Investor Alert: Is Masterworks.io a scam?
Every once in a while, someone decides to sell shares in “something” new. Today, that something is Fine Art. Let’s explore the pitfalls of investing in this idea.
Investing in Art
Purchasing art has always been about buying a single piece of artwork outright. Meaning, you find a piece of art you like and you buy it. That means that piece of art is yours to display in any way you wish. This type of purchasing of art is (and remains) the most optimal way to purchase art. You buy it outright and you own the entire work in totality.
However, there are exceptions to the above. If you purchase a reproduction of an original work of art, this purchase offers much fewer rights to the buyer. Some rights that you forfeit when purchasing a reproduction include reproduction of that art. Meaning, you can display your purchase in any way you choose, but you cannot photograph it and/or sell photographs of that art. The reproduction rights remain with the original work’s owner. Only the person who owns the original artwork may reproduce the work in any way.
Mass Produced
You may be thinking, “But, mine is painted with real paint on real canvas”. That doesn’t matter. What matters is if the painting is the first and the original. Many painters reproduce their works using paint on canvas, many times over. Typically, these reproduction paintings are painted by employees (in a sort of paint-by-number situation), but is not always painted by the original artist. These are painters hired for the sole purpose of creating a copy of the original. These reproduction paintings are sold typically at a fraction of the original art’s cost. These reproductions rarely become valuable simply because of the total number produced. It’s the same reason why many mass produced items rarely go up in value.
Because the original was painted by the actual artist, this original painting is the one that holds value. That’s not to say that every original painting by every artist will increase in value. Many do not. It depends on the artist, the artwork and that artist’s contribution to the art world. Perhaps in time that artist might be seen in some kind of historical light, thus propelling their artwork values upward.
Because an original art piece might spawn many “authorized” copies, copies that could become very popular in sales, that makes the original work much more valuable. For example, an original Thomas Kinkade painting would be worth far more than one of its many reproductions. That doesn’t mean reproductions can’t increase in value, but they will never be valued the same as the original first painting.
Masterworks.io
Masterworks takes the idea of Fine Art to an “investment” level. By that I mean instead of owning the actual painting / art piece in full, you only own a “share” (or small portion) of the art. In reality, this type of investing is an abstract concept. At the moment, Masterworks appears to focus solely on paintings. You might be wondering, “How does owning a small piece of a whole actually work?”
The short answer to this question is that it doesn’t. Investing in a tiny piece of a valuable work of art doesn’t do anything but ultimately make Masterworks as a company rich. You, in fact, don’t own anything but the knowledge that you “might” own a small piece of a work of art. You also own the knowledge that that investment might, maybe return value IF the painting is (eventually or ever) sold at a profit. In essence, you’re essentially placing a long shot bet that eventually that painting might be sold for a profit.
Let’s understand some of the problems with this idea.
Where is that painting?
Good question. If you’re buying into an investment object, you definitely want / need to know exactly where that “object” is physically located in the world. If you invest in a company, for example, you know where their headquarters are. You know who their executives are. You know their physical address and phone number. You can call and talk to someone. You can even find out their sales plans, the products or services the company sells and how much they make in revenue per quarter. Keep in mind that some private companies may be unwilling to disclose their sales numbers. With public companies, that company’s revenues are public knowledge.
Buying into a Masterworks painting, on the other hand, you don’t know exactly where it is. You don’t know under what conditions it’s being stored. You don’t know who currently has possession of it. Masterworks can “assure” you that that item is safe… but is it? Paintings are particularly susceptible to deterioration if not kept under the strictest of environmental controls. Artwork is also susceptible to theft. Both of these issues are difficult to manage at the best of times.
One might think that paying to invest in small bit of a painting might help protect it from being lost to time. It’s a lofty ideal. It’s, unfortunately, an ideal that when considering the underlying logistics of it all, make the investment seem highly risky. It’s also an ideal that may not hold true.
An investor should always ask, “Who owns the original work?” You must also consider the following:
- Is Masterworks attempting to sell shares in art they don’t legally own?
- Is Masterworks actually in possession of the art they claim to have bought?
- Did Masterworks actually buy the painting or is it under some kind of “lease”?
- Is the art being stored in correct conditions?
Who knows for sure? These are all very good questions. They’re also questions that should greatly concern you when considering “investing” in art through Masterworks.
Paintings as Investments
Art is entirely subjective to every person, but it is also highly volatile in its salability. What I mean is that paintings, particularly abstract paintings, go through ebbs and flows, waxing and waning in popularity and, yes, value. What might seem like an excellent painting today may be seen as outdated and worthless next year. Art’s value comes and goes, sometimes as a result of changing style trends. Painting values are, as I’ve said above, highly volatile. Way more volatile than investing in company stocks, bonds or even precious metals.
Sure, this investment type is yet another “thing” you can put some money into as part of your larger investment portfolio and hope to see a return on investment, but it may not return anything. The problematic issue with this concept is, can Masterworks be trusted or are they simply another Bernie Madoff? This is the ultimate question.
Novel Concept, Poorly Realized
The idea of share investing in art is definitely novel, even Masterworks states as much. However, is it realistic?
First, there’s the idea that you only own a tiny fraction of a painting. How does that work anyway? Are they planning on cutting up the piece of art if the art price bottoms out and there’s nothing left to pay you back your investment? Clearly, no. They’re simply going to tell you that you’re out your money and they STILL get to keep that art even if it’s worthless. Not only do you NOT get the art after investing, you don’t get your investment back if the painting is sold at a loss.
Second, there’s the logistics of where this art is stored. You have no idea as an investor. Unless Masterworks intends to spend boatloads to create a location to store all of this art under perfect archival environmental conditions (highly unlikely) AND they can prove that fact to investors, the art is then completely open to deterioration, decay and possibly destruction or even theft. Some art, in fact, may be produced using non-archival media. This means that no matter how well a piece of art is stored, it may still slowly (or quickly) deteriorate to the point of no longer even being art (or saleable) even within a few months. You can’t stop deterioration, which actually makes some art less valuable every day that passes.
Third, who actually owns (and holds) that art? Are art owners selling the full piece of art, selling it under consignment or are they selling only the concept of ownership as shares, so then Masterworks then manages that “concept trust”? If Masterworks is selling shares in works of art they do not rightfully own and possess, that is very close to a Ponzi scheme. It may also be very illegal. That’s like someone claiming to sell you the Brooklyn Bridge. Sure, anyone can claim to sell it, but they do not own it. They do not even own a piece of it. Giving money to someone claiming to sell you the Brooklyn Bridge is, thus, the very definition of a scam and fraud. With Masterworks, be very careful.
Masterworks needs to also be very careful in what they are doing, making sure their ‘i’s are all dotted and their ‘T’s are all crossed.. Here’s what Masterworks has to say about their own model and art investing:
‣ We have a novel and unproven business model.
https://www.masterworks.io/
‣ Masterworks issuers do not expect to generate revenue, so investors will only recognize a return on their investment if the painting is eventually sold at a profit
‣ No market exists for the shares and paintings are highly illiquid, so you must be prepared to hold your investment for an indefinite period.
‣ Each Issuer owns a single painting and this lack of diversification magnifies risk.
‣ Your ability to trade or sell your shares is highly uncertain.
‣ Paintings may be sold at a loss.
‣ Costs will diminish returns.
‣ Investing in art is subject to numerous risks, including (i) claims with respect to authenticity or provenance, (ii) physical damage, (iii) legal challenges to ownership, (iv) market risks, (v) economic risks and (vi) fraud.
‣ Issuers are totally reliant on Masterworks.
‣ Masterworks has potential conflicts of interest.
‣ Timing of sale of a painting is uncertain.
None of the above (or even their web site) describes how or where the art is actually stored or maintained. It almost solely discusses the risks of investing. The fact that Masterworks also finds the need to call out that purchased shares are “illiquid” says a great deal here. This word means that there are few participants, thus low volume, which ultimately means a very low chance of ever being able to sell out of purchased shares.
Consider stocks and bonds. You can likely sell out of any of these positions in about a day. With Masterworks investments, the low volume and few participants means once you invest, you’re likely stuck holding onto that investment until the painting either sells (at a loss or profit) or fails to sell at all. Masterworks doesn’t really state what happens if you can’t sell your position with a painting that never sells. I guess you’re ultimately out your investment money.
Art Storage
As with any artwork and has been stated above, it’s important to understand how and where the art is stored and who actually owns the art. None of this is explicitly stated on Masterworks’s site. I’m actually taken aback by the fact that for all the deluge of investing information provided, there’s equivalently a severe lack of information regarding the artwork itself, where it’s stored, how it’s managed or who owns it while it’s being held for shares. That’s a big, nay HUGE, problem in my book.
However, Masterworks does say this…
What this ultimately says is that Masterworks locates and purchases art. It doesn’t exactly state what “purchase the work” actually means. Are they taking possession of the work or are they leaving it at the gallery where they found it to remain on sale? They do claim to hold a work of art for 3-10 years. I’m uncertain how this works exactly considering the second half of that “OR” statement. Only questions, few answers.
As I said, for as much information as there is about risk of investing, there’s equally as little about the actual artwork itself… which is huge red flag 🚩.
Any business straddling both the art world and the finance world should be, at once, both engaged in explaining how and where the art is to be stored and handled, but also able to explain the risks of investing. Clearly, Masterworks is only interested in documenting half of this equation.
Volume Investing
Masterworks hopes that as more people jump on board with their share idea and begin investing, a larger and higher volume share marketplace will eventually emerge to allow for easier share trading. At this moment, however, Masterworks has stated that any position you buy is likely to be “illiquid”, thus implying that this is a new market with limited options for selling shares.
In other words, if you invest $100 into a painting and gain 2 shares, those shares in that painting are most likely to remain yours until the painting sells at a profit or a loss. The question is, though, even if the painting sells, does Masterworks have the painting to sell? I’m still skeptical.
Art Galleries
Masterworks, as a company, needs to be a whole lot more forthcoming about all aspects of its business operations, especially surrounding where, how and who stores the art after it’s purchased.
What Masterworks should have planned for is purchasing a number of galleries around the United States (or around the World) to support their business model. Instead of simply attempting to sell the investment share idea, they should have worked this idea full circle.
Here’s where things get a little dicey for Masterworks. Instead of creating a complete sales cycle (or sales funnel as some might call also it), they leave out one very important piece: Galleries. Clearly, they have Acquisition, Investments and Sales. Though, questions about Masterworks’s acquisition process remains, primarily because they don’t have galleries.
To really make this business model complete, Masterworks needs to own and operate its own set of galleries. Why galleries? Owning galleries sets a tone that you know how to properly store and manage expensive artwork in addition to offering a place to actually sell it properly. Though, paintings can be sold through auction houses as well. Masterworks is attempting to sell art for millions of dollars, yet Masterworks doesn’t really state where, or more specifically how, that artwork is managed and stored. It’s an important and necessary piece that’s conveniently missing.
Owning galleries keeps Masterworks honest and allows for auditing. If there is a gallery where a specific investment work lives, investors can visit the gallery and physically see the art they have invested in. This verifies that the artwork exists, that it is genuine (not faked), that it’s in Masterworks’s possession and that it can be verified. Without this piece, verification of the actual art remains an open question. Images on a web site do not verify that anything is genuine. Talking to someone on the phone doesn’t verify authenticity either. Only physically seeing the artwork in person can an investor verify the painting and, thus, verify that their investment is backed by something real.
Questions without Answers
That leaves too many open questions. Questions like, “What exactly am I investing in?” Like, “Where is the artwork stored?” Questions like, “Is the artwork properly stored for a long sales wait?” Like, “Is the artwork in the possession of Masterworks directly?” All of these questions could be easily resolved if Masterworks owns and operates a set of galleries… or at least a showroom at the bare minimum.
Additionally, with Masterworks ownership of galleries, this means you, as an investor, can physically go see the art you’ve invested in. You can see if it’s as it appears in the images. You can see it on exhibit, or at least it can be brought out for a viewing. You can see that it’s being kept and stored in appropriate environmental conditions.
There are so many questions surrounding the art itself, there is absolutely no way I would recommend anyone to invest in Masterworks… unless you absolutely like throwing money away on odd “investment” strategies. Knowing where that art is, how it’s being stored and if it’s being stored appropriately combined with knowing you’re able to view the actual art is extremely important BEFORE investing any money in a share of a painting.
Ponzi Scheme?
While I previously made reference to Bernie Madoff and his ponzi scheme, that statement isn’t intended to suggest that Masterworks runs a Ponzi scheme or that it intends to make off with your money. However, because of so many lingering questions, this business model seems unnecessarily risky… especially not knowing the answer to far too many questions surrounding the paintings.
Additionally, because of the volatility in art sales, as an investor, you must fully trust and be reliant on Masterworks buyers and appraisers to locate “valuable art” that might sell for some amount of money higher than what was paid. However, you’ve no idea if the art they’ve selected will actually sell at all. Because art is so subjective, what a few like, too many others may hate.
It also means betting that some nebulous “whale” will come along and snap up that piece of art (for millions) you just so happen to have invested in. That isn’t likely to happen often. Unless the art is of great historical value (i.e., Leonardo DaVinci or Michaelangelo or even more recent artists like Mark Rothko, Roy Lichtenstein or Marcel Duchamp), art produced by artists living and working today might fetch random amounts, but perhaps not millions. There’s just no way to know what any piece of art might fetch when produced by today’s artists. It’s all a calculated, but a seriously risky best guess.
Unfair to Artists
One thing Masterworks also seems to be attempting is to force art to be sold at far higher prices than it’s actually worth. This is what many collectors attempt to do, usually via auction. That is, Masterworks appears to intend to artificially inflate art prices to make better returns on shareholder investments. The difficulty is that this artificial inflation (nor does the sale itself) benefit the artist at all.
Where Masterworks might “buy” a work for $70,000 from an artist via a gallery, they may attempt to turn it for $1.3 million. That nets a huge profit for Masterworks and a lesser amount for shareholders in that work. However, for the artist, $70k is all they have received. The artist is not fairly compensated from a Masterworks sale.
One might argue that aftermarket sales of art never has benefited the artist. Yes, but here’s a business model that could arguably help bring artists into the fold by making sales on behalf of the artist. This goes hand-in-hand in owning galleries. Instead, it seems Masterworks has chosen an aftermarket sales model that excludes the artist. A model that only makes money for investors and Masterworks, but not for the artist. Intentionally leaving the artist out of this process is entirely greedy and unfair to the artist.
Artists Deserve Compensation
One might think that $70,000 is a lot of money for the sale of a painting. It is. But, it is nowhere near the amount that the artist could have netted if they had sold it for $1.3 million.
Artists shouldn’t be required to invest in their own paintings with Masterworks just to net more profit on an aftermarket sale. Instead, Masterworks should work directly with artists to list the work and then compensate the artist for at least 50% of the sale, either directly or by issuing a 50% ownership stake in the art via shares. The rest of the profits should go to paying out shareholders. This model would not only fairly compensate every artist, but it also fairly compensates the shareholders and Masterworks itself.
Artists are always the one who seem to get the shaft. This problem has existed for many, many years. Masterworks can modify their business model to make sales that directly benefit the artist while also properly compensating shareholders and turning a nice profit for Masterworks. Instead, it seems they have ignored this aspect only to make their sales benefit mostly Masterworks executives the most, leaving out the artist.
Artists vs Corporations
If you’re of the mindset that you would like to see artists fairly compensated for their work, skip these risky investment schemes and buy directly from an artist. If you buy directly from an artist, you are helping that artist, not some random corporate executives operating a more or less faceless and questionable company. If you’re willing to shell out $20 to see a movie actor perform, then why wouldn’t you be willing to pay an artist for the artwork they produce?
Not only can you carry pride in the fact that you purchased art directly from the artist, you also own an original work of art in full, not solely just a share in a work of art that you’ll never see. You can also hold pride in knowing that you have helped the artist produce even more work. Buying art from Masterworks does not, in any way, encourage artists to continue to their craft. In fact, the pittance that the artist might receive in the first sale may be barely enough to cover the time and effort put into producing that painting let alone help them produce future paintings. Art supplies are expensive.
Art Valuation and Secondary Market
Let’s talk about the investing and trading pieces. Masterworks operates a secondary market where shares can be traded. Unlike Wall Street stocks where a stock’s value is based on such fluctuating data points as company profits, company revenue, investor calls, product sales and announcements, analyst recommendations, investor confidence and volume of trading, paintings have no such intrinsic back end data points (other than perhaps trading volume… and even that is drummed up via this questionable investment scheme).
Art valuation is entirely subjective, made solely by a random person appraising its value. What that means is that if you invest in a work that claims to have a $30 “share price”, you’re at the mercy of an appraiser to raise or lower this price. Bid and ask sale prices might influence pricing some, but the pricing seen on the secondary market site is mostly “best guess”. There’s nothing behind that painting to “prop up” its changing value. There are no profit margins, no new product announcements, no analyst calls, no company books to review, nothing. It’s a painting. That’s it. Paintings don’t randomly change value UNLESS they are sold. Anything else purported is a dubious scheme.
Investing in a painting with a fluctuating value is a false equivalence to stock. There’s nothing there to change the value of the share in a painting, yet it seems that the values do change. Why? The painting hasn’t yet sold, so it makes zero sense. As I said, there’s nothing in any painting to justify changes in the share price until AFTER it’s sold. Once a painting has been sold, then the share price will change to reflect the sale price of the painting.
If Masterworks intends to see a painting’s share price fluctuate daily, like stocks, then there’s something seedy, dubious and awry going on. It’s also something that you as an investor need to understand before investing a cent. Intraday changes in painting’s share price prior to a sale is extremely dubious.
One might argue that there are a limited number of shares in the painting. That each share sold makes every share more valuable. I might be willing to accept that argument except a painting can be arbitrarily divided 100 times, 1,000 times or even 1 million times. When does that share division end? You can’t really divide a painting up like that. If you’re going to apply a random investment concept, such as a share, onto a painting, then any division into shares is entirely arbitrary and disconnected and holds effectively a fractional value tied to the current “worth” of the painting. Ultimately, there’s only one (1) painting. Therefore, there should only be one (1) share. When you buy that one (1) share, you buy the painting.
Having this sub-construct of many shares which are separate from the “painting as a single commodity” is not only an odd concept to apply to a physical object, it might be seen as a form of Ponzi scheme. These “shares” are actually an abstract idea applied to a single physical object which cannot be subdivided physically. So, how exactly does this abstract division concept work? That’s exactly what Masterworks is attempting to find out. It’s also why the Masterworks business model is unproven.
Overall
I can’t recommend investing “shares” in paintings via Masterworks for reasons already outlined above. However, let me summarize these points:
- Proper art storage isn’t explained (very high risk)
- Returns on investment isn’t fully explained (high risk)
- Paintings aren’t guaranteed to sell (high risk)
- No sales benefits given to the artist (problematic)
- No galleries to physically view or confirm ownership (exceedingly high risk)
- Art prices are highly volatile (high risk)
- Art sales are solely dependent on subjective criteria (overly risky)
- Art values are solely dependent on Masterworks “appraisers” (highly risky, requires high trust)
- Intraday changes in share prices are nonsensical prior to the painting being sold (dubious)
- Must trust Masterworks for both valuation and truth (overly risky)
- Must trust Masterworks that they actually own and possess the art (exceedingly risky)
- Secondary market attempts to treat shares in a painting like stocks (exceedingly risky & dubious)
Without seeing the painting physically, as an investor, you have no idea if Masterworks truly has that painting in their possession. It’s easy to take a picture and put it on a web site, making claims that they own and possess the work. This then tricks the investor into a purchase. Then, you hold and hold and hold and the painting never sells. In fact, you could come to find they don’t even own the original art. You might find that they’re selling something they don’t even have possession of.
While Masterworks may own some of the work they claim to own, there’s literally no way for an investor to confirm that every piece of art listed is actually in the possession of Masterworks. This problem is exacerbated mainly because Masterworks operate no galleries.
For this reason, Masterworks could be selling you shares in a work that they do not, in fact, own or possess. That’s effectively a form of fraud.
Masterworks would do best to modify their business model to offer a process that can prove they physically own the paintings they claim to own. The only way this is really possible is if they open and operate at least one Masterworks gallery somewhere so shareholders can visit and request a viewing of the art they’ve invested in. This is effectively an audit system which holds Masterworks accountable to all shareholders. Without this change in their business model, investing in any work that Masterwork claims to own is unnecessarily risky. To anyone willing to give money to this company, I say, “caveat emptor!” Let the buyer beware.
Without such basic investor auditing responsibilities, I strongly recommend staying away from this novel, but highly problematic investing concept and stay away from Masterworks as a corporation. That’s not to say this concept can’t be revised to be more functional, but at the moment this concept is just not there. This concept forces an over-burdensome amount of trust and risk onto the investor and off of Masterworks, while leaving too many unregulated, unauditable and manipulable pieces in the hands of Masterworks executives.
Bottom Line: If an employee at Masterworks wished to game the Masterworks system, the lack of proper auditing over this concept would allow any executive far too easy access to game it… thus losing investments from investors and truly turning this into a huge fraud scheme.
Business Concept: B
Business Execution: F+
Scam Risk Level: Exceedingly High, Stay Away
Recommendation: Don’t Invest in Masterworks
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Review: Is Fiverr a scam?
Fiverr is one in a new generation on “Work for Hire” sites (sometimes known as freelancer sites) that have recently sprung up, while they’re also hoping to turn a big profit off of the backs of buyers and sellers. Let’s explore whether Fiverr is a scam or legitimate.
Work For Hire
While Fiverr might think it is something kind of special, it isn’t. There have been plenty of “Work For Hire” kinds of sites throughout the years going back to the early 2000s. There’s nothing really new about this kind of site.
To explain more, Fiverr’s “Work For Hire” marketplace has two distinct type of visitors: Buyers and Sellers. This means that a person visiting the site could be one or both of these roles.
As a buyer, you visit the site looking for a specific kind of service to buy. For example, maybe you would like to have someone write a blog article for you. You can then find an author/seller who is selling such a service, then contract their services at an agreed price, place an order, then wait for delivery of the article… at which time payment is due.
As a seller, you use your talents to place your authoring services up for sale and reap monetary rewards (such that they are) for providing a needed service to the buyer community.
It’s a reasonable idea and a potentially great business model, if such a site is correctly designed. Here’s where Fiverr fails hard.
Buyers
As with any site of this type (or really any site in general that offers logins and passwords), certain expectations are set (and must be met). Any site with user logins must be willing to maintain and manage these user logins themselves, including appropriate application of Terms and Conditions by taking action against violators, abusers, harassers and scam artists. After all, it is Fiverr’s servers and system, therefore it falls on Fiverr to ensure users of the service act according to the Terms and Conditions while using that platform. This is a very basic expectation that all sites must meet.
For example, when you create a Google account, there’s an expectation that Google will both vet and maintain its new user signups appropriately. For the most part, Google does this well… except when the individual is under 13 years of age. That means that when Google identifies someone violating its rules of conduct (usually laid out in Terms and Conditions and/or Terms of Service documents or possibly other documents also), it will take action against a violating account up to and including termination from the service. However, Google has refrained from either detecting or deleting accounts created by users under the age of 13, for whatever questionable reason. I digress.
Along these same lines, Fiverr’s management is not only exceedingly naïve, they’re extremely inexperienced in running a user signup based platform like Fiverr and it shows. Why? Because the site’s weak signup system and rigid Terms and Conditions forces far too much of Fiverr’s buyer vetting work down upon its sellers. Instead of taking care to properly manage its buyers, it forces sellers to shoulder that responsibility and take this work onto themselves. As someone so rightly said, “Ain’t nobody got time for that”.
Sellers
As a seller, you would think that your primary job and focus is to sell your service to would-be buyers. While that is a portion of what a seller is expected to do on Fiverr, Fiverr’s unreasonable and overreaching Terms and Conditions require the seller to take on a whole lot more burden than they should, such as Buyer vetting, Buyer management and, yes, being “Academic Police”.
One egregious mistake in Fiverr’s Terms and Conditions is its overreaching “Academia” clause. One might think, shouldn’t we protect academic institutions and/or students? Well, no. Academic institutions are responsible for protecting themselves. Students are responsible for protecting their own best interests. It’s no one’s responsibility to protect any specific academic institution or student than that academic institution itself.
How does this impact sellers? Great question. Let’s get started answering this loaded question. There are 3,982 degree-granting institutions of higher learning as of 2020 according to US News. Nearly 4,000 institutions exist…. 4,000! That’s a lot.
This number is important to realize because Fiverr’s Terms and Conditions require sellers to become “academic police” for each and every one of those nearly 4,000 institutions of higher learning. Oh, but it gets so much worse.
Every single one of those institutions has by-laws and rules regarding code of academic conduct. Students attending are required to agree to that code of conduct upon enrolling in any one of those institutions. For example, rules against plagiarism is a typical code of conduct which may be found at many, if not most, of these institutions. It is beholden to the student to read, comprehend and understand this code of conduct for their specific institution upon enrollment.
However, for sellers on Fiverr, Fiverr’s Terms and Conditions effectively deputize sellers to become “academic police” for any or, indeed, all of these nearly 4,000 institutions of higher learning. This means that should a buyer show up at your seller doorstep, you must become responsible to make sure that buyer (who might be a student) isn’t violating a university’s academic code of conduct by buying something from you.
Not only that, Fiverr expects the seller to determine intent of every buyer… such as somehow magically deriving that a buyer is a student at one of those nearly 4,000 universities (or way less likely, even grade school), but also that the magically-derived “student” is buying the service with the INTENT of turning the resulting product in as their own work. Intent is something a seller cannot possibly determine or be expected to determine, let alone if the buyer is a student. Intent is difficult enough to determine and, more importantly, prove by defending and prosecuting attorneys in criminal court trials. How and, more importantly, WHY is a seller expected to determine intent for a site like Fiverr?
That’s like asking a gun dealer to be held responsible for intent of every gun sold. Thankfully, in the United States, there’s the PLCAA federal law that prevents this exact situation for gun dealers. Under the PLCAA, gun dealers cannot be held responsible for how a gun is used after it has been sold… which means, gun dealers cannot be held responsible for a buyer’s intent.
Fiverr’s Naïvety
Oh, it gets worse. Because there are so many institutions of higher learning not including grade schools, the seller would need to visit each and every one of those institutions of learning, THEN be required to read and understand each and every one of those rules of academic conduct for each of those ~4,000 institutions. That could take years. As I said, NAÏVE and insanely impractical.
Again, WHY is the seller responsible for this work? As a seller, I’m there to sell my services, not become police for for-profit higher education institutions.
Education Institutions
If schools have a problem with student conduct, that’s between the institution and the student. Fiverr, nor its sellers under it, has no role in this. That Fiverr has decided to take on the burden of becoming a police force for these mostly for-profit organizations is bewildering. Worse, that Fiverr expects the sellers to become that police is even more bewildering.
Work for Hire
In a discussion with a very naïve set of support representatives for Fiverr, a conversation ensued over this very same “academic police” issue. Essentially, the representative tried to make it seem like the seller is at fault by 1) not knowing the buyer is a student, 2) that a seller should know a student INTENDS to plagiarize and 3) that sellers are somehow responsible for that student’s plagiarism.
Let’s get one thing CRYSTAL clear. There’s no “plagiarism” under Work for Hire. The representative stated copyright infringement was also involved. There’s also no “copyright infringement” under Work for Hire. That’s not how Work for Hire copyrights work. If someone commissions and buys a work, such as writing a book, writing software code or any other software goods, as soon as the deal is closed, the delivered goods are considered as “Works Made For Hire”. The copyright office is very specific about this type of work and how copyrights apply to these works.
Works sold under “Works Made For Hire” see ALL copyrights turned over to the buyer as though the buyer created the work themselves. Meaning, as soon as the deal closes and those soft goods are delivered, the copyrights are fully, completely and legally owned 100% by the buyer. THIS is how “Works Made For Hire” copyright law works. From that link, here’s an excerpt that states that copyright law for a “work” (when made for hire) applies…
When a certain type of work is created as a result of an express written agreement between the creator and a party specially ordering or commissioning it
That’s exactly what Fiverr does… allow for commissioning a work using express written agreements. Thus, all works delivered from Fiverr are considered as “Work for Hire” and, thus, all copyrights are owned by the buyer upon delivery.
Academia, Works for Hire and Fiverr
Unfortunately, these concepts are like oil and water. They don’t want to mix. Academia wants students to create their own works. However, “Work for Hire” allows a student to buy a commissioned work, turn it in as their own work without legal issues and without plagiarism. Legally, under a “Work for Hire”, a student buyer owns the rights just as if they wrote it themselves. Therefore, no such plagiarism or copyright issues exist with “Work for Hire”. It might be an ethically poor choice on the student’s part and it might even deprive the student of much needed learning experience, but there’s nothing legally at fault here; not from the seller and not from the buyer.
Were the student to copy (not buy) a work from someone else and turn it in as their own, that’s plagiarism and copyright infringement. Keep in mind that plagiarism is not a ‘legal’ term. It’s an academic term typically bandied about when a student turns in a work they didn’t author themselves. However, commissioning someone and paying them for their efforts as a “Work for Hire” is not technically considered plagiarism and is most definitely not copyright infringement. While it might be ethically questionable for the student to take a “Work for Hire” route to complete an assignment, it doesn’t violate copyright laws and it isn’t plagiarism so long as the work was crafted by the seller as an “original work”.
Sellers Part II
With Fiverr, they’ve explicitly decided to place the burden of these “academically ethical” misdeeds onto the seller rather than onto the buyer / student. Let’s understand the problem here. Fiverr is not an academic institution. Fiverr, as far as I know, has no ties to academic institutions. Yet, Fiverr has crafted a Terms and Conditions policy that greatly benefits these for-profit academic institutions at the cost of requiring sellers to read and understand THOUSANDS of school policies to know if a potential buyer is violating any specific school policies.
WOW! Can you say, “overreaching?” I knew that you could. This situation is not only a ridiculous ask of sellers, it’s insanely complicated and time consuming and is highly unethical… all to sell a blog article, a work of fiction or a computer program on Fiverr?
None of this should be a seller responsibility. That’s Fiverr’s responsibility. A seller’s responsibility should end at selling their service. Violating school policies is the student’s responsibility to their school. The student agreed to their school’s conditions of attending that academic institution. The Fiverr seller plays no role in a student’s decisions. If a student intends or, indeed, violates a school’s enrollment conditions, that’s on the student to take the consequence. Fiverr should be completely hands-off of this process.
As I said, Fiverr’s management team is extremely naïve, gullible and unethical. That insane naïvety forces sellers to be incredibly overburdened as a long-arm-of-the-law for for-profit academic institutions combined with taking responsibility if a student violates a school’s academic policies. If an academic institution wants to task Fiverr sellers to become “academic police”, they can pay for that service like universities do for any other service.
Institutions of Higher Learning
Most higher education facilities (Universities and Colleges) are typically for-profit organizations. If they weren’t for-profit, they couldn’t keep the lights on, employ hundreds of instructors, janitors, staff AND buy desks, computers, buildings, land and so on. That Fiverr has taken the dubious and questionable step of writing into their Terms and Conditions a clause that favors these for-profit organizations is extremely questionable. Of course, one might ask, “Well, what about grade schools?”
Grade school is a whole separate bag and one where Fiverr shouldn’t actually ever see buyers for a number of reasons. The first and foremost reason is that grade school kids shouldn’t have credit cards to be able purchase items on Fiverr. The vast majority of grade school kids are at an age that prevents owning a credit card. A child might own a “learner” Visa debit card managed by their parents or perhaps a Visa gift card, but if Fiverr is accepting these payment cards without verifying age, Fiverr might be breaking other laws. For example, many grade school children are under the age of 13, which means that if Fiverr is allowing children under the age of 13 onto Fiverr’s platform, Fiverr is almost assuredly in violation of COPPA. Even minors under the age of 18 and who are still in grade school should be disallowed from making Fiverr purchases. In fact, only legal adults should be allowed to purchase services on Fiverr.
No, any application of “academic police” almost 100% both implies colleges and universities almost exclusively… which are most definitely for-profit organizations.
The above “academic police” situation would be tantamount to Fiverr adding a clause to its Terms and Conditions that holds sellers responsible for credit card fraud from buyers. Sellers aren’t “credit card police” any more than they should be “academic police”. Sellers have zero control over the payment system(s) that Fiverr employs and uses. Requiring such a condition for seller usage is not only backwater, it’s insanely stupid and definitely states exactly how inept the management team at Fiverr actually is.
Why would sellers be responsible for credit card fraud of a buyer when the seller has zero to do with that payment, that card or, indeed, the payment system? Sellers don’t get access to any of that card information. Thus, credit card management, just like academic management, is Fiverr’s responsibility.. and rightly it should be. It is on Fiverr to determine if a buyer is a student. It is on Fiverr to restrict and prevent purchases from students, not the seller.
If a seller is not a student at all and is not attending any academic institution, that seller holds exactly ZERO responsibility to any academic institution. Because Fiverr’s Terms and Conditions foists this agreement onto the seller is disingenuous, highly dubious, insanely stupid and, because of the time required to manage it, highly unethical. Everyone can understand the “credit card fraud” issue, so why is “academic fraud” any different here?
Low Wages
As a completely separate issue, but one that’s extremely relevant for sellers at Fiverr is how much money can a seller expect to make?
As a tech worker, the average wage to write code or build software, at least in the United States, is at typically between $30-70 per hour depending on experience, language, the type of code being written and so forth. That’s a lot for an hourly rate, but that’s the going rate in the United States.
Because far too many buyers on Fiverr are from Israel, Pakistan, India and other middle east countries where wages are very depressed, the expectation of costs of providing these services is extremely low. Meaning, instead of the normal going rate of ~$40 per hour, you’re expected to drop your fee down to $5 per project. Ironically, I think that’s why they named the site “Fiverr” because a “fiver” is all you’re going to get (less actually). I think you see the economic problem here. This brings me to my next point.
Commissions and Fees
Fiverr gets its money both coming and going. What that means is that for every “gig” sold (what they call a listing), Fiverr takes a 20% cut from both the buyer AND the seller separately. That’s a total of 40% cut for Fiverr from every single project sold. Let’s put a dollar value on that. For a $5 order, a seller will receive $4 with $1 going to Fiverr. A buyer will spend $6 to cover the $5 seller cost seeing $1 going to Fiverr. That’s a total of $2 that Fiverr made from that $5 sale.
This means for that $5, the seller doesn’t actually get $5, they get $4 (less after income taxes). You might spend 2 or more hours working on a project to receive less than $4? That’s way less than even minimum wage. So then, what’s the incentive to sell on Fiverr if nearly every buyer expects to spend $5 for almost any project? Yeah, that’s the real scam here.
Scam
Let’s get to the heart of the matter. Is Fiverr a scam? Clearly, Fiverr’s team is naïve and doesn’t understand the service they are offering. However, the overly expensive 40% commission that Fiverr takes combined with its overreaching Terms and Conditions, which is clearly designed to favor educational institutions over its sellers, and because the low price expectation from mostly middle east buyers leads the platform into extremely scam-ish territory.
Is it a scam? I don’t think the founders intended for it to be, but at this point it almost certainly is a scam. There are similar sites, like Upwork, that seemingly operate in a somewhat more legitimate way, yet those sites still choose to employ the overly high 40% commission system. However, because Upwork attracts more legitimate clientele over the “middle east crowd”, setting up listings on Upwork is more likely to lead to a better wage than when using Fiverr.
Bottom Line
Don’t go into Fiverr expecting to make a lot of money. Because of the mostly “middle east buyer crowd” who expects rock bottom prices that Fiverr seems to attract, because there’s few controls for sellers to protect themselves, because sellers must become “academic police” for for-profit educational institutions, because of the incredibly high 40% commission and because the actual income is so low, I’d class Fiverr as “mostly a scam”.
I strongly recommend avoiding this site unless Fiverr’s management team can get their act together and clean up all of these issues. Instead, if you’re looking for other “Work for Hire” type sites, try Upwork or CrowdSpring or, better, put your resume on LinkedIn and attempt to get legitimate actual employment with a real livable wage. However, if you enjoy frittering away literal hours of time for less than $5, then by all means head over to Fiverr.
How does Twitter Philanthropy work?
How does all of this Twitter philanthropy actually work? Let’s explore the seedier side of it.
Twitter Philanthropy Exposed
I won’t name any specific accounts simply because there are too many of these accounts preying on people’s needs, but let me expose how these accounts REALLY work. There is one on top of this pile, but I will let you find it yourself. If you search Google for the key words “Twitter Philanthropy“, you will find this specific Twitter account within the first 10 search results. But, don’t go run over there just yet to follow it before reading this article.
Twitter Impersonation
Let’s start this out by explaining how these accounts operate. While some of these large Twitter philanthropy accounts purport to be operated by a single individual, they are not. Instead, they are operated by a team of individuals who have access to this single Twitter account so named for a single person. In fact, this situation is in violation of Twitter’s Terms of Service rules of impersonation.
Impersonation is a violation of the Twitter Rules. Twitter accounts that pose as another person, brand, or organization in a confusing or deceptive manner may be permanently suspended under Twitter’s impersonation policy.
By operating an account as a team, rather than by the single individual named on the account, this is definitely impersonation… regardless of whether the single individual has authorized that “team” for that purpose.
If you are interacting with a Twitter account who appears to be a single person, but unbeknownst to you there are actually multiple people who are not the named individual operating that account, this is entirely deceptive and misleading… and the very definition of impersonation. You are not dealing with the person you think you are. This is in violation of Twitter’s rules. Whether Twitter sees it that way is entirely subjective and based on Twitter’s whims, unfortunately.
Team Accounts
There are many team operated accounts on Twitter. Many celebrities operate such accounts. Since the celeb can’t be at the account 24/7 to answer responses, they hire staff to manage these tweets. Most times, these celebrities are represented fairly and appropriately by their hired staff, mostly because the staffers remain in close contact with the celebrity to make sure the tweets are appropriate to the celebrity’s brand.
With these philanthropy accounts, it seems these are much more loosely operated. The team is made up of people around Twitter who manage this account and have Twitter accounts of their own. They don’t always seem to have direct approval of the account owner. If you read through some of these philanthropic account tweets, they seem to show random and incoherent tweet-to-tweet messaging, espousing differing and hypocritical ideals. Why? Because different people are posting these tweets to that single account under the guise of impersonating a single person.
Philanthropy Exposed
While these accounts may have started out as genuine philanthropy, they have degraded into an odd scam that takes advantage of people’s needs… and mostly exist as ways of gaining followers. Worse, these accounts breed even more scam artists. Scam artists who WILL take advantage of you and scam you in the process. I’ll talk about the scammers at the end and how those work. Let’s focus on the actual purported philanthropy accounts first.
Why a team?
Good question and one that you’ll understand once I explain it. Basically, when more team staffers are attempting to locate money from other contributors, that means more money to share in the guise of philanthropy under that single Twitter account. Looking for contributions isn’t the problem here, though. It’s the scammy WAY that this team goes about looking for contribution money. If this single aspect doesn’t leave a bad taste in your mouth, keep following along as it gets so much worse.
The team that makes up the single top Twitter philanthropy account uses Twitter (and sites like GoFundMe) to gain money first. Instead of actually giving out money from the purported account owner, the team actually solicits money contributions from random people using dubious methods including begging, groveling and outright scamming using sites like GoFundMe. These team members are then adding their ill-gotten money into that Twitter account’s philanthropy fund for giveaways.
Here’s where the deceptive part comes in. This team of people collect these monies using their own personal accounts, accounts not associated with that Twitter philanthropy account. This makes it difficult to trace where that philanthropy money actually came from. Deceptive and a form of money laundering. Dirty. When other people contribute their money to one of these outside accounts for some possibly even fake purported need, this is a huge problem for these larger philanthropist accounts. Any money given out by a philanthropist shouldn’t have been obtained by using a scam. Yet, here we are.
Yes, this means this team is not actually giving out the philanthropy account owner’s money, as is implied by the account owner’s statements. Instead, that team is raising funds using outside means, possibly using deceptive means (claiming to be raising money on behalf of a veteran or claiming to have a high electric bill). Then, they take that money that has been raised and give it out on Twitter. Do they give out 100% of that contributed money? Do they use the money towards the claimed need? My guess to both of these questions is no. These philanthropy accounts might be keeping as much as 50% or more of the money they collect and, in turn, only give out 50% or less of those ill-gotten contributed funds.
It’s one thing to solicit money for an intended purpose and use it for that purpose. It’s entirely another to solicit money for a purpose, not use it for that purpose and give it away to someone on Twitter. Full disclosure here? Yeah, no. Not to mention the tax ramifications of such a setup.
Giving Money Away
While giving away money might seem a good thing, this action actually preys on people in need. Worse, the way these accounts are being managed is dubious at best. Yes, it gets even worse. These accounts have so many followers that they can’t possibly manage what gets written into their Tweets. What you’ll find in most of the Tweet replies consist of people claiming to also give away money. I’d bet that at least 99.9% of these people dropping in Tweet replies are scammers looking to part you from your money. It might even be some of the team running that same philanthropy account looking for money for their next “giveaway”.
This is why this situation is a double whammy for those in need. Not only is there so little money given away from these top Twitter philanthropy accounts (they can only raise a couple hundred dollars at a time usually), the Tweet replies are chock full of scam artists willing to take advantage of you.
The act of giving away this money on Twitter might seem altruistic, but I guarantee you that it is not. There is no altruism going on here. It’s all about gaining followers on Twitter and making it SEEM like the account is altruistic. It’s just a show. The reality is, it’s a business that follows the following formula:
- Team hides behind Philanthropy account (unbeknownst to Twitter followers)
- Team is tasked to raise money (using whatever dubious means necessary) from random individuals, each team member raising money separately using their own individual accounts
- Team places raised money into Twitter account fund for “giveaways”
- Team likely keeps much of that money for themselves as “payment”
- Twitter Philanthropy occasionally awards random folks for random reasons
What if I win?
If you are one of the very few who manage to get picked to receive money from a philanthropic Twitter account, don’t think it’s all roses. To receive any money, you are required to jump through legal hoops before that money is deposited into your account.
“What legal hoops?”, you ask. Good question. You are required to agree to a long, stringent set of terms and conditions before you are awarded any money. These conditions allow this Twitter philanthropy account to do whatever they want with your win while restricting you. What document would I sign? You will need to read and sign a Non-Disclosure Agreement (NDA) and return it to the team operating the philanthropic account before you can take possession of that $20 or whatever small amount they are willing to give you. This is the very definition of victimizing someone in need. Someone in desperate need of money would be willing to sign just about ANYTHING to get that “free” money.
Once you agree to their restrictive terms and conditions, they will send you that money via CashApp or whatever other agreed upon payment system. If you violate these terms, they will sue you.
This is not a no-strings-attached way to get money. In fact, it wouldn’t surprise me to find that some of these “charity acts” might actually be loans which must be repaid at some point in the future. In other words, be very, very careful if you choose to attempt to get money out of these philanthropic accounts. They may screw you on the way in and on the way out… and perhaps even later in the future.
Twitter’s Response
Unfortunately, Twitter (the company) doesn’t monitor or manage any of these philanthropy accounts. They allow them to operate with impunity. Because it seems that these philanthropic accounts “appear” (it’s all about appearances) to be doing good for the community, Twitter (the company run by Jack Dorsey) turns a blind eye and allows this bad situation to continue and fester. Few people actually get anything good out of these accounts. Even more are getting scammed from the tweet replies claiming to also give away money for following and retweeting. Don’t fall for any tweet replies. They’re almost certainly a scam.
Essentially, Twitter is turning a blind eye to these accounts which, in fact, do not perform a “good service” for Twitter. In fact, there are likely more people being scammed out of their money than ever receive money from any Twitter philanthropy. On Twitter, it’s not okay to write about certain controversial topics, but it’s perfectly acceptable to take advantage of people in need and scam them out of even more money? Thanks for looking out for us, Jack!
Scams and Philanthropy
As I stated earlier about Tweet replies in the article, let’s now understand how you can get scammed through fake philanthropy on Twitter. There’s actually more fake philanthropy going on Twitter than there is genuine philanthropy.
In fact, it’s very easy to get scammed out of money on Twitter. This specific scam isn’t what the top philanthropy accounts are using, however. Instead, they use the model described above, which is nearly as seedy. With that, let’s look at how fake philanthropy accounts on Twitter attempt to part you from your money so they can sip champagne on a beach.
This next philanthropy scam is bait and switch and it’s the primary way they scam you. How this one works is that you’ll see someone Tweet replying they’re willing to give you money and all they need is your CashApp tag sent to them over a direct message (DM). You then give it to them. Seems harmless enough, right?
The Scam Begins
Over the DM area, they’ll start by asking you a lot of seemingly personal questions. If you pass all of these probing questions, they’ll explain to you that their CashApp app is broken and that they can’t use it. They’ll tell you they need to switch to using PayPal. Here’s where the scam actually begins. Any philanthropy person who switches the payment method sets up a HUGE RED 🚩. Don’t fall for this. If the person can’t use CashApp, which enticed you in, to send you the money, walk away. CashApp can be used by anyone and it can be set up quickly. Any excuse someone gives for not using CashApp is fake.
When they switch to using PayPal, they can then claim to need you to send them money to cover fees or other such nonsense to complete the PayPal cash transfer. In that goal, they’ll issue you an invoice to pay. This is the scam. First, PayPal doesn’t need money to complete a cash transfer. Anyone making this claim is scamming you. Second, you shouldn’t need to pay any money to get money. If they can legitimately pay you, they will pay you no strings attached. Third, remember that they roped you in by offering the use of CashApp, then inexplicably switched to PayPal (bait and switch).
Anyone who can legitimately pay you money can do so using CashApp. There is no need to switch to another service. You can read more about PayPal scams here, and there are plenty more just like this one.
Screenshots
To attempt to trick you further by making themselves seem legit, they will send over a screenshot showing that they paid someone else money. A screen shot is EASILY faked, let alone found on the Internet. There’s no way to verify that any screenshot they send you is in any way linked to them (or even legitimate). In other words, screenshots are not proof of anything, let alone of being charitable.
If the person is legitimate, they will send you the money without asking you for anything in return. If they ask for anything in return, it’s a scam.
Uncomfortable Questions
Other behaviors they might exhibit is asking a series of deep probing questions you might not feel comfortable answering. Specifically, question like what bank you are using, what credit card companies you have, and so on. That’s none of their business. If they’re willing to send you money under philanthropy, they don’t need any of this information. If they begin asking probing questions like social security numbers, birth dates, actual account numbers or any other deep personal information, this has the hallmark of scam all over it. Remind them that the CashApp tag is all they need to send over money. If they can’t do this simple one thing, then they’re not legitimate.
Philanthropy should be about the good in giving, not finding out as many personal details about a person as possible. If someone begins asking very deep diving personal questions about you, your location and your finances, walk away. Explain to them that they don’t need that information to be charitable. If their charity relies on this information, they can find someone else.
Chances are, the reason they are asking these personal questions is to not only scam you, but take the rest of your accounts for a ride.
The Dark Side of Twitter Philanthropy
Yes, there is actually an extremely dark side to Twitter philanthropy which has now been exposed showing just how dark it can get. No, Twitter philanthropy is not all roses, as some adamantly claim.
For a moment, let’s suppose you do win the philanthropy lottery. Let me ask you this simple question. As a recipient of that supposed good will money, do you really want to accept that money not really knowing if someone behind that philanthropy account scammed another to give you that money?
Yeah, I wouldn’t want to either. Money can be helpful, but not at the cost of someone else being scammed out of it. Be careful and tread lightly when following any Twitter philanthropy accounts. Keep your guard up and watch out for people on Twitter claiming to be altrustic do-gooders. In these especially hard times, don’t fall for fake altruism. If you are really in need of money, head over to GoFundMe and plead your own case with your money raising efforts. The money you raise at GoFundMe will be yours without such underlying strings. If you’re putting your hand out towards someone else’s wallet, particularly on Twitter, expect the worst in people.
In fact, let me point you to this exposé article describing one particular philanthropy account on Twitter. This article is a bit disjointed of a read, but if you can follow it, you will better understand this very dark and seedy side of Twitter Philanthropy in excruciating detail.
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Robocalls: Gotta Hate ‘Em
If you own a phone, you’ve likely gotten a robocall… and they suck hard. This one is short and sweet. Let’s explore.
Most Annoying Robocall?
The most annoying robocall ever has to be this one:
“What exactly is this specific robocall all about?”, you ask?
Well, I’ll tell you! It’s a sales and marketing multi-level scam. Apparently, this scam was devised by Paul Stevenson when he formed Exitus Elite. This company sells packages of varying “educational materials” (and I use these terms loosely). These materials contain marketing and sales “education information”. Yeah, you’re selling so-called “secret knowledge” about how to make money using marketing and sales. It’s a catch-22 circular sales pitch. You’re selling the exact thing that got you roped into the scam in the first place. And, you had to pay for that “knowledge” the first time before you can actually begin selling it. Yeah… so there’s that. That’s why it’s a scam.
Most scams like this require an investment before you can begin selling the thing you got roped into buying.
Now, don’t run off and go buy into this scam lest you read the fine print details. For example, Exitus Elite offers sales of four differing “knowledge” packages priced between USD $250 and USD $1000. If it were only a one-time purchase, it might not be so bad. Unfortunately, it gets worse.
In fact, you’re actually joining a “Membership” program called “Exitus Elite” that costs $299 per year. After you pay your $299, you are hooked up to someone who can then sell you one of those four expensive “Genesis” packages priced starting at $250. Your purchase helps out the MLM “representative” you buy it from which then allows you to begin selling the very same packages to other people.
Worse, Exitus’s refund details are sketchy at best. They claim a 7 day refund policy, but good luck trying to work that out with them. Their strategy will most likely string you along past the 7 day mark and then claim it’s too late to exercise a refund (usually the reason for such short refund periods). If you try to charge the refund back to your credit card, Exitus’s terms claim the right to be able sue you. It’s actually a scare tactic. They can sue you anyway. It’s just that because you signed up by agreeing to those terms, that “agreement” may or may not hold up better in a court of law. However, no terms a company like Exitus writes can deny you your ability to use your credit card’s chargeback program. If you feel you’ve been scammed by a company, it is your right to contact your credit card company and dispute the charge.
Stay Away from MLMs advertised via Robocalls
It is always your best option is to avoid getting involved with any multi-level marketing programs, especially when they are advertised over annoying robocalls from companies which repeatedly violate the Do Not Call registry. Some MLMs may make you small amounts of money, but you’re always making money off of the backs of other people.
To succeed in an MLM, you basically have to rope people into the same MLM scheme that roped you in, forcing them to pay a lot of money to the company and giving you some tiny amount for “referral”. If you enjoy alienating friends, relatives and co-workers, then perhaps MLM money stealing scams are for you. If not, then try other more legitimate methods for making money.
If you receive this (or any) robocall that sounds similar, hang up and block the number on your phone. This action is your best option to avoid being scammed. Just forget all about that call and do something better with your time and money.
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Rant Time: SmugMug and Flickr
While you may or may not be aware, if you’re a Flickr user, you should be. SmugMug bought Flickr and they’re increasing the yearly price by more than double. They’re also changing the free tier. Let’s explore.
Flickr Out
When Flickr came about under Yahoo, it was really the only photo sharing site out there. It had a vibrant community that cared about its users and it offered very good tools. It also offered a Pro service that was reasonably priced.
After Marissa Mayer took over Yahoo, she had the Flickr team redesign the interface, and not for the better. It took on a look and feel that was not only counter-intuitive, it displayed the photos in a jumbled mass that made not only the photos look bad, it made their interface look even worse.
The last time I paid for Pro service, it was for 2 years at $44.95, that’s $22.48 a year. Not a horrible price for what was being offered… a lackluster interface and a crappy display of my photos.
After SmugMug took over, it has done little to improve the interface. In fact, it is still very much the same as it was when it was redesigned and offers little in the way of improvements. We’re talking about a design of a product that started in 2004. In many ways, Flickr still feels like 2004 even with its current offerings.
Status Quo
While Flickr kept their pricing reasonable at about $23 a year, I was okay with that.. particularly with the 2 year billing cycle. I had no incentive to do anything different with the photos I already had in Flickr. I’d let them sit and do whatever they want. In recent months, I hadn’t been adding photos to that site simply because the viewership has gone way, way down. At one point, Flickr was THE goto photo service on the Internet. Today, it’s just a shell of what it once was. With Instagram, Tumblr and Pinterest, there’s no real need to use Flickr any longer.
A true Pro photographer can take their work and make money off of it at sites like iStockPhoto, Getty, Alamy and similar stock photo sites. You simply can’t sell your work on Flickr. They just never offered that feature for Pro users. Shit, for the money, Flickr was heavily remiss in not giving way more tools to the Pro users to help them at least make some money off of their work.
Price Increase
SmugMug now owns the Flickr property and has decided to more than double the yearly price. Instead of the once $44.95 every 2 years, now they want us to pay $50 a year for Pro service.
[RANT ON] So, what the hell SmugMug? What is it that you think you’re offering now that is worth more than double what Yahoo was charging Pro members before you took over Flickr? You’ve bought a 14 year old property. That’s no spring chicken. And you now expect us to shell out an extra $28 a year for an antiquated site? For what? Seriously, FOR WHAT?
We’re just graciously going to give you an extra $28 a year to pay for a 14 year old product? How stupid do you think we are? If you’re going to charge us $28 extra a year, you damned well better give us much better Pro tools and reasons to pay that premium. For example, offer tools that let us charge for and sell our photos as stock photos right through the Flickr interface. You need to provide Pro users with a hell of a lot more service for that extra $28 per year than what you currently offer.
Unlimited GB? Seriously? It already was unlimited. Photos are, in general, small enough not to even worry about size.
Advanced stats? They were already there. It’s not like the stats are useful or anything.
Ad-free browsing? What the hell? How is this even a selling point? It’s definitely not worth an extra $28 per year.
10 minutes worth of video? Who the hell uses Flickr for video? We can’t sell them as stock video! You can’t monetize the videos, so you can’t even make money that way! What other reason is there to use Flickr for video? YouTube still offers nearly unlimited length video sizes AND monetization (if applicable). Where is Flickr in this process? Nowhere.
Flickr is still firmly stuck in 2004 with 2004 ideals and 2004 mentality. There is no way Flickr is worth $50 a year. It’s barely worth $20 a year. [RANT MOSTLY OFF]
New Subscribers and Pro Features
Granted, this is pricing grandfathered from Yahoo. If you have recently joined Flickr as a Pro user, you’re likely paying $50 a year. 50 US dollars per year, I might add that’s entirely not worth it.
Let’s understand what you (don’t) get from Flickr. As a Pro user, you’re likely purchasing into this tier level to get more space and storage. But, what does that do for you other than allowing you to add more photos? Nothing. In fact, you’re paying Flickr for the privilege of letting them advertise on the back of your photo content.
Yes, you read that right. Most people searching Flickr are free tier users. Free tier viewers get ads placed onto their screens, including on your pages of content. You can’t control the ads they see or that your page might appear to endorse a specific product, particularly if the ad is placed near one of your photos. Ads that you might actually be offended by. Ads that make Flickr money, but that Flickr doesn’t trickle back into its paying Pro users. Yes, they’re USING your content to make them money. Money that they wouldn’t have had without your content being there. Think about that for a moment!
Advertising on your Content
Yes, that’s right, you’re actually paying Flickr $50 for the privilege of allowing them to place ads onto your page of content. What do they give you in return? Well, not money to be sure. Yes, they do give you a larger storage limit, but that’s effectively useless. Even the biggest photos don’t take much space… not nearly as much space as a YouTube video. Flickr knows that. SmugMug now hopes the Pro users don’t see the wool being pulled over their eyes. Yet, do you see YouTube charging its channels for the privilege of uploading or storing content? No! In fact, if your channel is big enough, YouTube will even share ad revenue with you. Yahoo, now SmugMug, has never shared any of its ad revenue with its users, let alone Pro users. Bilking… that’s what it is.
On the heels of that problem, Flickr has never offered any method of selling or licensing your photos within Flickr. If ever there was ‘Pro’ feature that needed to exist, it would be selling / licensing photos.. like Getty, like iStockPhotos, like Alamy… or even like Deviant Art (where you can sell your photos on canvas or mousepads or even coffee mugs). Instead, what has Flickr done in this area? NOTHING.. other than the highly unpopular and horrible redesign released in 2013 which was entirely cosmetic (and ugly at that)… and which affected all users, not just Pro. Even further, what as SmugMug done for Flickr? Less than nothing… zip, zero, zilch, nada. Other than spending money to acquire Flickr, SmugMug has done nothing with Flickr… and it shows.
Free Tier Accounts
For free tier users, SmugMug has decided to limit the maximum number of uploaded photos to 1000. This is simply a money making ploy. They assume that free tier users will upgrade to Pro simply to keep their more than 1000 photos in the account. Well, I can’t tell you what to do with your account, but I’ve already deleted many photos to reduce my photo count below 1000. I have no intention of paying $50 a year to SmugMug for the “privilege” of monetizing my photos. No, thanks.
If you are a free tier user, know that very soon they will be instituting the 1000 photo limit. This means that you’ll either have to upgrade or delete some of your photos below 1000.
Because the Flickr platform is now far too old to be considered modern, I might even say that it’s on the verge of being obsolete… and because the last upgrade that Marissa had Yahoo perform on Flickr made it look like a giant turd, I’m not willing to pay Flickr / SmugMug $50 a year for that turd any longer. I’ve decided to get off my butt and remove photos, clean up my account and move on. If SmugMug decides to change their free tier further, I’ll simply move many of my photos over to DeviantArt where there are no such silly limits and then delete my Flickr account entirely.
If enough people do this, it will hurt SmugMug bad enough to turn that once vibrant Flickr community into a useless wasteland, which honestly it already is. I believe that outcome will actually become a reality anyway in about 2 years.
SmugMug
This company is aptly named, particularly after this Flickr stunt. They’re definitely smug about their ability bilk users out of their money without delivering any kind of useful new product. It would be entirely one thing if SmugMug had spent 6-12 months and delivered a full features ad revenue system, a stock photo licensing tool and a store-front to sell the photos on shirts, mugs and canvas. With all of these additions, $50 a year might be worth it, particularly if SmugMug helped Flickr users promote and sell their photos.
Without these kinds of useful changes, $50 is just cash without delivering something useful. If all you want to do is park your images, you can do that at Google, at Tumblr, at Pinterest, at Instagram and several other photo sharing sites just like Flickr. You can even park them at Alamy and other sites and make money from your photographic efforts.
Why would you want to park them at Flickr / SmugMug when they only want to use your photos to make money from advertising on a page with your content? It just doesn’t make sense. DeviantArt is actually a better platform and lets you sell your photos on various types of media and in various sizes.
Email Sent to Support
Here’s an email I sent to Flickr’s support team. This email is in response to Margaret who claims they gave us “3 years grace period” for lower grandfathered pricing:
Hi Margaret,
Yes, and that means you’ve had more than ample time to make that $50 a year worth it for Pro subscribers. You haven’t and you’ve failed. It’s still the same Flickr it was when I was paying $22.48 a year. Why should I now pay over double the price for no added benefits? Now that SmugMug has bought it, here we are now being forced to pay the $50 a year toll when there’s nothing new that’s worth paying $50 for. Pro users have been given ZERO tools to sell our photos on the platform as stock photos. Being given these tools is what ‘Pro’ means, Margaret. We additionally can’t in any way monetize our content to recoup the cost of our Pro membership fees. Worse, you’re displaying ads over the top our photos and we’re not seeing a dime from that revenue.
Again, what have you given that makes $50 a year worth it? You’re really expecting us to PAY you $50 a year to show ads to free users over the top of our content? No! I was barely willing to do that with $22.48 a year. Of course, this will all fall on deaf ears because these words mean nothing to you. It’s your management team pushing stupid efforts that don’t make sense in a world where Flickr is practically obsolete. Well, I’m done with using a 14 year old decrepit platform that has degraded rather than improved. Sorry Margaret, I’ve removed over 2500 photos, cancelled my Pro membership and will move back to the free tier. If SmugMug ever comes to its senses and actually produces a Pro platform worth using (i.e., actually offers monetization tools or even a storefront), I might consider paying. As it is now, Flickr is an antiquated 14 year old platform firmly rooted in a 2004 world. Wake up, it’s 2018! The iStockphotos of the world are overtaking you and offering better Pro tools.
Bye.
Reasons to Leave
With this latest stupid pricing effort and the lack of effort from SmugMug, I now firmly have a reason to leave Flickr Pro. As I said in my letter above, I have deleted over 2500 photos from Flickr which is now below 1000 photos (the free tier level). After that, it will remain on free tier unless SmugMug decides to get rid of that too. If that happens, I’ll simply delete the rest of the photos and the account and move on.
I have no intention of paying a premium for a 14 year old site that feels 14 years old. It’s 2004 technology given a spit and polish shine using shoelaces and chewing gum. There’s also no community at Flickr, not anymore. There’s really no reason to even host your photos at Flickr. It’s antiquated by today’s technology standards. I also know that I can’t be alone in this. Seriously, paying a huge premium to use a site that was effectively designed in 2004? No, I don’t think so.
Oh, well, it was sort of fun while it lasted. My advice to SmugMug…
“Don’t let the door hit you on the way out!” Buh Bye. Oh and SmugMug… STOP SENDING ME EMAILS ABOUT THIS ‘CHANGE’.
If you’re a Flickr Pro subscriber, I think I’ve made my thoughts clear. Are you willing to pay this price for a 14 year old aging photo sharing site? Please leave a comment below.
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Is DealDash a Scam?
I’ve always been fond of online auctions, until I found DealDash several years ago. I’ve also seen a number of people who have complained about DealDash and how it operates. Let’s explore if it’s a scam.
Auctions and Bidding
In a traditional auction, you’re actually buying from a seller who has put an item up for consignment to the auction house. This is how eBay works it. The seller uses the eBay platform to pay for their auction. If the item sells, eBay gets a cut of the profit. This is a typical auction from a typical auction house.
Bidders pay nothing to bid at eBay. You simply join the platform and off you go on your merry bidding way. You will pay for any auctions you win or any Buy-It-Nows you buy, but if you bid and don’t win, you pay nothing. This is important when understanding the difference between a site like eBay and DealDash.
At eBay, auctions have a finite end. If the auction closes at 6PM today, then it’s over at 6PM. Whomever was the highest bidder at 6PM is the winner of that auction.
DealDash Auctions
With DealDash, the auctions here work a bit differently. Instead of joining and bidding for free, you must pay for your bids. The bid cost can range between 12¢ and 60¢ per bid. In order to get started on DealDash, you’ll be required to pay for some initial bids. Sometimes DealDash offers bid sales for as low as 12¢ per bid.
As for the auctions themselves, they work quite a bit differently from eBay. Unlike eBay’s fixed close time, DealDash has no fixed auction close. Their auctions infinitely run and continue to extend until the 10 second countdown timer runs out without any further bids. As long as even one bid happens within that 10 second countdown, the auction extends with another 10 second countdown timer. Basically, an auction can run infinitely or until no one else places a bid. Bids also increment the item cost at 1¢ per bid. You spend 12-60 cents to raise the bid on an item by 1¢. Admittedly, that means the item cost goes up very slowly, but it also means that the bidding can go on for days with enough bidders.
Bid Extensions
You’re probably wondering about how people can manage to bid within 10 seconds. To answer your question, they don’t. Bidders use a feature that DealDash offers known as Bid Buddy. See below for more details. Suffice it to say that DealDash’s automated system continues punching in those bids in an automated way so users don’t have to. You’ll also notice that many of those bids are made right at the last moment of second 9. There’s no way a human could time a bid that precisely.
However, there has been some speculation that some of the bidding is rigged by DealDash. That speculation alleges that DealDash itself has its own set of automated bidders driving up auction prices and bringing attention to those auctions. I can’t tell one way or another if this is true. I’ll leave that speculation alone because of Bid Buddy and how it works.
Buy-It-Now
Both eBay and DealDash offer a Buy-It-Now option. However, these work entirely differently between DealDash and eBay. The eBay Buy-It-Now feature can be standalone or attached to an auction. If it’s standalone, you can only buy that product through Buy-It-Now. If it’s attached to an auction, you can only use Buy-It-Now before the auction begins. Once an auction has a first bid, the Buy-It-Now option disappears for that item.
With DealDash, if you bid on an auction, you are eligible to Buy-It-Now when the auction finally closes. You’ll buy the item at whatever price that DealDash offers, which they claim is usually at a substantial discount. In addition to buying the item, you’ll also get all of your bids back for free. This means you can reuse those bids again on future auctions. It’s not a bad deal if you really want that item. However, if you decline the Buy-It-Now purchase, you lose all of your bids. There’s a big incentive to bid on items where you are likely to buy it when the auction closes no matter the price.
Bid Buddy
DealDash offers an automated bidding service called Bid Buddy. It continues to bid on your behalf even when you’re not around to do so. eBay also has a similar feature, but it’s tied to the actual bidding process and doesn’t have a name. If you put in your maximum bid on an eBay auction, eBay will continue to bid on your behalf at the current bid increment until your maximum bid is reached. After that, you’d be responsible for upping your maximum bid or bidding manually.
Bid Buddy works in a similar way. It continues to bid on your behalf until you’ve run out of bids or reached the maximum number of bids set on that auction. The reason to use Bid Buddy is clear. Those who are using Bid Buddy get priority over those who are manually bidding. It is in your best interest to set up and use Bid Buddy rather than manually bidding. Otherwise, your manual bid will always be last in line.
So far, So good
So far, there’s nothing here extraordinarily bad about how DealDash works. Other than the infinitely open auction which I don’t personally like, it’s pretty straightforward in how it all works.
Products and Quality
Here’s where this site falls down hard. Do you go to DealDash to buy merchandise for a great deal or to spend time gambling to win? If it’s the former reason, then you might run into problems considering all of the below. If it’s for the latter reason, you might want to seek gambling help.
DealDash claims to offer overstocked products at “discount” prices. The difficulty with this business model is that DealDash is in this business to make money off of bidding with the side effect of an eventual sale of a product. They are not a retailer, not a discounter and definitely not in any way a reputable store. They are an auction house and that’s how they run it.
As a buyer, you’ll notice there’s nothing mentioned about a Return Policy or what to do if you receive damaged or unacceptable goods. Indeed, there’s nothing on any of DealDash’s auction listings that even mention the quality or authenticity of the merchandise that you will receive if you buy or win the bid.
The products purport to be genuine, but are they? Also, unlike eBay where there’s a seller behind each and every product, with DealDash, DealDash is the seller. This means that if you have a question about the sale of a product, you have to go to DealDash to get it answered. Worse, buyers have tried doing this with no response from DealDash.
If you’re actually wanting the product you’re bidding on, you might want to consider that what you’ll receive may entirely differ from the listing. In other words, the trust level with DealDash’s merchandise is very, very low. If you really want that merchandise, you can probably find it cheaper from a more reliable seller on eBay or Amazon without the bidding fees. On eBay, both the sellers and the products themselves have a reputation score. You can see what buyers are saying about both the product in the listing and of the seller’s reputation. You’ll notice that on DealDash, there is no reputation information about the seller nor reviews from buyers about the product or what they received. DealDash is a black box.
Being the black box that it is, unfortunately, DealDash is about as scammy as it can get from a site like this. If you can’t readily see what other buyers have received from a listing, then how do you know that you’ll receive anything of value? You don’t.
Additionally, because DealDash is not a traditional store, returning any merchandise may be next to impossible, particularly when you can’t get in touch with anyone at DealDash. If the item you receive is damaged, misrepresented or outright garbage, you’re stuck with it. Otherwise, you’ll have to dispute the credit card charge. The only other thing you can do is complain about DealDash… and many people have done exactly that on RipOff Report. However, other than venting your frustrations to the world or forcing a chargeback, you may not be able to get your money back.
Jumpers and No Jumper Auctions
Here’s where DealDash also gets just a little bit more scammy with their auction site piece. A jumper is a person who jumps in at the last minute and begins bidding on an auction when they think the auction time is about to run out. Unfortunately, jumpers on DealDash effectively mean nothing. A “No Jumper Auction” is simply a way to allow early bidders not to be outbid by someone who wants to jump in at the last minute. With DealDash, there is no such thing as a ‘last minute’. On eBay, there is a ‘last minute’ because auctions have a hard close time. On DealDash, the auction is infinitely extended so long as even one person continues bidding.
A “No Jumper Auction” sets a minimum bid point that after that no new bidders are allowed to enter the auction. If the no jumper point is set to $5, that means new bidders attempting to bid after $5 will be unable to do so. Only bidders who placed at least one bid below $5 will be able to continue bidding on that auction.
This then excludes users from auctions after the no jumper bid price has been met. On eBay, this is called ‘sniping’ or ‘snipers’. A sniper is a little different from a jumper in that because the auction close time is finite, snipers join in during the last 30 second countdown to try and outbid the current high bidder. With DealDash, a “No Jumper” feature is entirely pointless and just gives DealDash a way to manipulate auctions and who can bid. This feature only serves to force people into auctions early or wait for another one to start. This feature is simply a way to lower competition and allow early birds to win the auction more quickly without extra folks jumping in and keeping the auction open much longer. That seems to go against the idea of DealDash making more money. It’s kind of a weird feature for DealDash to add a limit auctions and prevent even more bidding, losing DealDash even more money in this process.
The scammy part of this is that apparently these “No Jumper” auctions don’t work properly, or DealDash is able to manipulate the “No Jumper” price randomly against would-be bidders. Some bidders have claimed to join in on standard “No Jumper” auctions with the default threshold set to $5. Yet, the auction price never reached $5 and they were unable to bid with DealDash claiming they were a jumper. Fishy. It seems this feature is being manipulated by DealDash in a way that prevents certain bidders (new or not) from bidding on that “No Jumper” auction.
Is DealDash worth it?
DealDash is ultimately an addictive form of legalized gambling, but it actually feels much like playing slot machines in Vegas. Mostly you lose, rarely you win and you spend a lot of money doing it…. which is how DealDash likes it. It’s what keeps them in business. If you’re willing to Buy-It-Now, you can buy back some of your bids at the cost of the product stated in the listing. But, don’t expect the price of the Buy-It-Now merchandise to be any less expensive than what you’ll find in a retail store, according to many who’d done this.
Some complainants who’ve used the Buy-It-Now option have been quite disappointed in the process. One user claimed that instead of getting their bids back as was promised, the “total value” of the bids was deducted from the price of the Buy-It-Now item. However, the “total value” of the bids applied to the reduction in the item’s cost were substantially lower than what the user paid for the actual bids. They might deduct at 12¢ per bid when the user paid 60¢ for the bids. Assuming you can actually get your bids back instead of this deduction thing, that’ll buy you a little more time to bid on new items and addict you further to this form of legalized gambling. This getting-bids-back idea is a little like losing $500 at BlackJack and then winning back $100. You’ve still lost $400. It’s simply a way to make you feel a little better about having lost $400.
If you get a high off of gambling, DealDash may be worth it… particularly if you don’t care about whatever it is you might win.
If you do happen to win the bid on item, then you’ll lose all of your bids plus whatever the winning cost of the item. If you happen to win a bundle of bids, then you’ll lose your bids only to gain some back. If you win the bid on a pair of earrings, you’ve lost however many bids it took to win that bid plus the cost of those earrings.
Consider if you don’t do Buy-It-Now often and you continually keep losing bids, you need to keep track of how much money you’ve spent there. You need to keep track because all of your lost bid money adds up when you finally do win a bid. For example, if you’ve spent $500 buying and losing bids for a while, then win a $50 coffeemaker, technically you’ve spent $550 for that coffeemaker. That’s not such a great deal. You could have bought 11 coffeemakers for the amount of money you spent to win that bid at DealDash. You simply can’t ignore all of the money you’ve spent on bids as non-existent. Those bid costs add into the cost of any items you bid and win. This means you can’t claim you got a toaster for $5. It was $5 plus the cost of however many bids it took you to get there.
Scam or Not?
The idea behind the site is fine, the execution of it is poor. If DealDash had partnered with legitimate sellers to back each of the auction products and if DealDash had allowed buyers to review the product listings for quality and authenticity and if DealDash offered a buyer’s protection plan and an actual Return Policy like a legitimate store, I might be more inclined to say it’s not a scam.
As it is, because DealDash doesn’t act like a legitimate store and also doesn’t offer feedback from buyers nor is there a buyer and seller relationship to ask questions, I cannot recommend the use of this site for any purpose… not for buying products and definitely not to get your gambling fix.
There’s too much of a chance to lose far too much bid money and very slim chances you’ll actually win a bid. Of course, you’ll be given the option to Buy-It-Now and get your bids back on auctions where you lost the bids, but that’s of little consolation if the merchandise you receive is trash, assuming you receive anything at all. Between the bids you pay for and the Buy-It-Now, this is how DealDash makes money. The rest is all an addictive game.
Testimonials
Don’t be fooled by people holding up a piece of merchandise that they claim to have received from winning an auction. There’s no guarantee those are legitimate photos. You have no idea if the merchandise you will receive is legitimate, counterfeit, refurbished, used, hot or in any other condition.
Even if the “winner” photos are legitimate, what you don’t know is how much those people have spent in bids to DealDash to “win” the privilege to buy the item at that price. They could have been bidding for years and have already spent a ton on bids before they finally won an iPad. In fact, they could very well have spent more than simply going to the Apple store and paying full price for one.
It’s just like being in a Casino. When you hear the bells ring and see the lights flash on a machine because someone has hit the jackpot, you really don’t know if that’s a win or if someone is simply making back a little money towards what they’ve already lost.
Recommendation
Site Recommendation: 👎 Avoid!
Reasons:
- Highly Addictive
- Form of gambling
- Not a store
- No Return Policy listed
- No Product Reviews
- No User Reviews
- No Seller Reviews
- Auction items don’t describe authenticity or condition
- Pay to bid
- Pay to win (separate from item cost)
- Costly
- Difficult to Communicate with DealDash
- Mostly a scam to separate you from your money
- Doesn’t operate like a legitimate store
- May be less costly to shop elsewhere
- Questionable business practices
As always, if you find Randocity a fascinating read, please leave a comment below and please click the Follow button in the upper right under the Search bar to be notified of any new Randocity articles.
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Rant Time: MagicJack – Scam or Legit?
The magicJack company offers a voice over IP phone service. You can use it with an app on your phone or by a device plugged into an actual landline-type phone. It does require Internet to function. Either way you go, it’s VoIP and they have very questionable and deceptive billing practices. Let’s explore.
Internet Phone Service Choices
If you’re in need of phone services on a device that only has access to WiFi, then a voice over IP service (VoIP) is what you need. There are many different VoIP services available on the Internet. You can even make audio and video calls via Facetime on iOS, via Skype on pretty much any mobile or desktop computer or even via Google Hangouts. For this reason, magicJack is yet another VoIP phone service in a sea of choices.
Why would you want to choose magicJack? Initially, they were one of the lowest priced VoIP phone services. They also offered a tiny computer dongle that made it easy to plug in a standard home phone. That was then. Today, mobile devices make this a different story. Lately, this company has raised their prices dramatically and they’re performing some quite deceptive and questionable billing practices.
911 Service
As with any phone service that offers the ability to use 911, the service must tack on charges to the bill by the municipality. You’d think that part of the invoice that magicJack is already collecting in payment of services would also cover for those 911 services. I certainly did. Instead, magicJack isn’t willing to part with any of their service revenue to actually cover services that, you know, they provide as part of your phone service… like any other phone company does.
MagicJack seems to think they can simply pass on said charges right to you in an email invoice and have you pay them separately. Here’s where magicJack gets firmly into scam and deceptive billing territory.
I’m sorry magicJack, but you’re forcing the 911 service when we don’t really need it or want it on that magicJack VoIP phone line. If you’re going to force this service as part of the overall service, then damned well you need to suck it up and pay the expenses from what we pay you. There is no way in hell I’m going to pay an ‘extra’ bill simply because you are unwilling to use the collected service fees to pay for those bills, like any other carrier on the planet. It’s not my problem that you choose not to do this.
You, magicJack, need to pay those bills to the 911 service. It’s your service, you forced 911 onto my line and now you must pay the piper. If you can’t do this, then you need to go out of business. This means, you need to collect the 911 service fees at the time you collect the payment for your services. And you know what, you already collected well enough money from me to cover those 911 service fees many times over. So, hop to it and pay that bill. This is not my bill to pay, it’s yours.
MagicJack Services
Should I consider magicJack services as an option when choosing a VoIP phone service? Not only no, but hell no. This service doesn’t deserve any business from anyone! This is especially true considering how many alternatives exist for making phone calls in apps today. Skip the stupidly deceptive billing hassles and choose a service that will bill you properly for ALL services rendered at the time of payment.
MagicJack is entirely misinformed if they think they can randomly send extra bills for whatever things that they deem are appropriate. Worse, magicJack is collecting payments for that 911 service, but you have no idea if that money will actually make it to the 911 municipal services in your area. That money might not even make it there and you may still receive a bill. In fact, if the municipality does send you a bill, you need to contact them and tell them to resend their bill to magicJack and collect their fees owed from magicJack, which has already been collected in the funds to cover any and all phone services. If magicJack claims otherwise, they are lying. If you are currently using magicJack’s services, you should cancel now (even if you have credit remaining).
Is magicJack a scam? Yes, considering these types of unethical and dubious billing practices. Even though their VoIP service works, it’s not without many perils dealing with this company. As with any service you buy into, Caveat Emptor.
MagicJack Headquarters
Here is the absolute biggest red flag of this scam company. MagicJack claims their corporate headquarters address is located here:
PO BOX 6785
West Palm Beach, FL 33405
Uh, no. Your headquarters cannot be inside of a PO Box.
Yelp claims that magicJack’s US address is here:
5700 Georgia Ave
West Palm Beach, FL 33405
Better, but still not accurate. This is not their corporate headquarters. This is simply a US office address. Who knows how many people actually work there? We all should know by 2018 just how many scams originate from Florida.
When you visit magicJack’s web site, no where on any of the pages does it show their actual physical headquarters address. This is a HUGE red flag. Where is magicJack’s actual headquarters?
magicJack Vocaltev Ltd (opens Google Maps)
Ha-Omanut Street 12
Netanya, Israel
As a point of consumer caution, you should always be extra careful when purchasing utility and fundamental services from any Israeli (or other middle east) companies. Worse, when companies cannot even be honest about where their corporate headquarters are on their own web site, that says SCAM in big red letters.
Class Action Lawsuit
Here’s another situation where this company needs to be in a class action lawsuit. I’m quite certain there are a number of folks who have been tricked into this scammy outfit and are now paying the price for their unethical and scammy business practices. However, because they are located in Israel, setting up a class action lawsuit against this company may be practically impossible. Better, just avoid the company and buy your phone services from U.S. based (or other local) companies where they are required to follow all local laws.
Rating: 1 star out of 10
Phone Service: 5 out of 10 (too many restrictions, limits call length)
Customer Service: 1 star out of 10
Billing: 0 stars out of 10
Overall: Scam outfit, cannot recommend.
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Beware of Silicon Valley Clean Energy and energy slamming
If you live in California, you need to read this. This situation has scam written ALL OVER IT. Let’s explore.
State / City Mandated ‘Clean Energy’
Apparently, as a result of city voting, some cities (such as Cupertino) have decided to force residents in that city to change their power generation provider to a third party instead of PG&E. In my case, it ends up being the scam outfit Silicon Valley Clean Energy. Why are they a scam? Here’s what happened.
First, they enrolled my electrical generation service under SVCE’s generation service without my permission. Then, SVCE waited over 60 days to notify me of my enrollment into their power generation service. Because they offered opting out at less than 60 days for free, this means I am not only being assessed a $5 exit fee from SVCE and I am now being put under PG&E’s transitional rates (which are likely to be higher than normal PG&E rates for at least 6 months). Oh, it gets even better.
Second, because I was force exited from PG&E’s generation services, PG&E gets to assess a Power charge indifference adjustment (PCIA) charge (effectively it is an exit charge for leaving PG&E’s power generation services). This charge on my last bill was $25.60. If you add this charge together with SVCE’s power generation charges, the total generation fee becomes identical to PG&E’s generation charges. If you spread this fee out over 12 months, SVCE’s charges aren’t as low as they seem. Also, this PCIA seems to be assessed once a year (or as frequently as the CPUC allows PG&E to assess it). Basically, this is a charge that PG&E gets to assess to cover generation fees they lost because you moved to a competitor. And, they get to do it each year.
Third, SVCE’s crap web site would not accept my opt-out request. Their opt-out form is entirely broken. I ended up calling their phone and opt-ing out there. Unfortunately, I have no idea if they really got my opt-out request because this fly-by-night outfit only has 9-5 call-center business hours. So, I have to wait until the following day and contact them.
Fourth, I was only notified of my ‘enrollment’ in this service because of a cheap card sent to me in the mail over 60 days after my enrollment.
Fifth, they make a lot of bold claims about using wind and solar energy for generation, but do not back up those claims anywhere. They could simply be buying PG&E generated power and reselling it.
Charges and electric slamming
Not only does PG&E get to assess random charges as a result of the customer now using a third party power generation company, the power generation company gets to assess random exit charges for leaving their service when I never voluntarily joined it in the first place.
This entire situation smells of CLASS ACTION LAWSUIT. So far, I will have been assessed around $35 in fees plus an unknown amount for rates (up to 6 months) simply because SVCE grabbed my service without notifying me timely. This is the exact thing that long distance phone companies were doing in the 90’s. It is called slamming. This scam type is just another form of state / city endorsed slamming, now with the electric service.
The Feds need to jump on board and stop this slamming activity quick and force the same payback charges on the company who slammed the customer. Here’s what long distance providers were forced to do if they slammed someone onto their service and the end user paid the bill:
If you have been slammed, but discover it after you HAVE paid the bill of the slamming company, the slamming company must pay your authorized company 150 percent of the charges you paid the slamming company. Out of this amount, your authorized company will reimburse you 50 percent of the charges you paid the slamming company. Or, you can ask your authorized company to recalculate and resend your bill using its rates instead of the slamming company’s rates.
Electric generation companies need to be held accountable for slamming in the same way as long distance providers. Companies like SVCE riding on the coattails of city votes shouldn’t get a pass to switch services without permission. Slamming is slamming whether it’s for telephone service or power generation. No matter what it is, it’s a rip off unless the change is by consumer permission. If there are fees involved, the customer MUST authorize the change in advance. Otherwise, it is slamming.
How not to run a business (Part 10.2) — Case Study: Trust
A business is as good as the trust it practices. Trust is a crucial element in gaining new business. If prospects cannot trust you or what you offer, trust that your business is genuinely there to help your customer, trust that you will provide a high quality service, your business will not succeed. Trust is mission critical to business success. Let’s explore.
Kickstarter
Recently, you may have heard about the H+ Holus project on Kickstarter. Its premise is to create a display device that can provide a wide variety of viewing angles. Some words used to describe the device include ‘holographic’, ‘holographic experience’ and ‘3D’. From the link above, the description states,
Holus provides a blend between the digital and real world by converting any digital content into a 3D holographic experience
To visually get the point across, H+ uploaded some CG representations of what the finished product might look like… including this video….
By Day 3 of this Kickstarter project, the project had already been funded the amount of $200k CAD. So here’s where things get a little dicey with both this project and Kickstarter when complaints begin to roll in. At the end, the Holus project raised $297,790 CAD. Some sites are already asking if the Holus is the most expensive scam in Kickstarter history. Reddit readers state these grievances of the Holus device.
Kickstarter’s rules are clear on misrepresentation. In the above video, it is clearly shown that as the camera moves, so does the 3D of the imagery. With Pepper’s Ghost and a flat screen, this is not possible which misrepresents the capabilities of this device. In other words, Kickstarter doesn’t allow realistic 3D rendered concept photos or videos as part of the project. Including photos of the prototype or drawings of the concept is perfectly fine. However, 3D realistic images depicting a concept are not acceptable and Kickstarter’s rules prohibit the use of such imagery.
3D Displays
We all know what these are. They’re basically your flat screen TV with shutter glasses. They’re cumbersome to use, give you headaches and, in general, are mostly a novelty. Yet, this is the state of 3D displays in 2015. No, we do not yet have floating displays such as what’s shown in Minority Report or Avatar. These displays, if even possible, are years away from becoming reality. Yet, here we are on Kickstarter with a small company claiming they’re about to produce a 3D Holographic display. Frankly, it’s not possible. What Holus offers is no better than Pepper’s Ghost.
Pepper’s Ghost is a technology that dates back to 1862 and is named after John Henry Pepper who discovered the illusion. A Pepper’s Ghost display has no relationship to holograms or holography, further misrepresenting the display. What Holus offers is a flat screen reflected off of a transparent surface. Because the screen located in the roof of the cabinet is flat, it’s definitely not 3D (without using glasses). Worse, there are already devices like this available on Amazon right now for the iPhone for $10.99. Visit Amazon and compare.
Holus Deception
Whether the H+ folks intended to deceive or were naïve about what they could show on Kickstarter, it doesn’t really matter from a fraud management perspective. The listing violated Kickstarter’s rules. Yet, Kickstarter did nothing to stop or prevent this listing from continuing. In fact, it seems that Kickstarter even awarded the Holus Kickstarter Project as a staff pick at some point. When this listing was brought to Kickstarter’s attention for misrepresentation, they ignored the warnings and allowed the project to fund anyway.
Trust
As a CEO, it is important to maintain trust with all of your customers. If you don’t attempt to maintain that trust, your business is hopelessly lost. Case in point… Kickstarter CEO Yancey Strickler leaves a comment on Joanie Lemercier’s ‘covering up a scam’ blog article after she and several others unsuccessfully attempt to bring this misrepresented project to the attention of Kickstarter. Strickler’s comment is defensive and deflecting. Here’s what Strickler has to say (full comment below):
Hi Joanie —
Yancey from Kickstarter here.
I’m responding, in part, to thank you for the attention you’ve paid to the Holus project. We’ve seen a lot of debate and strong feelings around the project, and we’ve heard a lot of questions about our policies and how we enforce them. I’d love to clear up a few things about how we did so in this case.
Part of the issue we’ve seen with this project revolves around words like “hologram,” “holographic,” and “holographic experience,” which people have come to use in so many different colloquial ways. Some of our most-discussed “holograms” — Tupac Shakur’s appearance at Coachella, CNN’s election-night guests — aren’t holograms at all. Even Microsoft bills its HoloLens as a holographic product. There’s an odd lack of clarity involved in what many people mean and understand when they say the words.
So in this case, our approach was to focus in on how Holus actually worked. We asked the Holus team to post an update that demonstrated, clearly and openly, exactly what they were working on. They responded with a public update that outlined the technique they use. That update was emailed to backers of the project, to help make sure everyone involved was fully clear on what they were supporting and what they could expect.
Then there’s the question of our rules for hardware projects. First, we require creators to show prototypes of their work. Second, we prohibit them from using photorealistic renderings.
Holus satisfied the first rule, posting a number of demo videos and documentation showing working prototypes. But when the project originally launched, it included CGI renderings. We informed them that this was strictly prohibited; they promptly removed the material. They also emailed backers to clarify their process, including a video demonstrating their iterative prototypes.
And last, there’s the question of the staff pick. Holus was originally selected as one, until we spotted and received reports about CGI renderings. We immediately removed the staff pick status, and asked the Holus team to remove the badge they’d added to their project image. (Staff pick badges aren’t a part of our system; we don’t create them or provide them. Actually, we strongly advise creators not to use them at all.) They promptly did so.
In other words, the project conformed to our stated rules, added more information on request, and made a transparent, good-faith effort to thoroughly inform backers about the nature of their work. Based on that, we continued to monitor it, but allowed it to remain on the site. The question then became: were people interested in backing it?
And this is the part where you — and the broader Kickstarter community watching these projects — become invaluable. One of the reasons Kickstarter uses all-or-nothing funding is because it gives everyone involved in a project time to really research what the creators are doing, discuss it with others, and come to a collective decision about whether it’s still worth supporting. Ultimately, it’s backers who decide what gets funding, not us.
That’s why we’re always grateful to anyone who joins in the public debate about projects, asks tough questions about the claims they’re hearing, and shares their expertise with other backers. That kind of discussion is crucial, especially when it comes to new technology. It helps our Integrity team monitor projects for problems or violations of our rules — as we did throughout the Holus campaign. It helps backers vet ideas and make the most informed decisions possible. It holds creators to a high standard, and helps them build stronger communities. It does all these things no matter what action Kickstarter winds up needing to take, and whether projects succeed or fail.
And that’s why I’d like to thank you — and to say that, if you’ve chosen not to get involved in any more projects, we’re sad to hear it. The role you played in this one is incredibly important. Members like you are welcome in this community any time: you make things better for everyone involved.
Cheers
Yancey
This is not the type of diatribe I expect to hear from a CEO. CEO’s are the top agent of the company. They are the person who investigates wrongdoing and the person who puts a stop to it. No where above did Yancey even mention investigation, taking the strictest action or in doing anything to prevent such an occurrence in the future. Sure, they requested the prohibited content removal, but only after the project was already mostly funded. Kickstarter also didn’t apparently require full disclosure of this content removal to the backers.
Instead, he defends the project and states that it is the backer’s responsibility to post meaningful discussions, debate the project and then choose or not choose to back based on these comments. That’s all well and good until Joanie points out in a later blog post that in among other behaviors by Kickstarter to ignore the project and let it proceed, Kickstarter also
…DELETED the embarrassing questions asked in the project comments (see screenshots).
When Kickstarter deletes comments that could help backers make informed decisions, that ultimately means that Kickstarter no longer respects the backers and is in it to make sure the project succeeds whether it’s a real project or not. This also means that Kickstarter is in it for the money they will get from the project rather than protecting backers from fraud. This is a serious breach of trust and one that should resonate to every backer who has ever backed a project at Kickstarter.
In fact, Joanie points out all of the trust related issues around this Kickstarter project:
– YOU DID NOT REPLY to the official ‘reports’ made from day 1 (except email auto-replies).
– YOU DID NOT LISTEN to the experts: Jason Sapan has been making real holograms in NYC for over 40 years, he warned you about the fraud.
– YOU DIDN’T CARE TO COMMENT the 3 in-depth articles (1 – 2 – 3) written by Raphaël de Courville about his investigations on the scam.
– YOU DELETED the embarrassing questions asked in the project comments (see screenshots).
– YOU DID NOT MODERATE messages from suspicious accounts (1 – 2) and Holus partner comments (1) who broke another rule.
– BACKERS WERE NEVER INFORMED about the replacement of prohibited CGI and removal of staff pick status.
There were probably even more behaviors not documented here, but these are enough to show that even though Kickstarter was made aware of the project early in its life, Kickstarter ignored it all and even colluded in making sure the project appeared to be legitimate.
Even Yancey’s comment to Joanie attempts to justify the above actions in an obtuse fashion.
Business Don’t — Don’t allow fraud on your service
This is probably one of the biggest business don’ts I’ve ever documented in this series. You don’t do what Kickstarter did. If you establish rules by which the community must follow, then you need to ensure they are enforced regardless of outcome. Even if you stand to lose 20% of that 200k or whatever Kickstarter’s commission is, that is chump change compared to the trust you’ve lost from your community and the possible legal ramifications you face (which I guarantee will cost you more money than any commission you’d make from the fraud). Your community keeps you in business. For this reason, this trust case is worth studying. It’s worth realizing what not to do when running your business.
In Kickstarter’s case, the appropriate action would have been to delist and refund all backers before the project closed. Then, request the project owner to relist the project using drawings or other imagery that doesn’t violate Kickstarter’s terms… instead of silently requesting the images be removed without letting the existing backers know… instead of removing key discussions from the project to inform backers of what this project really is… instead of ignoring emails ultimately saying that the project is fraudulent.
Fraud is a very real possibility anywhere and everywhere, especially with crowdfunded projects. Fraud is intentional misrepresentation of something. It’s against the law in the US and the US government investigates and takes legal action against those who commit fraud against buyers. Allowing fraud to exist on your own web service and then doing nothing about it once you become aware is collusion and makes your business as much liable as the person who set up the fraudulent listing in the first place. The one thing you cannot know is intent and intent is the difference between innocent misrepresentation and outright fraud. However, to the government, intent doesn’t matter, only the outcome. As a business, you must error on the side of caution and assume the intent is intentional misrepresentation, which means taking the strictest action possible and forcibly removing the offensive content from your site. If your business cannot protect its own customer, then no one will and you’ve lost your customer’s trust. They trust you to be their advocate against thieves, scams and fraud when they are using your service. When you fail at protecting your customer from fraud, your company has failed.
Were someone to bring legal action against Kickstarter and H+ for the alleged fraud of this project, there is definitely enough evidence that Kickstarter could be held liable and culpable in this activity.
Enforcing Business Rules
Once you establish business rules by which your clients must abide, you need to absolutely enforce those rules by the strictest of actions in every case. If you allow even one client to slide by the rules, your business could end up in court. If you are on the other end of a Kickstarter project and you choose not to deliver on your backer rewards, the US Government will come after you. Fraud is a federal crime and can lead your business into a lot of federal legal problems. Ed Nash found this out the hard way when his company, Altius Management, failed to deliver the $25k Kickstarted funded Asylum card game in 2012.
Failure to provide the necessary level of trust through enforcement of your rules could lead your business into bankruptcy. In this case, Kickstarter’s woes are just starting. How this all ends for Kickstarter is yet to be known, but it’s probably not going to end well. How this ends for H+ and the Holus device is yet to be seen, but delivering a Pepper’s Ghost to backers will likely lead to outrage.
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