It may shock you to hear this, but there are quite a few scammers out there on the internet.  Of course, there are the usual suspects:  identity thieves, hackers, and the infamous wealthy Nigerian prince.  Most  internet users are familiar with these scams, and have learned to avoid them. 

It seemed like a good idea at the time.

However, there is an entire class of scams out there on the intertubes that you may not even know about. Even if you do, you may not be aware of how they function.  These scams are carried out by unethical affiliate marketers, and are extremely widespread.  In this article, I'll be outlining how these scams work by dissecting five common examples you may encounter.  I guarantee you've seen many of these before, so you'll be getting a look “behind the scenes” to how these people ultimately getting paid by ripping you off.

Who Are These Affiliate Marketer People Anyways?

Affiliate marketing is a very common way of selling on the internet.  The basic idea is that vendors will offer a product or service for sale, and offer a commission to “affiliates” who can sell it online.  These sales are tracked by means of affiliate links.  The affiliate will place these links on their own website.  If someone clicks the link and purchases the product or service, the merchant will give the affiliate a percentage or lump sum for the sale as a commission.  It's a great system that rewards marketers for performance.

Overall, most affiliate marketers aren't bad people.  However, there are many unethical marketers out there who will “game the system” to separate you from your money in attempt to make as many commissions as possible.  They are often aided by unethical merchants who encourage their affiliates to sell at any cost.  These merchants compound the problem by not clearly disclosing the exact nature of their product.   To illustrate this, I will show some examples of some common internet marketing scams, presented in no particular order.

Scam #1: Craiglist Insurance Lead Scam

This was a new one for me.  I am currently in the process of selling a used car on Craigslist.  I received the following e-mail, seemingly from an interested party:

So, I replied letting her know that the car was indeed still available.  I received the following e-mail in reply:

Notice the link?  That's one of those affiliate links I mentioned earlier.  Let's see where that takes us...

This is what is known as a landing page.  It explains the offer, and usually asks for some information to get started, in this case, and e-mail address.  Now, I can't be sure, but this is most likely what is known as an “e-mail submit” offer.  That is, the affiliate marketer is paid whenever someone clicks their link and enters their e-mail address on the landing page.  

Now, I know nothing about the legitimacy of the insurance site itself (let's assume it's 100% legit), but what my supposed Craigslist buyer has done here is unethical.  Using false pretenses, they are attempting to get to fill out this insurance offer page so they can get the commission.  This is unfair to me, and unfair to the insurance site owners, as they will be getting faulty leads from people who aren't really looking for auto insurance.  Scams like this are common on Craigslist, and not just with insurance.  Keep an eye out for these affiliate links and landing pages coming from Craigslist e-mails, as they are probably out to get your cash, not to buy your car.

Scam #2: Social Networking Game Cash

If you're on Facebook, you've no doubt noticed the wide variety of games people like to play.  One of the most popular of these games, among my circle of friends at least, is Farmville.  In the game, you operate a virtual farm, and are able to earn and spend Farmville dollars within the game as you improve your farm.  So far, nothing wrong with this.  However, many users are looking for shortcuts to earn more Farmville money, and the game is happy to oblige them by offering them cash for completing certain “offers.”  These offers are all affiliate offers, some of them to legit services (such as Netflix movie rental, a very fine service I can highly recommend).  You subscribe to Netflix, the Farmville people get a commission for bringing them a new customer, and you get your in game money.  Everybody wins. 

Unfortunately, not all of the offers have your best interest in mind.  The most common type of scam here is the “quiz” offer.  You will complete some type of quiz (say, an IQ test).  To receive the results of your quiz, you will be required to enter your phone number and confirm a “PIN” number that gets texted to you.  Easy enough, right?  

If you go through with such an offer, you have just signed yourself up for a monthly reoccurring charge on your cell phone bill.  The agreement you actually entered was outlined in very tiny print below the fold of the page, which you probably didn't even know was there, much less read.  Now, you're out $9.99 every month until you can figure out how to cancel your useless “subscription.”  Don't fall for these sorts of offers just to get extra Farmville cash.  Enjoy the game, just don't fall for the special offers.

I would invite anyone wishing to hear more about this to watch this video.

Scam #3: Free iPod/iPad/Gift Certificate Offers

These are very similar to the scam above.  The offer, often displayed as a banner ad, will promise a free item in exchange for completing certain offers.  The truth is, it is sometimes possible to get the prize promised.  However, you will have to sign up for so many different paid offers that you likely won't save anything in the long run.  In the mean time, you'll be spammed to death.  Not worth your trouble.

So, how are these people getting paid?  These offers work on a multi-tier system.  When you click on the banner and submit your zip code or email address, the affiliate (the one who's link you clicked) gets paid a small sum, usually around $1.50.  These types of offers are known as “zip” or “email” submits and are popular because it fairly easy to get some to submit the form and get paid.  Once you've submitted your information, the person running the offer then starts spamming you with further affiliate offers...ones that pay much more.  The idea is that they will turn a profit despite sending out the occasional prize to those brave souls who sign up for all of their offers.  They also have to pay out to their affiliates for the zip/e-mail submissions.  Even with all this, this is a highly profitable business model that sucks away tons of money from unsuspecting consumers who just wanted a free iPad.

Scam #4: “Obama Loans”

This one bothers me the most.  These scams advertise special loans or grants from the government, usually using Barack Obama's name somewhere in the ad.  The truth is, there are really no special loans or programs for individuals under the current stimulus package.  These scammers are simply peddling the same old  scammy loan and grant programs and trying to pass them off as special programs from the US government.  I find it highly unethical that these marketers are abusing economic hardship this way, often luring people into high interest payday loans.  Don't believe a word these people say.

Scam #5: Flogs and Acai Offers

This trend is dieing down a bit, but it was huge for a while. If you've spent any time online at all, you've probably seen an ad that reads something like this:

One Rule To A Flat Stomach: Obey

Learn How I Cut 37lbs of Stomach Fat in Two Months by Using One Old Rule

www.edwardsamazingweightlossblog.com

You click on the link, curious to learn the one old rule.  What do you find?  A blog purportedly written by our friend “Edward” who will tell you how he lost weight using two products: acai berries and a colon cleanser.  Going off of Edward's glowing reccomendation (he seems like a cool guy), you sign up for the free trial for these products to give them a spin yourself.  What do have to loose?

As it turns out, quite a lot.  You see, “Edward” and his blog are all fake.  You've stumbled upon one of many fake blogs, or “flogs” on the internet.  These are almost all promoting so called “rebill” offers.  These offers start you with a free trial, then hit you with a large monthly subscription fee that's hard to cancel.  Because they are highly profitable, those who run these rebill offers pay their affiliates very well.  These flogs were wildly successful for a while, since the blog format seemed credible, which increased sales.  Having a real person recommend a product is much more compelling than having a marketer with a crazy sales latter sell you the same thing.  These flogs capitalized on this, and made tons of cash by promoting not one but TWO rebill offers on the same page.  If someone signed up for both offers, marketers would receive somewhere in the range of $70.  Pretty nice, eh?  Not if you the guy who signed up, paying a huge monthly fee for your acai pills.

Fortunately, the FTC caught wind of this, and created some regulations that have reduced the prevalence of these types of offers.  Still, in their day, flogs and rebills were a highly profitable scam.

Be Careful

So, I hope this has given you insight into how some popular ad scams are being run, and how they make money.  Most affiliate marketers out there are honest business people  using the internet to make sales, but a few are out to mislead you out of your money.  Most of these scams can be spotted if you always read the fine print and use your common sense, so just be careful.  With that, thanks for reading, and happy browsing!