Online Marketing MLM Schemes & Scams, iJango & Over-Hyping

July 20, 2009

As per usual, I’m writing this first sentence last – after having just finished this post.  It looks like this might be the longest post I’ve written on here in quite a while – it basically discusses all things that are either scams, overhyped, etc. with a special focus on online variations.  Please share your thoughts with me!

Item #1 – Great House for $190 Per Month

A few days ago I was in the car listening to the radio while on the way to pick up lunch.  I do this most days.  When the local sports-talk show went to a commercial break I heard an ad with two young ladies talking about how one of them just bought a 3 bedroom house.  Her friend said something like “but we make the same salary, how can you afford this?” and the first girl (who just bought the house) said something like “I only pay $190 a month, that’s less than my rent was.”  The commercial then proceeded to try and give you a free list of foreclosed and auction homes in your area.

In fact, I’d heard this commercial before – several times.  But the price the girl paid has changed a few times.  She must have a thing for buying houses.  Last time it was like $350 or something.  Now its $190 for a 3-bedroom house.  I believe she said the total selling price was $15,000 to $20,000.

So what gives?

To be honest I don’t know.  But I don’t really care either.  What I do know is that if I call that number, get their “free” list and try to duplicate this myself I’m not going to find a nice 3-bedroom house with decent amenities in a nice neighborhood that I’d want to live in.  And I’m a reasonably smart, resourceful guy.  Its either a complete dump that is condemned, or there’s something else we’re not hearing here.  I’m sure my friend who are more knowledgeable about real estate and investing could shed some light on this… but it doesn’t really matter.  This is a get-rich-quick type of scheme here.  Except its not the guys getting the free list of foreclosed houses that are getting rich quick.3

I’ve got a healthy skepticism here.  I think most people do too.

Magic Bullets, Luck and Odds

Watch TV late at night and you’ll see the same type of thing.  The only one I can consistently remember by name is Carlton Sheets’ No-Money-Down real estate investing program.  I don’t doubt that the 5 people he has testify on the program actually did make some good money for only $95 or whatever his program costs.  But I do know that for every one of those people there are 999 more than made nothing.  Its not necessarily that he has a bad product, its simply that he’s packaging it as a “magic bullet” when really its a number of tips and tools that can assist you, but only if you really put forth the effort, make good decisions and probably have a bit of luck too.

So if Carlton’s system helps 1 guy out of 1,000 to make a ton of money, and the other 999 simply lose their $100 or whatever, is this a good business?  I don’t mean is it profitable, I assume it is.  I mean is this an ethical way to make money?  Is he a good guy?  Should he change his approach and tell you “look most people who order my system don’t make a dime, but most of the time its b/c they never act on it… and really my system is simply and handful of tools that will help you… its still your inputs that matter most.”  Something tells me if he pitches it that way it won’t sell quite as well.

So whether its Carlton Sheets’ system or someone else’s system or just a few tips from someone you know and trust… that’s not the point.  When it comes to real estate investing I think you can be successful if you have four things:

  1. Intelligence and “street smarts”
  2. A favorable market
  3. Good timing
  4. Luck

In fact, really timing and luck (which I might argue are the same thing) are the most important here.  If you could go back in time, go back to 2001 and buy pretty much any house on the market.  Just buy it.  Don’t even negotiate the price.  Get yourself a map of the local area, put on a blindfold and throw darts at the map.  Wherever the darts land, buy the nearest house.  Then, sell it in early 2006.  If you would have done that, you would have made great money.

Exhibit #2 – Why Won’t He Tell Me What the Product Is?

A guy called me the other day after having left me 1-2 voicemails the week prior.  He said he understood that I’m in online marketing, and he was a web entrepreneur himself.  Great.  We’re practically brothers, really.  Anyhow, since it was at least relevant to online marketing (he wasn’t trying to sell me a new long distance phone service carrier) I decided to give him 2 minutes to hear his pitch.

He started by asking me dumb questions like “are you looking to grow revenue?”.  Well, sure I suppose am I right.  Who isn’t?  Its just a matter of how that fits in to everything else.  Lately I’ve been working 60-70 hours per week, so if “growing revenue” means working more than I’m probably not interested.  I gave him some indecisive response so as not to humor him but to let him proceed.  He then asked if I was looking for multiple revenue streams.  I said “no”.  He was surprised.  I then told him that my issue as a business owner is not that I’m not offering enough.  Nope.  I’m doing too much.  I want to do less.  Multiple revenue streams to me means multiple service offerings.  I don’t want that.  I want fewer.  I want focus.

Anyhow, I let him talk for a total of 2-3 minutes before cutting him off and disposing of him.  By 3 minutes in he still had not told me what his product or service was.  He hadn’t set up my business need or anything.  All he talked about was how I was going to make more money.

I’ve got a healthy skepticism here.  I think most people do too.

More B2C than B2B

I’ve generally found that most small business owners and executive-level professionals are not stupid.  Sure, there is the occasional guy where you think “how’d he get that job?”.  But generally speaking, people in decision-making spots are there for a reason.  They can sniff this stuff out.  That’s why you don’t see too many B2B get-rich-quick types of scams.  I think this is b/c in a B2B environment, the decision-maker is someone that has had to (at least on some level) earn their way or prove themselves before getting decision-making power.  They are not ignorant.  They are not desperate.  They have a filter.

To be successful, an MLM or other get-rich-quick scheme generally must:

  • Sell the dream, not the product
  • Prey on ignorance or desperation

This is why I hung up on the guy who was trying to sell me “multiple revenue streams”.  Its a shame too.  I decided to do a little digging and it turns out he is selling video spokespeople for websites.  I’m actually in the market for that.  Had he called and said “hey I have this service offering video spokespeople – here’s how it can benefit you and here’s how we’re different than other similar services” than he might have had a sale.

So point #1 – “sell the dream, not the product” is why this guy on the phone was talking to me about growing revenue and being rich rather than about his video products.  Its also something we see things like iJango (discussed later on).  They talk about how it will change everything, and how you’ll make money, how cool it will be, etc… but not much about “what it actually is”.  I’m picking on iJango here, but many other products / programs do this even more so.

Regarding point #2, I think that’s why this sort of selling practice is more prevalent in the consumer world (B2C).  There are more prospects, and more of them are trusting.  That said, this is where some of the recent B2B programs that offer online marketing services are competing.  Services like Yodle and Local Ad Link… its not that the small businesses they prey on are ignorant… its that they are ignorant about the details of online marketing, SEO, etc.  This is where these services leverage deceptive wording like “we’re partners with Google” and similar such claims.  This is where they make their pitch.  Hopefully, as business owners in general become more knowledgeable and more comfortable with the web, they’ll be able to detect these types of schemes up front.

Exhibit # 3 – Conversations with Two “Make Money Online” Guys

Back when I was still in Baltimore I met two guys that were into online marketing, who happened to be two of the more “professional” guys that I’ve met in a while. Between them, I learned some interesting things about the “make money online” crowd… which before I had equated to the internet’s version of late-night infomercials.  They were kind and trusting enough to speak very candidly with me, as I had earned this through building a relationship with them.  They didn’t BS me.

The first guy owned a fairly high-end PR service.  He was a successful self-made businessman.  He was also very bright, and generally not a pushy salesman type.

I knew him vaguely for a couple of years, having used his PR service a few times.  Then one day I got an email from him that was totally trying to get me to buy some silly e-book about how I could make money selling domain names.  I was quite surprised, as I did not take him for this type of business guy.  In my mind, he was “high-end” and this was a “low-end” type of thing.

So we had lunch.  We chatted about online marketing, his PR service, etc.  Eventually I asked him about “domaining” and about his e-book products.  I was skeptical as to whether people actually bought this type of get-rich-quick product?  He told me they did.  What’s more, he told me that he didn’t even really run this mini-business of his, but rather he had a partner who did most of the dirty work.  He brought two things to the table – his name (which was worth something), and his list of contacts of people who ran online businesses and thus were in their target market.  This was significant.

So I then asked him some more about this…  He said that he would sell an e-Book for $20 and then pay out $15 on Clickbank or where-ever to his affiliates.  Rough math… $5 or 25% profit.  Eh, that’s okay – but running the rest of the math he provided me this didn’t really seem like it would be worth this guy’s time – given his opportunity cost.  That’s when he gave me the golden nugget.  I’ll have to paraphrase:

Jon, selling my own products isn’t where I make my money.  I only keep 25% there.  Its selling everybody elses.  That’s when they pay me the 75%.

Ahhhhhh.  The light went on for me.  He then said that basically he has a group of himself and like 6 or 7 other guys.  Each of them create the occasional e-book.  Then they offer it for sale and their buddies promote it to their contact lists.  The buddies make 75%.  In turn, the guy who created the book now makes a bunch of sales and gets a  bunch of email addresses… email addresses of people he knows are willing to buy get-rich-quick and make money online types of products!  Thus, when the next guy has a new e-book for sale the guy who just sold the product now has a bigger list to contact, and more people to make 75% off of.

This is genius, I thought.  True genius.  I wrote it down and put a star next to it.  This was 2 years ago.  I haven’t done anything about it though… as I haven’t found a way to apply this model to a more legitimate product.  Did this guy make a lot of money?  Yes he did.  I know this for a fact.  He sold e-books about how to make money selling domain names.  After further discussion, he told me he makes 4 times as much money selling the e-books about selling domains than he does actually selling the domains.

Takeaway = The best way to “make money online” fast and easy is to sell other people’s e-books and info products about how to make money online.

Okay now for guy #2.  He was a successful mortgage broker who used SEO to get a bunch of leads and make a bunch of money with the real estate market was up.  When it went down, he decided he would rather get into the SEO world instead.  He contacted me about a job, but I was hesitant.  He had very little experience plus he had one of those “make money online” blogs.  It turned me off.  It was surprising too b/c he was so polished and professional.  In a room of 30 SEO guys he was the last guy you would put into that category, based on appearances.

Anyhow a year or two went by and he was pushing out stuff on his blog like 5 times a day.  He was very active.  He also had his own SEO firm he was starting.  His blog talked about how he made money on this, made money on that, etc.  I assumed he was doing well, which wasn’t surprising.  He was (is) a smart, go-get-em kind of guy…

Then one day I saw he was back into selling mortgages.  I asked if the market had turned around.  He said no, it hadn’t, but he just needed a steady income.  I was surprised as I assumed he was doing well.  He basically said that he made a few bucks but not anywhere near the equivalent of his previous full-time efforts, and not enough to replace the income he needed from a full-time job – despite the impression given on his blog.

So we got to talking a bit and he told me he had tried many programs, etc. to varying degrees of success, but it was his opinion as a “make money online” guy that –

The only way to make money online is to sell other people’s stuff about how to make money online.

Interesting.  Note that we’re not talking about ways to run a business online and earn an income… We’re talking about the get-rich-quick type of system.  Do a Google search on that phrase and you’ll see what I mean.  Its the modern-day, online version of the late-night infomercials on real estate investing.

So between these two guys I put together what I felt like was a pretty good idea of what would and wouldn’t work in this “make money online” industry, and how the nuts and bolts worked out.  This is pretty valuable information.  That said, both of these guys basically told me that there was like 10% of the population that they cared about… These people didn’t buy 1 of these types of products, they bought many of them.  They weren’t poor people looking for a way to make a buck either – they were middle-class.  They had decent jobs and a little bit of disposable income (so they could afford $20 on an e-book 2-3 times a month without worry).  And while they had some ignorance (my point #2) it was more of a lack of knowledge about business in general and about online marketing.  Otherwise they were reasonably smart and confident people.  However, they were still desperate.  They didn’t like their job.  They wanted to go from middle-class to rich, and they wanted a jumpstart.

Something about this though just didn’t sit right with me.  I guess you could do like I surmise Carlton Sheets does and say “hey I made 10 guys millionaires this year” or whatever, and just write off the 99% of people who didn’t benefit from your system as a cost of doing business, or part of the process.  I guess he still really helped a few people.  You could view it that way and then probably feel good about yourself – feel as though there were a few people out there whose lives you really helped to change.  But I couldn’t do that.  I couldn’t do this.  I couldn’t go into a model where I knew that the vast majority of the time I’d be taking people’s money and they’d be getting nothing out of it.  What’s worse, most of these people were almost addicted to the type of product.  I would feel like I was really taking advantage of people.  But I don’t know… its a tough conundrum here.  Take $20 a piece from 99 people and they get nothing in return, but the 100th guy gets a lot from the deal (many times his $20 worth).  Is this a good thing?  I just don’t know.  Maybe it is?

Scam vs. Overhyped

I’m reluctant to call many of the things I’ve discussed in this post “scams”.  You can play the lottery and not win.  In fact, just about everybody who plays the lottery doesn’t win.  You lose your money, and you don’t get what you sought after.  Its not a scam though.  Why?  Perhaps b/c we know the odds are so low going in?  Perhaps b/c its not over-sold or overhyped.  But many things are overhyped and yet I still put them in a slightly different class…

So what about the Nutrisystem commercials or the latest Bowflex ads?  I see guys there who had a little spare tire (like myself) and now 90 days later or whatever they have 6-pack abs.  Not only that, but they got a haircut, new wardrobe, a tan and they’re smiling too.  Bowflex gives you a tan as well as a workout?  That’d be pretty sweet.  No the point here is that we know what’s going on.  We know that most exercise programs and most diet plans don’t work.  Everyone knows this.  That said, sure every one in a while they do.

Let’s look at Subway…  I don’t doubt Jared’s story about losing weight by eating subway subs.  But I will tell you that if 100 other people did the same thing, most of them would be just as heavy as they are now, maybe worse.  I can also tell you that the subs they want you to think he ate are not the subs he ate.  Remove the cheese, the mayo, the fatty meats, etc.  The guy ate wheat bread and lettuce, basically… twice a day.  Sure, that will help you shed some weight.

Nutrisystem, Bowflex, Subway as a weight-loss program…  These things I would not call scams.  If I got a Bowflex and used it every day I’d probably get stronger and lose weight.  Then again, if I got a single dumbbell and used it every day I’d probably have similar results too.  My personal problem is not the lack of a magical Bowflex machine.  Its the lack of commitment to using it.  Same thing with Nutrisystem, Jenny Craig, the Atkins Diet or whatever.  Its not the program that really matters.  Its the person and the commitment.  Weight loss is actually very simple – burn more calories than you consume.  That’s it.  All the programs are simply different ways on how to do accomplish that.

To me a “scam” is a big deal.  Its a straight lie as opposed to avoiding the truth.  Or its purposeful deception.  I guess I’d use the “reasonable person” test here, perhaps.

This Madoff guy ran a scam.  People were totally misled.  I’d also put those emails I receive from Nigerian email marketers about how I can help them transfer $2 million and keep $500,000 for my efforts… yeah… that’s a scam.  You will not get your $500,000.  You will not get any money.  There is no chance you will get this money.  This is a clear scam.

I also think Video Professor is a scam based on what I’ve heard from their customers.  The whole business model is based around deception, not around building a good product and growing sales that way.  Read the link if you are interested in those details.  But admittedly, its a much softer scam than those spam emails from Prince Mobutombu.

Fighting the Good Fight

Local SEO guy David Kyle has really taken an interest in calling out these shady businesses that operate similar business models but prey on small business owners who are looking to market themselves on the web.  David feels it gives the legitimate guys (like him) a bad rap.  I am totally with him in spirit and thought, but I’m not willing to carve out much of my personal time to fight the good fight here.  I guess I figure that most people will be able to see through the pushy sales tactics here.

Keith Schilling is also lending a hand in this fight, through his organization of legitimate groups like the SEMCLT, as well as a few blog posts he has about iJango (below) and the Local Ad Link scam.

iJango Scam?

David recently called out what he is referring to as the iJango scam.  Keith has also posted about the iJango MLM scam.  They are currently ranked #3 and 4 in Google for that search phrase.  I’m not really sure if I’d call iJango a “scam” myself or not.  I haven’t looked into the details.  I would call it overhyped though.  I can also tell you that its pretty obvious that iJango is trying to push down negative listings in the Google SERPs for the keyword phrase “iJango scam”.  As an SEO professional who knows all sides of this particular form of online reputation management, this looks pretty obvious 🙂

Again, I’m not sold on iJango being a scam.  I don’t know.  I don’t really care much either.  They do seem to actively promote themselves as an MLM.  That is clear.  They make no attempt to hide that.  I do know that most MLM scams I run into pretend they are not MLM organizations, as for many people (myself included), MLM = scam.  Or at least MLM = overhyped.

There is nothing revolutionary about iJango’s business model.  There are a million portals.  There are a million affiliate models.  They are simply rolling those two into an MLM program from what I can tell.  I’m sure they aren’t the first.  But who cares?  Success in business is not about great ideas. Its about great executive.  Great implementation.  For something like this its the network that matters – the critical mass to get this to grow on its own.  That requires excitement.  It requires hype.  In other words, whether or not their product or service is helpful and useful is really not the point… the point is their success depends on inspiring people to do their advocacy for them.  They MUST overhype this to succeed.

But I’ve got a healty skepticism here… and I think most of us do.


Scam or not, there have always been and will always be a bunch of ideas, products and other wares for sale that promise to be more than what they are.  In fact, one might argue that most every product or service does this to some varying degree.  Everyone puts their best foot forward.  We accept that as “just part of marketing”.

But sometimes some people push this a bit far – to where they are either very strongly misleading, or preying on the ignorant or desperate.  For me, that isn’t cool.  That’s pushing it too far.  That said, the good fight here is a bit overwhelming.  I think most people can sniff these sorts of things out and have learned to be skeptical consumers – not trusting every claim we hear at face-value.  Hopefully with a strong dose of consumer skepticism and “buyer beware”, combined with help from guys like David Kyle, Keith Schilling and one of my favorites – Justin Leonard – the success realized by  these business models that prey on those who are uniformed or desperate will be kept to a minimum.

Like just about everything on the internet – these schemes, scams and overhyped selling tactics are nothing new.  They just have a slightly different spin and slightly different packaging.  The ideas are the same, its just the channel (or medium) that has changed.


9 Responses to “Online Marketing MLM Schemes & Scams, iJango & Over-Hyping”

  1. Wow. Great post.
    Just yesterday I learned one of our acquaintances was pushing ijango. I feel bad for her because she is unemployed and somehow got sucked in to the hype. I posted D.Kyles link and a few others on my Facebook page hoping she will read it and follow the links. It was titled: “”Get paid every time your friends use the internet.” Yeah, right, sure. ijango is about to unleash a flood of business opportunities your way in yet another multi level marketing scam. See the links.””

    I did all that yesterday and today I wake up and see this epic post on the same topic. Great minds, genes, or coincidence, you decide.

  2. David Kyle Says:

    Hey Jon

    I define iJango as a scam for the following reasons:

    1) it’s terms of service contradict what is being advertised. They advertise that it’s a service that the business participants “give away.” Yet the TOS clearly states that the purpose is to SELL iJango products and services.

    2) They advertise that their “portal” is unique and has a patent pending. I can find no results of a patent pending for iJango, and the product is most certainly not unique. You can customize your iGoogle page to do everything that iJango does (minus the revenue sharing part). There are also other sites with this technology i.e. They advertise to the people that buy into it that they can give this away and people will use it because it is so unique. It simply is not true.

    A scam/con can be defined as:

    Mixing a little truth with a lot of lies and pulling the wool over the eyes of the ignorant and uninformed.

    and that is exactly what iJango is doing.

  3. Weird thing about it is that when you google Ijango Scam…there are 3 links that will send you to a website that is almost forcing you to download something in your computer.
    The 1st 2 links has a popup that says you have a virus on your computer!

    They’re playing dirty, and are not wanting anyone to search for them.

  4. Great read J-Payne. These online marketing companies you mention are making a lot of noise, and we need people in the community to be whistle blowers as necessary.

  5. brettbum Says:

    Great Article, I started to write a reply, but it got a little too long (2500 words) and maybe a little controversial(didn’t want to drop a stinker in your comments).

    So I did the good (SEO) friend thing and posted it as a reply blog article with a link back to you. 🙂 In general, I just had fun writing it, but thanks for the inspiration.

  6. Patty Reiser Says:

    It saddens me when companies like iJango come along and everyone lumps everyone that is involved in multi-level marketing into the same boat of scammers.

  7. Jeremy lyons Says:

    The fact is when an offer sounds too good be true, there’s a catch or is probably it is a scam. It is advice to do some research before joining in any online MLM opportunities.

  8. Kurt Milam Says:

    Excellent article.

    One piece of advice I give to anyone who asks me about SEO services is: If someone contacts you to offer SEO services, check their pedigree.

    My experience has shown that an inordinate number of “SEO professionals” are ex mortgage brokers and/or ex MLMers. They usually have little-to-no Internet-related training, expertise, experience or skills, and often have zilch in the morals department.

    Anyone can buy an eBook, hang an “SEO Expert” sign over their door and start selling SEO services. Sadly, many unscrupulous actors are doing just that and giving honest professionals a bad name.

    MLM = Scam? Check.
    Mortgage Broker = Scam? In many cases, check. Back in the early 2000’s, I heard numerous stories about fraudulent behavior from acquaintances in the Mortgage Broker “Industry.” These guys would boast about the fat check they got from their latest closing, then laugh that there’s no way the home buyer would be able to afford his payments once his NINJA loan came up for renewal. If that’s not a scam, I don’t know what is.

    So, if someone wants to sell you SEO services, check his pedigree. If it’s riddled with scammy ventures and devoid of professional experience working on Internet-related projects, save yourself some time, money and headache, and tell the guy to take a hike.

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