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Aardvark hunts NZ's biggest affiliate scammer

Imagine setting up a scheme whereby you earn an ever increasing daily income for doing virtually nothing.

No capital required, no effort required, no skill required.

Well that's surely the holy grail of everyone who's looking for a get-rich-quick scheme isn't it?

And one enterprising Kiwi entrepreneur seems to have come up with a formula for doing just that -- but is it ethical, or even legal?

Imagine a system that offers earnings of $150 a day, *free* joining and actually pays you $75 just for signing up - sounds almost too good to be true doesn't it? (listens for alarm bells...)

In fact, some affiliates, it's claimed, are earning over $15,000 per month!

Woohoo... how do they do it?

Well read on and I'll expose all the clever little details.

First, take a visit to their website over at AffiliateJunktion.com.

Look at all those bold claims, promises of wealth and glowing testimonials.

Not too different from many other affiliate sites from that perspective is it?

But let's examine some of those more bold claims in closer detail...

First up, how can they afford to pay anyone a $75 sign-up bonus when that person might be a complete 'tard and never produce a single sale?

Surely, given that most who do sign up are probably not the sharpest knives in the drawer and will be unlikely to become one of those super-affiliates that rake in the "big buck", this is a suicidal move?

Well no it's not, because there are strings attached to the claim that you can "Join Free!"

The way this system works is that you sign up to AffiliateJunktion's scheme at no charge, but to get started you have to set up a website.

And not just any website, oh no. Your website has to be with the hosting company IPower.com. There's even an animated Flash tutorial that shows you how to sign up. In that tutorial you'll notice the little banner (at about 15-seconds in) you have to click on to get your iPower hosting account.

Ker-ching!!

Here's where AffiliateJunktion makes their money.

If you take a look at the iPower.com affiliate scheme (which that banner is a part of) you'll find that signing up for such a hosting account will result in the payment of a massive $100 to AffiliateJunktion.

Now you can see just where that $75 sign-up credit comes from can't you?

Yes, once you've signed up and paid for your 1-year hosting account with iPower, AffiliateJunktion gives you $75 of that money and keeps $25 for itself -- not a bad earner.

But isn't this a win-win situation? Hasn't the victim (sorry, new AffilateJunktion affiliate) just got themselves some web-hosting for just a few bucks a year (taking the sign-up credit into account)?

Yes they do -- but they didn't come here just to buy some webspace, they came to make money, big money!

And here's how that works...

Once you've signed up and paid for your hosting, it appears as if AffiliateJunktion will send you a website that you can then upload to your new webspace.

I'm picking that the website involved is just a copy of the one used by AffiliateJunktion so it's nothing special -- in fact it probably refers people to AffiliateJunktion anyway.

Now, when one of the affiliates refers a new victim, they go through exactly the same process -- and AffiliateJunktion CEO Mr Michael Davies pockets another $25 ($100 referral fee from iPower.com, less the $75 sign-up fee paid back).

Well actually he has another expense for these sales. As an affiliate, the site which refers the new victim gets paid a whopping $2 for their trouble.

Yes, while those affiliates are out there recruiting new victims, they're picking up a paltry $2 a time while Davies gets a net payout of $23.

These new victims also get a copy of the website that they upload to their new domain and webspace, and the cycle repeats.

Now imagine that Davies has 100 dupes who buy directly into this from the AffiliateJunktion website. That's $2,500 he pockets -- just chicken-feed.

But imagine if each of those 100 affiliate sites manages to bring in another 10 dupes a month. Now we're talking about $25,500 a month in revenues -- and that's US dollars! Extrapolate a little further and the money gets scary-big.

Given the size of the Net population and the number of them that are stupid enough to get tied up in a ponzi-like scheme such as this, Mr Davies has the potential to become seriously rich from this.

But how rich?

Well let's examine the claims on his website.

On the FAQ page it says: "The minimum commission rate is $2.00 per lead so 100 leads x $2.00 = $200 per day"

Now remember that for every $2 an affiliate earns, Davies is pocketing $23 (11.5 times as much) so let's go back and look at the "top affiliates of the month" figures on the site's home-page.

The top five affiliates for February 2008 earned a total of $70,668 between them. Now if we multiply this total by the 11.5 earnings ratio we find that Davies must have pocketed a cool $812,682 from the leads generated by these five affiliates alone. Add in the rest and he must surely be raking in over US$1m a month.

Of course that's if the claims made on his website are true (anyone want to wager a bet either way?)

I be the IRD just love Mr Michael Davies of Trafalgar Street, P.O. Box 1228, Nelson 7010, New Zealand (Phone: 021 294 2308) because he must have a pretty damned big tax bill with an income like that!

And a quick Google for that post-office box brings up this business, which also has the same box number as Mr Davies' AffiliateJunktion operation.

The companies office records for Officemax Limited show no sign of a Michael Davies so is this just an alias -- or is Michael moonlighting and using the company's mailbox for his affiliate schemes without their knowledge?

Update
I've just spoken with OfficeMax and it seems that they no longer use this post Office Box number, their's is now 1098 so there appears to be no link between them and Mr Davies.

My suspicion that Michael Davies is just a fictitious name was pretty much confirmed when, digging a little deeper, I found this page.

How odd it is that the operator of defunct affiliate scheme "Affiliate-Inc" Mr Matt Johnson has the very same mobile number as our Mr Michael Davies of AffiliateJunktion. What are the odds of that I wonder?

If you're running a bonafide, legal, above-board affiliate business, why would you need to hide behind a nom de plume (or two) I wonder? (fear of the IRD perhaps?)

And I note that Affiliate-Inc gave their address (web.archive.org) as 4 South Street, Nelson, New Zealand. Gosh what are the odds of two people living in the same town having the same phone number and being in the same business I wonder?

What's more, it would appear that the modus operandi of Affiliate-Inc is exactly the same as AffiliateJunktion.

Is AffiliateJunktion ethical? Is it even legal? Has the IRD gotten their share of those millions Mr Davies claims to be earning?

Do any Aardvark readers know or know-of Matt Johnson aka Michael Davies, or whoever he really is?

I'll give Matt/Michael a bell too. I didn't want to do it before readers had a chance to read this stuff and see the pages concerned -- just in case he got scared and pulled them.

Watch for the update on Monday.

See -- affiliate schemes can be fun!

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