how many points you have earned and will earn is against the compliance rules. Past performance is NOT an indicator of future results.
I doubt any one who has close to a million points or is “on track to a million” would bother on public message boards. The top distributor who does not work for corporate has gone into total turtle shell mode after the compliance rules were rolled out.
His entire team’s set of videos and websites were taken down or heavily redacted, with just links now to the Zeek replicated websites. Corporate probably told the big guns to tone down the recruiting because they didn’t want to get shut down (illegal banking scheme and all).
So you would have to assume that if the poster above actually had any chance of reaching a million, he would have also had the same conversation with corporate.
Think about how Zeek compliance gestapo is threatening to shut down anyone and everyone not using corporate approved marketing or using words like “investment,” “compound interest,” or “profit sharing.” Any one with half a brain who has built up 6 figure balance and growing would not risk insta-termination by posting enticement on a public message board, and lying or misleading information at that.
Dave makes some good points. It doesn’t matter what MLM or company you are a member of, there is tons of trash against it on the internet.
And while they are all complaining about it, trying to be so analytical over every financial detail, the simple people are building their business and raking in the cash. I’ve seen it happen over and over and over again.
So why the skeptics continue to rail on Zeek, we’ll continue to generate oodles of money, and sip on our Pina Coladas and just laugh at them.
Usually these are people who are just jeolous of another company, and are trying to bring it down….or they are simply losers who are not making any money with any business, because they don’t learn to exercise any faith in a company whatsoever, as they get bogged down with trying to figure out how every intricate mechanical element of it works.
Enjoy your life of criticism, why we head to the beaches! 🙂
How many of these MLM’s that you’ve been a part of had a ponzi-investment scheme tied to it?
If you “do nothing” with Amway, Nuksin, Herbalife, Melaleuca, or USANA (just to name a few) you don’t make any money. You pay your monthly autoship and maybe you “get your products for free” because you sponsored some people.
With Zeek, if you “do nothing” (except placing your daily ad to qualify) your daily earnings compounds on itself. One year later, you just made 20x your initial investment! 20x !!!! All in virtual points.
So how is Zeek the same as the rest of these MLM’s you’re taking about?
How many people have said the exact same thing that you said above and then lost all their money in Ricochet Riches, JSS Tripler, AdSurfDaily… just to name a few?
There are also a ton of shills promoting or put up fake “Is_____ a scam?” reviews.
Any sort of objective analysis of the business model and likely chances of success while remaining legal, cannot be called “trash”, or as Ernest Hemmingway put it, “crap”.
So you don’t really care about whether the business is legal or not, do you, as long as you make your $$$, by joining early, accumulate a ton of points by enrolling as many people as possible, and get out before it grinds to a halt (either financial collapse or regulatory action)?
@ThisIsIt
So regardless of the business model, analysis of said business model and all probability it could be fraudulent and/or a scam, sign up anyway?
Yeah… and when it crashes we’ll have to listen to all the ‘but I had no idea!’ sob stories. Fun fun fun!
Isn’t it nice to be able to just blindly label your critics? And shame on said critics for analysing an opportunity and fully understanding what’s behind the marketing bullshit and sales pitches.
Wouldn’t it be oh so much more convenient if they just shutup and joined your scam… quick what’s your affiliate URL, you might get a few signups yet.
Some people evidently have no problems with “earning” other people’s money via scams. Meanwhile I’ve got a conscience.
Enjoy your drink.
(how many ‘I’m making money and I don’t care how, so fuck ’em!’ members does Zeek Rewards have??)
Isn’t there someone here who is both capable and willing to share with me how the ZW daily awards are calculated? Apparently there are flaws in my understanding of the system, but so far all I have received in response to requests around the message boards is a variation of “Trust me it works. I can’t or won’t explain how, but just trust me”. Fine, maybe it does. I HOPE it does. So why not just tell me HOW it does?
I don’t want specific numbers, I’m not asking anyone to violate ZW compliance, I don’t want to know how much you earn and I’m not asking how much a new affiliate will earn. I just want to know the process that is used to tally up the points ever day. Why all the cloak and dagger mystery surrounding what should be a very transparent method?
@Zach
I suspect the difficulty in finding reliable information lies in the fact that Zeek Rewards’ most vocal members are those who got in early and are making money.
These members, as evidenced by Dave and ThisIsIt above, know it’s a scam, accept it but don’t care “so long as they make money”.
Everybody else is still waiting for their investments to deliver a sustainable return… so until that happens I guess aren’t willing to assert themselves with any concrete authority on how the system “works”.
“Works” of course being solely measured on whether or not their investment pays a consistent return, not an analysis of where this return comes from (new investments), which as you’ve found is a taboo subject amongst members – beyond the ‘it works because the company says so’ marketing spiel.
@Zach,
Corporate compliance has told affiliates they cannot share spreadsheet projections to prospects. Once you are an affiliate the rules are a little different.
Corporate does not want to run afoul of check flashing and enticement rules. This happens with every MLM program at some point where the early adopters make a lot of money breaking the rules (including corporate staff at the top of the pyramid) and then the compliance rules slow everything to a crawl.
Your best bet is to search for Zeek Rewards in Google and look for forums and blogs that you can post questions to and ask there.
Jimmy said, “Your best bet is to search for Zeek Rewards in Google and look for forums and blogs that you can post questions to and ask there.”
That’s what I thought I was doing here on this website.
This is a cut and paste from the “About Us” on this website:
“There’s a lot of rubbish MLM review and news sites on the internet that masquerade solely as lead generation tools for their owners. I believe there’s a distinct lacking of concise and clear information out there regarding companies within the MLM industry and MLM itself.
The aim of Behind MLM is to fill that void and prove to be a useful resource to people curious about the MLM industry.”
I don’t need someone to give me their spreadsheet calculations if they don’t want to share, I can do them myself
I just need to know the simple process that is used to calculate daily awards – something like:
On day 2, the day 1 points are multiplied by an average of 1.5% and added to the day 1 point total and this becomes the new, day 2 total. This goes on for x days, then this happens, etc etc.
I don’t care at this point where the money comes from, I just want the process of figuring daily awards.
Thanks to those who have responded, but still, no one has told me anything.
Collect the daily invested real money by members.
Skim a bit off the top in company profits and divide the rest amongst Zeek Rewards members but only as virtual points. The amount the company takes each day is calculated thus that the investment return paid out to members hovers around a consistent point figure, without being too obviously consistent.
Don’t worry about whether or not the daily real money investment covers the points paid out – as greed will ensure that not everyone cashes out at once so you’ll never have to pay everybody out at the same time. Just make sure what the company takes is enough to keep the percentage payout consistent.
Oh and then deny, deny, deny this is taking place and claim your investment scheme is being funded by penny auctions.
@ Oz
Haha, I suppose that might be about right. A couple knowledgeable people claimed to know the real calculations, but wouldn’t share it due to “enticement” issues.
They said they would share it if I was their affiliate, but I’m not. Geez..
That could be considered a part of “information control”, a part of Steven Hassan’s BITE cult model. 🙂
No, not saying ZR is a cult, merely some of the tactics are similar.
I mean, all the ads, those late night infomercials about making money and all that all have disclaimers like “income not typical, your results may vary”, right? So corporate can’t come up with some standard disclaimer to inform prospective users, but instead, it’s “join and THEN I’ll show you the real deal”?
Sounds like a “shrink-wrapped contract” scam to me.
K.Chang,
It does sound like that, I agree. But, then again, it seems to be working well for some people despite their inability to explain how the numbers work.
Seems to all boil down to: How long will the gravy train last before running out of steam? And no one knows that except the folks at the top.
If most members are doing 90-100% reinvestment, it could go for quite a while, as very little money is leaving the system.
Lots of reading here.. Yes I am sure Zeek will fold and people will be left holding the bag. Forbes magazine made a great point years ago I think 2002 or maybe it was Fortune magazine?
The reason MLM companies exist and succeed is “the real companies ” that is.. Is because they make products that are better than what can be bought in stores, they are of highest quality.
D0 you you know of 2000 vitamins tested the ones you see in stores and on TV everyday came in dead last? In your body out to the toilet cheap on shelves but do little for you. Retail thrives on low prices due to competition.
What I have not seen here is the fact that you tie Free Store Club to Zeekler and well Frankly what I have seen is the cheapest most worthless products this Burke has pushed on Free Store and what people bid on at zeeks site. It’s No deal.
These things break the first time you use them if they even work. ( yeah I know other companies that tried the freestore cheap product thing too ) And Now Zeek has people bidding on this cheap crap with inflated pricing on the side.
Their is a sucker born ever minute and well I am certain or willing to bet on that at this very moment a case is being built against Zeek. It will go Down I predict and those who only care about money will continue fighting for it.
I say pick something real and go to work. There is no money for nothing and chicks for free. There holding 80% of your money..and your letting them? Come on man…
Joinus,
I have recently seen Ford Mustangs, Apple products, Haier products, Canon products and and many more including cold hard cash on Zeekler. How can you say these things are cheap???
Most of the products being auctioned are legitimate products. The cheap free club store products is just a side show. No one promotes FSC and the ones that do usually are just buying it for themselves.
The interface for the store sucks and there’s no chance of ranking on Google for anything as Oz has mentioned a few times on the whole flaw of FSC to begin with. You can find the products cheaper searching Google anyways.
All the products are cheap in FSC and there are no name brands, just the cheap stuff you see sold at flea markets.
For the auction, this is a legitimate penny auction. In the last month they have added “cash out” value so you can now request cash value for an auction instead of the item. This makes all the auctions just a lottery/cash item.
But just because the penny auction sells real items doesn’t make the INVESTMENT part of the Ponzi scheme not a scam. They have so many investors they have to give bids to somebody and they have to sell something. With hundreds of thousands of people posting ads every day, you will catch some retail customers coming in and buying real bids.
These retail customers are just not aware that Zeekler as a penny auction is one of the worse ones, the prizes are hard to win, they run few auctions compared to others, the bidding interface is not anywhere close to the top auction web sites, and the value of the bids are hyperinflated due to all of the promotions and profit sharing.
So Zeek does take in SOME revenue from the penny auctions. I doubt they take in enough to satisfy the 70/30 rule, and therefore are paying daily profit share from other investor’s money.
There are a lot of warning signs:
– No credit cards allowed
– Using scammy third party processors (same ones AdSurfDaily, Ricochet Riches, JSS Trippler and the lot all use)
– Lack of transparency on the revenue
– Lots of vague answers to tax implications
– Compliance gestapo recently introduced and lots of activity with multiple lawyers… supporters say this is to protect Zeek for the long-term, others on here say it is because Zeek is preparing for when it collapses to shield themselves from liability
How many lawsuits do you think will fly when hundreds of thousands of people (or just thousands, forget hundreds of thousands) lose money because the profit sharing drops to 0.5% ?
Yeah they will have “some” good stuff up I am sure in auctions a few gems can be had. I don’t argue that. But when I peeked I saw some of the not so good stuff being auctioned as others said here they just can’t seem to win at a good price because of robot bidders?
Anyhow a waste of time for me personally.
Here’s one more thought…
As I pointed out before, if Zeekler is doing 20% profit, and only keeping 2% for itself PER YEAR, so 18% profit yearly is returned to the ZR members, then the DAILY profit is a mere 0.27%.
So how does ZR manage to pay out 1.5% daily?
If you divided .27 by 1.5, you get… 0.18, or 18%.
If only 18% of the people seek to cash out (or partial cashout, like 10/90 or 20/80, that adds up to 18% of all points that need to be “redeemed”) then there is enough profit to do so.
But that would mean the growth in the points is completely bogus.
Someone PLEASE check my logic here.
Doom and gloom Jimmy.
Let’s put you right here. They do take credit cards for the monthly membership, the Customer co-op etc. They don’t take credit cards for VIP Bid purchase in the members area. This is due to people buying $10,000 worth of bids with stolen credit card details.
They use Solid Trust and Alertpay for bid transactions at the moment whilst they set up a new eWallet for everyone.
The Penny auction sites are being improved, but with any business it improves with growth.
As for the lawyers they are spending a lot of money to make sure that everyone involved complies. The videos and spreadsheets miss-leading people had to be pulled.
Whether you like it or not, if this was going to fail or be pulled they wouldn’t bother with lawyers and compliance. They hit the money and run, like a lot of companies out there.
As for people suing the company when it hits 0.5%, I dont think so do you? Intelligent people know that they are buying bids for people to play the auctions (it’s a purchase) and you are rewarded for placing an ad.
It’s going well, they have more daily auctions than ever, making even more money.
And the 70/30 rule you keep commenting on is covered.
How?
Reality, Dave. I guess warnings on Bernie Madoff and Ad Surf Daily were also all doom and gloom?
How many MLM’s do not take credit cards for their core product? How much “fraud” is occurring? I don’t see Sams Club refusing to take credit cards because of fraudulent credit card activity.
The only possible way Zeek can say they are satisfying the 70/30 rule is if they can claim that the bids being given away for free are being “purchased” by customers. In this case, the purchase price is zero.
I am very sure that any court that actually looks at the 70/30 and Zeek’s business model will agree that the act of giving bids away for free is NOT the same as selling 70% of your inventory to external customers who are not distributors.
Kevin Grimes, before contracting with Zeek, previously wrote about Webster v. Omnitrition and who must purchase 70% of inventory:
The court also made it very clear in Webster v. Omnitrition that sales to your own downline cannot satisfy the 70% requirement.
If you look at any case law on this matter, the critical component is the point of transaction where money is transferred.
There is no way Zeek can claim that the 70% of retail purchases is a result of bids being given away because in the Zeek business model, bids are given away for free and there is ZERO money transferred from the external customer.
Therefore, the only way Zeek can satisfy the 70/30 rule is if it has retail volume from the penny auctions, meaning actual external retail customers who are not distributors using their credit card to buy bids.
I don’t think anyone, even Zeek distributors, think the ratio is anywhere near 70%. Most predict the ratio is likely under 5%. Of course, we don’t know because Paul Burks refuses to share the data.
Other MLM’s have gladly shared their revenue ratios to show evidence of compliance of the 70/30 rule. You can bet that if Zeekler’s penny auction actually accounted for over 70% of the Zeek Rewards revenue they would have published it already.
Why can’t Zeekler just hold more auctions? It’s not like they’ve exhausted every line of products that can be auctioned on a daily basis.
If they need to implement “x” number auctions to in order to meet a 70/30 rule or continue to maintain 1.5% daily awards, just add that many more daily auctions.
I doubt each item is stored in Mr. Burk’s garage waiting for each auction to end, but rather drop shipped depending upon whether the cash value is requested or not. 100 auctions per day, 1000, 10,000? What’s the difference?
Of course there would have to be enough bidders to ensure a profit, but with a wider variety of merchandise, that might not be an issue. I don’t think adding more daily auctions would impose a relative increase in overall costs. So why not?
@Zach
First of all Zeekler isn’t Zeek Rewards. Zeekler is not a MLM company, Zeek Rewards is.
Analysis thus only goes as far as to analyse the structure of Zeek Rewards. As far as Zeek Rewards goes, it’s pretty obvious the VIP bids being bought by members dwarf any bids being purchased by retail customers.
How many acutions Zeekler has is irrelevant to the equation.
Hi all,
I have read with some interest many of the posted comments; they sparked my thinking in a number of areas. My comments come from a Human Nature point of view. Also, I am posting these thoughts because they have clarified my thinking.
This blog is the only one I have found that presents a real critique of zeek. In the interest of full disclosure, a little over 2 weeks ago I did not have a clue what a penny auction was or how they worked.
I friend has been in zeek for 98 days and wants me to become an affiliate. Since then I have been doing research, I think many of the comments here will help me to decide. (Sorry about the length of post.)
From many of the comments, I do not think many of you would use a penny auction. That is not a criticism; it is an observation about your rational and critical thinking ability.
In my opinion there may be, millions, if not, many millions of people world wide that would play, bid and attempt to win items at an online Penny Auction. (Ala. P.T Barnum)
The secret of longevity seems to me will be how these auctions attract and keep players coming back to their auctions. I do know most people do what is familiar, and are easily influenced with image or illusion over substance.
What this means to me is that if 8 out of 10 are comfortable and feel they had fun, they will go back to repeat the same feeling at the same place.
The simplicity of this business model making online Penny Auctions available to anyone with Internet and a devise that can submit a bid 24/7 from the comfort of their own home or wherever is marvelous.
Penny Auctions are new. There may be some aspects of a fad present.
In my view, from a lifetime of observation, Zeek has figured out how to use more of the basic motivations in human nature to attract affiliates and players than any other system I have ever seen.
From an income perspective the only business models that are close would be a casino or lottery. I can’t buy into the profits of either of those for a reasonable amount of money. And even if I could, a casino has huge overhead of advertising, brick and mortar buildings, executive pay, labor costs, utilities, equipment, inventory, etc. that significantly dilute the profits. Plus, people have to get dressed and go down to the place.
It was said in a comment, Penny Auction players only stay for a few days, maybe, but that logic doesn’t apply to the regulars at casino’s who typically leave empty handed and lighter in the wallet but swear they had fun and come back the next paycheck.
My understanding is that ZeekRewards offers the ability to buy into the profit pool of an online auction. This is done with cash and/or recruiting. To my knowledge they are the only Penny Auction that allows this.
The cash buy-in is limited to $10,000. (The original 10k is retired on the 91st day and stops receiving profit bonus)
Zeek found that other Penny Auctions have huge overhead in up front costs for advertising to attract players to their sites. There is no guarantee in advance that any advertising will bring in customers.
Zeek set up an affiliate program that only pays affiliates after the company makes a daily profit. Zeek’s plan is to use (currently) 200,000+ affiliates scouring every venue to find more affiliates and to attract a mass volume in the millions of retail players.
At the present time this appears to be working to zeek’s advantage. Is this sustainable in its present form? Don’t know.
Is there an element of Ponzi, oh yeh!! However, to prevent unlimited compounding, profit is only paid on the most recent 60 days for bonus points and 90 days on VIP points. It is referred to as point retirement.
All this makes sense to me.
Human Nature
In the past I have observed many good companies and products fail due to poor marketing and technological change. Kodak is a great example; they actually invented digital photography that ended up putting them in chapter 11 and essentially out of business.
I have also observed Inferior products succeed due to good packaging and viral marketing.
It seems to me, to survive all Penny Auctions need to acquire a loyal ever expanding group of players, to come back time and time again. It appears marketing with free incentives and auctioning products that attract and retain players is essential.
I would like to ask a few questions in relation to some of the comments by others.
“The bidding interface is not anywhere close to the top auction web sites;” would this be enough to stop someone from trying the auction if they had free bids?
“The value of the bids are hyper inflated due to all of the promotions and profit sharing.” This is not clear. Do items sell for too much? Or are there too many free bids and no real money involved?
“No credit cards allowed.” Based on the fraud info above, is this bad? Is this a permanent policy or temporary until the system can be programmed to prevent fraud?
“Lack of transparency on the revenue.” Am I mistaken, but in a competitive world, if I were a senior manager at zeek I would not want any other Penny Auction competitor to see or know anything I was doing that accelerated my growth curve over others. Companies only become transparent after they have gone public and become big. Am I off base here?
“Lots of vague answers to tax implications.” Having dealt with attorneys not representing me and taxes for many years, I can say the info I read is very clear.
Every VIP point will be reported as income on a 1099. An associate will need to keep records of the bids given away and other expenses per IRS standards to substantiate a business deduction. Further I guarantee from experience that there will be a number of audits by the IRS for advertising or cost of product, wherever one puts them on schedule C, until the IRS learns how the zeekrewards associate gives away most or all of their reward points.
All points per the 1099 will be counted as income from the IRS point of view.
What I do know for sure:
A young man I know owes $75,000 in student loans, accounting degree, can’t find a job and is starting truck driver school on Monday, millions like him.
The US governments, Federal, State and Local are broke and have debts and obligations that they can never fund the only hope they have is by printing more dollars in huge amounts over time driving the value of $ down. The US dollar is devaluing every day.
An individual stock “investment” can drop 25 to 50% overnight on bad news or a missed earning estimate.
90% of people who trade forex and other indexes lose everything in 6 months.
MySpace worth 600 million in 2006 lost to facebook, “The failure to execute product development,” Parker replies. “They weren’t successful in treating and evolving the product enough, it was basically this junk heap of bad design that persisted for many many years. There was a period of time where if they had just copied Facebook rapidly, they would have been Facebook. They were giant, the network effects, the scale effects were enormous.”
Most non-essential businesses today must be like sharks, constantly swimming and eating or they sink to the bottom and drown. This applies to Penny Auctions innovating and remaining alluring to players.
The biggest contributor to both Obama and Romney is Goldman Sachs, go figure.
A special thanks to the person who commented that there would be a mass exodus if the daily profit pool dropped to .5% per day. What immediately came to my mind was the ½ % (.5%) I am getting per YEAR on a savings account. That’s $125 per YEAR on 25K.
So I did some calculations. I think if I knew for sure that the profit pool would be .5% a day I would liquidate everything and attempt to buy every position possible from those abandoning the ship.
Where are they going to go with the money? .5% on 40,000 points is 200 per day. Even .1% is 40 a day or 1200 a month.
My Conclusions
Based on history, zeek could be a good idea if the world holds together for a few more years and they innovate. They certainly have a dedicated group of associates marketing for them with the hope of participating in the company profits.
Since none of us know the future, my big question still remains, who knows if Zeek’s Management is trustworthy or if they or any Penny Auction will be able to continually attract new players and retain a big percentage of the ones they currently have? Where will the Penny Auction market level off and stop expanding?
Thanks in advance for any responses. If I do join zeek, I will monitor this site to be aware of any rumors or problems on the horizon.
This is company marketing spiel. Penny Auctions have been around for years.
Swoopo was one of the first (if not the first?) penny auction site and they started back in 2005 (and went bankrupt in 2011).
This isn’t some new fad thing, online penny auctions have been around for almost a decade.
I think that’s all that’s really relevant here. Point retirement just delays the inevitable collapse as Ponzi schemes by nature are not sustainable.
You’d be joining one eyes wide open and when it does collapse, suitably would have no excuse.
As for advertising, please – nobody is visiting classified websites to read up on penny auctions. This is evidenced by the fact that Zeek Rewards smashes Zeekler traffic wise out of the ball park.
Members are far more interested in promoting the business opportunity than the penny auction site. Why? Because new investments = more profit share.
The problem is not with Zeekler, but ZeekRewards.
Penny auction is legal. It’s the MLM aspect and the “investment” aspect of ZeekRewards, not Zeekler, that is potentially illegal. Holding more auctions on the Zeekler side does NOT address ZeekReward’s problems.
Ok, I see that now. So if the 2 entities became one, single business, and the auction profits and other revenue streams satisfied the 70/30 rule, the legal issue might be resolved?
Yes, they have been around, but not many people know about them, what they are or how they work. Same thing happened with ebay, and some folks are still “discovering” it. There are lots of people who don’t have Facebook accounts too (believe it or not).
When you consider the how many people will have this technology available to them worldwide in the future (I’m thinking China & India), look at how much room there is to grow. This is not limited to the U.S.
I think the number of people who are aware of penny auctions and have access to them right now is small compared to how many might participate in the future.
They may not be going to the classifieds to read up on pennys auctions, but they are clicking the links, accepting free bids and even buying some retail bids after seeing the ads.
I know an affiliate who places ads, and his “back office” shows that people do, in fact, click his link for the free bids and use them. Some even go on and buy bids.
And are members mostly interested in promoting the Zeekler website in order to grow ZR profits? Of course, but in order to grow their own profits, the Zeekler profits have to grow first.
That is the purpose of promoting Zeekler, to get the ZR profits from the Zeekler revenue, right?.
Rich – Great post on the perspective of human nature side of things. I do know of people who use and enjoy the penny auctions.
I really only take issue with one of your points: If the profit pool payouts dropped to .5%, your rate of retiring bids might far exceed your daily awards, diminishing your points and cash-out to nothing in a very short time.
In other words, the model would not be sustainable at that point. I don’t know this for sure since no one seems to know exactly how the daily awards are tallied up.
@Zach
Allegedly. I still maintain that the majority of the profit share is just new member investments.
There’s no way the penny auctions can match everyone’s ever-growing VIP point balances so the money has to come from somewhere…
Even after forcing members to advertise Zeekler, Zeek Rewards is still being promoted more heavily and effectively because ZR members know this is where the profit comes from.
If the profit share was from Zeekler, why on Earth would ZR members even promote ZR? I mean what, each new ZR member only dilutes the profit share even further.
Why not just promote Zeekler and increase the daily profit share?
…because Zeekler isn’t where the money comes from.
First of all, ZeekRewards, as its name suggests, is a “rewards program” for participating in Zeekler (and promoting it). Thus, it is NOT necessary as a part of the business. A company can run without advertising.
This is an add-on, like the supermarket “shopping club” where you give up info for discounts. You don’t have to join to use the supermarket, just as you don’t have to join ZeekRewards to use Zeekler.
Second, merging the two may cause ADDITIONAL problems. Most of the shady programs and outright scams are mergers of a legitimate business AND a pyramid scheme.
TVI Express is a merger between online travel and pyramid scheme, for example. This causes massive confusion among its followers, who simply points to the “legitimate side” and say this whole thing’s legitimate, when one part of it is clearly illegal. And when you can’t separate the two, then the WHOLE THING is illegal.
Right now, if ZeekRewards is illegal, they can shut down ZeekRewards without affecting Zeekler (other than a reputation hit). If you merge the two, the whole thing goes.
Third, it is unclear what exactly is the product in ZeekReward.
The 70% rule (see FTC vs. Omnitrition) says 70% of sales must be to ultimate consumer, which is interpreted as people NOT in the company. With physical products (Amway, NuSkin, etc.) this is easy to see. The individual reps are selling the items to people who are buying it.
The case is not so clear with Zeekler and ZeekRewards. Zeekler sells auction bids, but the ZeekReward members don’t buy auction bids to resell them, or recruit more ZR members to resell more auction bids.
Furthermore, look at this item from their own FAQ:
https://www.zeekler.com/FAQ.asp?UserName= (last item)
They are NOT paying commission on bid packs being sold. So bid packs are NOT their product. Then what is? It must be the ZR membership itself.
Most of those “clicks” that you see in the back office are not customers, but search engines that crawl the internet. Did you know that your own login generates “clicks”?
Each time you login to your back office it registers as a “click”. It doesn’t even limit by IP address or cookies either. If you log in to your back office 5 times a day, it will register 5 clicks.
Most of the customers who sign up for free never buy anything. They just want the free bids. Even if they do buy something, how do a few retail customers sprinkled here and there generate enough revenue to pay all affiliates?
If the business model was really centered around the auctions, there would be no need for initial investment and rate based profit sharing.
Zeekler would do what all the other auctions, casinos, and online lottery sites do — pay you a commission based on deposits or what the customer actually spends. These other businesses only pay hwen they get revenue without virtual points and without the ponzi model.
Jimmy –
Maybe, but the ZR affiliates are doing the advertising, rather than paying Google Adwords or another marketing agency to attract auction customers. Pay-per-click is very expensive when competition in is fierce, which I would expect it to be with penny auction sites vying for position in search engine rankings.
I don’t know if Zeekler can use ZR as a marketing expense – maybe they can, maybe they can’t – depends on how the businesses are organised, bt if they can, ZR cold be a huge deduction for Zeekler. I have no idea if this is the case or not, just putting it out there.
At any rate, with ZR members doing the marketing for Zeekler, at least the advertising expenses are kept within the Rex Venture Group. They may use this arrangement to everyone’s advantage, I don’t know. Just a thought.
@Zach
…so where do you think the company-generated customers are coming from that ZR claims to give bids away to that it’s member dump on them? Thin air?
@Zach
How much do you think it would cost to outsource to India, China, Portugal, Philippines, or any of these low cost labor high tech countries a team of 100 people to place ads at the same venues that the current affiliates are placing ads? You can hire virtual assistants for $150 to $400 full-time per month. VA’s in Philippines will work 60 hours a week for $400, and with $400 you can get sophisticated technical employee (who understands social media, can write good English including articles you can submit to Associate Content or article directories). I have one available right now for $400 who works 60 hours if you are interested. I am running out of work to give her. She writes perfect English and we publish articles to Associated Content and other directories.
If you need someone to just cut & paste with an internet connection you can hire them for $150-200 and get at least 40 hours of work. It will take less than 15 minutes to hire one. And you can always hire people on mturk or odesk or a variety of other places for less than full-time work.
Do you really think the value of the placement of classified ads is that much? If that is the advertising strategy then Zeek is overpaying by 1000 to 10000x with profit share. Zeek could easily outsource spammy classified ad placements.
And why wouldn’t Zeek just cut off all new affiliates if this was their business model? Even if Zeek did gain any real revenue from classified ads, the difference between 10,000 ads a day at yourfavoritefreeclassified.com and 100,000 is not much incremental gain in clicks. You’re already saturating the free classified site with spam somewhere around 1,000… let alone 10,000 or 100,000. Get it?
And even if that strategy of posting free classifieds did work, no company in their right mind would may profit share based on a required investment. If you really could acquire new customers with classified ads, just use traditional affiliate advertising. Using Linkshare or Commission Junction or a dozen other affiliate programs you could add thousands of affiliates instantly with real web publishing content, not a bunch of newbies who don’t have any established web properties and are just posting random classified ads.
I know you’ve been doing your diligence and you have posted on MMG (lots of non-compliant posts over there). The reality is very simple… Zeek is paying out today, but it will collapse and it is a ponzi scheme where the investment is disguised as virtual points, and there is some SMALL retail interaction with Zeekler in an attempt to satisfy some legal requirement (compared to Ad Surf Daily, JSS Tripler, Ricochet Riches, etc).
This blog is simply pointing out the fact that the business model is clearly a ponzi scheme and the MLM model does not meet regulatory requirements for the 70/30 rule. Whether YOU will make a profit or not is unknown. Obviously, the sooner you start, the better probability you have of profiting. But what happens if you add friends and coworkers and they invest several thousand a few months from now and then it collapses? Someone will be left holding the bag. The question is will it be you, the next guy, the next next guy… nobody knows.
Well, I think they are coming from the ads that the affiliates place. They click the ad, get the free bids that are in the giant pool of bids that ZR manages.
Hopefully they enjoy the recreation of penny auctions and buy the retail bids. I think that is the idea. Is that not right?
Uh, wouldn’t affiliates be advertising their own affiliate links? They themselves are trying to attract customers after all.
That said I’m not sure if the mandatory daily spam requirement requires a Zeekler link or affiliate link, anyone?
Jimmy, That is a very persuasive argument, and I just don’t think I have a position to refute it. The logic and common sense demonstrated on this blog is tough to beat. I really wish I could find evidence to the contrary, but I can’t.
It’s interesting to me that the MMG discussion is like the opposite side of this coin. There seems to be a lot of blind faith in the system over there.
Thanks for taking the time to make and explain some excellent points. If I involve myself in ZR, I prefer to do it with my eyes open.
Jimmy, do you take part in zeekrewards? And how long had zeekrewards been offering this profit sharing thing to affiliates?
I see this as a risky thing to partake in, but the reward can be very high. Seems like a nice way to balance other conservative “investments” that I have.
@Mike
Since the beginning I think, except when it first launched it was a guaranteed 125% return before they got worried and decided to clamp down on investment terminology (without changing the fundamental way in which ZR works, which is still an investment scheme).
Thanks for the response. And how long have they been doing returns with the 90 day expiration?
I have been reading this particular post diligently. There has been quit a lot of valid points being made. Unfortunately, the people who defend Zeek rewards don’t appear to have much of a rebuttal at the accusations made against it.
If zeek rewards is a ponzi, I don’t see how they can stay in business. For example, if someone joins and buys $3000 worth of bids and that money is used to pay off another affiliate who makes a withdraw, How much can a one shot payment of few hundred of thousands dollars cover?
Especially if Zeek rewards affiliates are withdrawing hundreds, if not thousands continuously on a monthly bases.
Also, on another topic, lets talk about taxes. First off, Zeek rewards started discussing and sending out 1099 forms at the end of February. Most people could have filed there taxes by then. Zeek should have mentioned this topic back in December.
What is interesting about the taxes is whether you choose to cash out or buy more bids, you are still being taxed. I have been involved since the middle of December and I have extra $3000 in taxable income. Even though I did not cash out in 2011.
I have not talked to my accountant yet, but I am curious to know what percentage I am going to have to pay back to the government. I think some zeek affiliates are going to be in a state of shock this tax season. Probably, an affiliate would have to make a lot of withdrawals to pay of there taxes in 2011.
And one more topic, Zeek rewards has just got rid of the 5CC. It will be interesting to see where that is heading.
This just came across my desk this morning, full analysis and discussion on the abolishment of the 5cc here.
I’m taking it as Zeek using the FTC’s rule change as a last minute admission their 5cc passive investment model was illegal and trying to rectify it (but not quite).
@graves
Buying bids should be a deductable expense, according to the call with Howard Kaplan. It’s too bad they only spent 2.5 minutes discussing that topic, and they didn’t cover any details.
Members should have received information about tax issues and how to solve them when they joined Zeek Rewards, not months later.
I’ll guess your accountant will be able to solve this, if you are able to explain the business model and how the expenses are related to future income (within reasonable future).
I pointed out the problem you have described here earlier in this thread, but it didn’t receive any attention. As a tax rule it will be unfair to pay tax for money you never will be able to withdraw, so I’ll guess most of it will be deductable as expenses.
Most people starts to withdraw money after 3-6 months, before they switch to a “80:20 plan” or a “90:10 plan”. In most businesses it’s not uncommon to have more expenses than income in the first few months, so I’ll guess your accountant will be able to solve it.
I pointed out Zeek’s “Legal Staff” as a red flag against joining Zeek Rewards (in early January), before they hired a professional MLM lawyer.
“Legal Staff” of this kind will usually create a mess for most participants, with lots of unexpected problems popping up after a while. Many of these problems have already started to pop up, as new compliance rules and other changes.
@Mike
Yes, I am an investor. But unlike others defending Zeek, I am under no delusions that it is legitimate nor have I recruited others. I am using it as a form of HYIP. I’ve been investing in HYIP for years and don’t care if the program is illegal – only that I can profit. Some on here who think that all of Oz’s commentators are anti-Zeek don’t realize that some of us are IN Zeek, and are simply looking to time our exit strategy with some honest nalysis. In addition to HYIP’s, many autosurfs last for 9 to 12 months. There is nothing wrong with profiting from your analysis. Since I do not recruit others, I am not propagating the fraud (only profiting from it). I don’t care about moral judgments on this position as it is what I do and why I can provide insights into almost every major HYIP program on this and other forums.
Zeek switched to the 90 day expiration model in Aug 2011.
That only covers the process of giving away bids. It still doesn’t address where the revenue comes from and how does one earn an infinite return. I can create 100 free customers tomorrow and still earn profit share even if those customers spend no money with Zeekler.
Jimmy, how much longer, in your opinion, do you think these kind of profits will last? Of course I understand this will be a day by day decision based on the company’s performance and decisions over time.
The reason I ask is because I, like yourself, want to time the right strategy. Investing now as a diamond means that I won’t receive a total return on investment until 7 – 8 months from today (depends on web I switch to 80/20 reinvestment). You appear to know a lot about zeekrewards, so I’m hopIng to get your thought on this current opportunity.
Thanks! All are welcome to respond.
@Mike
Don’t do the 80/20. Push it at 100% until you want to pull out, then pull out over the next 90 day period. 80/20 never made any sense to me unless you assume Zeek would last for 2-3 years. And what happens when the rate drops below 1.3%? 80% doesn’t maintain your balance.
I also think when the rate drops below 1% you’ll see a rush for the exists. So your virtual points will get diluted very quickly.
Do not get into zeek at this time, there is a fire wait till the smoke clears first
What makes you think the smoke is going to clear? Like any good ponze eventually the gig is up…
About a half hour ago I posted the following over on the other board I have been frequenting:
What do you think about that?
@Zach
without a link (or at least the Google search string used), there’s not much to say.
@Zach
If you want someone to analyze it, send it to anonhackerexpert@gmail.com and tell him it is “from Zach”. I’ve let him know what you posted above. He is a web security expert he can analyze and either reply to you directly or I can summarize results here.
Use anonymous email if you want.
I didn’t receive any info from Zach but did show the anonhackexpert my Zeek back office.
Here’s the problem. Zeek doesn’t properly use cookies for web session. Their web app uses a session key in the URI string. This is why you can log into multiple back offices using a single browser (each tab can log into a different user’s back office).
So if a user is cutting & pasting their URL on some blog post or when posting one of their free ads, they might inadvertently including their back office URL which includes the session id. If Google indexes this and someone clicks on it before the session expires, you will be able to login to that user’s back office.
Another big security hole with putting the session in the URL and doing no cookie validation, is that if you are at public hotspot, even if you are using SSL, someone can sniff the traffic and see what URL you are connecting to, and steal your session.
The next Zeek Rewards party you go to, bring your wifi scanner and grab everyone’s sessions when they login their back office.
Lousy security on their end. Session must be combined with a URL filter mechanism and expired ASAP. If a different IP address came back with the same session ID the session should be invalidated and new login/session created.
Which sort of proves that ZeekRewards is not a pro endeavor, but a hackjob.
You have done a great service by posting this blog. I have been in ZeekRewards since the first of the year, and have been mesmerized by the smoke and mirrors. But reading this post, the veil has been lifted.
I have now set my Take Out Pay to a level that I am comfortable with, so that I can recoup all the money that I have put out very soon, and then I can ride this thing out, without having any of my own money at risk, (less some small monthly fees).
This thing will come crashing down when everybody finally gets the blinders off. Thank you for being a great source of reason.
Jimmy,
I’m not sure I should pass that link to anyone. I checked it again just now and it still works. I don’t think this person is at any more risk than the rest of us, but I’m not sure how it all works, either.
I wouldn’t mind sending the link to see for yourself, I just don’t want anything to come back and bite me in the rear later on. Can you share your personal email with me?
@Zach
I have a working Excel spreadsheet that I can share with you. But I am a Zeek affiliate and I have money at stake, so if you want to see and analyse and use my spreadsheet, you will have to post your email here on this forum.
Make up a new email address if you need to do so. I will then make up a new email address for myself and use it to send you the spreadsheet. then we can converse about how to use the spreadsheet. It works! the 80-20 plan does NOT top out and then decline. The balance actually grows while you are taking out 20% of the profit daily.
You can easily change the formulas in my spreadsheet to take out 20% for a couple cells (days) and then change the formula to take out 15% or 10% or 5%. With all these percentages, the account balance does indeed grow.
It is a Ponzi scam and will come crashing down, but we have some time left, and I would advise all you ZR affiliates to change your 100% redistribution to something lesser to at least recoup the money that you put in.
Then, with a proper spreadsheet to guide you, you can stay in Zeek like Dave and myself and profit from the Ponzi without having any money at risk anymore. I will not ever try to sponsor any more affiliates, now that I can see what a Ponzi that this thing really is.
Hi Harvey,
I sure do appreciate your offer to share. Here’s an email to send that to. I won’t share it with anyone if you say not to.
(Ozedit: after this email address was published there was a series of other people requesting it too and leaving their email addresses. So that this doesn’t turn into a ‘can you send me the spreadsheet?’ series of requests the spreadsheet can be sent to me via the contact form and I’ll whack it up here).
I am a new affiliate, I hope I don’t get hosed on this ZR deal.
Jimmy,
The link has been sent to your friend.
Please let us know what he/she finds out.
@Zach,
That URL you sent was simply a username and password embedded in the URL string. It looks like the Zeek back office used to user actually put your password in the URL string and did an HTTP GET rather than HTTP POST.
The affiliate then did a cut & paste, probably as part of a blog post or article to show “how to place an ad with Google”, but the URL he cut & paste had his password in it, and then Google indexed it.
For example, the URL does https://www.zeekrewards.com/backoffice/back_office.asp?UserName=username&Password=password
This is very insecure, of course, because the password is sent in plaintext with the URL, and even if it the user uses HTTPS so the content is encrypted, someone can still sniff the URI, or someone could cut & paste it inadvertently.
Any web server administrators (does Zeek outsource this to a hosting company?) would see the URL in the web server logs. Any AV or safebrowsing services, such as the default ones built into many browsers, would send this URL back for analysis.
The odds that someone would use it maliciously may be low, but when you have someone with tens of thousands of dollars in an account, you would think either the individual or Zeek would take security as seriously as a bank or stock broker.
But we’ve seen again and again how amateur an operation Zeekler has. It takes almost 24 hours to run their RPP, their reports are terrible, you cannot query more than 10 days of data in the back office, the back office is ugly and many links have 404, information is outdated and not coordinated (such as they announce “good-bye 5cc” with no warning but the 5cc links and instructions for new affiliates, and the welcome emails all include 5cc instructions.
This is probably no different than any HYIP or other investment scheme, except they’ve grown 10x larger. The fact that Dawn goes on calls and literally begs (her words) people to not send in checks and only use AlertPay and SolidTrustPay and to pay the 6-7% fee (her words) so they could have automation speaks volumes about how amateur an operation Zeek is.
How did they handle “3 million customers” when they can’t even handle 15,000 US customers and the small fraction who want to send in checks?
Hi,
I just took nearly an hour reading through the whole blog on zeek rewards. I have just recently joined Zeekler and started bidding with my 500 free bids given by my diamond upline. This is from a zeekler bidder point of view.
But I can see that there were too many bidders on free retails bids and it is just a headache bidding with free bids. I could see that there are quite a less number of people bidding on paid bids.
So I bought $260 worth of retail paid bids costing $0.65 per bid with my credit card and make $350 in hard cash and still have 200 paid bids left with which I can make atleast $100- $200 more. As You can see I am in profit.
Actually, It was easy winning for me because I joined at the end of the month of February and almost all the heavy players have finished their maximum winning bid in a month which is 8 wins/month.
Some of you may have forgotten but like someone above have said, you should take into account, the human factor also as bidding on penny auctions are very addictive once you win.
I am now planning to buy more retail bids and with the earnings, reinvest it into zeekrewards if possible.
If you check alexa rankings of zeekler, its more popular in Russia and the neighboring countries.
I think I find the concept of zeekrewards very interesting and unique , a win- win for the company because Everything is being done by the affiliates. They are buying the VIP bids and giving it to new Zeekler customers to play around( who doesn’t like free bids) and at the same time promoting it everyday.
Companies spend millions on ads alone and they are getting it for free( not forgetting the daily %).
An improvements on the auction site with new products will find lots of new paid bidders. The cash out options is great.
Let me tell you, 50% of bidders trying out the free bids will definitely buy retail bids if they have a credit card like me.
I am from an Asian country and I buy small stuffs online but this is the most I have ever spend online for anything because I could see that I can get high returns ( I mean Zeekler).But come, new month March and its a queue to bid even with paid ones.
So I am waiting for the end of the month and is definitely buying bids again on Zeekler.
I’m missing something here. How exactly are you going to make $350 by BUYING $260 in bids? Are you going to resell the bids? or did you actually think the VIP points are actually worth $1 each and you can “cash” them?
But that proves Zeekler, the auction part, is good. NOT ZeekRewards, the MLM part.
LOL…
Well, For $260, you will get 400 paid retail bids and with that I won a $100 twice, $150 once and a 250 bids pack and have still 200 bids left. These are zeekler retail paid bids and not VIP bids. You can only use these bids on Zeekler auctions and cannot be converted into points.
I can see some people winning around $1000+ per month with just around $400-500 worth of bids or even less and some guys using $260 worth of bids to bid for products worth only $100 or $150…LOL..
There is another angle on this: checks can be stop-payment-ed. AlertPay and SolidTrustPay cannot be reversed.
Also, browsing through ZeekRewards found a familiar name: Chris Molinari (scroll down to the very bottom, his name is on a blog link on the lower left). The blog itself has been dead for a few months
Chris Molinari is one of those guys who came in here accusing Oz of “ruining good name of a company”, even before ZeekRewards appeared on BehindMLM’s radar.
https://behindmlm.com/about/#comment-22196
So you are winning cash with bids? Or is it just more bid packs? And how do you withdraw the cash? Do they send you a check or debit card? Or is it just an number in cyberspace somewhere?
(And you can’t guarantee to win money all the time, can you? So your results are “not typical”?)
@Jimmy,
Thanks for all of that information regarding the link. I’m happy to know that we are not all at risk.
Actually, I didn’t check yet, but from what you wrote it sounds like the password is no longer in the URL and that the one I found was an old one. I guess I’ll call or email that guy and let him know he should review his blog and take down the old links.
Thanks again for checking that out for us.
@K.Chang,
I think Karina is bidding on actual cash. They have have real cash that you can bid on, as well as having the option of receiving the cash value for items that are not cash – like $300 instead of the TV you just won or whatever.
It may not be be typical, but it sounds like Karina is having fun and making a profit… I might have to give it a go myself!
Withdrawal is either STP/AP and similar to Zeekrewards, its once a week. And ya, with all wins, You are given the option of cashing out and I think most people are doing that.
And if you know how to bid well and knowing people psychology, its interesting.
I still remember my first win.. $100 win with just one bid at $0.01.. LOL
Get on to the Zeekler for fun…
@Karina — glad you’re able to win, but you can’t guarantee that you’ll generate this sort of “profit” week after week and month after month, can you? Thus, your current result cannot be used to “prove” you will continue to profit from Zeekler.
Furthermore, you’re proving Zeekler may be profitable, NOT ZeekRewards.
If I am profitable so is my up-line the one who referred me So, You See win-win for all. So the main thing is if Zeekler is profitable then So is Zeekrewards and is they are only distributing 50% to affiliates then they must be getting a lot.
We can only win 8 times per month so I think the maximum win is around $150×8=$1200/per month which is not enough to make anyone rich but can still can have fun. As with everything, You cannot be 100% sure but that is what makes LIFE interesting, isn’t it?
The concept of Zeekler/zeekrewards is very unique and since it is acceptable almost worldwide, this company have lots of potential if the administrators handle it wisely from all angles legal and stuffs.
Just make Zeekler as popular as could be and It will sustain itself, simple…huh?? 😀
@K. Chang
It takes you from 14 to 21 days to withdraw money from Zeek, and the most you can withdraw is either that day’s commission or a 20% commission as the referrer. They process payments only 1 day per week (Friday’s) and the payments are delayed 2 weeks before delivery.
So the actual risk of loss from someone paying by a check then stopping payment it and getting funds back is relatively low. Yes, you can fit a check + stop payment in that 14 to 21 day window, but seems like a lot of personal risk with a legitimate checking account (whereas fraud with stolen credit cards is easier).
@Karina
You are assuming that Zeek affiliates are bringing in customers with giving bids away. If you did come to Zeekler from free bids, your example is an exception. There are posts from many Zeek affiliates on other boards saying they have been posting ads every day for months and have receive ZERO revenue from any customer sign up.
Some have never even gotten a single one. I just looked at another’s back office yesterday who asked me for advice – he generated $80k in 2011, $35k cashed out in 2011, $21k cashed out to date in 2012 (the rest reinvested) and still has a mid-5-figure point balance, and he has had ZERO retail commissions.
My own experience, 4 ads a day across 4 accounts, different venues, not a single free customer from my ads, and none of the ones from the 5cc purchased any. Even if 1 in 100 or 1 in 1000 do, how do you think that can pay for all of the commissions Zeek is paying out to affiliates?
Even if Zeekler makes some money, it can’t be even 1/10th enough to cover the daily commissions. And even if it was more than 1/10th, it can’t grow infinitely, compounded 20x per annum (at 100% reinvestment, with 90 day bid expiration; or 35x per annum at 80% reinvestment, with 90 day bid expiration).
Please, spare us the elitism, or you are just making stuff up. There is very little psychology involved with penny auction bidding. You just wait for the ABE’s to be done and for the timer to drop to 3 seconds then bid.
The ONLY small bit of phsycologically that makes any sense is to use collussion. When you are down to 2-3 single bidders and don’t want to wait forever to bid at 3 seconds until someone gives up or runs out of bids, you can use multiple accounts (yours, friends, whatever) and each bid.
This introduces a whole bunch of “current bidders” from say 2-3 to 10-11. The other bidders will see this and say “damn it, I’m not going to battle it out with these many people” and leave that auction, or set their ABE higher in hopes of riding out the competitive bidding at the moment.
Then it’s just you (and your 8-9 accounts) left in the auction and you win.
Other than that, there is NO pshychogically involved. Just basic tactics – don’t bid when there are a bazillion other bidders. Don’t bid until it drops down to 2 seconds.
If you have other “psychology-based” profitable tactics, then please discuss. And if you have some profitable tactics that gives you +EV advantage on buying bids and winning prizes long-term, then you are actually making an argument AGAINST Zeekler being profitable long-term.
You, me, and a select few of other elite bidders win all the good prizes up to our max (or we create multiple accounts, or play friends accounts). This drives away all the legitimate business.
So if I give you 100% benefit of the doubt on your Zeekler story, you just argued against Zeekler being attractive to the gambler, because there’s no way the average schmuck can win against elites like you.
Finally, the reality is people are not going to sit around for hours to win each auction.
That’s why there are bots all over the place. Yes, psychological Zeekler tip – compete against humans and avoid the bots who are not using ABE.
Any possibility that some of the bots are run by Zeekler itself as shill bidders? (Just wondering)
I cannot tell if the bits are Zeekler or just people exploiting the auctions. My guess is they are not Zeekler bots as that is a lot more risk had theyhave so few auctions. Other penny auctions will auction thousands of items per day. Zeekler maybe 100. So they have sufficient normal bidding volume (oversaturated in fact with the free bids and BOGO offers).
The bots are dumb but they are not playing poker or chess here. They just want to use up their bids and win some prizes. They buy bids for profit share then need some way to use them up, might as well try and win some prizes.
The bots you can spot because they usually compete with each other around 6 to 9 seconds. Human bidders wait to 3-4 seconds before bidding. Or they interrupt an ABE battle.
No human would bid with 12 seconds to go while the ABE’s are battling it out. Some bots are on fixed timers they have to bid withon 20 seconds so you see that in the middle of an ABE bid off you record their userid and know how to play them.
You all sound like pretty sophisticated MLM’ers/investors/bidders. I just started ZW and put in $90 for VIP bids. If I am not bringing in anyone and I just want to make a quick profit so where is the harm in that?
Especially if I disclose to my friend’s that ZW might be a Ponzi and that timing is everything.
I pass out business cards that offer the free 500 bids which people are starting to register for my Zeekler.com splash page. I just upgraded to the Diamond level so I could pass out 500 bids like the big dogs.
Who would click on an ad for 50 bids when they could get 500 instead. That was my thinking, and I now agree, no one is taking them from the free online ads in any meanigful way.
I will simply invest like the guy who does the HYIP’s. I will risk putting in one to two thousand next week and hopefully enjoy the ride as I go into this with eyes wide open. Thank you all for your interesing posts!
BTW, where is the next big deal happening so I can be the one at the top!
@Jimmy
how do you have multiple accounts without violating the no-stacking policy?
@John
I don’t stack. I have accounts for family members that don’t live with me. There is only one Zeek account for my primary residence and it’s in my name with my SSN. No fancy LLC EIN tax id trickery or anything like that.
My family gives me permission to use their accounts. If you don’t think this isn’t the way it’s done across zeekland, then you need to ask around in some larger teams.
The only way to “give bids away” is either using 5cc and paying for it, and finding anyone you know with an email address and signing them up for free Zeekler customer. PRC will add another dimension shortly.
Most of the people you talk to don’t care about the auction so they let you do whatever you want with their accounts. Strike a deal where you split the profits with them. If you have the time to spend hours to win $25 in an auction with free bids, go for it.
For every story of hundreds won with free bids, there are many more where the final price was less than a dollar below the retail price because of all the bots and diluted point values where people just stick it on ABE.
“Better to win 50 cents than nothing with these free bids.” Also, in some countries, winning a few dollars a day makes a big difference even if it doesn’t in most industrialized countries.
You don’t need to upgrade to Diamond. As silver you can give away 1000 bids per free customer.
Good luck. 99.999% of all customers who get free bids never buy anything.
Jimmy and others,
Are there any other HYIPs that you feel are worth looking at? Particularly ones that you have experience with?
I see lots of ads for them, but I don’t trust any of them to tell you the truth. I wouldn’t have had any faith in ZR either except that I trusted the person who showed it to me. Now, what had me interested in ZR may have changed – not having to recruit or beat the bush for customers – but it’s still ok as long as it lasts for a good while.
Actually, I wouldn’t mind finding customers and affiliates on my own except that now I am worried that when/if ZR quits paying out a nice return, I would feel like I’m responsible for those people below me if they lost money because they trusted me.
That means I can’t even go to my family now and tell them about this great opportunity, because it might not last. It might not even last long enough for me to get paid. If I knew there were hundreds or more people joining every month, I might feel more confident that the funds will be here for a while. But right now I have no idea how many people are joining, or at what level.
I called the new ZR support last week just to have a little chat and see what I could learn. The woman I spoke to said she’d only been there a week, and it was clear to both of us that I knew a lot more than she did about ZR.
Anyway, my point: I asked if she could give me a ballpark estimate of how many ZR affiliates there are. All she could tell me is, “A LOT!” There was no other way she could describe it to me.
She also said there were 50+ people working in the support center with her and that they were all busy. When I called, I was number 54 in the queue, and it took more than an hour to get her on the line.
Maybe ZR really will be here for a good, long while after all. Especially with all the folks signing up from countries other than the USA.
One more thing – Since affiliates no longer need to be a Diamond to give away 500-1000 bids, what is the incentive to be a Diamond?
If you signed up as a Diamond and already got your Diamond-level bonus points, why not downgrade to silver and save yourself the high monthly subscription fees? Same goes for Gold affiliates. If lots of people downgrade, there goes a lot of money that was contributing to the RPP every month.
@Jimmy
So if you are playing with friends/family accounts, then you must like Zeekler a lot to be playing that way and just having one account couldn’t satisfy you.. Haha.
Where as I am just a beginner and just thrilled with a few wins.. 😀 and you sound like a professional..
@Karin
This has nothing to do with “liking” Zeekler. It is the worse penny auction I have ever used. The prizes are terrible, there is no buy option for the standard option (they cannot offer it due to bid dilution, i.e. not real revenue for bids), the number of auctions they run are a fraction of what other auctions run for the same ratio of players and bids in circulation.
Some auctions for items under $200 last for 24 hours – there is no way Zeekler as a penny auction has a strategy for future growth. It is simply existing as a “dump zone” for the Zeek Rewards investment scheme.
Yes, you can win items at Zeekler. Yes, it does function as a poor, amateur, unprofessional penny auction. No one here ever said that the auction didn’t work – just that the entire bizopp was never about the auction (it was about the ponzi).
So, as an online money making expert, I want to maximize how I make money. With Zeek Rewards, you have to buy and give away bids as part of the investment scheme. I am under no delusions that the investment scheme will last, and that is reflected in my reinvestment/cash out strategy.
In the meantime, because you HAVE TO buy bids, and you HAVE TO give them away, why would I just sit around and let the bids go to waste?
I PLAY THE AUCTION not because I “want to” or “like it” but because I am simply maximizing the biz opp by converting overvalued, diluted virtual bids into some tangible cash. I would much, much rather play any other penny auction you can find on the first 3 pages of Google.
Actually most of the person bidding with free bids are novice, first timers like me. And they just bid mindlessly even if the winning price goes up and is more than the actual price of the product and ya, 90% won’t pay at all.
However, with retail bids, its a different story. I am signing up for Zeek rewards next week… 😀 And I think its catching up with the rest of the world too. See alexa. And anybody with a sound mind will join zeekrewards after coming across it.
🙂
Alexa numbers are meaningless in this. They are embellished because of the dally ad registration requirement. Other MLM’s do not require you to login multiple times daily to your back office.
Re: Jimmy’s statement- “You don’t need to upgrade to Diamond. As silver you can give away 1000 bids per free customer.”
How do I give away 1000 bids? My bid preference only showed upto 50 when I was a Silver. Thanks in advance!
It has changed since the new PRC requirements. All silver, gold and diamond affiliates can giveaway 1000 bids per customer.
So besides being able to non-invest more money and get extra bonus points, why bother being a Diamond?
@Zack @Jimmy @James: So what are your Estimation? How long will Zeek survive..?:-)
@Karina
“Anybody with a sound mind will join Zeek Rewards”? 🙂
When was the last time they tested you, and what did the results show?
To earn more on referrals, or to buy more than $1000 worth of VIP bids with your own money (excluding what you earn via commissions). Diamonds can buy up to $10,000 of VIP bids.
This is more of a personal question I think in terms of risk and reward. I’ve talked to one guy who had 70k balance in Sept and fully drained his account and now is kicking himself for not staying in.
Another guy switched to 50/50 to cash out while still maintaining his balance (he had commissions and a large downline so 50% was what he needed to maintain). He pulled out over $140k cash in his pocket in the last 6 months, but now hindsight is cursing him because he could have been greedier and his account balance would be mid five figures today.
Your question is the “great ponzi question”. How long will it last? Put yourself into JSS Tripler or Ricochet Riches and ask yourself “what if I invested 1 month before it died?” You never know when it will start to decline.
There are some sites you can find via Google that track the daily RPP rate which may give you some good indicators on when the trend MIGHT start to decline.
In the end, it’s your own decision. What I do know is it takes 90 days to withdraw money completely.
@Karina
I have no idea how long it will last. I’m new and I know there are lot of others signing up every day. I hope it lasts long enough that I don’t get hosed. That’s about all I can say.
@Karina
I don’t know how long it will last. Maybe if we had a daily counter of all the new affiliate memberships we could feel more comfortable about executing our exit strategy.
As someone said above. If you get out more than you put in, its all good at that point. These guys with high VIP balances should cash out a little bit and find a safer investment.
I found this online and seems to be good advice and the fact that ZR claims that Zeekler is the main funding engine makes this profit sharing/Ponzi really believable on the surface. So this little engine might take a long time to make it up the hill. Again, from an online article:
Perhaps the question you should REALLY ask, is… If Zeekler is so profitable it’s feeding $$$ into ZeekRewards, why have ZeekRewards at all?
@K. Chang
Exactly. I’ve raised similar arguments on these Zeek threads. Why instead of paying X millions per year to affiliates doesn’t Zeekler just spend a fraction of that on normal internet advertising?
Surely Google adwords, banner ads, paid blog postings, Facebook CPA surveys, and even television commercials like the other PA’s are doing would cost LESS than what they are paying affiliates.
Unless, of course, they NEED the ponzi…
There certainly can be some “red flags” that emerge that will tell us when the company is beginning to collapse under the weight of the payouts. This entire auction process seems to be a shell game.
I am an affiliate and I give it, at most, three 90-day periods before we see the daily interest drop.
Tell me where I’m wrong.
wow. ponzi, scheme…we’re throwing around these incriminating words like the word doughnut, donkeys.
i am an affiliate, but I don’t really work the business.
i find it funny that with all this in-depth discussion and intelligent quantification you fools forget one simple activity most important to doing this business-you must post an add to ‘earn’ from the retail pool.
now that will probably change nothing in your argument.
when is it a ponzi scheme? lol…damn with all this scientifically precise explanations of this scam I thought I’d see that mentioned and I didn’t.
now, let’s be clear…I’m more in favor of destroying this act of crying wolf for no good reason…than validating zeek’s credibility.
now tell me where the ‘ponzi’ is in this scheme…
if you use some common sense and consider ALL the cases that were legally processed and EARNED the title of PONZI, there are several distinct qualifying elements:
1. as described by ftc.gov…if income is generated solely by recruiting
2. promises of return on investment.
3. the ‘victims’ get absolutely NOTHING in return on their initial investment.
lol…no tell me where you find this in zeekrewards.
recruiting is not necessary…
there is no promise of a return on the buying bids and posting ads…
in order to be rewarded from their so-called retail profit pool you must post and register an ad everyday…
now i can’t comment on the owner’s activity, but as for the business opp…so where is this
as a marketer you can opt for a payout…
if you take the case of a Charles Castro and Network Services Depot. he was charged for running a ponzi, why?
he charged affiliates up to $7,000 for an internet kiosk to set up in malls. he promised they’d secure the location and set everything up, they didn’t and affiliates were duped out of their $4,000 to $7,000.
did you notice the qualities of an opportunity that EARN it the title-PONZI as seen fit by the court?
can you show me how zeek is similar?.
i mean if the courts, lawyers, and investigators all determined that the defendant is guilty of this crime, surely we qualify to do the same…right?
i mean my observation of this in it’s entirety is no doubt limited…as is most of yours.
the fact that most failed to mention that affiliates must post an ad everyday speaks volumes.
if an affiliate’s initial monetary investment to operate this business was $200 and that person is now earning $20 per day…who’s the victim in this?
lol.
@doctorsizzle
If I join, ZR and start posting ads – do I earn anything from the profit pool?
Oops, you forgot to mention the requirement to invest money. Give your neighbour a blowjob, count the stars at night for a few hours, start collecting your toenail clippings – these are all activities ZR could subsitute ‘spamming the internet’ with and your profit share would still be entirely reliant on how much money you invested in Zeek.
1. recruiting requirements are a pyramid scheme.
2. Zeek guarantee a return. They don’t guarantee the amount of return, but they guarantee a return over 90 days.
3. If this were the case Ponzi schemes wouldn’t exist. Of course they have to pay out otherwise nobody would join. The problem is when the payouts exceed the money being invested.
This hasn’t happened with Zeek Rewards yet.
Please educate yourself before writing essays praising ponzi schemes that are riddled with errors.
Your rules are imaginary, except for point 2.
Point 1 is false. Ponzi schemes can be all from plain investment schemes to hybrids between pyramids and Ponzi. Recruitment by distributors isn’t required.
Point 2 is correct. The main motive for participating is ROI, but this is similar both in Ponzies and in pyramids.
Point 3 is false. Most people will get some of their money back, if they withdraw money before the collapse.
Your logics doesn’t make any sense. It seems like you’re only repeating some arguments that has been ‘delivered’ to you from an upline, the arguments that fooled you?
FTC’s position is “primarily generated by recruiting”, not solely.
http://www.ftc.gov/speeches/other/dvimf16.shtm
Whoever you quoted that bogus definition from was wrong, and may have INTENTIONALLY lied to you.
Where is this Dr. Sizzle thinking that
he’s getting $20 every day from $200?
That’s 10%–that’s wildly absurd! The very
most that I’ve ever earned is a little under
2%.
As an accountant, I can tell you that
when I crunched the numbers, there is
no possible way that ZR has enough
capital, from what it brings in,
to pay its affiliates, even if
they draw it out over six months.
@Warren
What ZR will do is as affiliates start withdrawing money, they will lower the profit share. Since points expire after 90 days, ZR can dilute the value of all affiliate points by dropping the rate.
ZR also sees what everyone’s current repurchase amount is. So if they see a trend of higher cash outs, they can scramble and send out an urgent email to all and bring on yet another motivational speaker to convince everyone they need to just stay in ZR and keep the repurchase at 100% and all will be fine.
@Jimmy
You said: It has changed since the new PRC requirements. All silver, gold and diamond affiliates can giveaway 1000 bids per customer.
I still can’t see more than 500 bids to giveway in the back office. Can you give me step-by-step on how to give away 1000 bids.
Furthermore, consider that having a 14-day delay in withdrawals / cashout gives them a chance to raise the capital without having much reserves.
A bank must have enough $$$ on hand to handle withdrawals. if they don’t, it’s called a “bank run” and they close if they ran out of $$$ (though that rarely happens as they can borrow from other banks, even the Federal Reserve Banks).
ZeekRewards have these points that that you can’t cash out for 14 days, which gives them 14 days to come up with the capital for the payout. All they need is, as observed, lower the daily profit shares.
Tim,
The max bids that are given at first is 500, so you are already doing it right. When you start accumulating bids and you don’t have new customers to give 500 bids to, the system will automatically start giving more bids, in increments of 25, to the customers you already gave bids to until hey have received the max of 1000 per customer.
Even if it takes 2, 3 or 4 weeks to receive a check, you can still get one every week by submitting a request weekly. After the first one arrives, they will just come in every week.
It’s not like anyone has to wait a few weeks to get their check before requesting another. If you request one every week, you will get one every week. That way the first one will be the only one that has the delay.
Actually they all still have delays and nothing’s changed.
You’re just requesting enough checks to recieve one each week with the delays. Ultimately the reason for the delays goes officially unanswered (to stop fraud is a load of crap).
@oz
That’s right. I just meant that the delay wasn’t perceived since checks would still arrive each week.
I don’t think the drag is a big deal on the surface, it’s only if the delay is an indicator of something unscrupulous taking place behind the wizard’s curtain.
Here’s an interesting observation:
Apparently the so-called proprietary auction parts of Zeekler can be duplicated for less than $1000
http://www.freelancer.com/projects/PHP/Project-Clone-with-alterations-dubli.html?so=asc&ord=rating
Add another $500-1000 for the MLM side (ZeekRewards) and hosting (let’s say, $500 a month which is probably WAY overestimating it), and it makes you wonder how much does it REALLY cost to run the place.
This paragraph was posted back on Zeek News on Feb 27, 2012:
This sounds to me that we don’t have to get two Zeekler.com preferred customers per month to qualify for the RPP’s. Or am I missing something here? Thanks to anyone who can clarify and confirm.
You don’t need 2 PRCs a month, however as per the Zeek Rewards income statement, it lists 15,308 active members.
ZR appear to be counting non-active members in their ‘tens of thousands’ figure, because it’s certainly not their active members (those that have 2 retail customers or their own “free reigstered customers”).
Basically ZR are trying to use misleading statistics to downplay the fact that the majority of their active members are indeed affected by the change as they were using Zeek as a passive investment scheme.
Those active members are affiliates. Customers aren’t included in the income disclosure statement. It was also only for the US. I think at most ZR has 2x that number worldwide.
Lots of affiliates I have been talking to are looking to start withdrawing more aggressively soon. Zeek has been making all the wrong moves from a business perspective, and as we’ve been speculating on this site, most likely because of they are playing defense for the eventual collapse.
If you’re the owner or an executive, you have to be scared at what happened to AdSurfDaily and others… the virtual points scheme doesn’t change the fact that it’s still an investment ponzi.
WOW, epic posts here.
I was actually thinking of joining the bandwagon this week.. until i noticed the speeches here.
From what ive read.. are people starting to pull money out now?
it would take a few months to get my cash back.. and frankly ive never trusted these systems. So.. anyone got any advice?
take a look to that: http://www.tampabay.com/news/business/article760467.ece
What I have personally seen is people actually getting their original bid purchase money out after 90 days and still continuing to earn on the points they have made. How is that a rip off?
I have seen the checks..! Example..You get 200 bonus points on entering as a diamond.$100.make % for working by placing your ad and after 90 days even that makes more than the original 200pts,even if you take it out, with time and work you can grow that again.
If people buy the bids to give away as advertising, they can write that off as an expense with the IRS. (everyone is getting 1094 and must delcare) .This did throw people alot of people..!! Gee I have to pay taxes? Yes you do and Zeekrewards send you US tax forms.
Also I can personally watch the auctions and let me tell you they are driving traffic and making money. I saw how many bids (cost 65cents each) being used by so many people for two days, that a Flat screen TV worth 500$ actually made the company $30.000. Each item on the auction may say sold for 5 bids or 35 bids but there are so many people bidding that much more is made on each item. One lucky person wins but many bid. I think everyone who has bought a raffle ticket understands that concept.
I see there is a legit retail part to this company, the auction, the retail store they give you to sell products, plus a legit Multi Level part, the drivers..and people ARE getting paid. so how is it a Ponzi?
Look at Alexa and see how both are doing. Yes it in about 419 last I looked. but zeekler is good too ..more traffic to zeekrewards side because all those people are in there everyday to post the ads plus look at their balances growing. It is fun to watch..I must go look at it about 4 times a day just for fun.
My brother was telling me about penny auction sites and that to me seems like how they make most of their money. (Not referring to Zeekler specifically).
This is how most of them work – You buy bids for a dollar a piece and they buy the item they are auctioning for regular price – let’s say an ipad 2 goes for $800 at retail, but sells for 150, but by the time they bid at a penny a time, the company is making 100% per bid which is why they are so lucritive.
They spent 800 bucks on the ipad, but they had a gross revenue of 150 – which means 15,000 bids assuming it started at 1 cent – or $15,000 because the bids cost a dollar a piece. No wonder they give them away in chunks of 100 for free. They made 14k on that ipad.
It’s basically like legal gambling on the side of the consumer for discounted products. The auctions are very difficult to win and the media actually warns against them.
I had a friend win a $900 laptop for 200 bucks, but he spent 220 of his own money buying bids and competed against at least 50 others.
So basically, there are thousands of these auctions going on every day, and the Zeek Rewards thing seems pretty legit because they are so profitable on the auctions.
If this part of the business didn’t exist, they would go broke real fast. Penny auctions are popping up everywhere. You see Quibids.com advertised on national television, but the difference is in Zeekler is that instead of paying for national cable advertising they use the Zeek Rewards program and pay people to market.
The longer you participate and help further the business, the more you get in rewards based on your points.
Hopefully that clears up any confusion. I could be totally wrong and don’t wish to get in an argument with anyone, just want to offer my two cents. I wish I had the know how to start a penny auction site. They are actually pretty fun to participate in, but I suck at it. HAHA.
@Linda
They’re not getting their money back, they’re getting money from people who have invested after they made their original purchase.
Likewise those people then get their money from people who purchase after them. No purchases = catastrophic payout meltdown.
Receiving money is not an indication that a scheme is not a scam. Schemes have to initially payout or they’d never attract new member to invest.
There are a lot of ZR members who disagree that if they re-invest their returns, that they should still pay tax on money they never saw. Meanwhile ZR has sent forms to the IRS counting the returns as taxable income. These are all going to be audited as the claimed business expenses are abnormally high.
Nah they’re not. Do you know how many free bids have completely flooded the system?
There is no auction component to ZR, it’s a different company.
Exactly, ZR trumps Zeekler traffic wise because the opportunity is being marketed, not the penny auctions (because they don’t matter).
Compulsory daily spam to free classified websites is not affective advertising, it’s just a rudimentary task set up to make members feel like they’re doing something for their returns.
The final proof is in the refusal to publicly announce what percentage of the daily profit share is made up member contributions (investments in bids and membership fees).
This one action could dispel the ponzi scheme notion once and for all, but Zeek Rewards won’t release this information citing ‘competitive secrets’. Given there’s nothing competitively secret about a percentage number, the only logical conclusion to make is they don’t release the percentage number because it would give the game up and incriminate them.
There is no way known Zeekler is covering or is going to continue to cover the ROIs Zeek Reward’s member’s ever-growing VIP point balances demand.
@Seth
Had your friend not won and lost his $220, how many more auctions do you think he would have participated in.
Once people lose a few auctions and realise they’re throwing money away – they don’t come back. Long-term business in penny auctions is negligible.
Zeekler is being dwarfed traffic wise by Zeek Rewards (indicating the business opportunity is being marketed far more effectively than the penny auctions) and I’d wager most of the traffic at Zeekler is just people running around with free bids wasting time.
The auctions are a joke. The price ratio between ending price and value is not indicative of a real penny auction because of bid inflation and the fact that you can buy retail bids with fake customers and get virtual points + 20% commission.
So the top affiliates are buying bids themselves for the points and then deciding “well, I have to spend the bids somehow” and then they configure ABE to spend 1000 bids to win a $25 gift card. That would never happen in a real auction.
And you wouldn’t see item after item going for over retail either. The penny auction is a joke. The low priced items are only going because the server is susceptible to a internet latency and DoS attacks.
If Zeekler’s penny auction was actually producing that much revenue, they would not require the investment component as an affiliate. They would just let you sign up customers using a traditional affiliate model where you earn a % of REAL revenue.
The investment component is unnecessary, and only used because it is a ponzi scheme.
Linda, Seth:
I actually ran some calculations after an acquaintance had been duped into joining ZR. I went over tens of closed auctions, being extremely generous in their potential profit to Zeekler.
If you did it too, you would have known there’s just no way Zeekler is enough to support the ROI on hundreds of thousands or even tens of thousands affiliates point balance. Not even close, not even if Zeekler sales jumped 1000% tomorrow.
So we can be pretty much certain money is taken from newer agents to pay older agents, and it’s only a matter of time (I guess April 17 would be an interesting date to wait for) until authorities start paying attention.
Also, one of you mentioned Alexa. Alexa isn’t the most reliable source of information, but even if it was – take a look at popularity by country for both websites, it might be very…illuminating.
So did all the people who got the money from Bernie Madoff… Guess what happened to them?
Please do NOT use “it paid me therefore it’s not a scam” excuse here. It only proves you didn’t read a word here.
The problem here is who is the advertising for? If you’re ZeekRewards, advertising ZeekRewards is obviously deductible. But if you are NOT ZeekRewards, but merely AFFILIATES of ZeekRewards, are you actually agents of the company? If so, does the deduction go to the company, or you individuals?
If Zeekler is so profitable, why have ZeekRewards at all? Why share the wealth? What do THEY get out of it?
You’re looking at the WRONG SIDE. Zeekler, the auction, retail, etc. are legit. It’s ZeekRewards that’s a potential Ponzi.
So the truth is most people are NOT there for the auction, unlike what you’re claiming, that the auctions are making tons of money. So which story are you going to stick with?
Troy has just posted an interview he had with Dawn Olivares, COO of Zeek Rewards.
I’ve left my concerns as a comment, notably
-the lack of disclosure on how much of the profit share Zeekler actually makes up
-the lack of expalanation as to how Zeekler can continue to support member’s ever-growing compounding point balances
-there’s an affiliate link for ‘hippiediva’ in the post itself, no idea who owns that account
I’m cited a few times as ‘the blogger’, wonder if that was a pre-req condition of the interview that ‘BehindMLM’ or ‘Oz’ not be named.
http://mlmhelpdesk.com/zeekler-coo-dawn-wright-olivares-speaks-with-troy-dooly-on-some-of-the-red-flags-surounding-zeek-rewards/
(edit: the FSC store account for ‘hippiediva’ has the name ‘Dawn’ at the top of the page (member information). Dunno if it’s Olivares’ own account, but it does beg the question as to why the COO of the company has her own investment account with the company. Is she drawing a corporate salary or a member salary… and what about the potential conflict of interest between the two??)
hippiediva is Dawn’s own affiliate link.
Dawn and Darryl Douglas are both affiliates in addition to working for corporate. Just think of the conflict of interest. They can steer corporate strategy from growth to stability, because they themselves would benefit.
Too bad for the new guy who wants to employ a growth strategy. I want to send spreadsheets around and use the word “compound interest” like Dawn and Darryl Douglas and the other early Zeek investors did.
I can grow a huge point balance if I am allowed to do that. But alas, I cannot.
Also consider the advantage of knowing what everyone’s account balance and cash out strategy is?
If you see the tide changing as affiliates begin to cash out, then Dawn or Darryl Douglas could switch to 100% withdrawal, while going on the corporate conference call and pleading with everyone to keep plugging away at 100% compound growth.
Citing an ‘overwhelming amount of fraud‘ occurring over at Zeek Rewards, Olivares put out an update today on the topic:
Given that most fake PRCs and customers are being created to just dump bids on, this doesn’t look like it’s going to fix much.
I suppose it could get annoying if PRCs can’t pay their monthly fee without being on the same IP address, but if there’s no ongoing requirement to maintain the same accounts those with high amounts of bids to give away each day who are dependent on the company generated customers could just create two new fake PRCs each month.
Beyond their initial membership those accounts don’t need to purchase anything to have bids dumped on them.
Why does this reminds me so much of Tarun Trikha, who later turned out to be “CEO” of TVI Express?
Better run to your local hotspot and use up that IP address before another Zeek affiliate does.
I’m also reading that new ZR members won’t have access to the company generated customers (?).
Putting aside the whole supplying fake customers and paying out investment returns issues for the moment, do ZR really think that by hamstringing new members they’re going to be able to continue to sustain exponential growth payouts of their existing members?
They’re basically saying ‘if you got in early then we’ll look after you with the ponzi model but suckering in new members into an actual customer-driven model (no company supplied members)’.
This news about new Zeek Rewards members not getting access to the company supplied customers (whether they have 2 PRCs or not) was apparently relayed on a recent company call, haven’t seen it anywhere in writing yet.
Good to see everyone debating here in a positive way, although the conversation is just going in circles now. The comments are a mixture of truth, opinion, speculation and some falsehood. Some believe and some don’t. So I’m not going to debate the validity of zeek anymore, you fine folks can handle that. I do appreciate the folks here trying to protect people from possibly losing money, I just don’t believe they are right at this time.
I wanted to clarify a few points about Zeek and tell how I built zeek to 527 personal referrals and a downline of thousands without many people buying bids out of pocket. I also have 15 columns on my spreadsheet to track my zeek business daily and I have a pretty good feel for what’s really happening numbers wise. I won’t post income claims, because it would be crazy to risk my level of income just to impress or make a point.
Facts:
1. NO personal affiliate referrals are required to earn daily profit share. You do not have to sponsor anyone. If you do, you make more. (50% of my upgraded referrals have never referred anyone.)
2. You WILL need to place one ad a day and have at least 1 customer to earn daily profit share. Most of my team never joined the 5cc because a few customers will last a long time for those who do not purchase sample bids. (about 70% of my referrals have never bought sample bids out of pocket)
3. NO buying of bids out of pocket is required to earn daily profit share. About 70% of my referrals have never bought 1 bid out of pocket. (Some say you have to buy $10 bucks minimum. Not true I have hundreds who have never bought 1 bid out of pocket because I used it as a referral strategy.)
4. ZeekRewards does NOT guarantee you will make a profit. YES, ZR does pay us profit share on a VIP point for 90 days, but as Jimmy and others know, if the daily profit share avg is below about 1.15% no rep makes a real profit from the Profit Share Pool. There is no guaranteed daily percentage of profit share, so it can go up or down (I know it used to be 125%). Also, about 3 days a week we do not make enough profit share (approx. 1.15%) from the company to cover the expiring bids.
5. Real/actual daily profit share is not 1.5%, it is actually more like .35% (.0035) because of the 90 day point expiration. (1.5% daily average minus 1.15% daily to break even = about .35%)
Example: If you have 100 VIP points and they earn $1.50 (1.5%) profit share each day, you can withdraw .33 cents (22% of $1.50) each day and your account will stay at approx. the same level. So if you buy $100 in sample bids today and give them away, the company has to make .33 cents a day to pay you your 20% withdrawal (actual leftover profit after 90 day VIP expiration).
6. The profit share average has gone up over the last 9 months and they have added/raised the commissions we can earn 3 times.
A. Longer earnings on VIP from about 58 days (to earn 125%) to 90 days before the VIP expire.
B. 20% commission on customer bid purchases.
C. Getting $2, $10 and $20 on your personal referrals instead of .25, .35 and .40.
Why did they pay us more over the last 9 months, because they started with a very conservative pay plan payout and raised it when they and their legal team and consultants determined the comp plan was viable long term.
7. VIP points have no cash/dollar value. They are just a point value to earn on like PV/GV in other mlm’s. You cannot cash out VIP, only the dollars they generate daily until they expire. (Some say that VIP is your money sitting in your ZR back-office, but that’s just not true. Try to withdraw every VIP point you have today and get back with me.)
8. When an affiliate or customer buys $10 in sample bids they own the bids and the company owns the $10. There is nothing invested, so there is nothing to withdraw. The affiliate or customer can use their 10 sample bids in the penny auction and entertain themselves. There is no refund on the bids the customer or the affiliate purchased so neither can get their $10 bucks back.
Now, an affiliate has the options of giving away or selling their product (10 bids) and getting 10 VIP points, it’s their choice. Again, VIP have no dollar/cash value, just like PV/GV in other mlm’s, so you CANNOT withdraw the 10 VIP. But if you place 1 ad a day, the company will share a portion of their daily profits with you base on your 10 VIP. ( Again, it doesn’t guarantee you will make a profit because the expiring VIP could be more than the profit share.)
9. ZeekRewards has evolved from the guidance of PROVEN top mlm legal minds to ensure their long term sustainability. They consist of:
Gerald Nehra; lawyer and has expert witness credentials in landmark cases and was the Director of Amways Legal Division in the 80’s
Kevin Grimes; lawyer, expert in mlm regulatory and compliance. Clients include Herbalife; Shaklee, Usana, Tahitian Noni and over 100 other well know mlm’s
Dr Keith Laggos; PHD; mlm consultant. Even the mlm industry top watchdogs rave about his credentials.
Look them up if you please or if you’re a zeek rep, just listen to the recorded conference calls we had with these guys.
YES, ZR needed to change several things in their comp plan that were recommended by their legal team and they have. I choose to believe the consultation of the top legal minds in our industry have the company on the right track over anyone else right now, because they’ve all proven themselves where it matters….in the mlm legal trenches and courts.
Now, I’ll tell you how I built my ZeekRewards business with mostly free people who never bought a bid. I know there are a lot of people who like to get paid for task (adsurf, ptc, etc). So, I told them I would pay them .5 cents a day to sign up for free and place a free ad for 60 days. And they would see their free 100 bonus points grow to 120-170 vip and earn about $1-3 bucks a day after 60 days.
I test/signed up about 20 referrals using this method. Funny thing is most of them were so happy that they could see those free bonus points growing that they did’t send me their email to pay them via Paypal/Alertpay. I stopped offering the incentive and just told people to sign up for free, place the ad and they would see their accounts growing daily from the first 24 hours.
At 59 days, they could upgrade to silver, then earn cash daily they could withdraw. I signed up another 500 people this way and my sister signed up over 400. We did this in 4 months. We were so tired from helping people that we stopped sponsoring and gave away 300 referrals and sold another 3-400. Most of our people are from lower income countries that can really appreciate making a dollar a day.
Here’s what 70% of our people did with our strategy:
1. Signed up for free and received 100 Free Bonus points. (they did not upgrade.)
2. Placed their ad for 58-60 days and watched their Free 100 bonus points grow to approx. 250 bonus points over 60 days. I also told them to sign up one customer before the 60 day mark.
3. Then they upgraded to Silver for $10 bucks out of pocket so their 250 bonus points converted to 150 VIP. Now their 150 VIP earned $1-3 a day. So far they’ve spent $10 out of pocket. We told them they never had to buy bids and most didn’t have the money to do so anyway.
4. Next, I told them to set it to withdraw a few days a month to accumulate $10 or so in their cash available account to pay their silver each month.
They never joined the 5cc because you only need 1 customer for the first 6-12 months, if you never buy bids out of pocket.
It worked like a dream. After 60 days they had the confidence/belief to tell others and our business really took off. Many had their friends and family duplicate. It was a 60 day delay before we profited from most of our new members but we grew faster. And my members earn off their referrals who most have never purchased a bid either.
This strategy has allowed me to withdraw 30% weekly from ZR. 15% from the profit share and the other 15% from my team earnings. I did buy bids last year after I saw Gerald Nehra put us on the right path, but by far, it is my team that has pumped up my VIP points.
So you don’t have to risk more than $10 in Zeek and you never have to buy bids. You can build it big.
I hoped this helps someone make a more informed decision to join or not join. It really doesn’t matter to me at this point….smile.
@BD
Bottom line is you are investing money with no guarantee of return, and where it will take at least 90 days to extract your virtual points into cash. Can I introduce you to RicochetRiches? AdSurfDaily?
The ponzi train has to end somewhere with Zeek. If you had a crystal ball and told me it will end in 3 years then for the next 2 years and 9 months I will mortgage my house and compound my investment with 100 accounts using different tax id’s.
Of course, you can’t tell me how long it will last and so I won’t risk losing my house on a ponzi scheme.
And what happens if you sponsor someone who invests $10k and only recovers $1k of it back? What are you going to tell him about his $9k in losses? “Well you should have known it was a high risk ponzi, not my fault you took the risk. No risk no reward, buddy.”
@BD
Not required, yet you went ahead and recruited 500 members. Not required is irrelevant when practically speaking when practically speaking you’re mass recruiting.
Oh and as far as your strategy goes, it’s required. Kind of like that stupid ‘no recruitment required’ matrix advertising line that pushes spillover.
People are still getting recruited, even if you’re not doing it.
Of course not, but they guarantee you a ROI for 90 days on your invested money, once you jump through their give the bids away hoops (even if that ROI is 0%).
Of course it has. More people investing = larger ROI.
You mean legally viable, right?
Guaranteeing a 125% ROI gives the game up that the returns have nothing to do with the penny auctions. Legally it’s not going to be long before the regulators come knocking with that kind of nonsense if the business gets large enough.
So what do you do? You go all hush hush and just calculate a percentage each day to pay out as a return. Make it a variable return to mask the obviousness.
Product purchases don’t pay out ROIs, investments do. ZR guarantee a 90 days ROI on all VIP bid purchases (if they are given away). It’s an investment anyway you look at it.
And what the hell happens when all these people have large enough bid balances that they need to give away ridiculous amounts of bids a day?
How are you personally generating customers to dump bids onto? Are you going to opt-in for the 2xPRC if you’re relying on company-generated customers? What about in a year’s time? What about 5 years?
Are you creating fake accounts yourself?
All you’ve provided is a short-term (albeit drawn out) strategy and completely avoided any long-term susitainability issues.
@BD — the problem with your explanation is all of them basically says the same thing: it paid me (therefore it’s not a scam. ) it’s great that you have a strategy to “game” the system. However, it doesn’t prove that the system is not a scam.
Of course, you mixed it in with “it paid lawyers for compliance (therefore it’s not a scam)”. perhaps one should wonder… if it’s not a scam, why would it need lawyers to check for compliance in the first place? You see positive news, I see signs for caution.
I don’t think you’re correct there. I calculated a return of around 1% with an average daily profit share of 1.5%. Did you take a look at sales on Zeekler (which is right now, again, on a several hour shutdown)?
If you did, it’d be clear to you there is NO way it alone supports your point growth, or even half of it.
Anyone know why zeekanswers.com has been offline for the last 2-3 days?
I emailed the admin and he said compliance made him shut it down or be deactivated.
I thought it had more information than any other ZR site myself. That’s where I got all of my daily profit profit share data. He always seemed to have gotten the profit share number 12-20 hours before I saw it in my back office.
Your math is wrong on this one for two key reasons. First, you assume a constant rate but during the period in which you are cashing out, your actual observer rate is variable and declining due to point retirement.
Secondly, the ROI for the first 180-days is artificially suppressed due to the large point retirement cliff on day 90.
For example (not counting monthly subscription fees or bonus points):
1. If you start with $1000 and immediately do 0% reinvestment (100% cash out), so that in 90-days you have your cash back:
– At 1.5% per day, you will cash out $1336 on day 91.
– Profit is $336
– $336 earned on on $1000 over 90-days = daily compound rate of 0.32%
– Check my math: $1000 x 1.00322^90 = $1336
2. If you start with $1000, keep it at 100% reinvestment for 90-days, and then switch to 0% reinvestment (100% cash out) for the days 91-180, then:
– At 1.5% per day, you will cash out $1745 on day 181.
– Profit is $745
– $745 earned on $1000 over 180-days = daily compound rate of 0.31%
– Check my math: $1000 x 1.0031^180 = $1745
3. If you start with $1000, keep it at 100% reinvestment for 180-days, and then switch to 0% reinvestment (100% cash out) for the next 181-270, then:
– At 1.5% per day, you will cash out $3230 on day 271.
– Profit is $2230
– $2230 earned on $1000 over 270-days = daily compound rate of 0.44%
– Check my math: $1000 x 1.004352^270 = $3252
4. If you start with $1000, keep it at 100% reinvestment for 270-days, and then switch to 0% reinvestment (100% cash out) for the next 271-360, then:
– At 1.5% per day, you will cash out $6036 on day 361.
– Profit is $5036
– $5036 earned on $1000 over 360-days = daily compound rate of 0.50%
– Check my math: $1000 x 1.005006^360 = $6036
5. If you start with $1000, keep it at 100% reinvestment for 360-days, and then switch to 0% reinvestment (100% cash out) for the next 361-450, then:
– At 1.5% per day, you will cash out $11,286 on day 451.
– Profit is $10,286
– $10,286 earned on $1000 over 450-days = daily compound rate of 0.52%
– Check my math: $1000 x 1.0051956^450 = $6036
The above is simply the power of “compound interest” – you know, the “banking terms” that Zeek prohibits you from saying so as to pretend it’s not an investment.
Your ROI increases over time because of the way the 90-day point retirement works. The larger your balance, the larger you daily return relative to the previous day.
The ratio between points earned on say day #270 to #271 is much higher than the ratio of points earned on day #180 to #181.
@Jimmy — how much does the numbers run if you subtract the monthly fees, and assume $10/hour and 1 hour per day spent to post ads and recruit people?
Exactly, it’s INCRIMINATING evidence that it’s promising profit shares and so on and so forth. Also, it’s dangerous for whoever was quoted answering the questions, either for mis-representing the company or as basis for a fraud lawsuit later.
(Wonder if any one had it mirrored?)
0% reinvestment (100% cash out) for further600 days Jimmy what then,:
I hesitate to produce a 690-day scenario because it’s highly unlikely the ponzi will be around that long, and likely that the terms will change significantly by then.
What this will illustrate is that there is no “fixed ROI” rate but that the ROI rate increases over time, and obviously is not sustainable. The reason the rate increases over time is because of the 90-day point expiration create a variable rate.
6. If you start with $1000, keep it at 100% reinvestment for 600-days, and then switch to 0% reinvestment (100% cash out) for the next 90-days (601-690), then:
– At 1.5% per day, you will cash out $80,196 on day 691.
– Profit is $79,196
– $79,196 earned on $1000 over 690-days = DCR of 0.64%
– Check my math: $1000 x 1.00637455^690 = $80,196
I agry with many staff here. But…
I have to say ZR have just horrible support. We have soooo many unanswered tickets in back offices and have no idea when all our problems will be solved. Live chat and call center are sweet but just good for nothing.
They just can`t help in anything and I can teach them but they can`t help me. That is very sad 🙁
Do you know that at least 50% affilates are Russians and zeek do not and as I know not going to have even Russian support. I am not even talking about Zeekler and ZR in Russian. But I know 100% that Zeek in Russian will bring just huge traffic. But it is not allowed even to promote Zeekler and ZR in Russian.
Strange…
We could bring just huge amount of affilates with good customer support and keep company on the top for long time for sure!
I am with zeek since November. Working personally only with Russian speaking affilates. I live in Europe and Australia. Was in Amerika too.
Don`t know what to say… I love zeek.
Making already good money but don`t realy understand their business strategy with such customer support and only English marketing policy.
But I am positive and hope everything will be just Great. Wish you all the best Guys 😉
Can anyone address the tax situation. I am convinced and been sure all along this is a ponzi. My husband is a true believer and and received a 1099 for 2011 for a very large amount of (imaginary in my opinion) money. Now taxes must be paid with real money.
He did not withdraw any money last year, so how can you pay taxes on money you don’t have?
Am I the only one freaking out?
Wont’ this cause a run on withdrawals in Zeek with people trying to get enough $ to pay their taxes? Wouldn’t this result in collapse (I hope)
If this thing survives a year, tax burden then would be in the 100’s of thousands. (Panic) How about Zeek using us as a giant tax write off? Isn’t that tax fraud? They didn’t pay out most of the money declared on 1099 and you can’t just get it all at once.
I know there is the bid deduction, blah blah blah. How about that for an invitation for an audit? Even using that the taxes due will be considerable.
The tax situation is bad to be sure. Especially for those in early with the eye-popping 1099s in 2011.
Go ahead and try to write off the expenses, but you better have iron-clad records because you will probably be audited with the huge amount of writeoffs. Also, there is some question as to whether the bid giveaways really can count as expenses and there really hasn’t been a clear answer given anywhere I have seen.
If it were me, I would be putting my reinvest at 0% and get some money out of that thing now, because the only thing worse than owing a big tax bill is owing big taxes that you can’t pay because you have “points” you can’t cash out because the money is gone.
You can bet a large number of people will be doing the same thing to pay their own tax bills.
Also, the 2 PRC requirement is kicking in now, so you can expect a large number of non-recruiting affiliates to cash out and exit rather than attempt to generate paying customers for the long term.
Regarding the ponzi issue – yes, it’s definitely a ponzi. The penny auction is not generating near enough revenue to really be paying out anything much to the profit sharing, which means new members fees are paying old members profit sharing, the true definition of a ponzi.
The similarities to AdSurfDaily and RicochetRiches (both defunct) are building. The only question now is how long it lasts before the percentage return drops and the cash-out panic starts.
You will be able to deduct bid repurchase as deduction, just expect the IRS to send a survey or get an audit. Also keep in mind when you are audited, the IRS tends to audit multiple years. My last audit the IRS looked at 3 years, not just the one in question.
As for the penny auction revenue and the ponzi, the part that I am really interested in knowing is not “is this a ponzi” (I know that answer), but whether Zeek is even being honest with their declarations that 50% of profits are shared with affiliates.
How are those profits calculated? How come the profit share has been so consistent by day of week for the past 6 months despite all of the various problems with third party payment processor?
Remember when they stopped taking credit cards… then remember when Alert Pay couldn’t take VISA/MC… then AlertPay couldn’t take AMEX… then AlertPay and STP had problems posting bid purchases to your backofice… then they were moving offices and were 4 weeks behind processing checks, money orders and bankwires, then there has been multiple Zeekler.com downtime one after another for 3 weeks for “mainteance” and “upgrades’. Yet during all of this time the daily profit rate has been steady.
Even your local donut shop has higher variability in day to day profits.
So is Zeek really paying out 50% of profits? Is there some super-complex-formula they are using where they include a rainy day fund and a rate-governor so they can maintain the steady rate (that’s not outright fraud but deceptive). Maybe they’ll invent one after reading this comment.
From the Zeek Rewards Facebook page:
I don’t have the heart to tell him that the client is probably going to convert their winning into cash, rather than pay $83 (now $143) on a $25 gift card, so it’s money out of Zeekler, not into their pockets.
The less thought one gives Zeekler, the so-called end product, the more confident one is with the legitimacy and feasibility of ZeekRewards.
@Dazy
Zeekler either has ignorant bidders or poorly designed bots that keep betting the price up.
If you look at even the auctions that require paid bids (not the free bids) even these prices are nowhere close to what they should be when compared with other penny auctions.
Zeekler as a penny auction is a joke. In Troy Dooley’s interview, Dawn spent how much time talking about the auction? Listen to the opportunity calls and watch the videos – they spend more time talking about the auction than anything else, as if they auction was the key revenue component.
The auction is just a distraction. It only brings in a little revenue, perhaps just enough that ZR hopes to avoid legal scrutiny when compared to say the Ad Surf industry. At least they have an externally consumable product even if the revenue for it is minuscule.
Also keep in mind a lot of the retail revenue for Zeekler is artificially inflated anyways. As an affiliate, you can buy bids yourself to gain the VIP points. A lot of affiliates have done just that, especially during the BOGO promotions.
So not only will ZR not publish the revenue percentages (as Oz keeps talking about), but even when they do, you have to discount the number used for retail revenue because much of the revenue is artificial to begin with.
You all are using math from a basic ratio , Zeek has the ability to make large amounts of money : example the mustang they bided which turned to be a profit close to 1/2 a million. And your forgetting the Math In all this.
Penny Auctions are unreal . Example a 200.00 gift card going for 50.00 =3050 profit . And intrest on large amounts of money . They are turning and burning .. They could bid 2 cars daily and make a million just off that alone .
@JtotheT
You have not read all of the comments. My math is quite accurate on this.
You are wrong. First of all, what no one knows was that the reason the Mustang auction closed was because there was a server timeout and there was only one ABE left, so the single bidders could not get their bids in. But that’s a general risk with all penny auctions.
Secondly, YOUR MATH is wrong here. There were 407,707 VIP bids used on the Mustang. So many are saying “wow, look at that, $407k in revenue… if the Mustang costs $20k then that’s a profit of $391k”. (I won’t give you too hard a time for characterizing $391k as “almost half a million”).
However, this is where your math is wrong and all of those thinking the penny auction revenue is substantial are all wrong.
Let me count the ways that the value of a VIP bid is not $1 = 1 VIP bid.
1. There was, and still is, a BOGO promotion. You purchase 500 VIP bids for $500 and were given 1000 bids.
2. 20% commission is given to the affiliate, immediately withdrawable as cash.
3. During the time of the Mustang auction, an affiliate would earn 2x the cost the retail customer was paying in VIP bids purchased in VIP points (now it is only 1x). MANY affiliates were signing up their fake/friends/family retail customers and buying VIP bids. For example, you spend $5000 in buying VIP bids using 10 fake/friends/family accounts ($500 in purchases each). You now have 10,000 VIP bids across 10 accounts to use in the auction, but how much revenue did Zeek make? You as an affiliate were awarded 10,000 in VIP points. These points are currently paying an average of 1.5% per day. Some affiliates immediately set their accounts to withdraw 100% until they received their original $5000 back, and then went back in to 100% reinvestment.
4. Affiliates also have VIP bids granted for their monthly subscription. These add to the bid inflation because affiliates did not pay retail for these.
To summarize, if you look at only issues #1 and #2, the actual revenue Zeekler made on a VIP bid is .40 cents, not $1. That makes the 407,707 VIP bids spent on the Mustang $163,082, minus $20k cost, plus $4k in auction closing value, there was net revenue of $147k. Let’s ignore issue #4 for this analysis as it’s hard to quantify how many affiliates used their VIP bids in the auction.
Let’s now focus on #3 only. If you assume that the 407,700 VIP bids used on the auction were all retail purchases, Zeekler how has the burden of having to pay daily profit share on an ever growing point balance of 407,700 with only $147k revenue.
At one point does the money scam collapse in on itself?
Now, what was this you were saying about my math being wrong?
.
So tell me this. How long do you think zeekrewards will stay afloat ? Being a smart business like it has been for many years . Don’t you think that they knew that compounding points would lead to monster payouts ? I’m sure that there is a formula. He could very well have billions compounding. Only time will tell .
You might look at your post a year from now and feel like a idiot or you could be smiling saying ” I told you so! “. I can tell you this . Affiliates that started early are making over 1000 daily on zeekrewards .
Some FAQ’s that zeek has .. shows examples of a person that has 50,000 points . Why would a 14 yr business do something that doesn’t equate ?
Only time will tell . You could buy 10,000 bids and do it at 0% and ride the the wave for 90 days and request a check lol. Then continue and don’t add another penny .
Till either the money being invested drops low enough that people can’t generate a >100% return over 90 days, or the authorities move in.
US tax returns are due in April so that should be interesting once the IRS starts going over them.
Oz, maybe something to investigate further here if you can find any objective data.
What I find amusing is the “fraud” that Zeek keeps talking about, while there may have been some credit card related fraud, the “fraud” that has caused the recent 24×7 non-stop development of code to block IP’s and decline credit cards is probably blocking legitimate activity!
The way Zeek Rewards works is you can sign up as a FREE affiliate and get 100 bonus points. You can then use those bonus points for 60 days to get daily profit share (as long as you are placing daily ads). After 60 days, your original 100 bonus points retire, and the remaining balance is converted to VIP points. A free affiliate will have about 140 VIP points on day 61.
What is happening is that a ton of free affiliates are signing up from Asia. I have seen several genealogy reports showing 300 to 500 free Chinese affiliates under a single sponsor, all free affiliates.
This makes perfect sense if you think about it. The value of a few dollars per day in profit share is significant in many Asian countries. So we are seeing a huge influx of free affiliates doing exactly what Zeek Rewards promises… free bonus points, place your daily ad. When the 60 day period is up, they pay $10 for VIP bids, get a free customer to give those bids away, and then start cashing out or switching to 80/20.
Earning $2-3 a day may seem not worth the effort for those of us in high cost of living western countries, but for Asian countries, many manual labor jobs pay only $1-2 per day for 8-12 hours of work. Now comes along Zeek Rewards and all you have to do is a few minutes per day and can earn $2-3/day after your 60th day of free bonus points.
Now what’s the problem here and why the “fraud prevention”? In many poor countries, or poor areas of developed countries, residents don’t have their own internet connection. They often have to use the community internet, similar to a public library or post office but with rows of internet terminals for the community.
So if Zeek can block access and decline credit card purchases based on their own made up IP address fraud detection software, they can block the mass influx of legitimate free affiliates from Asia and other poor countries.
I guess the value of the free daily ad isn’t that much, otherwise you would think Zeek Rewards would LOVE have all these free affiliates. They do the same amount of “work” (placing daily ads) as someone with a 6 figure VIP point balance, but you only have to pay them peanuts per day.
Unless the value of the daily ads is next to nil and it’s just a ruse…. but that’s not the point of this comment.
This is a common comment made by many wanting to believe that Zeek Rewards can’t be a ponzi or a scam. The idea that this must be a reliable company that wouldn’t do anything illegal or scam the public intentionally because the parent company has been in business for 14 years (or is it 15 or 16, the story changes slightly depending on who you talk to but that’s a minor detail).
Has any one asked how many employees this company has had over the years? Dawn said in the interview in January they had 11 employees. That’s it, 11 employees.
And was after hiring additional people based on the growth in Q4 (not sure exactly how many were hired, and how many may be contractors).
Plus Zeekler and Zeek Rewards itself has only existed for a year of real business.
Wouldn’t the characterization that the parent company is rock solid having been in business 14+ years be a lot less meaningful if you knew that they had less than 10 employees? (I don’t know the full employee history, am just speculating here based on comments made by Zeek Rewards executives that they’ve never seen this type of growth before, and that they had 11 employees in January, so this is probably the height of their headcount).
So if I have business license and have been mowing lawns for 14 years, now I’ll start a ponzi and tell everyone “this company has been around for 14 years”.
I wouldn’t be surprised if there was members signing up in droves from Asia… India will get on it too soon enough I imagine.
Someone from Russia was mentioning she was heavily marketing ZR in Russia the other day (although ZR don’t allow advertising in Russian as they can’t control the investment terminology used).
If you listen closely to that interview towards the end, Dawn is talking about not knowing how often the compensation plan would need to change because “we have never done a business like this one before”.
That implies that one should expect constant changes in the payout plan, and that they probably had no idea it would get this big in the first place, so there is a good possibility that the point balances will become unsustainable and there is really no other coping plan than just chopping down the payout percentage until it implodes on itself.
Regarding the penny auction, they do not have a “Buy it Now” feature like Quibids where you can still insure you are not being ripped off on your bids, so the Mustang auction ending due to server issues is a giant ripoff to all the other bidders not using ABE.
When you keep ripping off “customers” like this, they don’t come back and they certainly aren’t paying real money for bids just to bid in a rigged auction. Even the dumb ones that buy once aren’t buying again after experiencing the thrill of winning nothing and watching their money go down the drain.
The industry leaders in penny auctions generally don’t allow auction prices to get much past 20-30% of retail either. If they start running high, they run more auctions. Auctions finishing over retail is proof positive that there are tons and tons of watered down bids out there, and the model is completely unsustainable, and these people are idiots concerning how to run these auctions.
Also, a real business is going to take 4+ weeks to pay out???? WTF. Still waiting for a check I requested on March 1st, which they waited until March 26th to cut and now I am waiting more for it to get here in the mail.
Anybody knows a good MLM pays out fast, or it dies. So, basically this is not a good penny auction, and it is not a good MLM….
@cashing out
I did receive my check for the run on 3/23 that was cut on 3/26.
Otherwise, totally agree with your comments and what some of us have been echo’ing here. Note that when I joined, none of the compliance issues were raised yet, and you could use your credit card to buy bids, and sharing spreadsheets were okay, etc.
Bernie Madoff started his Ponzi in the early 1990’s, and was only revealed in 2009. That’s almost 20 years. So age is NOT proof that it’s not a scam.
Furthermore, Zeekler.com was registered 2008. Burke may have been in business for 14 years, but Zeekler / ZeekRewards was NOT 14 years old.
Was Burks also owner of FreeStoreClub? Just noticed that Zeekler.com has DNS servers hosted by FreeStoreClub, with similar pyramid structure.
And where is Zeekler actually based out of? Zeekler.com goes to paul@lhastore(dot)com which is “LightHouseAmerica” in North Carolina, but isn’t Zeek based in Las Vegas? Or is it a virtual business again?
BBB profile is mildly interesting: Rex Group has tentacles in many areas
http://www.bbb.org/northwestern-north-carolina/business-reviews/multi-level-selling-companies/rex-venture-group-in-lexington-nc-12000422/
@Kasey
Yeah Free Store Club was one of their previous ventures.
They rebadged it into Zeek Rewards and it’s the ‘retail store’ offering for members now (the one nobody uses or talks about).
This article is pure speculation and annoying at best. The information in this review is misinterpreted and totally inaccurate. Although the writer has his own opinion, it is still an opinion and should be taken very lightly. The writer is an amateur that makes claims based on his own theories.
To say that 100 percent of the customers were Zeek affiliates is a lie in itself, because I have personally signed up seven customers that have no affiliation with the company or were not remotely interested in the business. They just buy bids to use on the auctions. They do really well and have won some nice things.
I will generate a theory of my own that could be true. Behind MLM has a business model like the better business bureau. Here we go!!! Why would someone pay for a domain and a website, spend countless hours designing a website and posting reviews without some sort of financial gain?
Well they are getting paid. They are getting paid by companies to destroy companies such as Zeek and kill the competition! They would surely take a bribe from Zeek if Zeek were indeed as dirty as the claims, but Zeek denied the extortion attempt.
Good job Zeek! Hope idiots that run these sites are banned from the internet one day! If you can’t beat them fairly, then tarnish their name.
@Duanne
When the company itself puts out a press release stating $100,000s of fraud is occuring, what exactly is speculation?
For VIP bids they are. Can retail customers even purchase VIP bids?
Oh dear… another one.
Yes, retail customers can purchase VIP bids for use in the auction. This earns the affiliate 20% commission and matching VIP points.
The confusion here was that Zeek used to refer to both “bids that earn profit share purchased by affiliates” as VIP bids and “retail VIP bids” VIP bids.
Now Zeek refers to them as “sample bids” (what affiliates purchase and give away). VIP bids now refers only to the retail VIP bids. But it’s still confusing because the points you earn are “VIP points”.
Ah well, replace ‘VIP bids’ with ‘sample bids’ and the point stands.
@ Jimmy
Actually, that number has increased notably. Furthermore, that number likely references full-time office staff. In addition to this about 2 months ago they requested and accepted applications/resumes for independently contracted home staff (from among the affiliates at that time).
They wanted specific background/credentials/experience. Anyone who was an affiliate at that time would have gotten that email and many people responded and were accepted and trained – my sponsor being one of them.
Many of the affiliates will be meeting much (if not all at some point) of the staff during weekly luncheons beginning in the month of April in the HQ area.
LOL @ the part time admin volunteers from affiliates. Yeah, I received that email too. I belong to two private forums with several hundred active affiliates, plus read the public forums regulalry on Zeek topics. No one I know was accepted.
I also read the plea from Dawn for an admin assistant who can work 90 hours a week and is not a Zeek affiliate because Dawn said no one could work both as her admin and still have time for Zeek. There was some satire in that post but the “no Zeek affiliates allowed” part was a real requirement.
You are only speculating on the employee growth (“it has to have grown, look how big this thing is becoming”). Does it seem odd to you that Dawn was interviewed in March and asked how many employees Zeek had, and replied with 11 as of January? Why not just provide the number as of the time of the interview?
But regardless, my point in mentioning the employee count was to counter the common statement “why would a 14 year old company do X”. The inherent credibility of “a 14 year old company” is relative. The guy that mows my lawn runs “a 24 year old company”… it’s just him and some illegals he pays.
Perhaps we should be asking if there is so much revenue being generated, why is Zeek scrimping along begging for volunteers and hiring only those willing to work 12 hours a day for 8 hours pay? If they are giving 50% of actual revenues to the profit share, shouldn’t the net profit to corporate be money like mana from heaven? If the 50% profit share can sustain tens of thousands or hundreds of thousands of active affiliates, surely the same 50% can also support real staff, real developers, real IT professionals, more professional everything?
I wouldn’t care if they called the buying VIP section a The Engine Or even the Trash can because it still converts to VIP points for 90 days and compounds daily . So who cares . Lol
I am so happy I found this site. I was just presented with the opportunity to “Purchase” not “Invest” in Zeek Rewards and I am so happy I didn’t.
I do not believe in anything that does not align with common integrity. I also do not believe in any “Get Rich Quick” schemes. I believe in working hard for my money and investing in a product that I believe in.
Thank you again for this amazing blog. I loved the opportunity to hear from “Both sides of the isle”. Take care.
Going back to the 1099’s. I talked to a family member who has a very successful business and does his own taxes. I told him about the way ZW is reporting the VIP Points as income and he laughed. He said “that was ridiculous, he said this was just like a slot machine, you keep playing the credits that are still in the machine and only when you cash out should you be taxed on that”.
Plus who knows what the future of the cash out will be if they drop the percentage rate! I am getting my two friends out before they cross the $600 threshold so they don’t get audited by the IRS when the hammer falls on ZW.
If Dawn can be an affiliate AND still have Zeek as full time job, why can’t her assistant be? Hmmm?
VIP points are not income, because they are not money. ZeekRewards is NOT a bank or investment (they said so themselves) thus they cannot hold money for you. They hold bids, or VIP points.
If ZR reported VIP points as “income” and giving 1099’s on VIP points, they are cooking their books for the IRS claiming massive expenses when in reality the payout is much much smaller.
Sorry, I misread the article. After reading the following again, it looks like we are only taxed on earnings:
That would be fullish to even ask someone if a person should get taxed on no earnings . LoL
@ jimmy , new members that go in at 100 points gains points for 60 days then the 100 will retire then the remanding will be back in retirement for 90 days , so basically after the 5 month period they can start taking out .
You can say after 60 days they should have around 180 VIP points from bonus points – 100 = 80 then the 80 is collecting daily but on freeze for 90 days in retirement then that 80 will retire in 90 days .. So yes they can collect maybe 8-15 dollars a week
Sorry, I don’t think you have misread anything. They consider ALL “income” from the profit sharing pool and other sourcs as income, and THEN you can deduct expenses (like buying bids). The result CAN be the same as “only taxed on earnings”, but we don’t know this yet.
And your family member is absolutely right. It’s somewhat meaningless to consider something as income when it’s mostly backed up by virtual currency instead of real money, and hasn’t been withdrawn as real money. It’s more similar to the balance you can have in a slot machine, designed to play for instead of withdrawing each time you win something.
Accountants will usually use a “cash principle”, where they don’t register amounts before the transaction actually has happened, or they use special accounts to store amounts temporarily.
ZR seems to be a mess, where they use a mixture of real money and virtual currencies to calculate revenue and profit, treating virtual money as real money.
I don’t know what the story of the day will be to explain Zeek Rewards downtime. First it’s new server upgrades, then it’s fraud prevention software, then it’s more upgrades, then it’s bandwidth increase, then it’s DDoS attack, now it’s just routine maintenance.
Who does “maintenance” in the middle of the business day? And why was it that during some of the upgrade periods that Zeek Rewards name servers didn’t respond with any information for the entire domain (DNS information has nothing to do with the server upgrade itself or a DoS attack – the IP address didn’t even resolve).
And the entire DDoS attack is a bit strange in general because if you think about it, wouldn’t they attack Zeekler as the first target and not Zeek Rewards? You don’t attack a Casino or Poker site by taking down their registration and profile pages, instead you attack the transaction servers.
Meanwhile, despite all the various problems to both Zeekler and Zeek Rewards over the last month, the daily profit share is slow and steady and doesn’t skip a beat. Hmm… interesting that they have so much revenue with the backoffice is down and SolidTrustPay is down, and AlertPay doesn’t take credit cards.
It’s probally some people retaliating because of getting band and using a botnet to attack .
Certainly possible, but it’s also just as likely that one of the extortionist groups wants to attack Zeek for money like they do every other lotto, online casino, sportsbook, poker room, and penny auction.
Maybe Zeek wasn’t on the radar until the fallout from the banning with zero notification and with nebulous reasoning.
If the DDoS attacks are ex-affiliates who have been banned, Zeek could have prevented if they provided a more straightforward answer with standard notification of termination like every other MLM, and/or if Zeek provided fair value for accumulated points, there wouldn’t be so much outrage.
Troy Dooly says this wasn’t too difficult to predict but how come we analyzed the situation and predicted it here 11 days before it happened?
Any time you have any business that takes drastic, unfair action and does it with zero notification, of course you invite protest – it doesn’t matter if it’s a brick & mortar or an online business.
I am a silver member and I came to the following conclusion: This thing is real as it looks if you are on the top of the pyramid and know how to get out fast.
If you are the kinda guy who likes and are good at recruiting ppl, then you can get some quick cash even faster. However, once the recruiting slows down or too many ppl cashing out, then the pyramid will start to collapse.
Legal or not, will depends on how good the defense lawyers are, but that’s not the important part of it. It can be legal for years and be legit and ppl can makes some real good profit until it collapsed one day.
@Joee- thanks for your honesty. Though, I would like to add one thing to your conclusion:
One also need the ability to rationalize the following:
I didn’t know or care it’s really shady and I’m probably simply getting money from all the people I recruited, as I’m not involved in that portion of the business.
If this program is shut down by the goverment for being a ponzi, it will grab all the money from ZW and then come after everyone of us for the profit we made, just like they did with Maddoff.
If ZW collapses a class action law suit will do the same. Hopefully they will just go after the mega pointers!
@James — Usually only the top tier, i.e. those with most “affiliates” are punished along with the leaders.
ZR is unique that you *could* rise to the top without recruiting many people yourself, but instead, feed $$$$ into the ZR black box (and let someone else recruit people).
I have a relative who works in the SEC (Securities and Exchange Commission), and he has told me that when the investigators conclude that fraud has been committed, the first action taken is to freeze the corporation’s assets. If the officers were found to be complicit, the available assets are distributed to the victims on a percentage basis.
Then, the SEC might go after the salespersons or agents who were involved and their assets become the property of the Court, and are also distributed to the victims.
The closer that individuals are to management in the case of fraud, the greater the danger of losing their assets AND getting a conviction.
If an individual simply invests money into a scheme, it is highly unlikely that he will fall under the umbrella of an investigation.
Jimmy, I don’t know where you live but if it was anywhere near me, I’d ask you out to dinner. Sorry to go off on a tangent.
Spent hours on this reading most of the posts over the few months and really trying to pay attention to both sides, although the mind is self serving and I didnt like the smell of this going in, I have to admit that I am an Accountant and one of the biggest jokes in my industry talked about in many circles even at seminars, is the true lack of profit in any MLM business.
The fact that one makes true profit reportable on a federal income tax return is so rare, that over my 32 years in practice, I have never seen one profit.
I have been on blog sites whereas I have challenged others to provide me with some sort of copy of an income tax return that would even show a profit from anything MLM, and also added that they could in fact black out names and social security numbers, never happened! With just that in mind, why would one even bother, like myself anyway.
When Zeekler involved attorneys and changes had to be made with affiliates as far as changing the wording from “investment” to “purchase”, the attorneys in my opinion did what I have seen them do many times, they look out for the company, but fail to look out for the affiliates.
When an investment changes from an investment to a purchase, and an individual does certain acts on a daily basis to manage the “purchase” any income at that point would not get special tax favored treatment, i.e. capital gains rates which by the way are based on investments held more than a year and when your in the 10 or 15 % bracket they are none existant, the attorneys caused the income to be considered self employment income, subject to social security tax, and regular income tax.
Real Stupid in my opinion. Good luck if the IRS challenges one who would even submit a tax return under the reporting impression that its an investment, when obvious facts say its not.
I really feel sorry for many that have come to this site amongst many others, looking for the pot of gold at the end of the Rainbow. Its seems like, that when the mind is so self serving, that one could fail to look at some of the most obvious facts of right and wrong.
The most obvious fact is the companys true business model and lack thereof. Anything that seems to be successful in business starts with a business model, this type of model (pyramid) has never found itself successful over the long term. And finally, being a CPA I feel I have seen it all.
I’ve written off government certified Ponzi schemes for too many taxpayers over the years, this looks Ponzi simply because of the companies lake of TRANSPARENCY.
Ah, that’s one aspect I haven’t realized: tax aspects of investment instead of work! Thanks, Dan.
The problem is, of course, if they declare themselves as investment, they are required to disclose all sorts of **** to the SEC and register and all that. If they claim to be WORK, then they are protected ‘somewhat’ by business secrets and such processes, as they are a private LLC, so they don’t have to disclose their books except to the minimal extent as required by that income disclosure statement (which appears to be purged of any really useful information)
I will usually follow “The true nature of something”, and follow rules in the order “From top to bottom”, looking for rules with a higher priority before I’ll accept rules with a lower priority.
The change from “investment” to “purchase” is part of the agreement between Zeek Rewards and the affiliates, but usually we can’t agree in something that is regulated by other laws. The true nature of something will usually have a higher priority than an agreement.
The true nature of the investment part of Zeek Rewards is that it is closer to be investment than purchase.
* Purchases will usually not generate ROI, but the purchases here generates a 90 day ROI.
* The daily profit share is calculated from the VIP Point balance (invested money), not from the work done.
* The work required is only 2 minutes per day, too insignificant to be counted as “work”. It’s more like a “qualifying rule” than real work.
Other parts of Zeek Rewards are more similar to work, but I would have treated the investment part as “investment” or “investment in a Ponzi scheme”. I would have used exactly the same arguments I have used here, plus a few more.
When it comes to “cash vs. accrual” and the related doctrines (“cash equivalence”, “constructive receipt”, etc.), I would have ignored these rules in the first place, and instead looked for rules with a higher priority (“taxable as income or as investment?” or “taxable vs. NOT taxable”).
I don’t consider ROI from a Ponzi scheme to be taxable before the amount is higher than the initial investment (since they only pay your own money back to you, and the investment isn’t backed up by any valuables).
Bids are more similar to service than to products, but they are most similar to virtual currency – if we analyse them technically. They have no other value than as a virtual currency used for the right to place bids in specific auctions on a specific website.
As soon as you have bought them as a retail customer, they have no real value other than to be used in auctions.
I will consider it to be taxable income when people sell bids to retail customers, but they will probably make a mess out of it if they starts to calculate price IN / price OUT like we do for products. I would only have stated the NET commission as taxable income.
Most other people here have agreed in the “cash vs. accrual”. But the problem in Howard Kaplan’s methods is that they mix both the methods.
It’s an investment ponzi disguised with some useless daily work of posting ads (or you can pay an external service to do it for $10/month… some of those services being run by the top affiliates to milk more money from the masses).
Even if you give Zeek every benefit of the doubt, what about the first 8 months in 2011 when they promised 125% ROI without the expiring bids?
I don’t see them produce two 1099’s, one for the obvious investment for the first 8-months, and one for the way the program is today for the remaining 4 months of 2011.
Yeah, but that would be Zeek Rewards’ problem and not mine (as a taxpayer). 🙂
My suggstions are theoretically, since I haven’t invested anything in Zeek Rewards. From my viewpoint, the whole situation is a mess, and I would probably have withdrawn my investment completely if I had invested in ZR.
If I had been a U.S. citizen and had invested in ZR in 2011, I would have tried to make my tax return become as correct as possible, based on “the true nature of something” principle. The true nature of these investments are “investments in a Ponzi scheme”. They are neither “work / income” nor “real investments and ROI”.
I have calculated the situation from the viewpoint of “as an ordinary taxpayer”, and also from “as a sales-man”. The true nature of something is a highly sellable argument, and it becomes more sellable the higher up in a system your case is coming.
You may not win the first battle, but you will probably win the war.
IRS defines it like this, and the last line makes sense to me and even if one were to spend 2 minutes a day, that could still be considered “an ongoing effort”.
Of course the Zeek Rewards tries to make it look like a business far more than that of an investment, but then even the “true nature of something theory” has to include factors from all points when that sort of determination is made.
When I put money into a 401k, or even a CD there is not the “ongoing effort” after I supply the money, specially on a daily basis for it to grow, thats a real difference in making this type of determination. But even as rental property ownership (passive income) is considered an investment for tax purposes, one that is in the business of rental property by way of certain rules that govern risk and participation, the investment turns to a trade or business, and is subject now to self employment taxes.
But the defination looks like this:
A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. The regularity of activities and transactions and the production of income are important elements.
You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need, however, to make ongoing efforts to further the interests of your business.
Even the words “recruitment” creates an action, and actions alone cause lines to be divided between investment, and trade or business.
Can you name any sort of investment, i.e.stocks, rental properties, royalties, 401k or retirement accounts, CD’s etc etc that you could even come close to mentioning “recruitment” as though it were not an ongoing effort?
I cant think of a single investment activity that relies on recruitment to further your investment and is NOT considered self employment income.
@Dan Matthews: But you do not have to recruit to take advantage of the mostly-passive investment. Recruiting allows you to earn commissions on other’s investments, so that could clearly be normal affiliate business income.
The murky part is the passive investment. What if you don’t recruit anyone and buy your $10k in bids? The daily ads is “some action” but you have to look at the value of the work and the intent behind it.
What if instead of posting a useless daily ad I was asked to sneeze three times for my daily profit share? That was an action, wasn’t it? So pay me my thousands a day.
Also, consider that many have outsourced to third party providers to sign up customers on their behalf, and post ads on their behalf. If I’m getting paid hundreds or thousands a day, who cares about a few bucks to outsource this “active daily action”.
I found this Q&A on JustAnswer.com forum. It is pretty long but I think its a good article to share here. Cut and pasted in full without edit:
(Ozedit: I tidied it up and made it a bit more readable)
@Dan Matthews
I specified which part I considered to be “investment in a Ponzi scheme”. The other parts were only mentioned as “Other parts of Zeek Rewards are more similar to work”.
The passive investment part can be considered to be the main part of Zeek Rewards, the main motive for most people to participate. The marketing are mostly focusing on this part
The network part CAN be a main motive for some people, but then they will be interested in keeping ZR alive for as long as possible. I have defined the viewpoint (in another post) to be “from the viewpoint of an ordinary taxpayer, with main income from a normal JOB, used Zeek Rewards as a passive investment in 2011, and have withdrawn all the money recently”. 🙂
From my side, this is only theoretical. I haven’t invested anything in Zeek Rewards, so I don’t have any real motives in any directions here either. I’m trying to predict what possibly can happen when lots of different people are doing their tax returns, and I waited to after they had filed them.
My prediction is that at least SOME people will not follow the tax methods “served to them” from Zeek Rewards and Howard Kaplan.
ONE ADDITIONAL POINT = TIME
In Norway, those with easy tax returns (sent before 30th April) will receive the final taxes in June (appr. 70-80% of the taxpayers), the rest will receive it in late September.
My method was designed to be in the last group, having a tax return that seriously would need a further check. And lots of things will probably happen in the 3-4 months, making my statement about “investment in a Ponzi scheme” become far more acceptable for the IRS. 🙂
I’ve been reading the comments and I’m starting to agree. When I first joined Zeek Rewards, I was afraid that they might be a ponzi scheme…paying out so much money you know. But I emailed their contact number and asked that question.
I received a reply from affiliate support…”It is not a ponzi scheme because we pay our affiliates to advertise”. So I dived in.
At first everything seem to be OK. Now they can’t bill our cc for our subscriptions ( and I don’t understand why), the RPP run is VERY SLOW. Most people can’t take the compliance course without getting errors and a LOT of the people that did take it…their back offices are telling them that they haven’t completed it.
It says in the back office that it’s updated nightly. Not true, because I have many in my down-line and theirs are not updated.
I don’t understand for the life of me that if something is broken, why don’t they fix it already! Everyday there are excuses. And why in the hell can’t they bill the credit cards for the monthly subscriptions (this is holding up so many folks commission payments). WE want our money!!
Starting to make a lot of comments here ring true.
Am I looking at the demise of Zeek Rewards?
Just wondering if anyone here could tell me how long zeekrewards has been in existence in its current form?
Let’s see if this site actually posts my comment this time as it is the third time when someone defends Zeek Rewards you “trash” it!
Zeek Rewards is not an “investment” people must work to see rewards. First you need to gather customers and a lot of them if your making profits daily. Posting ads daily is more valuable then anything unfortunately Jimmy this is why your not making money online because you have no clue why Zeek Rewards requires this.
“The murky part is the passive investment. What if you don’t recruit anyone and buy your $10k in bids? The daily ads is “some action” but you have to look at the value of the work and the intent behind it.
What if instead of posting a useless daily ad I was asked to sneeze three times for my daily profit share? That was an action, wasn’t it? So pay me my thousands a day.”
Posting ads drives massive amounts of traffic to their sites. It helps to brand the Zeek Rewards name and most importantly it build “backlinks” to their site!
When a company is #1 in the MLM world, 125% growth rate, with the top attorneys in the world backing them, with a 25 to 1 customer affiliate ratio, point retirement balance and sustainable system its pretty EASY to determine that Zeek Rewards is the most legit and best income opportunity on the planet.
Jimmy, KChange & the rest go back to Visalus, Amway or whatever nutritional program your failing at. Sorry for harshe words but its obvious what other marketers from different businesses are trying to do.
@Erik
In it’s current form, since April 2012. That’s when they introduced the PRC requirement formally. Although on paper it hasn’t kicked in yet.
@Chris
Here’s where you slipped up.
The daily ad requirement is for Zeekler, not Zeek Rewards. By your logic Zeekler should be trashing Zeek Rewards in traffic but instead it’s the other way around.
Ergo the daily ads are worthless and just constitute a pointless task. The application of common sense of course would already have indicated that, I mean really – who is going to free classified websites to see ads on penny auctions?
Furthermore, if you look at the recent banning of members of six countries, they were not compensated in any way for the daily ads they had published for Zeekler, in some cases daily for over a year.
This is further evidence that the daily ad requirement is worthless. And at the end of the day all you’re left with is a passive investment scheme paying out 90 day ROIs.
So if I purchased $10k in VIP bids and placed a daily ad, and ZR pays me an average of 1.5% compounding per day (with 90 day points expiration), do you think that “work” is justified?
What if I pay $10/month for one of third party sites (run by the top affiliates) to post my ad for me. Then I’m making 1.5% compounded per day and I’m not doing any “work” … I just pay $10 for someone else to do the work for me.
And much value do you think Zeekler or Zeek Rewards is gaining from posting daily ads? Please, be realistic. 100,000 people all descending on the same spammy free classified sites. That’s driving millions of dollars of revenue per day?
You probably should read the various threads and hundreds of comments on BehindMLM because your arguments have been debunked a dozen times already.
I love the Alexa BS that keeps coming. The reason Zeek Rewards ranks high in Alexa is because they require everyone to register their useless daily ad post each day.
How many times do you login to your other MLM back office? If I was giving away $1 per day and required everyone to login once per day to redeem that $1, I’d be #1 on Alexa too. Of course, Zeek is paying out millions per day which get “reinvested”. It doesn’t take more than common sense to figure out the money has to come from somewhere… and it ain’t retail penny auction customers, that’s for sure!
What nobody involved in Zeek Rewards seems to be able to explain is why a penny auction site would pay thousands of people a total of millions of dollars to advertise their site by spamming free classified ad websites on a daily basis instead of hiring some IT staff at around $40,000 a year to develop ad banners and pay for internet, TV, or radio ads which would be far cheaper.
But I guess that zeekler.com is making so many millions of dollars in profit every day and Paul Burks is such a kind-hearted person that he wants to spread the wealth around to as many people as possible. Yeah, that’s it.
Based on numbers given in the 2011 income disclosure statement, and working back from number of affiliates in each rank and their average income, I calculated Zeekreward’s payout to US affiliates in 2011 to be 58.5 million USD.
For some level of perspective… superbowl 30-second TV ads cost about 3 million.
A typical TV ad campaign for a political candidate in election season is about 1.5 million.
http://www.nj.com/news/index.ssf/2012/01/group_of_christie_supporters_p.html
So that right there makes me extremely suspicious of ZR, especially since I really doubt zeekler.com makes that much profit to pay out to all these people.
Who visits free classified ad websites anyway? I wasn’t even aware they existed before hearing of ZR except for craigslist, but I’ve heard of people getting banned for spamming zeekler there. Personally, though, I’ve got better things to do with my time than read a bunch of spam on a website.
Like I said, I think everyone investing money in ZR are blinded by dollar signs, and as long as they’re getting some money back and see their points keep increasing, they don’t care where the money is coming from. I think that’s what drives every Ponzi scheme.
Said the internet marketing sales king!
Give it a rest, you are doing nothing that another person that gives zeek $10k could do.
You pay a third party to place ads and another third party for customers.
You invite all your friend and family into a ponzi….big deal.
Just want to remind you all. Whatever you said here does not count because you are not the regulators. It only matters when the “fat lady” sings.
You guys can start a bet on when and if the “fat lady” will sing. At the mean time, Zeek Rewards memebers continue to make money and the new members continue to join. Life goes on.
If Paul Burks can open his book to show us WHERE THE HACK IS THE MONEY COME FROM? HOW MUCH CASH IS PAID OUT? The rest is just a simple math. Who knows, may be most of people does not request checks and that’s why the Penny auction business can afford the payout. Just trying to give Zeek Rewards program a benefit of the doubt.
Let’s see what the “fat lady” has to say. If Zeekler can pull if off, a lot of people will be able to send their kids to college. A lot of people will be able to take care of their elders and a lot of people will be able to quit the jobs they hate.
Uncle SAM will be able to get more tax dollars And the world will be a better place to live :).
Yes, that’s what they’re selling. “Who cares where the money is coming from? Don’t you get a check once in a while and keep seeing your points increase?”
Trouble is when people put in money right before the whole thing collapses and lose everything. What about the people who never take money out and just keep letting their point balances build up until it collapses? I don’t have to be a regulator to see that that’s wrong.
I really just can’t understand people who defend ponzi schemes knowing that they’re ponzi schemes.
Money often brings out the true nature of people, or worse still reveals what they never even knew was there all along.
There are plenty of people in this world who if you tell them they can make $x a week don’t particularly care where the money comes from. It’s sad but a reflection of the world we live in nonetheless.
No surprise, until the FTC knocks on their door. Remember, in the Burnlounge case, FTC burned the three biggest promoters (most downlines) along with all the owners/execs.
I’ll guess you meant the opposite, “a lot of people will NOT be able to …”? Because the majority of people will lose money in a Ponzi scheme, so for everyone that will earn money four people or more will lose. So your statement was rather meaningless in it’s current form.
Ponzi schemes and pyramid schemes won’t generate much “new money”. They are simply distributing the participants own money among themselves, usually upwards in the system to the ones who joined early.
The statement is also meaningless from your own personal viewpoint, since you then will have an inherited accept of losing your own money in systems like this.
It’s usually wiser to be “neutral” than to eagerly defend something, making it possible to claim being a victim if the system are cheating you, and avoid being sued by someone in your own downline if they feel you have actively participated in cheating them.
We can agree on that, can’t we?
Which reminds me… Stephen Colbert once defined “truthiness” as “what the holder thinks the truth should be” (instead of what it really is). So there are, generally speaking, two types of defenders:
a) Those that don’t know their truthiness is NOT truth
and…
b) Those who *do* know their truthiness is not truth, but don’t care any way.
Sounds like “I agree” is in the latter camp. He (?) is willing to squeeze as much “profit” out of ZR as he can, never mind where those money are coming from (i.e. other affiliates)
I think you people( oz, kchang, jimmy etc) should rest your case as You are just repeating what is written over and over again and every-time some new people will come to defend ZR again and again.
Nobody goes pouring money into an online business like ZR without having a first hand knowledge of the actual working process of the company.
And also almost everybody knows that absolutely” NOTHING LASTS FOREVER” in this world AND “MAKES HAY WHILE THE SUN SHINES”..
So I think you are just plain jealous that people are making money while you are not or you are making big money anonymously at Zeek rewards yourself! Oz! LOL!
You all sound like a broken record and not interesting anymore!
Have a great Day!
@Karina
Yet with Zeek Rewards refusing to divulge the makeup of the daily profit share, that’s exactly what’s happening.
Nobody (except management who are affiliates themselves and their close mates who joined at the start) have first hand knowledge of the working process of Zeek Rewards.
This discussion isn’t here to entertain you, it’s to analyze the Zeek Rewards business model and where the money comes from. Something most ZR affiliates ignorantly have no idea about. Y’know… so long as those checks keep rolling in.
You’re just another ‘I get paid so who cares?’ affiliate sucked into impossible mathematics. Next.
I think it’s called “magical thinking”, not impossible math. 🙂
So i am interested in all of your opinions as to how long zeek will remain in its current form…ie a profitable 1.5% average per day.One year? Two ???// just curious.
Someone did point out that due to the “point expiration”, the REAL daily profit share is actually closer to 0.35%. (I’ve previously calculated the “break-even” to be about 1.1%, and I use the average of 1.45%) Compounded daily, that turns out to be 11% a month, or 358% a year. (Yes, I did count expiration already) Less outrageous than 1.5% daily, but still impossibly high rate of return.
The main question is whether ZR will implode first, or will regulators (SEC, FTC, state attorneys, etc.) get to them first.
There is no ‘case’. This is not a court trial. This is analysis and discussion. As new data emerge we discuss its significance to the overall picture.
Anecdotal fallacy: believing direct experience somehow is more valuable than logical analysis of evidence available.
My guess on what will happen is when the growth stalls, ZR will start lowering the daily profit share. They will probably do it carefully and watch how the masses react. If they see a large increase in withdrawals, they are going to have to come up with new promos.
ZR also has the option of employing other tricks that the HYIPs and AdSurfs have done for years, such as “resetting” point values based on some formula or changing the point expiration.
For example, what happens if they drag the point expiration out over 180 days instead of 90, but lower the daily profit rate? That allows those with high point balances to continue to cash out while it locks in the masses for longer.
Keep in mind there is an inherent conflict of interest if both Dawn and DD have large downlines, which they have implied on several calls. Troy Dooly never responded to that question. Wouldn’t it be fair reporting for Troy to reveal that?
Executives of a company with large downlines who therefore may act in their own selfish best interests instead of the mass of affiliates (they will claim those interests are one in the same, but they clearly are not, as those who with large point balances are more concerned with longevity vs. growth, meanwhile, affiliates are selling the growth story to prospects).
So I guess nobody ever lost money in any ponzi scheme throughout history? You’re pretty naive if you don’t think that people willingly invest money in scams and ponzi schemes all the time because they think they’re going to make a huge profit.
Plus of course Paul Burks has stated that the inner workings of ZR are secret, so none of the members knows where the money they’re getting is coming from.
I only reviewed the company the other day and I’m quite impressed. I don’t know why so many people think it’s a scam. It makes perfect sense to me.
Late last year I participated in a program called “The Big Deal”. Online auction similar to Zeekler. It had no connection to any MLM just an auction site similar to many other sites now operating. (This is a legal business endeavor).
In terms of the daily payout, that is incredible concept. Here’s how I see it. You only earn on a daily basis if you are “qualified”. Meaning you have sold, belong to company co-op & run a daily ad and proved you have done so. If you fail to run that ad and post YOU DO NOT GET PAID!!!! WOW!!!
So, there is no daily payout for YOU, if you fail to take ACTION!!!! Thus it is NOT a pyramid scheme because you MUST fulfill the requirements to be paid! If you don’t understand that basic premise I say quit!
If you were at the TOP of this so called “pyramid scheme” and failed to run that ad no money for you even if you had 1,000,000 pts in your account! That’s awesome! In a scheme you would have been paid!
What makes this so unique IMO is these auction sites are “ADDITIVE”. People get HOOK. Zeek gives away free bids to entice them to play, to get hooked. Those that like the action will continue to spend THEIR money!!!! AWESOME concept!!!!
Giving away bids should not be an issue at all. If you have extra bids give more away! GIVE THEM ALL AWAY on a daily basis. I see a problem with not having enough bids to give away. I saw a statement you will receive your bids in lumps of 10 or all at a time.
Zeek has thousands of reps posting free bids daily every where, that tells a skeptical person (last week) that is now seeing the same ads daily, there’s something to this. He/she is more apt to take action now, you get FREE bids. What has it cost the company? NOTHING!
Reps put of your money, your time and effort to run ads and spread the word. Should not enough people respond NO DAILY PAYOUT! How simple could that be? Oh, you say many would stop buying bids and quit??? These auctions are addictive!!!
If the other auctions are succeeding spending their money to advertise and drive traffic, why on earth would Zeek have a problem when they have a team of willing reps??? THINK PEOPLE!!!
How many of you have participated in the auctions? If not do so. Last year I watched as people spent hundreds of dollars trying to win an Ipad, Iphone, 60″ TV. While the auction site took in thousands of dollars from bid purchases.
It looks good to me.
@reseller7
If The Big Deal didn’t have gross bid inflation as a result of the value of the bids being used destroyed by an affiliate program, then it wasn’t remotely similar.
You only need to spam the internet to earn a ROI on your VIP bid purchases. Referral commissions and the matrix do not need this requirement.
Furthermore it is entirely possible to participate and get paid within Zeek Rewards without selling anything. VIP bids purchased and dumped on customer accounts are not sold by affiliates, they’re purchased and given away.
Products are sold through the auctions but the bids themselves are only a chance to win an actual auction product, not a product in themselves (it’s a virtual currency, not a product).
There is nothing “additive” about genuine retail customers spending money and receiving nothing in return.
The only people bidding at the moment are people who have been given VIP bids or dummy retail accounts who were just created to purchase retail bids with so that their upline can earn the referral VIP point bonus.
Why would any genuine retail customer want to punch themselves in the head and try and compete with people who hold thier bids to have no inherent value?
The problem is NOT with the auction side. The problem is who are making the bids (thus generating the profit), then share the profits.
I am going to start a new ponzi, and the daily requirement is that everyone was cough 3 times and register that they did it. Then you are qualified to get paid. Since you are doing a unit of work, it is legal and we will all make millions.
Sorry, no sale. ASD tried that defense in Federal court, claiming the participants have to click on ads to view them in order to “earn” their “daily rebate”. Court declared that a bogus excuse.
In fact, in a different case, another pyramid schemer claimed that “recruiting additional members” is work. That was also rejected as bogus.
So sorry, but your explanation is bogus.
I don’t understand? What difference does it make who’s bidding?
The pool payout as I understand it, is on daily sales/earnings 50%. That’s paid out to “qualified reps”. If there are no profits for the day, no one gets paid. If only one rep is “qualified” he would receive the entire pool. (even if he joined last week).
@reseller
Because no outside money = members paying themselves, however you want to dress it up (auctions in Zeekler, traffic exchange in ASD).
Members pumping money into ZR and then this money being redistributed amongst members isn’t profit sharing, it’s a Ponzi with ZR taking a cut off the top.
Then you better go look up the definition of “Ponzi scheme” instead of flaunting your ignorance here.
Forgive me if I don’t believe that you just reviewed the company.
Another thing i just realized that is suspicious about zeek rewards is that if members don’t want to take the time to place an internet ad every day, they can pay $10 a month to have a ZR program place ads for them. So this means that Zeekler already has autobots in place to place thousands of spam ads every day.
So why are they paying thousands of people an increasing amount of money (currently millions a week) to advertise for them? The general premise of their business model falls apart.
I think it means someone is making an extra $10 off those who signed up, probably no ads are even being placed because the ads don’t mean a thing.
You can place an ad and use the same link every day, they never notice.
@Erin — so you agree that the whole “posting ad” thing is bogus, merely “busywork”, right?
I wouldn’t be surprised a bit if no ads are automatically being placed. I’m sure the whole “place one ad every day” is just a weak attempt to have ZR members appear to be “working for the company” and not just receiving payments on their investment.
But if you look at the ostensible business model, it just doesn’t make sense for any business to recruit thousands of people to place ads and buy bids to give away, when the company could simply just place the ads and give away free sample bids itself without having to pay off all those people.
Not to mention allowing all those people to have their balances continue to increase at a huge rate which the company would eventually have to pay off.
In other words, in the business world you try to maximize profits by maintaining a careful balance between maximum effectiveness and keeping expenses low.
Sharing 50% of the daily profit with thousands of people to do something the company could do itself cheaply and easily just doesn’t make sense. The only explanation for ZR has to be a front for a ponzi scheme.
1st, there is no proof they share 50%, or even up to 50%. The company doesn’t disclose financial records.
2nd, a majority of people who buy into this thing have never visited the company. I think it’s important to know that. It just goes to show you that people are very desparate to make extra cash these days and are willing take a lot of risks to do it.
3rd, I’m not sure if anybody here has ever listened to some of these training or conference calls…. no substance at all. Just a few people shooting the breeze with nothing informative.
4th, has anybody tried to call the company to resolve an issue or two? They make you wait 2 hours+ on the phone. What company does that?
5th, that “retirement” concept is BS. When three months is up, they take away your original investment. That doesn’t make sense at all and is a questionable practice. They don’t even want you to call it an “investment.”
6th, Zeekler and Zeek are two separate websites. In case one goes down, the other is still alive.
7th, Have you seen the merchandise on Zeekler? Low-end merchandise. I’m pretty sure their penny auction site isn’t making money.
8th, this is a classic money-absorbing company. They use the money they get from you to pay the person who joined before you.
9th, big tax ramification and consequence in the end.
10th, they hired a lot of top name compliance attorneys. Why? Because a lot of what Zeek does and used to do are illegal.
That’s why the attorneys are there to fix and patch things up and cover their tracks so that if a class action lawsuit happens, they have things to defend themselves.
Oh the other thing I was wondering was, if you’re just paying ZR to place the ads for you, does that not negate the requirement to actually do some work on your own so that it’s a “business venture” or MLM business as opposed to an investment scheme?
According to the 4 rules of an investment scheme, one of them is that you receive returns based on the work of others. I’d think that if you’re just paying the company to do the work you’re “hired” to do, it looks like you’re receiving benefits based on the work of others.
OK I set up a fake account just to see the auction site. Yes, pretty low-end stuff there.
The site seems to run incredibly slow. I don’t know if they’re still suffering DDOS attacks, but some of the links I clicked on brought up error pages.
I finally had to shut it down because I clicked on “winner’s circle” to see the closed auctions, and it just sat there for ages not doing anything, nor could I click on any of the other links. Then when I tried to open it again, I realized there was no login screen, just the signup for free bids page again.
I don’t know if the page is just hosed or if they do this so you’ll re-register so they can claim they have more customers than they actually do. It wasn’t until I clicked the “Register” button with all blank fields did it come up with another screen where it had a login field. Then when I tried to log in, it said “Bad gateway.”
I can’t imagine any company making millions of dollars in profits running a poorly designed website like this.
@ K. Chang…absolutely, busy work. The whole thing is a mess and I hope it fails ASAP. I am in great fear of what the 1099 will look like for this year (this is hubby’s thing, and he is a true believer and has been in almost since the beginning).
Also…do we really need to analyze this to death and crunch the numbers? Since when has there ever been free money? These are always Ponzi schemes and always will be Ponzi schemes. In what other legitimate businesses do they give away huge sums of money for no work?
And who closes a bank account without having the next one open and running? What will they do with and how will they receive their millions of dollars while in limbo? Bury it in the back yard?
You can access the auction-website directly, without creating any accounts.
http://www.zeekler.com/index_penny.asp
I haven’t checked it in weeks, but it looks like they are having far more trouble now. So if the link won’t work the first time, try it again later. 🙂
You are analyzing this like a thinking person. Now be a good little zeekler and stuff your head in the sand.
😀 Not really, but yeah great questions.
I am NOT a Zeekler, I’m just married to one 🙂 I also hope all the people he’s gotten into this thing don’t come and firebomb our house when they lose their money.
I have run my own business for 20 years, never had a bank refuse to process credit cards for me, I have had one credit card fraud out of thousands and thousands of transactions, I have never had to change my bank account, never been turned away from using Paypal to buy items or receive money.
It’s just so terrible how Zeek has all these unfortunate things happening to them in such a short period of time, I guess I’ve just been lucky
@Erin:
My in-laws are into ZR and are intent upon recruiting everyone they know. They’re showing the cult-like behavior exhibited by those in pyramid schemes in that they tend to make snide comments about anyone who doesn’t express interest or want to sign up under them.
They know I’m skeptical of zeek and make a point to constantly tell me about how so-and-so is making X amount of dollars in it.
My father-in-law is a small businessman so you’d think he’d know that it the Zeek business plan just won’t work. It doesn’t make sense for a business to pay out millions of dollars to thousands of people to promote the penny auction site when it could advertise far more cheaply.
Nor does it make sense for any company to be spending 50% of its profits on advertising. Plus it’s easy to see that all the money being paid to ZR members is coming from ZR members, since they’re the ones who appear to be buying 90-99% of the bids.
But, they’re blinded by dollar signs and think that they’re going to get filthy rich. Over the weekend they were busy getting a bunch of their family signed up, and I overheard some of them mention that it sounds too good to be true. Yet they signed up anyway.
I’ve cataloged many of the fallacies and excuses uttered by recruiters on my blog:
http://amlmskeptic.blogspot.com
Most recruiters use “it paid me”, “true believer”, and “you don’t understand us”, with an occasional “I dare you to join”.
I think they become true believers and deaf to any criticism of the investment schemes they join because they’re afraid to admit to themselves that they may have been scammed.
So they keep their heads in the sand and vigorously defend the scheme to which they’ve placed their money.
Ah, there’s always Michael Shermer’s TED presentation about “patterns of Self-Deception”
If you join any private mailing list or Zeek Rewgards group (the leaders keep the groups private to avoid compliance issues), you see this hitting a fever pitch. The most commonly used statement is “Zeek is changing lives”. People are buying cars, refinancing their homes, and planning exotic vacations based on the assumption that the money they are receiving once they hit “80/20 cruise control” will go on forever.
New sheep are being brought onboard and just salivating at those with 6-figure, and some with 7-figure incomes. The weekly team meetings where someone shares “their story” or posts a screenshot of their 7-figure back office balance gets every one even more excited to invite ALL of their contacts into Zeek.
The “proof” is the banned enticement that everyone shows “privately” to make sure compliance can’t see it linked somewhere via a Google search.
Yet not once has anyone in these groups been allowed to criticize or raise questions without getting kicked out…. “if I buy in $1,000 today, by the time my $1,000 hits $10,000; won’t my sponsor be at $100k, and his sponsor at $1M, and our esteemed MLM leader at $10M?” (or whatever the numbers are, depending on how aggressive you compound ad whether you have a downline feeding you daily commissions).
It’s just not sustainable, yet the newly initiated continue to enter the Zeeklight Zone (cue music).
Like I said, as long as they see their point balances keep increasing and getting a check once in a while, they don’t care about how it actually works.
Oh yeah, if it weren’t for appeal to greed, no ponzi schemes or MLM’s would ever work, IMHO.
My sister invited me to a MLM recruitment meeting, and the very first thing the guy said was, “Do any of you have a house or car payment? How’d you like to have that paid for you every month?” Really? You’re going to lead off with an appeal to greed and not even introduce the company and what it’s about?
FWIW I don’t think my sister is making any money in it.
@Joe — typical sales technique… pick a “need” that everybody has, dramatize the need (often to ridiculous extents), then claim to fulfill it. Every infomercial starts the same way.
One of these days I’ll wrote an article on sales techniques.
K.Chang thank you! for that very informative video, if we take the time to watch the full video (19 minutes) things really starts to make sense (along with the best of the video at the end (lol)).
And you wonder why there is 40,000 different denominations of religion, that video pretty much explains why.
I live in lexington NC and have been by the home office. not much there. I even walked inside to talk to someone about the company but there was just a line of people waiting to give there checks to a young girl behind a glass window.
There were no brochures or anyone there to answer any questions. also heard that they are dropping newbridge bank and going to BB&T. Does anyone know if that is true. I have also heard they are looking offshore to establish a bank account.
I’ve been wondering if/how I should tell my in-laws that I think Zeek Rewards is a ponzi scheme. As I’ve said before they love to “remind” me about how many points they have and how another guy in town with a lot of people under him is making $4000 a week (“He showed us the checks”).
They’re pretty fanatical about ZR and I don’t want to make them angry, but I don’t want to see them lose their money, either. I’ve briefly mentioned to my wife that I think it’s a ponzi but she doesn’t know what a ponzi scheme is.
Her father got her into it using $1000 of his money since I would have refused to let her use our own money in a scheme like that.
I just don’t know if I should warn them or just keep my mouth shut and wait for the inevitable collapse.
See if this podcast helps on explaining what is a Ponzi Scheme
http://subprimethemusical.wordpress.com/2009/08/18/scene-3-how-a-ponzi-scheme-works/
Joe: I say it once, politely, then I shut up.
Maybe you could phrase it like: “I’ve heard things like this could be a ponzi schemes, have you looked into that? It might not hurt to go online and check it out. Just want you guys to be careful!”
Then you haven’t actually said anything negative about “their” ponzi. Maybe they will stumble on this blog, but I wouldn’t direct them here. My experience is you can’t change a true believer, but at least you tried.
Yeah I’m with Erin, mention it once then let it slide – only so much you can do.
If anyone approaches you after talking to one of your family trying to recruit them just give them your opinion and leave it at that.
Zeek Rewards might crash relatively soon but you’ve got to live with your family the rest of your life so no point burning bridges over a ponzi.
I know a few folks who are involved with the program and have made some money. As long as you go into this with your eyes wide open, and know that there is risk involved, then thats your choice.
Remember all the hundreds of thousands of dollars that were lost when the stock market crashed? I’m talking about legitimate investments made through reputable brokerage firms. And it mattered not, people still lost thier moeny.
There are no guarantees in this world. Whether its the stock market, or gambling, or any other venture requiring capital(money), there is always a chance that you could loose your money.
Just my two cents worth!
Ah, but you are missing the point. Just because something is profitable doesn’t make it legal. There are many risks that your comparison of stock market and other businesses you mentioned do not have, that Zeek does have.
When a look at an SEC filing for a company I am going to buy stock in, I can be pretty sure that they are telling the truth. If they say they have a million paying customers, I believe them. If they say they are earning X revenue, I believe them. I believe them because there are accounting standards and regulations.
Zeek’s definitions are nothing standard – so you have risk in lack of transparency at best, and outright deception at worst.
When I put money in my brokerage account, I accept the risk of market volatility only when I make a trade, but I trust my broker won’t disappear the next day with all my money. And even if they did, my account was insured so the federal government covers my losses.
My risk is the activity, not the institution.
Case in point: the 6 banned countries due to non-existent OFAC sanctions. These affiliates worked the business and all of their virtual points evaporated. Imagine if a stock broker decided to stop doing business in your country, they would at least give you the money in your account back. (Some affiliates are STILL unable to get their initial investment back from Zeek with tickets going unanswered and first level phone support unable to assist.)
When I play poker at a licensed card room, I have risk that I may lose money in the game, but not risk that if I put $100 chips in my pocket and return the next week that the chips won’t be honored. My risk is the activity, not the institution.
Finally, in all the examples you cite, the risk is based on “money in play” not “money at rest”. If I put $100k in my brokerage account, I am only putting money at risk when I make a transaction. With Zeek, your entire VIP point balance is always at risk because you have institutional risk.
One could argue that the act of investing in Zeek is “money at play” or “just a gamble”, but if people really thought that they the discussion on the opportunity calls would be much different.
The company is doing everything it can to convince the prospect that there is no/low risk, that the company is reliable, stable as a rock, and that payments will keep on flowing. The company’s efforts are largely aimed at trying to appease ones tolerance for institutional risk.
In other words, Zeek knows it’s a ponzi, and its marketing is aimed at covering that up.
Jimmy…. Anyone who is considering parterning with this company (or any other company they are considering), needs to have the facts and do the research to make an informed decision, before shelling out a single buck.
Unfortunately, these days there are lots of people who are in need of extra income, however they can get it. Opinions are like noses. Everyone has one!
Until they are shut down for being illegal, then they are a legally operating business.
As for your explanations for the stock market and gambling…although truthful, the end result is the same. If you do the research and decide to participate in this program, the stock market, gambling or any other venure that requires funds(knowing the risks involved) and lose then you still lose. And that was my point!
I believe Jimmy’s point is you tried to rebut with “fallacy of equivocation”. He’s talking about institutional risk, while YOU are talking about overall risk like “market conditions, economy” and such.
Given that ZR has previously misrepresented various issues, and has an aura of secrecy around it (no transparency about customers, sales, profitability, etc.) the risk of it being a Ponzi scheme is VASTLY underestimated or outright ignored by participants or prospective participants.
Well that’s kinda stupid.
Until the police catch me, I legally committed a crime.
In MLM being shut isn’t the sole qualifier for being illegal, the business model alone is usually enough to guage it. Beign shut down just introduces criminal liability into the equation.
In anycase, legalities are something for the authorities to work out when they get around to it. I usually find analysis of the business model and the manner in which business is conducted sufficient in the meantime.
When it comes to family and friends, you’ll have to use your own knowledge instead of general rules for what to do. The general rule is that we will have to act differently when family and friends are involved, differently from when we are discussing something with completely strangers.
Erin told you that you can’t change a true believer, and I’ll guess that is true. So I don’t believe it’s worth trying either.
That’s just it. They’re not going into it with eyes wide open. They’re going into it blinded by dollar signs and dreams of huge bank accounts, and are signing everyone they know up while basically telling them there is no risk. They WILL all get rich, they say. So-and-so is now making $4,000 a week so we will, too.
I guess I’m just going to let it slide for now, but if asked I’m going to delicately tell them that I think it could be a ponzi scheme.
So, basically what you’re saying that it’s legal if you don’t get caught? If I rob a bank and don’t get caught, then does that make the money legally mine?
@SMSGRL Also if you think or suspect it’s a ponzi/pyramid, whatever you like to call it, wouldn’t you have some ethical duty not to participate, knowing it’s illegal, and that the money you may make will come from someone else losing theirs. It’s not legal or okay to do just because they didn’t get shut down yet.
If I put my money in the stock market, or whatever other investment that may not do well, I lose MY money, that I worked my legitimate job for, I don’t help others lose theirs.
As far as I’m concerned if a person suspects/knows it’s a ponzi, they are a thief, in addition to being a con for getting others in.
But if you make money, someone else LOST it. Trading is a zero-sum game (minus transaction costs).
There are two levels of ponzi morality. On one level, you buy in to the ponzi but do NOT recruit. You are effectively gambling against the overall health of the ponzi itself. The second is where you recruit or otherwise participate to draw in others.
In some cases, you are participating in a combination pyramid/ponzi like Zeek. In the later case, you are directly bringing in others who may lose money (or they bring in others who may lose money, etc).
One could argue that the moral hazard of recruiting is worse than just participating.
Now where Zeek corporate has liability and lack or moral responsibility is they do everything to lie to you to convince you it is NOT a ponzi.
At least most HYIP’s and AdSurf’s know they are a ponzi. It’d be interesting if there is ever legal action to see what’s discussed with Zeek internal emails…
My friend just told me about this. He will be investing 4k soon. I searched online and found this site and read most of the comments. There are about five to ten of you that are very vocal against the way zeekler’s business model operates.
I am from a family restaurant background. I understand one thing. Get rich quick scheme rarely is ethical. If the fish smells fishy, I’m not going to eat it nor serve it to the customers, family, friends, etc. I’ll pay for it one way or another if I did serve it.
I am passing up on my friends request to go under him. I’m going to earn my money the right way. At least this way, I get to sleep at nights peacefully. I can’t talk my friend out of it. He likes gambling and I fear that this is his behavior speaking rather than his logic.
The number of critics against Zeek is not the issue. The issue is no Zeek defender can voice an effective and logical rebuttal to all the issues we raised.
The money simply flows from member to to Zeek back to member as the members are sharing profits they themselves generated by purchasing the bids. NOBODY DISPUTED THAT, and NOBODY DISPUTED THAT IS A PONZI SCHEME.
They keep insisting that “buying bids are legal and promotional”. Blah blah blah.
Yes, when someone gets blinded by the idea of getting rich quick, nothing you can say will dissuade them from getting involved in it. They’ll just have to learn on their own when it crashes.
I think the evidence is fairly obvious that it’s mainly ZR members who are buying 95-99% of the bids, so all the money people are getting are from other ZR members. Therefore, it’s a ponzi.
There’s just no way a cheap penny auction website that few people have heard of can be making enough profit to make thousands of people filthy rich.
Oh and I did bring up to my in-laws this weekend, since we were all sitting around and of course ZR comes up in conversation, my suspicions that it is a ponzi scheme, and of course they rejected that idea as ridiculous. And of course they invited me to come to a ZR recruitment meeting which I declined.
They’re not going to tell me anything new that I haven’t read on here and other places, and of course they’re not going to admit that it’s a ponzi. They also kept trying to claim that it’s not an investment scheme, yet all they ever talk about is how people put money in and get a lot of money back.
If that’s not an investment scheme, I don’t know what is.
Not much you can do about it now.
Recruiting meetings / seminars are almost like cult meetings, where you end up cheering for “woo” (a term used by skeptics for bogus stuff, like “magnetic bracelets” and such)
I think I posted this link before:
What to do when my friend/family loves “woo”.
http://skeptoid.com/episodes/4187
Yes, sometimes I feel like they hate the fact that I’m not going totally crazy over Zeek Rewards and feel like I’m outside the cult.
I’m well aware of woo, and my in-laws believe in it to a certain extent, such as the fact that my father-in-law believes he can witch water, and my mother-in-law is superstitious about a lot of things.
I, on the other hand, am very skeptical about woo and get-rich-quick schemes.
if zeekrewards collapse before next year tax time, will they still send out the 1099? what if zeekrewards is find as a ponzi scheme and illegal, what will happen to the affiliates, what kind of punishment will they receive?
one of my friend joined zeekreward few months ago and he been trying to persuade me to join with him too. after countless research about zeekreward, i am still doubtful about it. And after reading this blog, it make me feel even more uncomfortable…..
All is fine, nothing to see here.
Never mind the BBB rating of an “F” for Rex Ventures:
http://www.bbb.org/northwestern-north-carolina/business-reviews/multi-level-selling-companies/rex-venture-group-in-lexington-nc-12000422/
(Note that one of the factors in the BBB ratings is “Time in Business” which for Rex Ventures is 15 years.)
Oh we all know that the BBB is a corrupt organization anyway. Any company that’s been in business as long as Rex Ventures is bound to get a few complaints.
Hey, who cares what the BBB says, people are making lots of money on this thing. If it really were a ponzi scheme or a scam, the government would have shut it down by now.
I could probably think up a few more ad hoc defenses of zeek if I wanted to, but I predict that these will have already been used.
Lots and lots of people have not been paid on winning Zeekler auctions. Can you imagine if this was a REAL penny auction what kind of mass exodus would occur as retail customers flee the site?
So why are people more tolerant with Zeekler? Because they are also affiliates who purchased retail bids for the VIP points and they don’t want to bite the hand that feeds them.
Escalate not getting paid but don’t hit all the scam sites and contact BBB, FTC, SEC because you still have VIP points you want to cash out.
Here is an example, from http://zeeksupport.zeekrewards.com/zeeksupport/topics/has_anyone_been_paid_on_a_cash_auction_winning:
I was reading that thread today and noticed this gem:
Yet they can’t seem to make the connection that since it’s only affiliates playing the auctions as opposed to retail customers, then it’s a ponzi scheme since all the revenue is coming from affiliates to pay other affiliates.
It’s not me claiming that there are no real customers, it’s a ZR affiliate saying it.
Don’t worry, I imagine they’ll hire some more compliance lawyers and put out a new directive prohibiting members from mentioning there are no real Zeekler customers.
Problem solved.
“…but you didn’t actually address the problem or change any-“
I SAID PROBLEM SOLVED. OFAC regulations prohibit Zeek Rewards management from discussing this matter further.
Reminds me of that Russian joke…
I have a friend who joined and is an affiliate, He invested $500.00 in it and pays $100.00 a month in membership fees. The average percent he makes per day on that $500.00 + its interest made each day is 1%.
I find it very sketchy because they tried to being me on but not one person has shown me there bank statement and the person giving the speech said he has only cashed out once (a $2000.00 check) claiming he makes 6 figures.
Also no one at the meeting answered my question about how do I quit. They just told me after 90days to reinvest 80% and only cash out 20%..why not 100% if it is all my money earned.
From my viewpoint, taxes are a potentially HUGE problem for the affiliates in the U.S. (the ones who receives a 1099). Some of them may potentially have to pay more than they have earned in ZR as income tax.
This potential problem became visible in February 2012 when people received the 1099’s, followed by rather vague tax advises from Howard Kaplan, followed by all the confusion in late April when people should file their tax returns. But we haven’t got any conclusions yet.
There has only been a few discussions about the tax issue, since none of us are qualified on taxes.
What’s the problem?
The problem is that ALL the daily profit points are counted as “taxable income” in the 1099’s, while the deductible expenses were rather vague.
People will need to use a spreadsheet to fully understand this potential problem. They will need to SEE the problem in a spreadsheet, either simulating scenarios or by using data from a real investment.
An example using simulated numbers:
* Initial investment: $3,100
* Investment plan:
26 weeks at 100% reinvestment
26 weeks using an 80/20 plan (20% withdrawal)
* Average percentage for the daily RPP: 1.5% per day
* Percentage Monday-Sunday: 1.7% 1.9% 1.8% 1.7% 1.1% 1.2% 1.1% (repeated through the whole spreadsheet for 52 weeks)
If you’re using a plan like this starting 1st January 2012, the result will be something like this:
* amount withdrawn: $12,300 (close to 4 times your initial investment)
* taxable income: $88,700 (counting ALL profit points)
* possible deductible expenses: $53,000 (counting only retired bids)
* VIP Point balance at the end of the year: 26,600
So, in the end of the year you will have had a real income of $9,200 (money withdrawn minus your initial investment). The taxable income will be something between $35,700 and $88,700, depending on how IRS will treat the deductions.
And it gets even worse in other scenarios.
I made a few suggestions for the 2011 tax return – “withdraw completely, and post it as an investment in a Ponzi scheme”.
When the top Zeek officers, who also are top affiliates earning over $1M per month, are so disconnected from reality, it’s a sign that the end is near:
From: http://zeeksupport.zeekrewards.com/zeeksupport/topics/zeekler_cash_auctions_won_in_february_still_not_paid
@benny
Some of the suggestions can be found in this thread, starting in this section of the thread:
The accountant didn’t agree in my definitions. 🙂
But I’m pretty sure he would have used similar sets of ideas himself, and added a few of the details that I am missing in my suggestions.
@benny
Other parts of the tax discussions can be found in another thread, somewhere around the posts I will link to here:
I have a completely different viewpoint than most others. I would have withdrawn my investment as soon as possible, and posted the net gain as ROI (not as income).
Some of these threads have 4-500 comments. I have linked to a few of the comments that were relatively easy to find using the search-function.
Keywords that can be used to search for tax-related comments:
“Cash principle”, “accrual accounting”, “ordinary tax payer”, “constructive receipt”, “cash equivalence”.
The most detailed tax discussion here was in late April + early May 2012, but none of us had any complete solutions.
How do I quit? I had that problem too. By the way, the proper move is to switch to 0% reinvestment until your points are cashed out at the end of 90 days.
Canceling the subscription proved a little more challenging. Since I could not find a way to delete the auto-billing credit card info, the only solution I could find was updating it to invalid information so no more charges would go through.
Nonetheless, here we are 2 months later and they are still showing my subscription as valid, despite the fact that no charges have gone through for over 2 months. I guess eventually they will figure out out…. lol. Apparently, ZR is not the most competent organization regarding handling money.
Regarding affiliates not getting paid on their Zeekler auction wins, this appears to be the new official excuse:
Zeekler’s been up and running for 18 months… and somebody only just now realised payouts are borked?
Riiiiiiiiiiiiiiiiiiiiiiiiiiiiight.
Hundreds of tickets and customer support calls and emails that have gone unanswered. So 4 months later they realized it’s an IT problem?
Regarding the autopay system. When it did work, it took 10 days to get paid. More like slowpay than autopay. 10 days to call an API to send money via SolidTrustPay?
It’s possible to withdraw all the money in 90 days, but most people won’t recommend a method like that. The method will cost you 20% percent or so of the VIP Point balance (if your balance is 10,000, then you will be able to withdraw $7,500-$8,500 as cash), because of the retirement of points each day.
So it’s possible to quit. Just set the reinvestment to 0% in your backoffice for 90 days, and then stop paying the membership fee.
He is counting the VIP Points as money or something?
VIP Points are worthless in themselves, they are only used to calculate each affiliate’s share of the daily profit pool. So they are NOT equal to money, and you can’t withdraw them as money either. You can withdraw most of them as Profit points in 90 days, if Zeek is able to pay.
Sounds like he haven’t hit 90 day yet, when that 500 “expires”. (yes, it really does)
According to them, they can’t show you their bank statement that’d be “promise of income” and get the company in trouble, but apparently TELLING YOU doesn’t count. Hmmm…
Ah, they can’t even explain that “90 day expiration” thing, hmmm? Here’s the short version:
-You buy bids (say, $500)
-You “give away” the bids to “prospective customers”
Company gives you “VIP Profit Points” (same amount) with life of “90 days”. (500 points alive for 90 days)
-Your VIP profit points then entitles you to daily growth (they call it “RPP”, retail profit pool I think) which is that 1% thing. Call it, 1.5% for now. At end of day you get 500*1.5% = $7.5
-You can “repurchase bids” with that 7.5, or you can cash out (receive $7.5) or whatever proportion. If you do 80 repurchase 20 cash out, you then have 500+(7.5*0.8)=506 VIP Points, and you’ll received 1.5 in real money.
Repeat as you wish.
That’s why most joiners advise you to repurchase 100% (i.e. keep the money in) just to grow the point balance, so you can “take out more” later. The 80/20 would allow the “points” to grow while still giving you some cash.
FYI, another Ponzi, Ad Surf Daily, worked as follows: you purchase “ad units”, and every day you get 1% “rebate” if you watch some ads (allegedly purchased by others). You can choose to cash the “rebate” or buy more “ad units” with it.
http://kschang.hubpages.com/hub/How-Pyramid-Schemes-and-Ponzi-Schemes-are-Prosecuted-in-the-US
I leave you to your own conclusions.
I’m guessing someone was getting lazy making payments (or else they couldn’t afford to), and then they realized they’d better pay off those winning auctions before everyone decides to cash out.
I was actually toying with the idea of bidding on zeekler using free bids just to see if I could win anything, but now it doesn’t look like it’s worth the time.
“1099 to be or not to be”
Whether or not one would come to their own sort of conclusion on this being an investment,or self employment income (mine being SE income), the fact that a 1099 shows a dollar amount, relates only to the fact that remuneration was actually received.
In other words, each event constitutes taxation of some sort when it comes to making money, and one can only truly define the event that causes the 1099 as a “cash received” event.
1099’s are based on cash basis transactions, they mean nothing on accural dollars. The requirements of a 1099 do not cover monies owed to an individual, but only specifically cover monies paid out by the payee, and received by the recepient. Just some fyi there.
Very simply stated here: There are only two parts of this puzzle, but both parts have to be existant for the sake of qualifying the 1099 question mentioned here so often, There has to be income for there to be expense when the conversation relates to 1099’s, period. This holds true for ANY business.
So to apply this to ZR and the possibility of them issueing 1099’s, the perfect application on there end would be to call the 1.00 bids they are giving away “income to them” and expense to “you”.
It is doubtful they are showing income on their reporting side for the bids they are supposedly giving away on behalf of earnings, and just because they normally sell for a dollar a bid, doesnt constitute a purchase basis when in fact they are really never purchased at all, you earned them with this example.
It’s not bank interest for G sakes, bank interest paid is a tangible dollar. Its not barter income since no one is trading either.
So in summary if they really wanted to do it right, they would increase the value of your account by the supposed bid values they are giving you, and since your not receiving the money at the time they are adding this to your account then you shouldnt be including those dollar amounts on 1099’s, but on 1099’s only the amounts you withdrawal from the system since those amounts in actuality are the amounts actually paid to you in a calendar year.
So Dan Matthews, if someone received a 1099 for a huge dollar amount last year, but didn’t actually withdraw or receive any real dollars, doesn’t that seem like Zeek is doing some kind of tax fraud?
They use the amount on the 1099 as a tax deduction, but they hadn’t actually paid any real money out. As the IRA sees it, you received X amount of dollars, big problem when you didn’t. Their convoluted tax deduction bids bought thing they put in the back offices…I don’t know how that’s going to hold up to scrutiny if the IRS audits.
Do you realize, (I guess you do) if this thing hangs on for this whole year, what some people’s 1099’s are going to look like for this year? I have to say for myself, it’s the most worrisome part of this whole thing. I guess worrisome isn’t even the right word…freaking out is more like it.
I think the concerns on 1099’s and taxes are overblown. The only real risk is that the IRS wants to audit your taxes because they see an anomaly with your Schedule C showing a very high amount of expenses and almost no or negative net profit.
For example, you start with $1k and compound at 100% with no other commissions (to keep things simple). After 365 days you will have a points balance (factoring in 90 day expiration) of 20,656 points based on 1.5% average daily profit share.
You actually earned a total of $40,858 (the amount of cash Zeek paid you daily for 365 days). But since you put them all back into points, you will claim an expense of $41,858 ($40,858 reinvested plus $1,000 initial purchase).
You’ll also deduct your monthly membership fees, let’s just Gold at $50/month for $600, and other costs such as what you paid a third party company to give you free customers. Let’s say you spend $2.50 per customer and purchased 40 for cost of $100.
So your year looks like this:
# Expenses
– $1,000 initial purchase
– $40,858 bids purchased (100% reinvestment)
– $500 membership fee ($50/month at Gold)
– $100 for 40 customers @ $2.50 per customer
# Revenue
– $40,858 in daily profit share
So your Schedule C will show loss of $1600 on revenue of $40,858 and expenses of $42,458. That might raise a red flag with the IRS.
You could look to cash out some points before the year is over to bank some profit so you won’t trip red flags. If your profit margin was over 10% that would avoid most red flags, and over 20% margin is very safe.
This is the same method I would have used (or ONE of the methods I could have used), posting the expenses when they actually happens, when bids are repurchased.
But someone gave me an impression of “when points retires” in the discussions we had in May. The discussion starts around this post:
From the FAQ:
Howard Kaplan didn’t answer the real question here, so we didn’t reach any conclusions when we discussed these issues in May.
As a taxpayer, I will prefer tax advisors I can understand rather than using an “expert”. Howard Kaplan had too many vague “in theory” answers, and the methods favourized Zeek rather than the taxpayers.
Here we are talking the same language. The bids you buy and give away is an expense for you, and an income for Zeek (as a part of the logic where the RPP became taxable income).
The only problem here is that most of the bids are paid for in virtual currency. The daily RPP’s are taxable as income, but they don’t hold any monetary value. Yet you can still withdraw them as cash, or reinvest them buying more bids.
I followed your logics through the whole post, and I will agree. Your logic holds water. And you have also pointed out the same problem as I did, from a different perspective:
It is highly doubtful that they are paying money into an account each time they are paying out daily RPP. The RPP will only be available as cash as long as they have fresh money coming IN from investors. Other than that, the daily RPP will only be available for reinvestment.
This will make the tax methods used here flawed, as far as I can see? And then we can point out some basic rules found in other laws, the rules that regulates procedures for governmental agencies, the duties they will have to take care of when they are performing the work (like identifying the correct laws, protecting the interests of the party involved, “being neutral”, Right to Information, and so on and so forth).
As a “responsible taxpayer”, I will usually try to make my tax returns as correct as possible. From my viewpoint, a part of the ZeekRewards-system offers investments in a Ponzi scheme, poorly disguised as “purchasing bids” and “being paid for work”. My tax-return would probably have reflected the facts rather than the methods they have used as a disguise.
Here’s another method they may have used:
* The stream of money IN derives from the affiliates, when they are using real money to purchase bids.
* The stream of money OUT goes to affiliates who have started to withdraw RPP as cash.
* RPP and VIP Points are only motivational factors, and they won’t show up in the accounts (neither when they are transferred to the backoffice nor when they are used to purchase bids).
* The profit pool is only an “internal system”, so it won’t show up in the accounts.
This model will make it possible for Zeek’s accountant to post things correctly, having a clear stream of money IN and a clear stream of money OUT. It will also survive being audited.
In this model, the RPP paid to the backoffice shouldn’t be taxable. WHY they became taxable is probably related to tax issues (like instructions from the IRS, or as a tax savings advise from an advisor).
In this model, ZeekRewards main purpose will be to attract money from their own affiliates, and give them lots of “motivational stuff” in return for their money. They will also have to pay out SOME money to SOME of the affiliates, in order to create an impression of “real money” for the worthless points (or else no one would be interested in putting money IN).
WHY THE RPP BECAME TAXABLE?
They have probably had an unexpected visit from tax authorities sometimes near the end of 2011 or the beginning of 2012?
Or their accountant can have pointed out a problem in all the money being paid out to affiliates, choosing what he/she considered to be a “safe solution”?
The person or authority behind this solution have had a very onesided viewpoint, showing an over-reaction to a potential problem. This over-reaction indicates an in-house decision-maker, from the management team itself.
Zeek seems to have SOME people eager to make decisions, more eager than really qualified. This will often give unexpected results, but it will also create work for external advisors (and Zeek has used alot of them). 🙂
Folks, I keep saying that you are making this way to complicated. RPP is taxable as income because it is given to the affiliate as CASH. It is 100% cash, available for withdrawal daily.
The fact that affiliates reinvest at 100% or 80/20 or whatever perpetuates the ponzi, but the bottom line is Zeek is paying the affiliate income with the daily RPP and that is why it is reported on the 1099.
It is up to the affiliate to deduct the reinvestment as expenses. It’s really that simple.
As for surviving an audit, Zeek’s biggest issue is what value they put on outstanding VIP point balance. Zeek will probably tell the IRS they have fixed value and are relative to daily profits. Affiliates all believe 1 VIP point is worth $1 based on the way the program has paid to date.
But your method is more complicated and far more risky, if you followed the “recipe”. The only thing that makes my method more complicated is because I don’t have a complete solution (I’m not a tax expert).
Howar Kaplan’s method will give you a huge taxable income (compared to the amount you have withdrawn). And the deductions are questionable, they are very far from being safe.
You will even have to pay tax twice for some of the money, your initial investment and any additional money you have invested. This is money you probably have paid income tax for when you earned them? Now you will have to pay income tax for them one more time.
The fact that RPP is presented as “cash available” and is possible to withdraw as cash (via a procedure) doesn’t mean the method is correct. You can’t withdraw them directly as cash, you’ll have to go via a procedure controlled by someone else. And I doubt they are backed up 100% by money, for ALL the affiliates each day in the tax period. They are only available IF Zeek has the money and are willing to pay.
Cash available IF Zeek has money and IF they are willing to pay isn’t exactly “cash available”.
I had an issue, I sent in $2000.00 Cashier Check to buy bids, I am a Diamond and I was only credited $1000.00. I have called 2x and spoken with rep who says they have to give it to Corporate.
This has been over 1 month ago, and still no resolve, they say they are back logged. I was given the number to Corporate and all mailboxes were full, no one answered.
I am now getting antsy to say the least as I can’t get my money and no one will help. Anyone know what I can do?
@Sparkles
I hate to say it but your experience is typical of people having problems with Zeek. Phone calls go unanswered, or else put on hold for hours and then are given some excuse that they’ll have to pass it on to someone else, support tickets go unanswered for months and are then cancelled.
I guess your only recourse right now would be to bring it up in the zeek support forums and try to see if you can get one of the employees to notice your problem, but from what I’ve seen they don’t seem to care much there either.
People posting problems there on occasion have gotten a Zeek employee to post on their thread maybe once, but problems seem to go largely ignored.
If you don’t get any recourse through Zeek after a few months, the only other recourse you might have is legal action. It could be a matter of fraud.
Zeek running a ponzi is bad enough, but their amateur business sense and poor execution has magnified visibility on the scam.
That’s what I’ve been saying, Jimmy. All the “growing pains” are going to get them into big trouble at some point, especially not paying out on auctions. All it takes is one disgruntled customer to contact an attorney general to get things rolling.
But in the long run, when people’s bid purchases don’t get credited or accounts just disappear altogether, not to mention the total lack of concern for affiliates on Zeek’s part is probably going to turn a lot of people off and they’ll just end up cashing out, starting the collapse of the ponzi.
I’ll continue to analyse the tax methods, because I find the deductions used in Howard Kaplan’s model to be questionable.
Both the income and the deductions are questionable, because it don’t involve monetary transactions when people receive or reinvest RPP. So both the income and the deductions will be too high.
Some different aspectss of the case:
* The first date when they’re discussing the 1099’s in the MMG-forum is around 15. – 20. January 2012. I found the thread using the keywords “Rex Venture Group accountant”.
* Howard Kaplan popped up in February 2012. Dawn called Sandy Botkin first, and he recommended Howard Kaplan (if I remember it correctly from the call).
* The tax method used doesn’t give the impression of being a well designed plan. It looks more like someone has tried to solve a problem in a hurry, without having the necessary overview to find a good solution. So it reminds me of other in-house decisions I have seen in Zeek.
HOW WOULD AN ACCOUNTANT HAVE POSTED THE DIFFERENT POSTS?
1. Money paid IN from affiliates is clearly a monetary transaction, and can be posted as “SALE”, “SALE OF GOODS” or similar methods?
2. RPP paid out as money is a monetary transaction, and can be posted as some kind of “salary to independent contractors” or something as the TYPE OF PAYMENT?
3. RPP paid out as points is not a monetary transaction. I can’t see how an accountant can be willing to include this? Why did they include this in the 1099?
– this method will pump up the expenses dramatically. There can be a tax motive here?
4. RPP paid in as payment for bids is not a monetary transaction. I can’t see how an accountant can be willing to include this? Why did they include reinvestments (either retired or when they were bought) in the 1099?
– this method will pump up the revenue dramatically, and allow all the sample bids to be treated equally as “products” when they are sold to affiliates. This might have been a motive? It will also make Zeekler look more profitable than it is.
MOTIVES:
A:
A possible motive here can be to be able to survive some kind of control from authorities. Authorities checking for a possible fraud might leave them alone when Zeekler looks like a highly profitable business.
B:
The balance between point 3 and 4 (RPP) can be a tax savings motive. Ponzi schemes can’t afford to pay too much in taxes.
* So if the 1099 only reported expired bids the taxes will be lower for Zeek, but the affiliates will have to pay higher income tax. The differenc is within the 90 day expiration period (Zeek can post the expenses immediately, the affiliates can post them after 90 days).
* If the 1099 reported bids when they were bought, then the tax motive here will probably not exist.
(more tax related stuff)
Link to North Carolina “How to form a LLC”:
http://www.citmedialaw.org/legal-guide/limited-liability-company
At least I started on a North Carolina website, but the link seems to cover LLC in general.
The method I have started to use is “Build up some more insight into a topic”. I will prefer this method rather than focusing on small details like tax doctrines, getting some overview rather than details.
Income is real income. It is cash you can withdraw, or reinvest. This is not unlike stocks that pay dividends that get reinvested.
I think you have to look at it from two levels: affiliate and corporate. Cash paid to affiliates is real income for the affiliate. It is an expense for corporate. Then when that cash is reinvested it becomes expenses for the affiliate, and income for corporate.
You’ll have to see it from the viewpoint of more than one affiliate. You’ll have to use a professional viewpoint rather than a personal one. The equation that leads to “available as cash” becomes untrue when you involve the whole group of affiliates. And if it isn’t true for the whole group then it isn’t true.
The RPP is ONLY available as cash IF Zeek has the money needed and is willing to pay. They will run out of money if all affiliates starts to withdraw 100%, or if people stops putting money IN. So the logic simply isn’t true.
The RPP doesn’t hold any monetary value. They don’t qualify as “cash equivalence” in my opinion. To qualify, they will have to be backed up by a pool of money of the same size as the daily RPP to each and every affiliate each day (not “fractional reserve”).
Zeek will have to transfer money from one account to another in order for the RPP to become taxable. If they don’t transfer money, the RPP will only become “points” with no monetary value. And “points” isn’t taxable, and you can’t use them as deductions either.
The 1099’s for 2011 most likely contains false information. I’m trying to find out WHY they have used these methods.
I think the above is still true regardless of personal or macro view. From a personal view, this is the only correct way to handle your taxes. From a marco view, Zeek is paying out cash to all affiliates. What they are doing is incurring a debt by having a negative balance.
The fact that not all the affiliates cash out 100% and some reinvest means that their daily cashflow won’t go negative until new affiliates stop joining (or rate of new affiliates slows down below rate of cash out that is not reinvested).
In other words, for the Zeek corproate view, if you add up all of the:
1. initial investments (income)
2. cash paid for daily profit share (expense)
3. cash reinvested automatically (income)
4. cash withdrawn and paid to affiliate (expense)
The above will show the correct cash balance within Zeek even though steps #2 and #3 involve “virtual points” it is reconciled as cash out to affiliates, and cash back in to Zeek.
Because it is a ponzi, there is a huge negative liability. If they were filing taxes, they would have to lie about their liabilities or show a huge negative loss. But if you are focusing only on cash and balance sheet, the above can be reconciled in cash even though steps #2 and #3 are all “internal”.
You can’t post virtual revenue or virtual expenses in accounts. Accounting is about MONEY and other values. And this is the most basic principle here, the rule that has the highest priority. There has to be some real money involved.
The points acts as a motivational factor, and that is the primary function they have. They FEEL like real money for some people when they can SEE their investments grow rapidly.
The points can neither act as income nor expenses, unless they have some matching real transactions connected to them (moving money from one account to another).
I would like to share my experience with zeekler. I am not a zeekrewards affiliate. My roommate is and I believe that he has fallen for a scam. I have read a lot about it and wanted to test out the penny auction side of it.
I made a zeekler account and my referring agent gave me 300 free bids. Before i bid, i watched some of the auctions and noticed that they ended very close to the cash out price (and sometimes higher).
I set the automated bid executive (ABE) to bid 200 bids from $33.00 to $35.00. The item for bid had a cash-out value of roughtly $36. I understand 200 bids from $33-35 would be all 200 bids, but i didnt care since the bids were free and of no value to me.
I returned later to find that I had lost the auction and the high bidder won with $33.43. How is that possible? The only explanation that sounds reasonable to me is that the auctions are rigged so that in inside member wins.
I brought this up to my roommate and he still believes that it is a legitimate penny auction site.
Also, all 200 of my bids were deducted from my account.
Zeek has had extensive “problems” with not only its auctions, but affiliates not being credited with purchases, or on some occasions having their accounts deleted entirely without warning or explanation.
I wouldn’t be surprised at all if the auctions were rigged, or possibly hacked. If you do some reading, you’ll see that their IT staff appears to be totally incompetent since they always seem to have problem after problem after problem.
Secondly, since all the available evidence points to Zeek being a big Ponzi scheme, it would appear that they’re more interested in affiliates recruiting more affiliates to pump money into the system and they don’t really care at all about the auctions.
In fact, recently they’ve had a lot of auctions which they hadn’t paid the winners for 4 months or longer, even with affiliates winning the auctions. So you’re probably better off not winning the auction anyway.
At any rate, issues like this are going to drive any potential retail customers away from the Zeekler auctions, not that Zeek ever really cared about them in the first place.
Hi zeek leers…Have got just one question..I just put in a few bucks…
My question is this for zeek members;
Can u make a certain amount of withdrawal at a time….Let’s say I have 5000bids… CAN I REQUEST TO CASH OUT $2000 ….?
Holla zeek members
No you can’t.
You can only cash out slowly over 90 days via the ROI scheme and VIP points.
I’m not familiar with the auctions, but an ABE will need other bidders between it’s own bids. There’s max 100 possible bids for an ABE between $33 and $35.
In your case, the ABE has probably started to bid at a lower price than $33, and have ran out of bids long before it reached the $35 amount limit. It can have used most of it’s bids in a “bid war” against another ABE.
If you’re worried about your roommate’s money, focus on the investment scheme rather than the auctions, and make sure he’s not “all in” with his money.
The auctions won’t contribute much to the revenue in Zeek, so they don’t have any real motives for cheating. People are spending worthless BIDS (not MONEY), so spending 200 bids will only contribute to raise the price for the item with $2.00.
The real scam is within the investment scheme, where affiliates are spending real money in their initial investment (aka “purchasing bids”), for gradually to be rewarded in “points”.
In a best case scenario, the “points” can be paid out as cash (more than his initial investment). But in reality all the odds are against him because of all the other investors, some of them with huge balances.
In most other scenarios, people will be able to withdraw a small fraction of their initial investment as cash, or not be able to withdraw anything at all.
We live in America and I’d really like to see some real-proof of these accusations. Of all the accusations posted above -I have not read one ounce of proof. Surly there has to be at least one person who has been ripped off by Seekrewards, and has seen this thread, that would have told their story by now. Where are they?
Put yourself in Zeek’s position for a moment. Is it not true that any company that experiences the kind of growth that Zeek has had is going to have many of the same kind of problems, as outlined in this thread? Would they not also be easy prey for credit card thieves to rip them off?
It seems to me like Zeek is doing all they can with these kinds of growing pains and in 5-years –just may be one of the best stores on the web to shop.
YES -we all know that a company can’t sustain this kind of growth forever, but until it slows down to normal -why wouldn’t you be spending more time try to figure out how you and your friends can benefit from this phenomenal growth?
To me, companies’ like Zeekrewards is what the American dream is all about. I personally would recommend the Zeek’s business opportunity to anyone, provided, like any business opportunity, that they only put in what they can afford to lose.
90% of all new business in the US fails -even after their owners put in a lot of hard work, their time, and their money. Zeek only requires a $10.00 VIP Bid purchase, which could turn into more than a million dollars in 36 sort months. How many people has this thread robed of that great opportunity?
I would be ashamed to call myself an American and be a part of all these unfounded accusations. But we do live in a free-country, so you do what you want, I don’t have to read it anymore, and won’t!
Zeek Rewards themselves made the claims of $100,000s in fraud occuring, so you’d have to ask them for further proof.
Well VIP points are compounded and continue to grow forever, so ultimately it’s going to collapse.
But not because they use fundamentally flawed investment scheme business models primarily funded by new and existing investors.
Well, so long as you’re getting paid… fuck ’em, right?
This is precisely the line of BS that convinced me that this program is crap. Where in the world are they getting $1 million dollars in revenue to pay someone on only $10 and a paltry monthly subscription fee? Are you high on crack?
Money doesn’t grow on trees, and spamming the Internet is not attracting real customers. There is nowhere near enough revenue in this “business” even to hire a decent IT staff and customer service, much less to pay out these ridiculous amounts. Also, the FTC and AGs from some states are already sniffing around to shut this ponzi down. Banned in Montana already, North Carolina AG distancing itself from Zeek just this week.
The days are numbered. Once it crashes, all you will have is broken dreams and a ridiculously inflated 1099-MISC which will show you earning money that you didn’t even receive as cash…. No thanks.
People didn’t complain about Madoff until he ran out of money, which was like… 70 BILLION. What’s your point again?
Perhaps, but we’re discussing how it’s an investment, but insist that it isn’t, how it heavily resembles a Ponzi scheme, but refuse to explain why it isn’t, and so on.
The rest of your wishful thinking is just that: wishful thinking.
According to the NC Attorney General’s office, some of them have contacted them.
So keep your head in the sand, I don’t care. Just don’t come crying when you lose all the money you’ve invested in it.
I need help understanding something about Zeek, I live in Israel in a small town, people here are very religious and many do not use computers/internet.
I saw an ad in our newsletter yesterday, I’ll translate:
I called and was told that the company is Zeek and they share 50% with their investors at the end of every day.
I read most of this thread here, but I suck at business.
I can’t understand how someone can make money of Zeek without a computer! Obviously this is making someone money but how?
And why 1400$ initial investment? What is that about? Can anyone help me make sense of all this?
I really don’t want to see my fellow townspeople loose their money on something fake.
@shira
Participation in Zeek Rewards can be automated as such that you can pretty much treat is as a passive investment. Deposit money and enjoy a rolling 90 day ROI which can be compounded.
I’m assuming in the ad you cited that you hand over $1400 to a Zeek Rewards affiliate, they sign you up as an affiliate (or worse, use your money to bankroll their own account(s), and pay you the 90 day ROI (sans re-investment).
The daily ad can be automated and so can the dumping of VIP bids on customers via the purchasing of customer accounts from third-party vendors.
@shira
In America some people say, “If it looks like a duck and quacks like a duck it is probably a duck”. I think your questions answer your own question about whether this ad is fake or not.
As an affiliate, I’ve done nothing but receive positivity from ZeekRewards. When something or someone is on the “up & up” and things are going great, you’re going to see/hear about negativity from those who either
1. Envy them
2. Jealous
3. Draw any attention to themselves (via video or website/blog).
You’re going to have your pros and cons in any company. Nothing is perfect and people make mistakes. I’m not oblivious to whats being said from Dawn or what I read but from a personal standpoint, I’ve been happy so far.
So haters, keep on hating and sharing your “Facts” and say “you’ll be crying once you lose your money” and all the things haters will say, but day to day, it’s all good
*tebowing*
So you actually believe that the only reason we are against Zeek is because we’re jealous of people making money from it? What kind of logic is that?
If I thought Zeek was on the “up & up,” I’d be putting plenty of my own money into it. But as it stands, every way you look at it, it appears to be a Ponzi scheme, which are very risky to get into because you never know when they will collapse.
And they ALWAYS collapse, or else get shut down by the government. Either way, if you’re a new investor when it happens, you lose money.
But please, mgang3, tell us how many actual retail customers you have who are buying bids on a regular basis? How many retail customers does your upline and downline have?
Ever notice how the focus tends to be mostly on affiliate recruitment rather than bringing in paying customers? How do you think Zeek can stay in business without auction customers?
Is positivity cash in your wallet or bank? Can you spend it to improve yourself?
Unfortunately, this is a pure conjecture on your part, with no evidence to back them up. In fact, this is a common tactic among unethical debaters, known as the “sour grapes” tactic.
http://amlmskeptic.blogspot.com/2012/06/bad-argumentsour-grapes-argument-and.html
That part is true. So is the company actually solving the problems? Or just telling you all to IGNORE the problems?
Happy enough to let that gaffe slide. We got that. How about all the OTHER stuff?
Tebowing… that’s PRAYING right? As in you believe without a reason to do so? But that’s contradictory to own position: you’re happy because you’re getting “positivity”.
Maybe you should reconsider your own position instead of doing a “Dawn-snafu”.
Hmm. Just found this and read (not all). Did not realize people thought Zeek Rewards to be a scam. I enrolled thru a friend of the family. It seems like business advertising and selling to me.
Guess I’m not understanding the conversation here very well?
1. I’m posting ads – that’s a daily requirement.
2. Before each ad expires I renew.
3. I use free ads but in an account so I can renew.
4. I am growing a “garden” of advertisements in different zip codes thru the USA with option to be clicked anywhere in the world.
5. Each gets clicked, though rarely in some zip codes.
6. I’m using the suggested $15/month tool that shows a video to people who are interested.
7. I connected tool as cynthiasel.com using a domain of my own as requested.
8. My statistics in the tool suggest that each of the ads do get clicked over time because overall the videos get played pretty much thousands of times.
9. Very few enroll as members or affiliates. Far less than 1%. (That’s the way advertising works, right?)
10. Bids buying – Not been here long enough to know the details fully. However, so far my customers used the free bids only. Me too – not bought myself bids to shop with. I used the free bids I was given and “won” three “prizes” that I bid on more to figure out how it worked than for wanting to shop.
Investing $10,000 seems a bit crazy – that’s certainly not what I did. I started free actually. Upgraded to Diamond when it was able to support that. I have some affiliates planning to do the same thing.
blessings,
Cynthia
@Cynthia
That, right there is typical of Zeek Rewards affiliates. A complete lack of customers who purchase anything.
Where on Earth do you think all your infinity money is coming from if not from other affiliates like yourself?
As your VIP point balance grows… do you think the affiliate funded money tree is just going to keep on growing too?
@Oz: Shhh… you’re just being a dream stealer. Don’t you know you’re not supposed to question where the money comes from as long as you see your point balance keep increasing?
@Cynthia: How many actual paying retail customers do you have buying bids from you? How many actual paying customers are buying bids from all the affiliates you know?
Have you actually gotten paid for those won auctions, or are you yet another in a long line of people who haven’t received their winnings on an auction?
Zeek is doing a decent job of catching up on unpaid auction winnings. I don’t think they are stiffing auction winners on purpose. I think they “don’t care” about the auctions and have very poor workflow and process to support the auction because they know it’s just an artificial vehicle to attempt to legitimize the investment Ponzi.
The auction winnings are peanuts compared to affiliate payments so it also doesn’t make sense for them to stiff auction winners and not affiliates.
Their lack of customer support and all the IT and delivery problems on the auctions does provide some insight into how much the auction doesn’t matter to the business model.
@Cynthia Ann Leighton
You are one of the few I have seen who is actually trying to follow an advertising plan, instead of spending 2-5 minutes “just to get the work done and be finished”.
I have seen a few others, too, but they are very rare. And they mostly attracts free customers who seldom buy anything.
The part of Zeek we consider to be a Ponzi scheme is the passive investment part, where you make an initial purchase of sample bids, give them away to fake or real customers, get VIP points in return and earn a daily profitshare for 90 days, and where you can reinvest the daily profitshare.
There have been a few concerns about the network part too, but we haven’t focused on that part. What people criticizes in both parts are the lack of real PAYING customers.
Other than that, nobody has any serious problems with Zeekler, except that we don’t consider it to be very profitable. I don’t consider delivery-problems to be “serious”, they are solvable problems.
Around half of the comments in the different threads are from Zeek affiliates, but this blog has mostly a critical viewpoint in most of the followup-stories about companies (where we have detected some problems).
This was a quick overview for some parts of this topic. There has been posted over 3,000 comments about ZeekRewards here since September 2011 and January 2012, related to 21 articles. I won’t recommend trying to read all of them at once. 🙂
I have just went to a meeting were we learned about Zeek.com sounds real good, but I have Qustians… after reading your post
@Cynthia Ann Leighton, There has been posted over 3,000 comments about ZeekRewards here since September 2011 and January 2012, related to 21 articles.
Articles Come From?
My wife and I are considering to In vest into ZeeklerRewars, were can I find thees 21 posts?
Money is to hard to come by now days for a lot of us!
I am in the beginning process in my research, I hope this Company is just getting bad press from people that Zeekler Know, who may not Like Him!
I will be flowing up with the Attorney General , to find out as much as I can about Zeek.com ands to whoever put up this Site. My email: (Ozedit: email removed).
I’m collecting some links to the tax discussion here, quoting only part of the posts (so you will have to click on the links to view the full posts).
Starting with Dan Matthews:
Dan Matthews once again:
Dan Matthews #3:
Dan Matthews #4:
All these 4 comments are from an accountant’s viewpoint, and they contain some important information about the principles used in accounting.
Zeek is not a bank. So when they’re displaying something as “cash available”, it will not be like withdrawing money from a bank account.
A 1099 will require payouts of real money or other “cash equivalences”, or an action similar to a payout. Transferring of money to an eWallet will probably qualify as “similar to a payout”, but presenting some numbers as money in a backoffice doesn’t involve any payouts.
Any payouts that involves some work will most likely qualify as income (not as investment). So if people have earned commissions from a downline then it’s taxable income.
NOTE:
When people are posting comments here as professionals, they are posting them as “viewpoints” meant for “general use, not as a professional advice”.
So the meanings in those comments are “Here’s my viewpoints. I hope they can bring you closer to a solution, but you will need to use your own brain or use qualified help for the actual solution. I haven’t studied YOUR case here”.
And when I’m quoting those comments, it’s because the logic there makes sense, not because he’s a professional.
So I have read this post, took me a few days, and I like to see this kind of information being shared with each other, those in zeekrewards, and those just curious and trying to figure it out.
Half or so of the commentators here have a zeekrewards business, as I do myself. A few concerns I have are……why are there so few auction items on the zeekler page? Quibids has 30-40 running at the same time, zeekler has 12penny auctions?
Why don’t they just increase the auction size, hence more bidders, more money, more interest.
Has anyone that has posted on this sight won a penny auction item and received it? There was an iPad auctioned on zeekler for very close to retail price, good for the zeekler site, but not for the winners. If they had more frequency of items like this the entertainer auction bidder would be more susceptible to repeat his entertainment, and win at a bargain.
If they had agreements with suppliers to purchase product art wholesale they could definitely increase their profit margin.
It does take a long time to reach the chat line online, about 70-200minutes before you get to type to a support staff. I have done this 4times.
I guess I just say all this tell of my experience with zeekler, and zeekrewards. If we (all those that are concerned by posting or reading this blog) can change something’s , suggest some new practices, incorporate some working tax ideas, then why don’t we pool those resources together to be the driving force doe this MLM, to be a “legitimate” business instead of a ponzu scheme as it has been suggested?
Then the benefits would be for all and not just for the “ground level” few?
I signed up with $2000 as a Diamond Affiliate. Set my reinvestment of vip points at 0. The purchase of VIP point are non-refundable… I am trying to get my money back asap. Then I will play with the houses money before they collapses.
This is definitely a scam. NO Customer services, no banking in the US, “E Wallets” are BS set up outside the US. Also, I listened to a daily conference call with “Dawn Wright-Olivares and Peter Mingilis”,,, this was a complete joke…
They started out by saying it was a question and answer session and there were over 400 affiliates on the call. THEY TOOK 0 QUESTIONS.. and just babbled on about nothing…talking in circles with no specifics about anything….WHAT A FKN JOKE!! THEY SOUNDED LIKE UNPROFESSIONAL IDIOTS…
MY ADVICE IS TO REQUEST CASH AT THE CLOSE OF EVERY BUSINESS DAY. DO NOT “BUY VIP BIDS WITH YOUR CASH” GET YOUR MONEY BACK ASAP!! THEN SEE HOW LONG THIS CRAP LASTS…
Good advice. I think most of the affilates around here including myself are trying to do just that.
Do you mind if I ask when you joined, approximately?
Can someone use their 401k (self directed) fund Zw? Of course, you would have to roll all monies back into the 401k fund until you reached 59 1/2. But how would you pay taxes?
The so-called “leadership calls” is usually about Dawn and someone at the top babbling about how affiliates should be sheeple and not ask any questions, any problems you experience will be resolved in no time, blah blah blah.
The disastrous burger to eWallet analogy doesn’t help.
As Zeek themselves would tell you, “ZeekRewards is not an investment”.
(Whether that’s reality, I doubt, as I am quite convinced they’ll pass the Howey test)
Which brings me to a question I brought up with Troy Dooly…
Do you Zeek affiliates actually CONSIDER ZeekRewards to be a BUSINESS?
I mean, you are being paid with a 1099-MISC and all that… So you’re technically independent contractors…
However…
You’re NOT being rewarded for the amount of work you do, that’s for sure. Posting ads can be done in 2 minutes a day, as they claimed.
You *are* however being rewarded for the amount of $$$$$ (dough, moola, dinero, plata, greenbacks, whatever) you put into Zeek.
Are you actually exercising enough independent control over your business to be classified 1099 instead of W2? In your own opinion?
Or you just don’t know and don’t care?
Hmmmmm these zeekerrewards sound a like good old fashion ponzi.I BET if everyone was to pull out the company would collapse and feds would come in and everyone would be force to to pay back every penny on clawback charge.
If its to good to be true because …………
Jimmy and everyone I find the tax topic quite interesting and very curious – also learning a lot.
Now knowing jimmy is an affiliate, I have a question for you.
What are your plans in cashing out? Have you begun to cash out at a high rate? When do you personally think zeek will die? What will you do for the taxes since you are an affilliate and it is most likely that your expenses will be much higher than your income
Correct me if I am wrong but I just learned that to avoid a red flag to the IRS for an audit, your income should be at least 10% higher than your expenses. So if an affilliate decides to cash out at 0% while being in July one would lower Their chance of an audit correct? Assuming if it get close to the end of the year
Now if zeek don’t make it to 2013 or by the end of 2012, wouldn’t it r most likely that they won’t report the affilliate earnings to the IRS and there would be no 1099.
Wouldn’t that mean no one would need to worry about expenses or reporting their income – if they do just income they receive in their pocket only. I mean who’ll in their right mind report scuba think when they are bankrupt and trying to run away
Now Howard said that bids are expenses and it can be deducted and he also stated that if you set your repurchase to 100% for the entire year then you would have to pay no taxes and everything can be deducted but he never mention any danger such as an audit.
Why would a famous CPA not mention something as important as that. Are you guys sure people will be audit for claiming higher expenses than their income
Many have reported their 2011 taxes and I have asked many and every one of them told me that teir expenses are much higher than Ther tax and many had to pay no tax due to their expenses and they are so happy but what I do not understand is that you guys make it sound like people will get an audit if their expenses are huge but their income is low.
Well how come those CPA and those who been working for years never recommend those I asked the risks of high expenses. If to be safe from an audit, must be at least 10% higher than income why not the CPA tell these innocents
Now a few people mention being prepare to provide good documentation for an audit. Would printing out an affilliate back office daily rpp report be consider good documentation because as you see most people who joins don’t even know what they are doing.
They only understand they are receiving money and nothing else. Can you be more specific as good documentation would look or be.
When requesting a check or wire transfer, can’t the FBI track to see where is it getting cash/deposited. Something doesn’t seem right here….Some hands are getting washed here.
Came here to investigate this ZEEK THANG for a friend who is being seduced. Had a brother who LOST $110,000 in 1997 in a marketing scheme similar to this one.
After having read the entire thread I can tell you ; Its deja vu all over again ! ZEEK may continue to offer some of you income for a while longer BUT believe me when I tell you that some little 72 yr old woman who lives off her deceased husbands estate will call a States Attorney Office somewhere in Podunkville and her phone call (especially if she cant get an answer on the phone when her “payouts” take too long) will DRAG this whole thing down.
However, if you’re savvy you CAN make soem dough here BUT when the smoke clears and you learn that 1,000 little old ladys took it on the chin …you still have to live with yourself as your MONEY kept the beast alive long enough for the sweet gals to get TRIPPED.
We’re seeing lots of excuses from Zeek corporate. The “blame the eWallet companies” continue though at a much more subtle pace since affiliates & critics blasted Dawn for her leadership call where she Zeek didn’t have enough money in the eWallets to pay affiliates (Troy hinted that Zeek can deposit money but the eWallets won’t let them).
Here was a response from an affiliate who didn’t buy the “blame the eWallet” and actually contacted STP since he is 3 weeks behind in payments:
Hi all. Thanks for all the contributors for a lively and informative dialogue.
With out takings sides, I am a new affiliate and have mixed feelings about the whole thing. However, I did not anticipate any tax problems as a result of hoping to make a few measly extra dollars each month.
My question, has any actual person who is an ACTUAL affiliate of Zeek received an actual 1099 form and incorporated it into their taxes last April 2012 for the 2011 tax year? If so, can anyone please tell me the reality of it.
Does the 1099 form actually report your VIP points earned and represent that as income? Or does the 1099 form report the money that you actually withdrew and had in hand as income? A VERY important distinction and one I, for one, would sure like to know in order to anticipate what records I might need to keep.
Also, if anyone actually processed their taxes, how did they do it? I know we need to pay “experts” and CPA’s and Tax attorneys, etc do do our taxes in this country as our tax code is, well, that’s another story..but what did YOU do..what forms did you use and how did you treat your Zeek income and expenses? Thanks!
Interesting discussion. I joined as a diamond member on 3/18. I only found this website after I joined. Before I joined I did a lot of web searches and found more positive than negative reviews. I don’t care what you search on you will always find negative reviews.
So after reading through all the links at this site, I set my repurchase to 0. My up-lines are still positive but they are cashing it at the > $50k level and so they don’t have any/much risk in Zeekler.
So my plan is to get back my initial investment + a few K for my risk and then try and build it back up just in case.
So in one respect, if and when Zeekler is declared an investment then I’d be happy to pay taxes on schedule D as opposed to having to pay taxes on a 1099 misc and the self employment tax. Am I missing somethig and if so what?
My husband did receive an actual 1099 form for 2011, and it was a doozie. It reports ALL the vip points earned, even though he never withdrew actual cash last year. There is a report in the back office listing bids bought, etc, as deductions. The accountant handled it, but yes, we did pay taxes on money not received.
The accountant did ask if either of us understood the deduction report, I said not really. So if the IRS comes knocking, I’m not sure how that’s going to go.
I really don’t know how we will deal with this year if it lasts that long. This tax debacle would be enough for me to suggest people run, fast.
Nothing will happen to you, *but* your money may be frozen when SEC brings down the ban-hammer and close Zeek as “unregistered security”.
Jimmy and I suspected as much. According to ZR, you *did* receive it, but you put it right back in.
Well you may risk an audit right
You can always withdraw all your money before they put a stop on anything
So when the authoritss comes in all the affiliate will be safe plus they get their initial balance back like ads?
What happens to the big dogs?
K Chang
Yes you are right but it should had been deducted because zeek claims to be a business and for it to be a business one must have the intention to make a profit
Bids are a nescarry form of a profit so therefore they are business expenses that can be deducted
What Erin stated did not make sense because how did the accountant deducted her expenses and still pay for money she did not receive
She is contradicting herself
Jimmy didn’t “suspect”… Jimmy “knew,” because Jimmy received a 2011 1099, too.
Listen to the general tax advices from Howard Kaplan, in the first 8 minutes or so in the conference call from around February 20th 2012, that can be found on ZeekrewardsNews.com. Google “Howard Kaplan tax site:zeekrewardsnews.com” to find it.
He recommends people to keep their own track of the income, expenses and work related to ZEEK, and to understand the business model.
You can also take a look at the 4 post from Dan Matthews in this thread. I have linked to them a few posts higher up in the thread.
The IRS should audit ZEEK, not the individual taxpayer, and make sure the IRS themselves uses the correct tax methods. And THEN they can make corrections on the returns filed by individual taxpayers.
An explanation of the tax method for the IRS or an accountant should first of all contain the information that ZEEK probably is a Ponzi scheme. They will have to start from THAT viewpoint to make the tax methods become correct.
The business model can be explained something like this, but this is only a “raw model” where you’ll have to document some missing points and details:
HOW TO EXPLAIN IT FOR AN ACCOUNTANT:
“We have serious reasons to believe that ZEEK is a Ponzi scheme, and that the tax method they used for 2011 is incorrect — mainly in the part where RPP paid to the backoffice is counted as INCOME, and the purchase of sample bids is counted as EXPENSES.
Parts of this process doesn’t involve any real money, and will fail the tests for cash equivalence and constructive receipt.”
HOW TO EXPLAIN IT FOR THE IRS:
* “I’ll believe this problem will relate to ALL U.S. affiliates, so we should probably make this become a case about using the correct tax methods, methods that can be used for ALL the taxpayers involved, and avoid handling it on an individual level. The correct method should be to collect the necessary information from ZEEK, and then apply the correct methods.”
* “None of the taxpayers involved here are tax experts, and none of them has the right to collect information from the other party involved (ZEEK). So the information will have to be collected by someone who has the correct rights.”
* “When it comes to deciding which tax methods that will be correct, we will need to go higher up in the hierarchy of laws, and make sure the basic principles of EQUALITY BEFORE LAW can be followed, making the tax method become fair for every taxpayer involved.”
* “The main problem in this case is that ZEEK has reported the RPP as taxable income, and suggested the purchasing of bids to be deductions. Only a part of this process will involve real money.
A. When affiliates pays money IN
B. When affiliates withdraws money OUT.
The other parts are only ‘points’, some numbers in a database and on a screen.”
* “The main concern in relation to the RPP and other amounts paid to the backoffice is whether they involve any real money or are only points made out of thin air, giving an illusion of being real money.”
* “As an additional info, ZEEK seems to have used Sandy Botkin as a tax advisor. He was mentioned one time during a conference call, as the person who had recommended Howard Kaplan.”
THE STRATEGY:
I will try to direct this issue away from the individual taxpayer, and instead making it become a case about finding the correct methods that can be used for all of them.
The statements about “ALL taxpayers involved” and “higher up in the hierarchy of laws” will tell the IRS-employee handling the tax return that this issue probably is outside his jurisdiction.
The first step will be to collect the correct information from ZEEK through an audit, and the next step will be to identify the correct methods from TOP–>BOTTOM in the hierarchy of laws, not the other way around.
IRS has the right to collect information, the individual taxpayers don’t have that right. So THEY will have to do it, collecting the correct information from ZEEK.
The higher up you come in a system, the less they will focus on the specific laws (tax laws, etc.), and the more they will start to implement basic principles and previous cases in their decisions. This will usually result in a more fair decision than if you have a “me against the IRS” case.
NOTE:
I haven’t calculated the effect this will have on the taxes, but usually you will get a more fair result if the correct methods are used.
This is only a “raw model”. We will usually need a method like this to start to think in the right directions, but a raw model will never be perfect.
Zeek’s method will give you artificially high income and similar expenses, and I don’t think this will have a positive effect on the taxes. Zeek needed this method to be able to post a very positive Income Disclosure Statement, but the individual taxpayer shouldn’t need to fake a higher income than they have.
@Erin
A shorter and more understandable explanation of the business model can be something like this:
The RPP paid from the daily profit share is probably made out of thin air, mostly derived from the owner’s fantasy rather from any economical transactions in the business.
Like any other similar schemes, they are probably shuffling money around between different participants, from the ones who pays money IN to the ones who takes money OUT. And in the middle they have a system that makes it look like and feel like a real business, but where there is very little money involved.
Other Ponzi schemes have used similar methods. An example is online gambling sites like Full Tilt Poker, where the owners could withdraw huge amounts from the players’ accounts and only leave a small fraction in the system to support payouts, shuffling money around in the system to support payouts when it was needed.
About taxes:
“The CORRECT method will usually be the BEST method”. Other methods will usually have potentially negative effects. Some methods will make you pay too much in taxes. Other methods will make you pay too little, but then you will also face the risk of penalty taxes for the next 10 years, if the IRS discovers the method used as an incorrect method.
Tax rules have probably some basic rules for how to choose the correct method if two different tax methods both can seem to be correct. The correct method will then be the one that gives the taxpayer the lowest taxes, not the other one. And the taxes will be relatively fair if they follow all the correct principles.
The biggest problem with taxes and Zeek is the question about “expired points”. Basically, Zeek’s 1099 includes all RPP points in it, and Kaplan tells you to deduct the bids you give away.
However, there is no easy way to justify a deduction for expired points. This means at whatever point Zeek’s return starts dropping precipitously below the 1.1% necessary to keep balances growing, you lose.
Thank you M Norway, I will copy all your info and put it in the Zeek file.
For last years tax return he couldn’t very well declare it was most likely a ponzi, and then proceed to stay in this year, but could work for the future. Hopefully if an audit comes our way, they will understand the situation if explained. By then Zeek should be history.
hi bye…when you get a 1099 the IRS expects you to pay your taxes on that money, so it may be a contradiction, but it has to be done. Zeek says they gave you XXXXXX amount of dollars.
Even after deducting the bids from the total, it still *appeared* as if there was profit, so tax is due on that amount, unless you are ready to start explaining the ponzi thing.
Points are real money in hubby’s mind, so he’s fine with it all. I don’t know if he’d be considered a big dog, but I think pretty close.
So in the meantime, not spending any of the actual money received this year, don’t know what might happen. It might all be needed to pay this years taxes anyway.
I cannot open my id from few days please solve this problem
You mean you cannot login to your zeek rewards bock office?
A friend of mine had her website hacked. She lost right at $250.00 and was told that from all indications a hacker had been traced to New Zealand.
Zeek generates a lot of income for a lot of people. A hacker’s paradise.
Oh man, I just read this whole thread, a friend has been trying to recruit me for a few days and out of respect for the friendship I’m giving it due diligence. I started reading this around 7AM, it’s now after 9PM, along with other blogs I read yesterday and watching all the recruitment videos, I think I got it figured out.
You can make money several ways, the easiest is to just pump money into it and do the 2 minute a day ad posting thing and you get the average 1.5% daily ROI. You can also direct people to the auction site and make a percentage of their purchases (yeah right). Finally you can recruit people to join up and start making money in several ways such as if you are a diamond you get paid $3.50 a month for every diamond under you, you get a percentage from the purchases made by your first two levels of downline, ETC.
ZR pays all the money out with the money they get from all the income streams including the auction site. The basic idea from the pro side is that the auction site makes enough money to keep the whole thing profitable and the con side is that there is no way this ‘bottom shelf’ quality, penny auction site can be that lucrative.
I know there is a lot more detail to it than that but I think it’s a good summary.
It is working, the friend showed me his ‘back office’ statement and after 4 months he has it set up to be self supporting. There are people under him playing the auctions, some of them I recognize such as his Mother so I know they are real people and he is making little bits of money from them.
All total he is pocketing about $50 a day real money. It sounds like a real good thing, maybe too good! I’m trying to decide if it’s a scam or not but I just can’t seam to reach a firm decision but I’m leaning towards scam.
Well, if you choose to participate in a scam, that is your decision. As long as you go in with your eyes wide open…
Personally though, I think there’s WAY too much positivity surrounding this thing, as if they are hiding something. The fact they discourage curiosity is VERY worrisome.
@MikeD
You’ll most likely find his mother has put in $0 herself into the penny auctions and is either playing with retail bids purchased with your friends actual money (for referral commissions and matching bid points), or is just using free bids dumped onto her account by your friend.
$50 is small potatoes but will grow. Try and track any external non-affiliate money going into Zeek Rewards to support it all through your friend’s backoffice. If experience is anything to go by, actual money coming in will be near 100% from affiliates in one form or another.
All this about Zeek is Greek to me. In a few words, is Zeek safe to try.
Thanks
Randy, I would say no. Zeek Rewards is most likely a ponzi scheme, and with no way of knowing when it’s going to collapse (they ALWAYS collapse), it’s very risky to get started in Zeek right now.
Even if Zeek isn’t a ponzi near the end of its life, read these facts and see if any red flags pop up:
1. Zeek is supposedly making thousands of people rich just for posting one ad for Zeekler a day.
2. Zeek is very secretive about where it does its banking, and most likely does its banking overseas.
3. When you join Zeek, you give them money for bids which are given away, and then you have to trust them that they’ll pay you back with interest at some point in the future.
4. Zeek is very secretive about how much money the penny auctions are making, and how much of that money vs. money put in by affiliates is being paid to affiliates.
More red flags:
5. Zeek, a supposedly multi-million dollar business has only about 11 employees and extremely poor IT.
6. The zeekler.com auction site features only about 100 or so auctions a day, mainly low end stuff which is often bid up far past the value of the item.
7. Even if not a ponzi scheme, the Zeek business model is doomed to fail because it not only pays out 100% to affiliates for bid purchases, but is also based on infinite growth which is impossible.
In other words, it’s paying out more and more money to affiliates based on the idea that each ad they place every day will bring in more and more paying customers. In reality, there will only be a limited number of actual paying customers.
There are many, many more red flags but I don’t have the time to list all them here.
I live in Australia and have just signed up with Zeek Rewards but having read this I am now very concerned about the tax implications.
If US-affiliates are getting 1099s I believe that overseas affiliates should get a 1042-S and file a US Tax Return as the source of the income is from the US. Can anyone clarify this?
They just upped their entry fees which means that they are needing more money from the bottom to pay for the top. I was going to sign up at the $10.00 level but it declined my credit card which was a slap in the face.
I told my upline and he said that it happened to him the first time and to try again so when I tried the next day it went from $10.00 per month + $39.95 per year. I guess I saved myself from getting burned big time!
Wow lot of hot air on this thread. How is it that scary to put 10.00 bucks in and post an ad one time each day. Even if zeek dose not make it where is the big risk. So many on here trying to make others feel guilty or scared. Please we are adults and can make our own choices.
I have lost a lot more money in the stock market than i probably will ever loose in zeek.Sure its arisk,but so is just about everything else. So take a chill pill and stop trying to freak everyone out about what could be a better oppurtunity than some pump and dump stock scheme.
@Erik –
What if your bank absconded off with your money and the answer you got back from others was “sucks to be you, we are all adults here, every business transaction has risk, I’ve lots a lot more in the stock market”.
What if you gamble at a Casino and later learn the game is crooked. “All gambling has risks” right?
What if there is fraud and deception in that the way Zeek sells the business opportunity? “Life has risks, any business you enter has risk, it’s just risk/rewards, what’s the problem?”.
And my choice as an adult is to read this blog and stay informed.
I don’t think anyone here knows. But I don’t believe a U.S. company sends tax information to other countries, other than maybe Canada?
The taxes shouldn’t be any problem for you. The potential tax issue is related to U.S. affiliates only, where ALL the daily RPP was stated as taxable income for 2011.
You have to give the information yourself in your own tax return, if you prefer to pay taxes on what you earn. But don’t use the same tax method as Zeek did for 2011, use your own method instead. And have the necessary documentation.
As a taxpayer outside the U.S., I would have considered the passive investment part to be an investment, and I would only have paid taxes on the PROFIT from that investment (no tax when my initial investment is paid back to me).
I would have paid income tax for most other parts:
* commission from downline, if it’s withdrawn as cash
* other income from dowline?
As deductions, I would have used:
* membership fee
* other fees (compliance course, etc.)
* other expenses
* if you pay for retail bids, post them as expenses, but be able to describe why this method will give you a higher ROI.
In a worst case scenario, you should file a loss rather than income. But I can’t give you any answers on that topic.
NOTE:
I haven’t analysed the details here, it was a quick answer. But I would used my own methods rather than the Zeek-methods.
I have also used a very specific viewpoint here – my OWN viewpoint. I consider myself to be an ordinary taxpayer, not a small business owner nor an investor. So I will try to avoid too complicated tax methods, and the methods offered by Zeek’s tax advisor Howard Kaplan was really confusing.
The general tax advises was useful — “keep a track of expenses, income and work, on a daily basis”, “organize your documentation”, and “make sure you understand the business model, and are able to communicate it to an accountant or a tax advisor”. You can probably find them on zeekrewardsnews.com around 20th February 2012 — google “Howard Kaplan site:zeekrewardsnews.com”
As long as you only recruit your OWN family and friends, then it’s perfectly OK for most others.
By the way, where did you find that scary part? I can probably ask Oz to delete it, if something is too scary, and if it’s not a needed part of a dialogue between someone.
He can probably post some warnings in the article too:
You’re the first one who has been really scared here, so we will have to identify the scary parts first before we can decide what to do with them.
Just do we’re clear, the person posting as Erik, is not this one here.
@e
Are you sure you’re not scared?
…cmon, not even a little?
OZ, you mean:
@Erik
Are you sure you’re not scared?
…cmon, not even a little?
He’s either using my real name or has the same name as me. I post as e.
Nah I directed that at you.
Cmon you’re terrified, admit it!
Yes…I’m shaking in my boots terrified! You got me!
Phew it’s not just me then.
I thought I was the only who crapped my pants everytime I saw a $10 note.
Thanks for he info. I’ll check that out.
When my upline affiliate was here he said under no circumstance, never ever use the word investment!
First Jimmy banks and casino’s while they can both be crooked they can also be legit. Fact is Zeek has not been probven to be guilty of anything. All who call it a ponzi scheme are spewing opioion as if it were fact.
If and when they are in violation as such i will be the first to call them what the facts of law say they are.
Now OZ it seems you like to poke fun at those who like to point out the truth. Many have posted on here that they are glad they found this blog before they invested.
The scary part is that people like you refuse to believe in zeek and therefor your opioion should be fact or you will be condinsending and make fun of someone for posting the facts.
@Erik
There’s a difference between a scam and a CONVICTED scam. You’re trying to claim that a scam that has not been convicted is not a scam.
Second, you’re trying to portray a premise backed up by evidence and logic as “opinion”. Maybe you need to check the dictionary.
@Erik
“Belief” in a business model is idiotic. Follow the money.
There’s a reason there’s a complete lack of retail customers and nobody can sign up legit PRC’s.
In the meantime the only other revenue coming in is from affiliates, which means the money going out (specifically in the daily ROIs) is from affiliates. How much do they get? Depends on how much they put in, how much they continue to re-invest and how much (if any) they convince others to invest.
When asked directly if the majority of commissions being paid out is not affiliate money, Paul Burks states that this is “proprietary information”.
Please post some facts refuting this.
@Erik, because we share the same name, spelled exactly the same way, would you mind changing your user name? I have somewhat of a reputation to maintain and I don’t want people thinking you’re me (@e).
Can you please start using your last name or at least spell it different than the way I spell my name. Come on dude. I can’t have you embarrassing our name the way you do with these nonsense posts. Thanks.
It will probably become less scary if you know WHY?
You can partially find the answer in the number of real customers you have, spending their OWN money on retail or VIP bids.
Other parts of the answer can you find in your own motives, WHY you joined ZeekRewards. Did you join it as an income opportunity or because you like to buy bids?
The core of Zeek’s business model is the recruitment of affiliates, who can put money in and earn ROI on their investments. They can also earn commissions from other affiliates they have recruited to their downlines.
This is the main “product” Zeek is selling, the reason why people are joining and investing money. You might have believed the main product is bids, but the income opportunity is a much more significant part of the business than the auctions.
You didn’t join it to buy bids, did you?
Did it become less scary now?
OK Chang here it is:noun
informal
a dishonest scheme; a fraud:
So you tell me has this been proven???
Second im not trying to portray anything.You on the other hand seemk to think your logic is fact.Well in the real world facts make logic not the other way around.Stick with the facts instead of the BS.
OZ 1} Belief in a businees model has made me some serious money. Sorry it has not worked out for you.
2} How do you know there is a complete lack of retail customers? really zero customers….again not true. So your saying there is a complete lack of revenue other than affiliates….also not true.
I know people who have bought and used retail bids at auction.The auction revenue is huge compared to the item cost. If an item sells for 150.00 the you can simple remove the decimal point and see the real profit. As for affiliate revenue well yes it is used to run the company JUST LIKE ANY OTHER GOOD COMPANY WOULD DO.
e How about you change your name so the rest of the Erik’s can revel in the joy of knowing there is one less coward who has nothing to offer.
Norway thankyou for a level headed and repectful response.Yes i joined for the investment opp.However i have bought and used bids on zeek and qbids.I know a lot of zeeks cashflow comes from affiliates.
I also believe more money than many on here refuse to believe there are other sorces of revenue comming in. How much well currently we do not know. Many here would have you beleve because we don’t know it is whatever they say it is, or just a scam.
I will not believe something not based on facts. Nor will i believe its a scam just because someone says it is.I am a free thinker and have done quite well in that mode. Thanks for you input.
It passes the Howey test, so it’s an investment, yet it telsl you to NEVER refer to it as an investment, that it is not an investment.
Thus, scam and fraud.
Your turn.
@Erik, how many retail customers do you have buying bids from you so they can play the penny auctions?
Imagine there’s a box for you to fill in a 1, 2, or 3 digit number. In that box, there’s no room for a story…just a number. How many retail customers do you have______?
This should be a real simple answer for you.
Whether or not the majority of the ROI money paid comes from affiliates is “proprietary information”. There’s only one reason Zeek Rewards wouldn’t disclose whether or not affiliate money makes up most of the daily ROI.
Think about it, they’d be shouting it from the rooftops if retail money was making up most of the daily ROI.
In the meantime, all other signs (all the affiliates who have commented here, affiliates with access to downlines in the hundreds/thousands) have confirmed a complete lack of genuine retail customers.
Your beliefs do not interest me, follow the money.
Yes, we know affiliates buy retail bids through dummy accounts. This is for the matching points and 20% referral commission.
How many non-affiliate genuine retail customers do you know of who regularly purchase retail bids with their own money?
Each retail bid sold attracts a >100% liability for Zeek Rewards when you consider the 90 day ROI paid out on the bids and 20% referral commissions. The auctions being a money-spinner is a mathematical myth.
Lol?
So even you admit it’s a Ponzi. Thankyou for your time.
You tell em Erik! While Oz is wasting his time flipping burgers we can be building our businesses at Zeek!
Well I kinda overstated it a bit…
I mean we aren’t really building a business, all we really do is pay somebody $10 a month to post a daily ad for us. Pretty much a waste of money seeing as how Zeek doesn’t check to see if the ads are posted.
I mean really these critics are so damn stupid they don’t know a thing about the labor we put into our Zeek business. We have to type in a login and a password to drool over our VIP points, thats alot of work!
Damn Zeek critics just dream about our 500% annual ROI. But in the end they dont have the MLM and sales experience to make it in Zeek, what with all the products we are selling…
Well oz there you go again.Not one answer based on fact.Just your uneducated opioion.Ther are plenty of companies out there who make millions and don’t run there mouth about it. I myslf have owned a few of those.
And yes i know several people who have bought retail bids.The point was that you post inacurate info to imbold your possition….ie there are no retail buyers.
Just like your 100% liability—total BS.The ipad they paid $600.00 for sold for say $210.00.Is this a loss?
No just remove the decimal and they really sold it for 2100.00…..you would have people believe that there is no profit here. Yes there auctions could be improved but that dose not mean it won’t happen. These things are not myths they are facts.
NO I NEVER SAID THIS IS A PONZI SCHEME YOU DID.That has yet to be proven. Just because they use the membership fees and bid buying income dose not make this a ponzi scheme.
You on the otherhand could be on the other end of a very expensive lawsuit someday as you think it is ok to blog lies that may hurt many hard working people trying to better themselves.
Erik, you fail to understand what Oz said about the bids costing Zeek >100% liability, because every bid purchased by affiliates is added to their points and paid out later with interest. Every bid sold by an affiliate is paid out with points plus 20% commission.
So Zeek is not making $2100 on a $210 auction because they have to pay those bids back later (with 1.5% or so daily interest). As a business model, even if ZR wasn't a ponzi, they'd still keep going deeper and deeper into the hole.
Zeek isn’t about to sue anyone, because then all the secrets of their ponzi scheme will be laid out in the open for everyone (including federal regulators) to see.
The truth is always a defense in libel/slander lawsuits, and the rule of discovery means Zeek has to give up information. They could easily sue Randy Schroeder of Monavie for calling Zeek a ponzi, but do you want to place bets on whether they will or not? I don’t think it’ll ever happen.
If you “remove the decimal” the $210.00 final auction price is 21,000 bids not “2100.00”. How about a little precision here, please?
Also, those 21,000 bids did not generate $21,000 in revenue to Zeekler. If it was retail bids, they cost $0.65 and there were some BOGO promotions. If they were VIP bids, they are current BOGO promotions. So in the best case you have to discount that 35 to 50%.
Then you need to subtract the 20% commission paid to affiliates.
Then you have to add in what everyone else is trying to tell you – that there is matching VIP points that Zeek pays out in compounding bids that earn ROI for 90 days.
In other words, Zeek Rewards loses more money than Zeekler makes. That is until they drop the RPP to where 1 VIP point is worth less than $1, at which point, everyone cashes out and the entire Ponzi collapses.
Do you know any customers who have bought bids? Real customers paying for the bids with their OWN money, just to spend the bids in auctions? In case you know any, I can add them to my list (a very short list).
I don’t think anyone except you have talked about “retail buyers”. We have talked about “retail CUSTOMERS”. And “no retail customers” isn’t 100% accurate, but it’s very close.
The use of “Ponzi scheme” is related to one part of Zeek’s business model, the passive investment scheme where you can put money in (buying bids), and earn a 90 day ROI on your investment. NOTE: None of the following descriptions are 100% accurate.
Ponzi scheme is a business model where they use money from new investors to pay ROI to the old ones, with none or insignificant external sources for revenue.
Investment can vaguely be defined to any kind of “system” where participants pays money IN, where the main motive is to earn ROI.
So if you would have bought sample bids anyway (without the 90 day ROI attached to them), then Zeek is probably NOT a Ponzi scheme.
@Erik
Yes, affiliates through dummy accounts for the 20% commissions and matching VIP ponts. We’ve been over this.
Still no genuine retail customers.
Yup. Each and every bid used on that auction attracted a 20% referral commission on the cost price and >100% liability again when you consider the matching VIP bids paid out (90 day ROI = >100% the cost price paid out to affiliates) on each bid purchased and used.
Total liability is way over 100% of the cost price over 90 days on each bid used. $210 doesn’t even make a dent.
You just said it again. That’s the definition of a Ponzi scheme, taking in members money and paying out a daily ROI with it to existing members.
Perhaps you’re not reading the right comments. How about this? I’ll cite my source, and you cite yours.
There you went off the rails again.
The point is there are not enough retail buyers and purchased bids to make a difference. How many bids did those retail buyers buy in the last… month? How many bids did YOU and your DOWNLINES bought in the last month? Don’t forget to add up all the repurchases DAILY.
You’re counting the wrong things.
For each bid you bought, they’re paying out 20% commission, plus the RPP, which compounds at 1.5% daily for 90 days. That’s WAY MORE than 100%. You do the math.
You’re dodging the question. WHO is providing those profits? YOU and fellow affiliates, or real customers (not affiliates) who actually BOUGHT bids?
You did agree to all the parts of a Ponzi. You agreed that you bought the bids. You agree those are income, and you agree you share in that income. You paid yourself. Ponzi scheme.
You just won’t accept the conclusion.
Lots of interesting perspectives on here. Let me try to give a perspective of how this seems to work from an owner of an mlm company myself. I have owned a healthcare company for 13 years; 3 years ago we went mlm. With over 2,000 reps.
I was introduced to this by one of my reps no longer interested in our opportunity because he was making $6k a day with this. I called BS. He proved it. He was withdrawing and collecting $1600 a day. Seen his bank statements. I decided to look at it to possibly pull ideas from it for my own comp plan.
Your math is all wrong guys. The idea of 1.5% 100% liable doesn’t fly. The 1.5% is not a guarantee. Just this last week the payout over the weekend was only .8%. Zeek always stays profitable. You see, they take their daily profit, PROFIT not income, after all expenses, then take 50% or less and divide that by all the vip points sitting.
Example: all zeek reps have a total of 10 million vip point, zeeks profit for the day is 1 million, 50% to the points so each point is worth $.05, the bubble can’t burst if they only pay on PROFIT not on compounding interest of any kind, if zeek has a bad day so do you.
It is not at all uncommon to earn at this rate for a new company idea. Microsoft, Walmart, how many times did their stock double and split plus many of these growing companies managed to keep their dividends the same because their profits were rapidly growing.
Those companies EVENTUALLY slowed profits as 100% growth for billion dollar companies is almost impossible. But 1000% growth every year for million dollar companies is common. I once dropped $11,000 in TV advertising to help provide leads, total bust; we lost almost $9,000 of it.
Zeeks model works, they never give away even one free bid, affiliates pay for the bids, they never worried about going in the red from bad advertising, affiliates do the ads.
If the ads are poor and unsuccessful, zeek simply makes less that day and the payout is much less. You have to place an ad for products, the bid site, the retail site, the shopping software, yes they have more then the auction site, you have an ecommerce store. Affiliate ads to recruit DO NOT count.
As an MLM owner I understand affiliate pay outs and bonus pools, Zeek is simple, you qualify for the bonus pool at the bottom rather then the top. Instead of an equal share divided, it is divided by your point total.
Instead of some other companies bonus pools being 2% Zeek does up to 50% but still leaves 50% for them. If reps take all their payouts okay, then you just buy no bids and don’t get your example extra .05 for the new extra bids, it all makes sense.
It seems as though all of your growing bids would mean the profit per bid would be watered down, except that new reps are advertising and growing company profit as well as your ad from last week finally did something and got a response, if you place one ad a day and the ads stay on sites for weeks then growth will happen.
All of you out their saying it’s a ponzi scheme, well I agree the money may dry up eventually as the company seriously levels out growth and the 1.5% becomes .5% and is less attractive to newbie’s.
The numbers are difficult to understand but I went over and over them and every time the company ends up still able to pay even at 100% of reps cashing out. Of course less reps placing ads means failing revenue, it’s all connected.
@RenS
Engage your brain please, the 1.5% quoted is a rolling average over any 90 day period. And as for not being guaranteed, if Zeek Rewards pay out anything less than 100% of the money invested by each affiliate over any 90 day rolling period, what do you think affiliates are going to do?
Nobody is going to invest money into Zeek if they can’t re-invest enough over 90 days to wind up with a growing VIP point balance. All the marketing crap about posting ads is irrelevant, as is the retail stores and all the other recycles crap from past failed Rex Ventures opportunities that nobody uses now.
Cheers, marketing spin and psuedo compliance BS aside it’s plain to see if you follow the money, as you have done.
Thanks for being polite. You can see lots of people just go “Lots of bullsh__ flying around.” 😀
For doing almost nothing. It doesn’t ring alarm bells in your head, hmmm?
It AVERAGES 1.5%. It varies from 0.8 to 2.0%. Math ain’t that different.
The problem is points total keep GROWING, DAILY. Can profits keep pace? UNLIKELY!
Even with expiration of points, if you repurchase 80% you points CANNOT decrease. So you’re 20% IN PERPETUITY. Where is that money coming from?
It’s not goona burst. The VIP points is gonna grow so much that no amount of profit is going to keep RPP above the ‘breakeven’. Then everybody switches to 100% cashout, then the whole thing goes KAPUT.
As you can choose to ADD to your VIP points count (repurchase of bids) it definitely WILL compound interest. Are you *sure* you read the relevant parts?
Stock value rise is NOT the same as DAILY profit. Besides, stock is an investment, and Zeek insists it’s not an investment. So either they’re lying, or you made a bogus comparison. 🙂
So Zeek will go bust soon, is that what you’re saying?
Exactly. Affiliates PAID MONEY, generate profit, and Zeek turn around the profit and paid it back to the affiliates. Affiliates are paying each other. That’s called a PONZI SCHEME.
The points are NOT based on sales, but based on amount put INTO the company, i.e. products PURCHASED BY THE AFFILIATES. Thus, it is NOT a valid bonus pool.
You need 1.1% to balance out the expiring points. When the average falls below 1.1% everybody will switch to 100% cashout, then you will see whether Zeek actually HAS any money to pay out, because NOBODY will be repurchasing bids.
Again, affiliate pay Zeek, Zeek pays affiliates. It’s a money circulation scheme called Ponzi scheme.
And this doesn’t raise red flags to you? Even when their penny auction website would occasionally go down for a couple days, they somehow still made profits.
Joe Mama – no i ment what i said -every bid is NOT purchased buy affiliates only.Therefor to say all bids are subject to the same process is again a false ststement.
Oz is just full of half truths or no truth at all.But that is what many on here do when they have no real facts.[The truth is always a defense in libel/slander lawsuits] – I love that statement seeing as how there sure isn’t much truth here.
I guess i was brought up different….in my world your innocent until proven guilty.
Jimmy i knew you would catch that.Thanks for pointing that out.$21,000 SOUNDS ALOT BETTER…times how many auctions per day….you two seem to miss the point that not all bids are matched.
I think we can all agree that all the facts are not known therefor much of what is said about zeek is mere speculation. I will just point out that zeek has fulfilled every obligation to myself and many i know since i became aware of them.
Norway — lol I guess you need me to say it again..YES i do know several people who have only bought bids and are not affiliates.I know a few you know a few some else knows a few hey guess there are alot more than oz would have you believe.
A half truth is a lie plain and simple. It is not just affiliates buying bids. And the point i was trying to make about ponzi is that every dollar that comes into zeek is used in some way to run the business.
The point is we don’t have direct access to where all the money is used.Until then i will not call them a ponzi like so many on here do.
Oz –are you really that blind. Again not all retail bids are bought buy affiliates.And yes there are genuine retail customers.Each and every bid used in an auction dose not earn 20% comm.
HELLO membership fees and revenue from bids at auction are not in anyway part of a pozi scheme.
K. Chang–What happened to your source??No im still on the rails just keepin it real.lol
You like so many others on here have no facts just speculation.You nor i know the answers to the questions you ask me.I will only comment on what i do know.
What i do know is there are other penny auction site’s who also make millions on there auctions.But i guess zeek is the exception. Please get real…if they buy something for auction for $300.00 and it bids out at $40.00 then they just realized a profit of $3700.00.
This is done about 100 times a day or more. Profits are higher and smaller but you get the drift. And buy the way i share in the income generated buy the penney auction. Are the bids i buy part of the process, yes in that it brings customers to the table.
@Erik
…says you?
Meanwhile we’ve got a fair few affiliates telling us otherwise. Let’s face it, nobody is stumbling across Zeekler on their own and buying bids. It’s all affiliate traffic.
Affiliates themselves can’t sign up retail customers and you’re going to suggest that retail customers are just signing up themselves in considerable numbers?
Riiiiiiiiiiiiiiiiight.
Yeah they are. Please don’t waste our time with marketing spin, nobody is buying bids at Zeekler without the 20% referral commissions and matching VIP points. Zeekler’s auctions don’t compare to genuine penny auctions due to massive bid inflation from affiliates and there’s a neglible retail market (if one exists at all).
The “few people” you claim to know are not buying millions of dollars a day in bids.
Both are affiliate money, membership fees are 100% affiliate money and bid purchases are close to, so of course it’s a Ponzi scheme. Affiliate money being used to pay affiliate money through daily ROIs where returns can be compounded daily.
Textbook Ponzi.
How many genuine retail customers do you have that are not your friends and family, continue to purchase retail bids on a regular basis and are not just dummy accounts that you created to funnel your own money through to purchase retail bids for the referral commission and matching bids?
Any attempt to dodge the question with a mountain of irrelevant text will be marked as spam. All signs point to Ponzi and there’s a reason all you have is ‘we don’t have all the facts’.
Forget the facts we don’t have and work with the ones we do. Also you’d do well to think about why we don’t have the facts. Dawn Olivares was directly asked whether or not affiliate money went into the daily ROI, Troy Dooly stated if she answered that question Zeek Rewards would be out of compliance.
Paul Burks claims that revealing whether or not affiliate money goes into the daily ROI Zeek Rewards pays out is “proprietary information”.
Think about both of those facts for a second. Or continue to live in ‘we don’t know the facts *winkwinknudgenudge* this is not an investment’ lala land.
What you believe is up to you, but running around proclaiming with any certainty that Zeek Rewards is not a Ponzi scheme, based on the fact you know a few people who buy retail bids, is a drop in the pond against the overwhelming evidence and data pointing otherwise.
And did they spend their OWN money? I know about lots of people who have bought bids, who are not affiliates themselves. They are family or friends of affiliates, and don’t spend their own money when they buy bids. They have only said “yes” to act as customers.
The primary audience here is “normal people, without any specific profession (like lawyers and so on)”. It means we won’t repeat something if it’s commonly known among people, and we won’t use exaggerated level of details in specifications.
So this statement in my previous post was aimed directly towards you:
You fall outside the scope of “normal people”, the audience this blog is meant for. Most others here won’t bother to post disclaimers like that, but I did (this time). Try to google “nitpicking”?
I’m sure you have heard something similar before, when you have been thrown out a bar or something — “And never come back!”?
http://redwing.hutman.net/~mreed/warriorshtm/nitpick.htm
The trouble is, if you want to introduce nitpicking as a strategy, you’ll have to accept that and other strategies from others.
So my post here was only a reply to what I consider to be a flame warrior strategy, but what you probably consider to be your normal behaviour.
Are you SURE he’s not using a strategy against you? He has probably discovered the nitpicking style long time ago. One of the strategies that can be used is “give them enough rope, and they will hang themselves (with a little help)”.
Since you started to talk about truth, for how long have you been an affiliate? The time you have been an affiliate will place some of your statements into their right context, make them become more truthful.
It’s a theory backed up by factual evidence and logic. As you can’t disprove it, you’re trying to discredit it by renaming it “speculation”.
WHO BOUGHT THE BIDS? Are they affiliates or retail customers? You just kept on hawking it *could* be profitable, and that’s enough for you. You didn’t bother asking for the SOURCE of the money.
You’re tracking it wrong. You’re looking at bids SPENT. Profit is made when bids are PURCHASED!
(Ozedit: answer the question and stop wasting my time:
How many genuine retail customers do you have that are not your friends and family, continue to purchase retail bids on a regular basis and are not just dummy accounts that you created to funnel your own money through to purchase retail bids for the referral commission and matching bids?)
I quoted your definition of Ponzi scheme here, from an answer you gave to K. Chang.
I have a followup question:
Can a “Ponzi scheme” be considered to be a business model? Or is it limited to your definition?
Evidence shows that affiliates buy large amount of bids (up to 10000), and buy more daily as “repurchase”.
Retail members buy maybe 10-100 bids at a time and only enough to satisfy their bidding frenzy. Which means sporadic buying, in small amounts.
Simple logic would tell you even if there are retail buyers, their amount could not even come CLOSE to match the amount of bids affiliates are buying.
FTC defines legal MLM as something that has retail revenue comprising of a MAJORITY of revenue. Burnlounge got burned because it only retailed about 10% of its revenue.
Therefore, Zeek’s illegal.
Your turn.
@Erik
Even bids purchased by “external customers” that are not an affiliate’s own dummy/friends/family account relies in VIP bid matching.
So it’s still a Ponzi AND an illegal, unregistered investment even in the best case assumption that there are real retail customers, and also likely an illegal pyramid scheme with far less than than 51% of revenue coming from external customers.
Zeek is illegal in 3 different ways, and only 1 of those 3 need to be true to result in your definition of “scam”.
Also, don’t forget the “dishonest” answer of non-existant OFAC sanctions that ripped off affiliates in 6 countries and confiscated all of their VIP points with no compensation.
That alone would quality for “scam” even without the 3 illegal aspects of the business model above.
Are they regular customers? I’m trying to identify the number of real customers they have in Zeek, but so far very few affiliates have come forward with real customers.
Regular customers can be defined to be someone who buy bids a couple of times per month, or more often than that. And of course the other definitions too, like spending their own money and not family/friends.
“Nitpick” was the closest I found in the Flame Warrior Roster. And it IS a strategy, but it can also have deeper roots. Since I wasn’t quite sure, I included “what you probably consider to be your normal behaviour.
One of the reasons why we don’t exaggerate the use of details is because of some social factors, e.g. the risk of people being bored to death. You can probably try to google something to find a theoretical definition of “social intelligence”, so you can get the theoretical idea of what I’m talking about?
I have identified ONE real customer in 6 months. She spent $260 on buying 400 retail bids 4 months ago, and have later become an affiliate.
I have also identified ONE real free bids customer. She received 400 free bids, but didn’t like Zeekler very much. But she was interested in the free bids in the first place, so she could have become a retail customer if she had liked Zeekler.
In addition, I have found a few people claiming to know some customers, but they are usually very vague in their descriptions.
I have also found a few affiliates having PLANS for how to attract real customers, but most affiliates are focusing on their own downline instead of retail customers.
But normally, I won’t list each and every detail in each and every comment. So descriptions like “hardly any retail customers” and similar descriptions should be close enough for the primary audience here.
I could never get past the notion that with 20% commission and then matching VIP points , and with the RPP averaging 1.5% daily or thereabaouts, Zeek actually LOSE money on every retail sale made through an affiliate.
So it’s better for Zeek if affiliates DON’T make a retail sale (chuckle).
Zeek would need to be making a lot of retail sales from outside the affliate system in order to make money from the penny auction, which kind of removes the raison d’etre for ZR in the first place.
Now have even Troy Dooly agreed in “RPP isn’t money”
The reply:
And here’s an indirect link to the comments from Dan Matthews, repeated once again.
Dan Matthews is an accountant, and has added some basic understanding to the tax issue, without having studied the case in detail.
Is Zeek trying to pull a SpeakAsia on us, switching business model in mid-flight?
A “pivot” is real, and if they can pull it off, great. But if it’s just to divert attention from the potential scam then NOT great.
@K. Chang,
The question I would ask is, why prevents every Ponzi on the planet from changing their model to use virtual points? They promise profit sharing but not a guaranteed rate. They implement point expiration.
Surely that sleight-of-hand would still make them a Ponzi and an investment? So how is Zeek any different? (You see, I’m approaching this analysis from the opposite direction.)
Troy has got a few answers from top-down in Zeek, related to the taxes for 2011 and the 1099’s.
http://mlmhelpdesk.com/breaking-mlm-news-monavie-president-of-north-america-randy-schroeder-calls-zeek-rewards-ponzi-and-is-suing-two-former-top-distributors/#comment-60887
The discussion is around the same place as the link.
1. It started with a description from me — “ALL the RPP paid to the backoffice in 2011 was posted as taxable income in the 1099, whether or not people had withdrawn any money”. The description was picked up from the MMG forum, from random search hits about ZeekRewards and taxes.
2. Troy got a reply from Zeek
Since I’m not an affiliate, I will have to verify what was actually posted in the 1099’s.
There’s one red flag here in the answers from Zeek. Instead of identifying that they are talking about the same thing, they’re wordsmithing it into different descriptions, e.g. “accrued income” and “accumulated RPP”.
3. Then there’s a few posts trying to clarify whether we’re talking about the same things or something else.
4. Then he has got an answer from Zeek:
“The points accumulated” can both mean the VIP points or the total RPP paid to the backoffice. But since I already had eliminated the VIP balance at that stage, the answer is probably about the RPP paid to the backoffice.
From my viewpoint, commissions should be one of these:
A. The commission paid to upline, when an affiliate buys more sample bids — the 10% and 5% commission to his upline in 2 levels (if they are Diamond affiliates).
B. 20% commission from the sale of retail bids to customers.
C. Any other more insignificant commissions, like the commission you can receive from people paying their membership fee.
5. And then he got further details:
“None of the RPP is ever counted for 1099” means affiliates who didn’t earn any commissions didn’t receive any 1099 for 2011 ???
“When an affiliate request a portion of the RPP balance to be converted to cash” will normally mean when he’s requesting a withdrawal ???
From Zeek’s description (through Troy), the problem doesn’t exist. RPP reward points from the daily profit pool has never been stated as taxable income in the 1099 if they haven’t been withdrawn as money.
6. But then, in the same comment, he starts to mix in how the daily RPP is being displayed in the backoffice, as “cash available”:
“Converted to cash available”? Most affiliates describes them as they’re being displayed in the backoffice as “cash available”.
“Some of the confusion did come from the purchase of bids”, and there we’re back again to my initial statement about “all the RPP paid to the backoffice was reported as taxable income in the 1099 for 2011”. Troy has only added a few more details to the description, like “RPP points being converted to cash available”.
RED FLAG
Dialogues like this should raise a red flag if you’re trying to establish facts. Troy is probably repeating what Zeek has told him, but they have dragged him through a complicated description where lots of possible misinterpretations can be made, just to end up close to the starting point.
This is a commonly used method designed to confuse people, or to make them focus on some specific parts of a dialogue and ignore other parts — what we basically can call “misleading people”.
Can someone confirm the process where RPP reward points are being converted into cash available in the backoffice? A process where you’ll have to REQUEST them being converted into cash?
Okay Norway, I’m trying but didn’t understand most of this. Is there something specific I can try to find out for you to help sort it out?
As far as I can tell, total point balance, bid balance, whatever they want to call it was on the 1099 for 2011. No actual money was received last year.
I’d contact you direct but I can’t see there is any way to do that?
This is part of the year end report from back office, i’ve removed $ amounts, except where it says $0 received, that is correct.
It looks like bids given away are calculated as earnings. Then there are pages and pages and more pages of bids given away.
If I’m understanding what you guys are trying to figure out correctly, it seems pretty straightforward.
If you use points to reinvest and grow your balance, they are considering that as converting them to cash and then buying the bids.
So they are considering points used to purchase more bids as income because they would technically be converted to “cash” before being used to buy the bids.
The YMMSS/Success Through Advertising doubler ponzi did the same thing, but instead of buying bids you were buying advertising.
When your position cycled from say $160 to $320, if you left it in to double, they considered that as $320 in earnings.
There was quite a fiasco over the 1099s issued based on that info.
@Erin
Thanks. I didn’t have the time to look into it earlier today, but I will use it.
The dialogue in Troy’s blog was directly confusing. I didn’t get any real answers, but a few of the details there has some value. I’ll need to sort out the usable information.
They probably have a big problem if they consider purchasing bids to be equal to “converting to money”. We can’t convert points to money in that way, there has to be real money involved for something to be posted as money.
If they pay out in points, and the points is used to buy bids, and that purchase of bids is used to calculate daily profit share, there’s partially no money connected to the growth of points. There shouldn’t be any tax liability connected to it either, since the profit is only (partially?) virtual.
If there is any tax liability connected to it, it will be the real money backed value, not the virtual value.
A similar principle should apply to commission when it derives from reinvestment of points.
The 1099 received in February was false and misleading as far as I can see. The IRS will eventually have to collect the correct information from the origin of the 1099’s.
YMMSS/STA:
I had a look at it, but the problem there seems to be different. First you had missing 1099’s in YMMSS, then you had false 1099’s when the scheme changed to STA.
They had a similar system of virtual currencies, AdUnits instead of bids/RPP/VIP points. The use of virtual currencies is a classical method in most Ponzi schemes, as a method to create the right feeling of money growing.
I don’t see what the problem is here.
Everyday you get a Retail Profit Pool (RPP) award in cash. If you add that up over the year it should equal the amount of income on the 1099.
If you choose to buy bids with some or all the cash award then that will not affect the 1099, you have still earned the same amount. The bids you purchase are then given away so they are an expense.
If you repurchase 100% all year and not take any cash out your 1099 will show the total of the amount earned as income. All you need to do when filling in your tax return is claim a deduction for all the bids you purchased and gave away.
The points have no value and are only there to work out your share of the Retail Profit Pool. Or am I missing something?
@OzzieGaz –
Yes, your explanation is exactly how I did my 2011 taxes. The main issue for me, and what I raised on here, is not whether the bid purchases are deductible, but that:
1. The very high revenue to deduction ratio will trigger red flags especially for those filing on Schedule C as sole proprietorship. The lack These are the most scrutinized of all business tax filings in the US.
2. The lack of any or much cost from any other parts of your schedule C.
Take a look at the 2012 Schedule C(http://www.irs.gov/pub/irs-pdf/f1040sc.pdf). Taking a Zeek distributor that: you had $100k in revenue and $110k in deductions for 2012. Your net income is at a LOSS and you claim a $10k deduction.
What does your expense profile look like on your Schedule C?
Line 8 (advertising): – $110k
The rest of the expenses? Perhaps throw in some office supplies and deduct use of your home as expenses, but when the IRS audit red flag detectors run:
A) It will see the huge advertising number and lack of revenue (greater than 1:1 ratio)
B) It will see this is your first year in business
C) It will see you have no inventory
D) It will see you are running a business out of your home
E) Filing as a sole proprietor on a Schedule C
F) Depending on your other income, and how much you made in Zeek, it may see a sudden spike in income compared to previous years
You add up A-E (even without F) and now you have risen to the top as far as audit candidates.
I’ve lived in the MLM world for many years and have gone through multiple IRS audits (where they audit not just the year in question, but also 2 prior years; or the year before and after if they don’t audit you for a few years).
@Jimmy
I see the problem; it is that the IRS haven’t caught up to date with internet business and don’t live in the real world.
I am curious. If someone is sending funds from their e wallet to another person’s e wallet, would the receiver be subject to paying taxes? Would that be consider income?
I understand the argument about retail bids not generating real money into the auction. However, all of the big ticket auctions require VIP bids. These VIP bids cannot be given away, they must be purchased at $1.00 each and do no earn 20% commission.
All of the free bids (retail bids) cannot be used on big ticket auctions and only work on the beginner auctions.
What big ticket auctions?
@Jimmy (or anyone else)
Does this explanation from Zeek Training Center show a correct picture of the backoffice? I’ll guess it does, but I have some followup questions, too.
http://zeekrewardsnews.com/training/zeekrewards/rpp-retail-points-pool/
What kind of information does the link in “Cash Available” lead to?
I’ll guess it leads to a detailed list of the different income streams (commissions, rewards from the daily profit pool, commissions from sale to customers, etc.). The link to “2011” indicates it also shows the history for 2012.
The recommended repurchase level is 100%. What’s their main explanation?
I’m trying to identify exactly WHERE and HOW the reward points from the daily profit pool is “converted” into money. Do you have any information? “HOW” means probably either “Automatically, done by Zeek before the numbers are displayed” or “Manually, done by the user each day / one time, by clicking something”.
(This post is related to the tax issue for 2011)
It looks like they have changed the system? Last time I checked, the VIP bids were used in relatively ordinary auctions, giving the impression that they try to replace the retail bids with VIP bids as the main retail bid type.
I counted the auctions 3-4 weeks ago, and half of them used VIP bids, the other half was about retail bids and free bids. So people are buying much more VIP bids than 4 months earlier, on the expense of retail bids. The retail bids looked more like “last year’s model”.
The items they had in the VIP-auctions weren’t exactly “big ticket”, but they were slightly more expensive than previous items in retail bid auctions.
Note: I haven’t focused on the auctions, I have only checked them a couple of times, just to know what the others are talking about here.
Zeekler FAQ:
Zeek Rewards FAQ:
From memory only affiliates can purchase VIP bids or if customers can too, they follow the same commissions structure as retail bid purchases (referral commission + matching VIP points).
I too have paid little attention to the auctions in a long time due to their irrelevance. Might have to leave this one to Jimmy for clarification.
Here’s an example of VIP bids being wasted due to compensation plan inflation: http://www.zeekler.com/auctioninfo.asp?auction=49176
Current auction price is $555.92 and rising, retail price of the iPad is $499. I think these are just bids bought through dummy customer accounts by affiliates for the commission and matching points.
Quite clearly those affiliates bidding hold no value in the bids they’re churning through and just want to recoup an extra $499 via the cashout option. No legit customers (let alone 5) are biding $100s over retail.
@M_Norway,
Yes, that image is a correct and current view of the back office, which hasn’t changed since at least Aug 2011 that I am aware of.
The “Cash Available” is the money that you can:
1. Request to withdraw via STP, Payza, NxPay, and in the past via check
2. Buy more bids
If you set your reinvestment percentage to any number > 0%, Zeek will automatically deduct that day’s profit share aware from your cash available and buy bids for you. The repurchase is not instant and you can receive cash from different sources:
– daily profit share
– 20% commissions from retail customer bid purchase
– 10% commission from any earnings on your level 1
– 5% commission from any earnings on your level 2
– matrix commissions
– commission on monthly subscription fee
When you earn from any of these activities, it lands in “cash available”. Then later on that day, another run goes through and “reinvests” based on the % you specify.
This is why I said previously that “everything is paid as cash”. You have the “cash available” in your back office to withdraw each day. The process of “reinvesting” is Zeek puts money in your cash available, then Zeek takes money out of your cash available.
VIP bids cost $1 each, but everyone buys them with the automatic BOGO offer, so they really cost 50 cents each retail.
You also get VIP bids as a premium subscriber, so Diamonds pay $99/month and get 250 VIP bids to spend in the auction.
You DO earn 20% commission on all retail bids purchased, whether they are “paid retail bids” or “paid VIP bids”. You also get matching compounding VIP points for each dollar spent, so Zeek has greater liability than it gets in cash… it gets cash now but promises to pay out MORE in the future.
With apologies to Dawn and the Hamburglar, Zeek would gladly pay you next, next, next, next Tuesday for a hamburger today.
That’s what I was thinking, cheers for the clarification.
I find it easier to just think of any bids customers can buy as “paid bids”, seeing as they have the same liabilities.
@Erin
If you’re still collecting information about the tax issue, the link in one of my previous posts to “RPP Retail Profit Pool” is something you will need.
There’s probably a flaw in Zeek’s tax methods. Points can’t be “converted” to money. They can be REPLACED by real money, but you can’t convert them by renaming them or by other methods. So when the daily reward points are presented as “Cash available”, it won’t make them become “cash equivalence” or “points with real money attached”. When Zeek pays money out as withdrawals, they will replace the points with real money — not convert them to real money.
When a newly recruited affiliate makes his initial purchase, e.g. $1,000 for 1,000 sample bids, there’s clearly some money connected to the purchase. So his purchase generates $100 and $50 in commission to his upline. Zeek keeps the $850, and the affiliate gets 1,000 VIP points.
When that affiliate gets his daily reward points for 90 days from his initial purchase, they are only “points”. If there is any money connected to them at all, it will be much lower than the “$1 per 1 point”.
When the affiliate reinvests his daily reward points, he is not bringing any new money into the system, and the purchase is connected to his previously earned “points” rather than to money.
Being paid in “points” shouldn’t be taxable income, and a huge part of the daily profit share seems to be calculated from “points”. The “points” part of the “Cash available” shouldn’t be posted as taxable income, but other parts of it may be taxable. Spending “points” on buying sample bids shouldn’t be deductible, either.
What makes something taxable or deductible here is what it derives from, whether it derives from identifiable sources that clearly can be identified as MONEY, or from vague sources that probably aren’t backed up with money (like the daily profit share).
Paying for something in “points” should normally not generate any revenue or profit. Yet Zeek seems to include the repurchase of sample bids in their calculations for the daily profit share, even if it doesn’t have any stream of money connected to it.
I can probably write something easier to understand for accountants, tax advisors, the IRS, and similar targets — something more “organized” than the comments I have made here. The comments I have made here have been about analysing the problem, not about presenting it for a specific audience.
The “Cash available” reminds me of “Mortgage Backed Securities” from the subprime crisis, aka “Toxic Securities”. 🙂
A few of the income streams there are subprime, and information about them is “Proprietary” and impossible for people to verify.
Thank you Norway. Appreciate the info. Feel like I paid taxes on Monopoly money. It’s bad enough paying on real money 🙂
We did the 2011 taxes similar to Jimmy, but still ended up with some taxable income, even though there wasn’t any actual cash withdrawal. Hoping the ponzi is exposed and falls before too long.
Membership CC charges from mid-July coming from South Korea, where’s that new US bank?
Is now a good time to re-examine?
Have the “authorities” spoken yet?
Those who listened to Oz and “the critics” didn’t lose their money.
Because when I met Oz and BehindMLM, I realized the writing was on the wall. I am thankful I saw the light and cashed out as much as I can. You wrote the above 6 months ago. Have you recruited anyone in the last 90 days who are not screwed? What are you going to tell them?
More like truth, rational thought & independent thinking. What’s that about putting me right?
BOOM! Goodby scammers!!
Hey as Of August 18th 2012. Zeek rewards has been shut down. Unfortunately I Read this article too late(this previous week) before I could take out my money.
I appreciate all the hard work everyone did one this website to promote facts and analyze of the market I trusted. Although I didn’t trust the right company and do enough research, I’m glad there are people out there trying to give out the facts and fight people who scam people out of their money.
thank you for being the good guys. Keep doing what your doing and I’m sure you will be able to save more people from scams over time.
Hopefully I will be able to get my money back and make better decisions in the future. My heart goes out to all of those who lost their money like me. Again thank you guys God bless and stay safe.