Pyramid schemes have been around for ages. They are illegal now in Canada and the United States, but that doesn’t stop people from trying to start them up. Pyramid scheme operators have gotten crafty over the years. The “new” pyramid scheme is one that infuses a supposed product or service into the scheme so as to obfuscate its true nature as a pyramid scheme. The thing that I find frustrating is that there never seems to be a shortage of gullible victims for these schemes.
One example that I recently ran across is ADITNetwork. I uncovered this program during an investigation of strange Google Analytics results in one of the websites that I’m involved with. The website was receiving large amounts of traffic for periods of about 90 days long. Then this traffic would all disappear for a period of 90 to 180 days. This cycle occurred 3 times before I finally started to dig into the cause.
I saw that during the periods of heavy traffic I was getting a large amount of traffic (nearly all of it) from aditnetwork.com and other IP addresses that could be traced back to aditnetwork.com. But we weren’t paying them for advertising and, in fact, we weren’t doing any advertising at all so wasn’t sure exactly why they would be giving us all of this traffic.
All of the traffic was to our home page and there was 100% bounce rate.
I had to ask, what was their deal? Why would they be giving us all of this free traffic? And why was there such a high bounce rate? Something certainly wasn’t right.
The AditNetwork website is non-specific when it comes to exactly how it works. It does say:
ADITnetwork.com helps our clients establish a professional global Internet advertising platform, combined with an efficient marketing system. We can help to improve the clients website’s traffic and ranking effectively. We help the small and medium business owners not only get to be more popular and reach more potential markets, but also get more benefits through affiliate marketing. Our customers will have continuing long-term interests. We’ll form a win-win situation for all the partners and the company.
So this makes it look like they offer web-based advertising to web sites to help get them traffic. That sounds like a legitimate operation. But it still didn’t answer why they were sending us traffic, when we have never asked them to.
After a couple of Google Searches for “AditNetwork Scam” etc.., I was very surprised to find two things:
1. Google was full of pages talking about how you can get rich with Adit Network.
2. The only pages that mentioned the word “scam” seemed to be saying that it wasn’t a scam, and that it was a great business opportunity.
After reading a Facebook fan page for them, and watching a couple of Youtube videos (here and here, I now understand what their game is.
Basically they pay people to click on web advertisements. At first I thought that this was just a simple ad-clicking scam where they pay people to click on ads, then split the money earned from the click. However, that isn’t how it works. In fact, people (i.e. suckers born yesterday) *pay* AditNetwork for the privilege to be able to click on advertisements. Then, if they click on enough advertisements, they can earn up to 70% of their original investment back.
That 70% is the crux of the grand bargain. It is the remaining 30% that provides the cash pool upon which the pyramid scheme operates. Of course nobody would invest in business where the maximum they could earn was 70% of their original investment. Participants can only make a profit by signing other people up, for which they get a cut. Essentially they’re just receiving a cut of the 30% (minimum 30%) that AditNetwork will make off of their sign up fee. The following is a screenshot from their Youtube Promotional video:
Notice the break down. They pay 10% commission for people you sign up, 4% for people they sign up, down to 1% for the 9th and 10th level of sign up. And you need to be a VIP member (i.e. pay them $5000 in order to get commissions down to the 10th level). Let’s do a break-down of where the money goes if I sign up for AditNetwork. Let’s assume that commissions are paid all they way up 10 levels to an original VIP member. Then:
10% goes to the guy who signed me up
4% each goes to the next two guys up the ladder
2% each to the next 5 guys up the ladder.
1% each to the next 2 guys up the ladder.
Adding that up we get 10% + (2 x 4%) + (5 x 2%) + (2 x 1%) = 30%.
We have our magic number of 30%. So if I happen to earn back all of the remaining 70% of my investment by clicking on ads, then we see exactly where all of the money is going. Of course, if I fail to make back the full 70% or the ladder doesn’t go up that high in my case, the extra money just goes to AditNetwork. But they make money either way because they are the original VIP investor.
So we can break an AditNetwork investment down into two parts:
1. 30% of the investment goes into a pyramid scheme.
2. 70% of the investment is a deposit that you make and work off by clicking on ads.
Presumably, AditNetwork plans to be making money also by selling actual advertisements (i.e. getting websites like mine to pay them for the traffic that they generate from people clicking on ads), but an advertiser would have to be brain dead to pay for this traffic if they knew where it was coming from.
This is just another example of how easy it is to prey on people’s willingness to believe in “a free lunch”.
AditNetwork is doomed to fail because it is built on a house of cards. I’m not sure if it’s strategy is obfuscated enough to evade the laws against pyramid schemes, but it is clear that it cannot survive in the long term and many, many people will have lost their investment when the scheme dries up (like all pyramid schemes do). Advertisers would be silly to pay for advertisements on AditNetwork because the traffic they receive is false traffic (people just being paid to view their site). And the revenue stream that is being shared is coming 100% from sign-up fees. No useful work is taking place. No useful product is created. No useful service is being carried out. It is just money being funnelled in from the bottom of the pyramid to the top.
It is really sad that there seem to be so many people who allow themselves to be deceived by operations such as this one.