Talk:Matrix scheme/Archive 2

message: Introduction:
*1  The model is non-sustainable.  
http://www.oft.gov.uk/News/Press+releases/2005/161-05.htm
These schemes are unsustainable and will eventually collapse to the detriment of many people. They can also undermine consumer confidence in e-commerce. The OFT's targeting of mass-marketed scams is an important part of its work of making markets work well for consumers'.''
*2  The value of the "bonus" item is of greater value than that of the token item being purchased
http://www.oft.gov.uk/News/Press+releases/2005/161-05.htm
Mobiles4all Ltd promoted a 'matrix' scheme (see OFT consumer alert December 2004) promising people the chance of getting valuable 'free gifts' such as mobile phones and ipods by purchasing a low value product costing £20 - £35, ''
*3  Matrix schemes are also commonly considered to be Ponzi or Pryamid schemes.
http://msnbc.msn.com/id/3078957
But Flynn and his imitators think they’ve found a way around the Ponzi label. Entry into the matrix is a free gift, they say, attached to the purchase of a real product. On many sites, the product is a set of electronic books; others offer digital photographs, vacation packages, pens, cell phone antennas, even Barbie dolls. But in each case, the lure appears to be the chance to walk off with a high-priced item like a $4,000 television with only a minimal investment
Operation:
*1  Matrix Schemes operate much like Ponzi schemes.
http://msnbc.msn.com/id/3078976
The ethical concerns came, Kurt said, because operating a matrix site is uncomfortably close to running a Ponzi scheme, a form of fraud in which early investors are paid off with money from later ones. 
*2  The operation needs to be reworded a little bit.  More people joining does not change the likelyhood of recieving an item.  The probability is somewhat independent.  In a typical scheme of size 50, 50 people are needed for the 1st person to recieve a free item, an additional 50 are needed for the 2nd person.  2,500 people are needed for the 50th person, but to say the probability changes is not quite correct mathmatically since in a 50 person matrix the probility is always 1 out of 50 regardless of the number of people.  It is true that eventually you run out of enough people to "cycle" anyone else however.
http://msnbc.msn.com/id/3078976
“If people are really buying the opportunity to obtain the laptop, obviously most people can’t do that,” Kohm said. “Only 2 percent of the people could get a laptop, if you’ve got to have 50 people under you. That means 98 percent of the people have to fail.”
*3  It is not possible to use outside revenue to move people through the list.  If you get an infinite number of people in the list it would take multiples of infinate money to purchase their items from outside revenue. 
History:
*1  The Primary Matrix scheme was started by EzExpo.
http://msnbc.msn.com/id/3078957
EZ Expo and its founder Damion Flynn started the matrix craze in April (2002) of last year. Flynn said that by January, some $800,000 had poured into his small computer shop in Gulf Port, Miss., where he operates the site.  Other entrepreneurs took notice, and imitators flocked to the concept. Now, nearly 200 matrix-style sites are in operation. Dozens more have opened and closed since January (2003).
Legality:
*1  In most cases the item for sale could not be reasonably sold for the amount asked.
http://msnbc.msn.com/id/3078957
“If people are really buying the opportunity to obtain the laptop, obviously most people can’t do that,” Kohm said. “Only 2 percent of the people could get a laptop, if you’ve got to have 50 people under you. That means 98 percent of the people have to fail.” 
But Flynn and his imitators think they’ve found a way around the Ponzi label. Entry into the matrix is a free gift, they say, attached to the purchase of a real product. On many sites, the product is a set of electronic books; others offer digital photographs, vacation packages, pens, cell phone antennas, even Barbie dolls. But in each case, the lure appears to be the chance to walk off with a high-priced item like a $4,000 television with only a minimal investment.
http://msnbc.msn.com/id/3078976
Kurt, who operated B-and-K.com, said the electronic books purchased by many participants are essentially worthless, and certainly can’t generate self-sustaining revenues.
“Most of those e-books say you have full resale rights or giveaway rights,” he said. “Most probably were obtained for free. And if people know how to look around the Internet, they can get the same e-books for free. 
“I don’t believe any sales (on my site) were generated based on the e-book,” he added. “People were putting their money in to win a prize.”
*2  If people are buying purely for the chance of obtaining an item of greater value it is probably illegal.
http://msnbc.msn.com/id/3078976
Free gift a common tactic
But that’s a common tactic for con artists trying to circumvent the law, said James Kohm, assistant director of marketing practices for the Federal Trade Commission. 
“Simply calling it a gift doesn’t change the nature of what you’re doing,” Kohm said. 
Steven A. Richards, a lawyer who represents multi-level marketing companies for Grimes & Reese in Idaho Falls, Idaho, said there often aren’t clear legal tests for Ponzi schemes. But if the product sold has no value or very little value, and consumers wouldn’t buy it without the attached free gift, the scheme probably runs afoul of federal and state laws.
“Are people who are paying $100 really getting something of value in return for that $100, or is it some means to disguise the scheme, that’s the question,” Richards said. 
*3  Most people think they are actually buying the "bonus" item.
http://msnbc.msn.com/id/3078976
Last week, there were over 100 eBay auctions serving as thinly disguised ads for the various matrix Web sites. Most promised deeply discounted plasma televisions — listed with prices as low as 99 cents — and appeared under eBay.com’s plasma TV listing. And in some cases, ponzi schemers are using eBay to recoup their investments by selling information on matrix systems.
References:
*1 The "How Matrix Schemes Operate legally" is not a reference.  This is the same link as provided by Cybertrax's pro-matrix POV.
*2  Matrix Watch is a Consumer Protection Website, and should be labeled as such.
I will add some when I have some more time.  Arzel 22:29, 25 July 2006 (UTC)
replies: text: I must be off for a few days, but I should be back on Sunday. Feel free to propose more changes in the meantime. Cowman109Talk 22:18, 26 July 2006 (UTC)
replies: text: I like much of what you have put together and will put forth a proposal for 2 and 3 of the operation.  I will also be gone for the weekend, so no worries.  Arzel 12:55, 27 July 2006 (UTC)
replies: text: Oh! Well, it seems this page has drifted down my watchlist and no discussion has occured in my absence.. well people are obviously still having some issues with this article, so can we address any further problems in my sandbox version of it? Or should we go ahead and replace this article with teh sandbox version and see where we can go from there? Cowman109Talk 21:55, 6 August 2006 (UTC)
replies: text: Sorry, have been really busy the past week.  I have just made a few changes to the oepration on your talk page, but didn't make the footnote conversion that Fieari mentioned.  Let me know what you think of the operation aspect.  Arzel 22:19, 6 August 2006 (UTC)
replies: text: An issue I see with the changes is that it refers to the reader, by using 'we'. Perhaps it could be changed to be in a more encyclopedic tone. The key, however, in coming to some sort of compromise rewrite, is to have references and citations. I will gladly help convert the new style into footnote style, though. Cowman109Talk 23:22, 6 August 2006 (UTC)
replies: text: I have converted it to footnote style, but the tone of the changes will have to be addressed. Cowman109Talk 23:40, 6 August 2006 (UTC)
replies: text: There's something about the extensive use of examples in the revamped version of the article that seems a bit off. Perhaps we should avoid going step by step to explain how a matrix scheme works and give examples to the user - is a matrix scheme's operation not already explained in the paragraph before the examples? If anything, the article could use more citations to confirm that the information within is not original research. How does that sound, Arzel? Cowman109Talk 02:00, 8 August 2006 (UTC)
replies: text: This article http://msnbc.msn.com/id/3078976 gives a very similar example as to how a matrix site works.  I was trying to provide a better description without making the article excessively long.  The previsous article does explain a little, but without an example it can be difficult for most people to understand that the list grows longer in a linear fashion.  Perhaps you have some better insight on how to word the operation.  As for the rest of the article I am satisfied with the wording.  Arzel 02:50, 8 August 2006 (UTC)

text: I see what you were talking about, I didn't even notice the 'we' which you had mentioned.  My only other concern is the citation needed for the legality section.  It is probably hearsay, even if it is probably accurate.  That comment had been made by a number of matrix site owners during the early days of the matrix scheme collapse and was intially intended as an excuse to blame matrix watch for their demise.  However, I am unaware of any published articles making that statement.  As it is, it was initially put in by matrix site supporters, I personally didn't care because it was probably true, but it could probably be removed or changed because of the lack of citation.  I don't know what happened to Cybertrax, but you are right that it makes it somewhat difficult to come to a finalization.  It seems that Samoyed is still interested, but he/she has not been willing to make any suggestions as of late.  Arzel 04:11, 8 August 2006 (UTC)
thread_title:  Comments for article - Arzel 

message: I edited this bit as I didnt understand what had gone on in my absence - now I do.  
INTRODUCTION
(Elevator Scheme, Escalator Scheme, Ladder Scheme)should be edited to say, (also known as a Matrix Site, Elevator Scheme, Escalator Scheme or Ladder Scheme).
is a non-sustainable business model [1] - non-sustainable should be taken out as it is unsubstantiated.  The reference given relates to the OFT chairmans comments, but has been taken out of context.  In actual fact, they were commenting on TWO specific matrix schemes that the whole article was about - not all matrix schemes.  As such, this reference should not be used.  
Matrix schemes are also commonly considered to be ponzi or pyramid schemes. [2].  - this sentence should be deleted as it is misleading.  They are NOT considered to be the same as ponzi/pyramid schemes - this is a lie brought up by anti-matrix people.  They have been stated as different by the OFT, the DTI, Paypal, Nochex amongst others.  If this sentence were to stay then a further addition should be made pointing out that this is a misconception.  
:::This is not a lie.  Please read this article http://msnbc.msn.com/id/3078976  There are several mentions to the comparison to Ponzi sites.  The non-link to ponzi and pryamid schemes is a lie to decieve by matrix site owners.  Arzel 13:40, 9 August 2006 (UTC)
replies: text: I have made some of your changes, but didn't remove the sourced link about matrix schemes being considered ponzi schemes - however it appears to be misquoted from the msnbc link, so I reworded to state that they are sometimes considered to be similar to them. I reworded the 'claim that the schemes are legitimate' sentence, expanded the history section, I added the reference you gave above and reworded the section to be more gramatically correct, mentioned the trial was still ongoing, removed the questionable sentence for us to continue that discussion here, removed the second references section (it is unnecessary with the footnote citations). I also changed the description of the external link to match that of the other external link so neither is highlighted more than the other. So, then. Let's discuss! :) Cowman109Talk 20:46, 8 August 2006 (UTC)
thread_title:  Comments for article - Cybertrax 

message: I changed the inline citation method to footnote style.  Click the link if you have any questions.  Hopefully, we can make all our references inline this way, so every claim is backed up immediately. Fieari 18:18, 28 July 2006 (UTC)
thread_title:  Converted to [[WP:FN|Footnote]] style 

message: I must again state that the matrix model is non-sustainable.  The reference used was not making a specific statement against those two matrix sites.  It was a general reference to this type of scheme.  Arzel 23:21, 8 August 2006 (UTC)
thread_title:  Introduction 

message: Another final note, guess I was too tired last night.  The description for Matrixwatch is not acceptable.  We are a consumer protection website.  We are biased against matrix sties, but that is not relevant since we provide consumer information.  Additionally we have been labeled a consumer protection website by several other news organizations and groups through our other work.  I will accept the term anti-matrix site if the description for Cybertrax's site removes the "Owned by Matrix Watch ltd."  The only purpose of that title is to confuse. 
I am going to take a another look today to see if I have missed anything else.
Arzel 13:25, 9 August 2006 (UTC)
thread_title:  External Links 

message: The reference to tymglobal needs to be removed.  Or else it must be stated that Stormpay was sued as part of the EzExpo case and as a result droped the matrix model and also will no longer also matrix sites to use their payment processor.
Sorry for the late changes, but many of the "small" changes suggested by cybertrax clearly put a positive spin on the matrix model.  Arzel 13:35, 9 August 2006 (UTC)
replies: text: I removed the sentence Shortly afterwards many others started, including tymglobal - owned by the same people as Stormpay, the payment processor., as your statement will require verification (it can always be added after we find a source to the article if we replace it, first). Cowman109Talk 17:50, 9 August 2006 (UTC)

text: To verify the stormpay/tymglobal statement, there is a reference to the Tymglobal being "under common ownership and/or control." in this article: http://www.theleafchronicle.com/apps/pbcs.dll/article?AID=/20060208/NEWS01/602080335/1002, that should probably be a decent reference for the above. Let me know if you agree.Jokach 16:12, 10 August 2006 (UTC)
replies: text: I was not aware of that connection.  Nor was I aware that Tymglobal and Stormpay had been accused of running a Ponzi scheme.  Arzel 17:11, 10 August 2006 (UTC)
thread_title:  History