There are still plenty of people searching for “Shop to Earn scam,” ShopToEarn fraud, “is Shop to Earn legitimate,” Shop To Earth scam, and the like. The company has, for the most part, avoided negative commentary on the internet.
It seems important, therefore, to go over some of the finer points of this newer multi-level marketing (MLM) company that is being promoted as the next big thing. Let’s review…
- MLM is not revolutionary – This outdated business model has been around since the 1960’s. People are still joining because they’re being sold a dream… the dream of financial independence and owning their own business. Yet 99% of people involved in MLMs lose money.
- It’s not “direct selling” – The term direct selling, at one time, might have been accurate. In the early days of MLM, there was a focus on actually selling a product directly from a distributor to a customer. Not anymore. The whole focus is really on recruiting new marks into the schemes, but the term direct selling is still used to confuse the public and shift the focus away from the recruiting.
- Online shopping is not new – The founder of Shop to Earn, Patrick Welsh, brags that it took him ten years to come up with this idea. While he was twiddling his thumbs, online shopping has developed into a huge industry. ShopToEarn offers nothing new in this regard. In fact, all it really does is use the success of already established online sites to collect fees from its representatives.
- You don’t really own your own “store” online – When you join Shop to Earn, you’re not getting your own store. What you’re getting is a page of links to retailers. That’s it. There’s nothing revolutionary about this.
- You don’t even own anything – All you get when you pay your $448 fee is the right to have a ShopToEarn / ShopToEarth page for as long as the company allows you to, and you have the right to recruit other people to have a page. What is that page? Simply a collection of links to real retailers. You don’t own the page. You don’t own your downline. You don’t own a darn thing!
- Fees, fees, fees – Do you know how ShopToEarn representatives make their money? It’s through the fees you pay when you sign up. Yes, there is money to be made from shopping, in theory. But they’re not really in it for shopping. The name of the game is recruitment. $448 to start. $119 a year to renew.That’s where the real money is, not in actual shopping. (Yes, the shopping generates money in theory. In reality, the people in STE are making their real money from recruiting.)
- You could do the same thing on your own for free – Want to make money from people shopping online? You can get access to the exact same stores STE had by signing up for Commission Junction and LinkShare. (That’s all STE has done, after all.) You could host your web page and set up the actual page for a very minimal cost, and all you’d have to do is create links to each of the stores you sign up with through CJ or LS. If it’s really all about the shopping, then this is the way to go because there’s no $448 signup fee, no annual fee of $119, and no monthly minimum of $100.
- Look how many people have already joined! I don’t want to miss out! – This one reminds me of the old “If everyone was jumping off a cliff, would you?” It also reminds me of the saying that there is a sucker born everyday. Yes, thousands of people have already signed up for Shop to Earn. In fact, millions of Americans sign up for all sorts of MLMs each year, as they are sold a dream of financial freedom. But almost none of them will get there. So the fact that people are signing up for STE means nothing.
- Getting in on the “ground floor” – Worried about being left behind? Heard those stories about the guy who signed up when the company first started, and now he’s making millions? Well it is true that those who sign up early are more likely to be part of that 1% who turns a profit. Still, most will lose money, and even being in early won’t stop it. And don’t worry, if you miss your chance with Shop to Earn, there will always be another MLM right behind it to give you that chance to get in on the ground floor!
- Endless chain recruitment – In endless chain recruitment schemes, a steady stream of new blood is needed to keep the business model going. Haven’t you ever wondered why people in MLMs like Amway, Mary Kay, Usana, Herbalife and the like are spending all their time trying to recruit you? If what they’re selling is so good, why don’t they just sell it? Because selling isn’t the name of the game. Recruitment is. That’s where the MLM insiders will tell you the “real” money is. And that’s true… even though very few make any money in MLMs, the ones who do are almost always heavy recruiters.
- Minimum purchases required to get your commissions – In order to get your money from recruiting and shopping you have to have at least $100 in shopping purchases on your site. Some STE representatives say that it’s simple… if you don’t have any commission coming, you don’t buy the $100. Except it’s not quite that simple. The contract says “…$100 of monthly business volume must be generated to qualify for next month’s commissions.” That means you have to spend $100 this month, in order to get commissions next month. How do you know if you’ll have any commissions coming next month? You don’t. So many will spend the $100 this month just to be safe. MLMs make sure to get money out of you with these minimums. Sure, you could get people to shop on your site to make the minimum (or in the case of other MLMS you could sell $100 of product). But the sad fact is that most of the representatives aren’t able to do that, and will instead put their own money in to meet the minimum. They hope they’ll recover it via commissions, but 99% won’t.
- Is $500 a lot of money to you? – For some people, $500 means nothing. But for many of the people signing up for MLMs like Shop to Earn, it is a lot of money. They’re already struggling, and $500 could go a long way toward feeding their children, putting gas in the car to get to work, or paying down their credit card bills. If it’s a lot of money to you, ask yourself if you’d go and put that $500 on a table in Las Vegas. The odds of turning a profit on that $500 are higher than the odds of turning a profit in an MLM. If you wouldn’t put it on a table in Vegas, why would you give it to an MLM?
- If it was illegal it would be shut down… – If I had a dime for each time I’ve been told an MLM must be legal because if it wasn’t the government would have shut it down. Surely consumers with an ounce of common sense realize that each day, there are tons of scams that are carried out in the business world. They haven’t been shut down because they haven’t been caught. Or because the peopel in charge choose not to go after them. In the case of MLM, we have a government agency called the FTC that has chosen to almost never prosecute MLM schemes. Does that mean they’re legal? No. It means only that they haven’t been prosecuted. The Direct Selling Association (DSA) is a huge and powerful lobby that MLMs belong to. They spend millions of dollars each year convincing lawmakers to leave MLMs alone. Sadly, law enforcement agencies like the FTC can be bought.
- If the MLM structure is so bad, why do companies keep using it? – One simple reason: It’s very lucrative for the company’s owners. There is a ton of money to be made in selling dreams to consumers who are looking for an answer to their financial problems. MLM is very lucrative because the costs are low, and many of them are variable (i.e. Commission is only paid when the company gets money from distributors.) Companies like Usana and Herbalife have shown us that there are millions to be made from consumers with these schemes, and since the FTC isn’t stopping them, new MLMs are popping up constantly.
- But people are making money promoting Shop To Earn! – Yes, in any MLM, you will always have people who are profiting. They couldn’t sell their dream otherwise. But they’re profiting at the expense of those below them. Everyone at the bottom is paying their fees and making minimum required purchases, and the money is flowing up the pyramid-like-structure toward the people at the top. It is a money transer from those below to their upline. That doesn’t mean it’s right or good. If I reach into someone else’s purse and steal $100, I’ve “made money” on the deal, but it doesn’t mean I’ve done something right.
- It’s not a get rich quick scheme – The promoters of Shop To Earn use this phrase to make you think that everyone who failed at MLM did so because they were lazy. They wanted to “get rich quick” and didn’t really want to work at their MLM. Having personally communicated with thousands of former MLMers, I’ve found that simply not to be the case. I’ve found very few who wanted to get rich quick (of course there will always be some who get in for this reason), and many who worked very hard doing exactly what their upline instructed them to do. Why did they fail? Because MLM is systematically flawed and designed so that almost everyone involved will lose money.
- High failure rates demonstrated over and over – I often repeat the statistic of 99% of people involved in MLMS losing money. Why? Because I don’t think most consumers realize the failure rates are that high. Robert FitzPatrick is an absolute expert on the MLM industry and has been studying it for years. Over and over, he studies the numbers companies release about their distributors. And over and over, he finds that 99% of people involved spend more on fees and minimum purchases than they will ever recover in commissions. It’s an important statistic. (And although the distributors could earn profits from retailing products, the studies have also shown that almost none of the distributors are able to do that. So still, no profits.)
- Continuous recruiting – Do you really want to try to make a living by talking your family and friends into joining? Do you enjoy seeing people cringe when you walk up to them? Do you wonder why they never answer the phone when you call? Believe me, there is little honor in trying to recruit anyone and everyone into an MLM.
- Who cares if others lose money, so long as I get mine! – I suppose it’s possible to say that you don’t care how many thousands of people lose money on this “business opportunity,” so long as you don’t lose any money. That’s not how I was raised. I was raised to care if people got scammed out of their hard-earned money. I was raised to not cheat others out of money so that I could profit. If you don’t have a personal moral code, then there’s not much I can say to change your mind.
Can you read all of the above and really come to the conclusion that Shop to Earn and Shop to Earth is something you should be involved with?
Note to those who want to leave comments on this thread: No personal attacks. No links to your sites. No income claims unless you’re prepared to send me your bank statements to prove your claims. Keep your comments limited to factual statements only.
Note to Shop to Earn lawyer Gerry Nehra: If I’ve made any errors of fact above, I’m happy to correct them. Please send me notification of those errors along with documentation proving the facts. I’ll make the corrections immediately.