Here's
the position as I see it from an Australian perspective
The product being promoted
is a package of software and information products. Apparently excellent, with high
perceived value. No problem here. The price is US$597, which seems reasonable to
me for what you receive.
If you become an affiliate — and this is the real product being promoted,
not the software, etc — you earn an instant commission of US$500 on
each sale you refer. And this is where the real problem arises, at least in Australia,
and many other countries with similar laws.
Australia's federal Trade Practices Act and various State Consumer Protection
Acts outlaw what's called "referral selling", where your ability
to earn a reward is contingent upon you having to make a personal purchase first.
In other words, the seller pitches the opportunity to earn commissions — especially
high commissions that obviously inflate the selling price — if you first make a personal
purchase of that product.
This legislation was first enacted in response to dodgy selling practices in industries
like siding and cladding in the 1970s. The referral selling provisions of the Australian
Trade Practices Act 1974 remained untested in court for almost twenty years. But
that's no longer the case. The Australian Consumer and Competition Commission
(ACCC), the watch dog charged with policing the Trade Practices Act, with exceedingly
sharp teeth, bottomless pockets, armies of lawyers and freedom from political patronage,
has won repeated cases against companies and individuals for breaching this section
of the Act, in a wide range of industries, from encyclopaedias to home loans.
ALL affiliate
programs may be technically illegal
Strictly speaking, any affiliate program that operates in Australia, and that requires
an affiliate to first purchase the product in order to earn commissions on subsequent
referrals, is in technical breach of the law. But, since most affiliate programs
involve relatively low sums of money, it's not really worth the ACCC's time and resources
to pursue them. Besides, most are promoted and conducted responsibly.
But when the selling price is US$597 (around AU$840), and the commission paid
is US$500 (around AU$704) — close to 84% of the sale price — and it's
promoted in such a blatantly hype-ridden, "get-r1ch-qu1ck" style, it's
a pretty safe bet that it will attract ACCC attention, along with unfavourable media
attention, sooner rather than later. My bet is that there's probably a file opened
already by its investigations section.
The ACCC targets
LOCAL individuals, not overseas scheme owners
Since the principals behind the system are not resident in Australia, it's difficult
for the ACCC to pursue them effectively — although the Free Trade Agreement
now if force between the USA and Australia may change this. But this hasn't stopped
the ACCC from targeting local promoters and hauling them into Federal Court, as it
did with Kevin Ryan of Perth, the first person in the world convicted of promoting
the infamous SkyBiz2000 scheme. Within a week, SkyBiz2000 was finished, world
wide, as overseas regulators followed the Australian lead and began prosecuting key
local individuals.
Australian residents should also remember that Australian law applies to individual
Australians and Australian-owned companies doing business around the world.
You can be prosecuted at home for illegal acts committed elsewhere, especially via
the Internet.
Side note: Ironically,
this loooong arm of Australian law is what prompted me to forecast (in an article
I wrote in 2001) that, within the foreseeable future, Australian-owned M|L|M companies,
required to maintain the highest standards of corporate ethics and governance globally,
could very well take the lead in attracting people who are sick and tired of being
ripped off by US-owned M|L|M companies if their scamming continues, and US regulators
continue to be powerless, ineffective or blatantly unwilling to prosecute such unconscionable
activities. View
article...
My advice
is simple: proceed at your own risk!
The software and other stuff in this package is not so unique that you'd normally
want to promote it on the scale this system is creating. The real reason for
most people getting involved is plain, old fashioned g-r-e-e-d, nothing more. And,
as always, when greed, ignorance, fear of loss, laziness and gullibility are the
driving factors, guess who the scheme attracts? And guess who ends up losing out
when the scheme inevitably runs out of fresh canon fodder?
While this scheme may comply with the letter of the law in other countries,
the promotion techniques and high commissions mean that it's unlikely to comply with
the spirit of the referral selling and anti-pyramid selling laws in those
countries.
It's not a question of whether this is a case of "caveat emptor" (buyer
beware) or "caveat vendor" (seller beware). In this case it's BOTH,
because the seller has to first become a buyer in order to qualify for those outlandish
commissions — which, by the way, is how you tell the REAL value that the
owners of the system place on what they're selling.
And even if it proves to be completely legitimate and legal, promoting a legitimate
opportunity in such an over-hyped, scammy fashion makes it a definite "sheep
in wolf's clothing". Not too bright, in my book, and could result in it becoming
a prolonged 9-day wonder. But, once again, the owners and super affiliates will get
very, very r1ch. (Surprise, surprise.)
If you're struggling to find prospects for your present M|L|M opportunity, ask yourself
where you'd find prospects willing to fork out almost US$600... and who's going to
make up the final level who won't be able to recoup their losses? (A loss is what
you have when you have more product than you need and less money than you had before
buying it!)
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©1998
The Profit Clinic. All rights reserved. This page updated 27 March 2006.
A
number of people have contacted me about a new online program at www.1stepsystem.com.