Internet Scams

Dot-Com or Dot-Con?

 More of this Feature
● Part 1: About Internet Business Opportunity Scams
● Part 2: The Bottom Line
● Part 3: Avoiding Internet Business Opportunity Scams
 Related Resources
● Business Resource Center
● Contract and Freelance Job Banks
● Entrepreneur Center
● Federal Job Scams
● Job Fraud: Tip-Offs to Rip-Offs
● Overseas Job Scams
● Telecommuting: A Matter of Trust
● Work-at-Home Job Scams
 From Other Guides
● Don’t Blame the Scammers
● Scams, Frauds and Bad Guys
 Elsewhere on the Web
● Business Opportunity Scams
● Dot Com Shakeout Summary
● Franchising Fraud
● Internet Fraud Complaint Center
● Legit Business Advice
● MLM – Opportunity or Scam?
● MLM Scams
● Top Ten Dot Cons

Part 1: About Internet Business Opportunity Scams

There are many Internet business opportunities that exploit the novelty of the Web as a lure. If you nibble, they’ll further bait you with promises of freedom, esteem, high income and the good life. For a fee, they’ll set you up with a company-sponsored, duplicate Website, along with products or services to sell. But many will also offer you incentives to recruit others to pay the fee, which is really what these so-called opportunities are all about. They are among what the U.S. Federal Trade Commission cleverly calls Dot Cons.

The real business of these types of dot-cons is not wholesaling products or services. It’s selling the concept of the scheme itself, and duping you into reselling it for them. But by law in most U.S. states, one can’t profit from recruiting, with nothing changing hands but fees and commissions for the scheme itself. That’s illegal pyramiding. To get around it, these dot-cons sell tangible, “distributorship” Websites on which to seemingly resell their products or services. But a closer look reveals that, what’s really for resale, is the distributorship itself over and over again.

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It’s all just a guise for a relatively new twist on an old scheme called multilevel marketing (MLM) or network marketing. One of the latest twists is exact method marketing (EMM). It’s touted as a revolutionary idea that eliminates the flaws in MLM. But it’s little more than refurbished hype for the same ol’ scheme. They all use some form of pyramiding to resell the scheme itself, some by exploiting loopholes in the law to recruit through a backdoor, others by breaking the law until they’re busted. Regardless, they are often formulas for failure, except for the people who created them. They’re at the very top of the pyramid, the only place to be―if you’re going to run a scheme, that is.

Even if products and services are more than just a hook to resell the scheme, often the dot-cons are not really wholesalers as they might claim. They are extra middlemen between wholesale distributors and you, and you can bet they’re taking an extra cut too. Another dot-con trick of the trade, is to “borrow” the reputations of well-known merchants, financial institutions and such, by offering referral (affiliate) deals with them. But affiliate deals are all over the Web, and just about anybody with a Web site can sign up for free. Again, the dot-cons are often unnecessary middlemen taking an extra cut. As a result of these tricks, you’ll likely have to gouge absurd retail prices from your customers to earn any margin at all, share your meager referral commissions with unnecessary middlemen, or both.

Web-savvy shoppers would likely be hesitant to submit their credit card numbers to reputation-unknown shopping sites, especially those that also hype get-rich-quick schemes. Additionally, you’ll be competing with hundreds to thousands of others who paid the fee too, and are attempting to sell the exact same products or services and the scheme itself, on identical, company-sponsored Websites. It sounds good on the surface when dot-con hype promises “free training” in marketing and sales techniques. But the fact of the matter is, those with duplicate Websites are your direct competitors, and they too are learning the same techniques.

Internet business opportunities also tend to hype the ease of online marketing and popularity of shopping on the Web (e-commerce). Granted, online marketing has a broader reach than most traditional methods. It’s also true that e-commerce is a growing, multi-billion dollar industry. But that very reach and popularity makes the Web a highly-competitive place to do business, and it gets more so everyday. Many failed dot-coms will attest to that. Despite that some had millions in venture capital to finance far more marketing resources than home-based Internet businesses typically can, they failed.

Among the biggest dot-con hypes is getting “free advertising” in “hundreds” of search engines. When starting up a small businesses, you likely won’t have much of an advertising budget. So, free advertising might sound good, and you can bet the dot-cons know it does. Because search engines are the “Yellow Pages” of the Web, it’s true that they are the main source of Website traffic. But the reality is, there are only a handful that deliver significant traffic, such as Yahoo, Excite and Google. The rest of the “hundreds” are relatively inconsequential for marketing.

To get a free listing of significance in the popular handful takes search-engine savvy―a whole ‘nother ballgame―and lots of hard work, such as keyword and meta tag optimization. If you don’t know what a keyword or meta tag is when you pay the fee for an Internet business opportunity, you’re already in trouble. Again, if the dot-cons promise to teach you the techniques, remember that they’re also teaching your direct competitors. Besides, no matter how much training a seller of duplicate Websites promises, many of the popular search engines won’t list identical sites or those that are even close. Search engines call them mirror sites, and consider multiple submissions of same to be redundant. Some won’t list get-rich-quick schemes either, for obvious reasons.

“Build it and they will come” doesn’t work nearly as well as the dot-cons would love for you to believe, so they conveniently fail to mention these and other inherent flaws. Natch, it’s to their advantage to make it sound far easier than it is. They’ll say anything to get your fee, their main source of income.

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