By David Teitelbaum
I stumbled across a web site the other day called www.cyberrebate.com. They offer products that are free after rebate. Basically, you purchase an item for X amount and then you get a rebate for the full amount back. They also offer free shipping so it’s 100% free. The items are very over-priced, and you have to wait 14 weeks for your rebate, but hey, it’s FREE. Well, like most people I was very skeptical. How can a company survive without an income?
I decided that before I purchase anything I’d do some research. I came across lots of web-sites, some of which, were put together by unhappy customers. As I read through these web-sites it seemed that the company is a little understaffed and unreliable. They suggest that you be careful to fill out all the forms properly. Some even say to make photocopies of all the papers and send them registered mail to avoid any problems. The complaints people had seemed like small problems one that you might have with any company, for example, not receiving merchandise and late on sending rebates, kinds of things that are not done purposely. I searched Internet and found that Bizrate.com, an Internet site that rates other web-sites, gave them a top rating, that lead me to believe that they were somewhat reliable.
One thing still bothered me, how does the company make a profit? Well, I was told, studies show that most people don’t bother to send in their rebates. I was a little uncomfortable with this theory, since from reading what people wrote, it seemed everyone had the same reasoning, "I don’t mind paying 10 times the price if I will get it all back later". Such people aren’t going to forget to send in their rebates. I was back to square one and was going to hit the purchase button when it hit me. Pyramid Scam! I thought about this for a moment and it really made sense. I gave it some more thought and everything seemed to fit in very well. I have done quite a bit of research on Pyramid schemes, but most people don’t really understand what it’s all about, so I’ll explain.
Since the beginnings of time, scams have been around. One of the earliest scams is called a Ponzi scheme. It works something like this: You borrow 1 million bucks from a guy and skip town. Well, you ask, no one in their right mind will lend you a million dollars, so here’s the trick. You borrow $100 from him and pay him back, with interest. You then borrow $1000 and do the same. As long as he sees your good behavior he will continue to trust you. You continue this behavior until you reach a million and then you jump ship. Getting a million out of one guy is a little hard especially since most people don’t have it. An even better scam works something like this: Start an investment business and offer people an incredible return for their money. People will trust you with a small amount of money and you work their way up into trusting you for more. As long as you keep giving people their returns they’ll throw their money back at you again. But, where do you get the money to pay these people back? You take from one and give to the next. Assuming your scam is working well, you don’t need to spend a penny of your own. Most people won’t even ask for their money back after they see how great their returns are. They’ll just shove more of it in your face. That’s what pyramid schemes are all about. If you can spread your suckers out across a huge amount of people and have each person double their investment, you can just take a few hundred from each one and you’ve got a winner. What better way to build your base than to have the losers build it for you.
Now, let’s fit this in to Cyberrebate.com. Offering something for free is always an easy way to attract people. Of course people will be wary at first, keeping their orders to a minimum. But, turn these people into happy customers by giving them what they ordered, and chances are they’ll make another purchase doubling their first. They’ll also tell all their friends about you and who doesn’t trust a friend?
How do they give you things for free? Easy, the next guy pays for it, or even better, on your next purchase you pay for it. Look at the comments people write and you’ll see that after they get their rebates they all make another order, usually much higher than the previous one. You’ll also notice that their prices have gone up drastically. People have mentioned that they’ve seen some prices double, but since you get it all back, no one seems to care. Well, if it’s a scam then there is a good reason to care. Do the math and you’ll be amazed at how much business a site like Cyberrebate.com can do in just a few months, never mind a few years. All they have to do is close their doors and they’ll be up a few million dollars. Try to dispute your charge? Sorry your credit card company gives you only up to 4 weeks to dispute! Ever wonder why they say you must wait 14 weeks for the rebate? They send you their products within 3 days of purchase, why can’t they get you the rebate any faster!? I think the biggest part of this scam is to make everyone think that they make their money by holding your cash for 3 months. Please!! The tiny percent they can make from that won’t do it. Having people complain that they get their rebates a few weeks later then expected is pathetic. It just makes a person say, "OK, so I’ll wait a little longer for something that’s free anyway." We don’t realize the power of greed that we all have. Thinking we can get something for free is a powerful temptation. I am not saying that it’s definitely a scam. I have no proof as to what their intentions are, but is there a reason for concern? I think so. I will not purchase from them.
Update: A few months after I published this article CyberRebate went bust
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