Thursday 8 February 2007
One of the current crazes in the Internet Marketing sector is the “Randomizer”. These are nothing more than a variation of the classic Ponzi scheme, and are blatantly illegal. They sell no product. Their means of bringing money into the program is by recruitment of new members. The person at the top is guaranteed a payout but the other members aren’t. The primary means of funding is from the members themselves, not by sales to people outside the membership. By legal definition, that is a Ponzi scheme.
There is typically a lottery associated with these programs. Of course, they use some convoluted language to say it isn’t really a lottery, but all you have to do is look at how these programs work. Lotteries are legal, but only if you are licensed and officially sanctioned to do run one.
When a new member joins, usually for $10-$20, a part of that immediately goes to the program owner; he can’t lose, except perhaps legally when he/she winds up being indicted for fraud. Another part of the cut goes to the person who referred the new member, which makes the referrer an accessory to felony. And finally, a part (typically $5) goes into the “pool”. Each time a new member joins; someone within the program is randomly selected to receive the $5 pool allotment.
I don’t know any other way to say this, so let me be blunt. The people who think they are going to make money through this system obviously have no understanding of basic mathematics. Not only are the odds against you, those odds continue to decline as the program grows.
The math is painfully simple. If there are 100 people in the program and 5 new members join, your odds of being randomly selected for the $5 are 1 in 20 (5/100 = 0.05%, which translates to 1 in 20). When the membership increases to 500 and 5 new people join, your odds of winning one of the randomly selected pool slots drops to 1 in 100 (5/500 = 0.01%). When the membership reaches 1,000 members, the odds drop to 1 in 200. If the membership reaches 10,000 and 5 new members join, your odds drop to a rather daunting 1 in 2,000.
Of course, you don’t have to rely solely on the lottery. You also receive a “commission” for bringing new members into the program. That means, of course, that in order to make money, you are now in a position of having to recruit people for what is an illegal activity. For those people who are thinking of joining one of these idiotic programs, I suggest a 2-step detox program: 1) go to your local community college and take a fundamental mathematics course, and 2), make an appointment with a neurosurgeon to have your head examined.
Randomizers are specifically banned from inclusion in the imadspace.com ad site. The diligent owners of traffic promotion sites (traffic exchanges, safelists, etc.) also ban these scams. Unfortunately, not all owners of such facilites are as diligent. As a result, these scams appear in promotion vehicles all over the Internet.