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Matrix Scam

By: Chris Nickson - Updated: 5 Sep 2012 | comments*Discuss
 
Matrix Scam Pyramid Scheme Chain Letter

It's an unusual name, one that has nothing to do with the film. Instead, the matrix scam is a very clever variation of the pyramid scheme and the chain letter, one that's been going the rounds with the promise of free goods like iPods and HD televisions.

How It Works

You buy a product for a relatively small price - in the £30 - £50 range - something like a CD-ROM containing ringtones or possibly a SIM card. It's overpriced, but the purchase gives you the chance to get something like an iPod or a new TV. All you have to do is bring in a certain number of people who buy the lower price product, and your name is added to the list. When your name reaches the top, you'll receive your free gift.

It might sound like a good idea, but in reality it's a scam. The maths behind it means that the number of members waiting for their free gift will always far exceed the free gifts awarded. As an example, if you sign up in hundredth place on a waiting list that requires 50 new recruits per gift you would not reach the top and receive your gift until 5,000 people had joined - i.e. 50 new recruits for each of the members on the list.

Essentially, your chances of ever receiving your free gift are very small. All the company has done is sold a lot of its overpriced product to you and your friends.

The Office of Fair Trading has investigated these matrix schemes, and has decided that the scheme is an unlawful lottery under the Lotteries and Amusements Act.

How To Avoid The Scam

The simplest way to avoid this scam is to not even become involved. It's one where you have no chance of winning - and you'll also annoy the friends you persuade to buy the product.

But if you're tempted, the first thing to consider is whether the product you're buying is worth the price you're paying. The chances are that it's not, and that you could buy the same product in a high street shop for less than one-third of what the scammers are charging.

Ask yourself why they're offering the free gift. Is it because they're generous? Obviously, it's a marketing ploy - and in this case, ploy is the operative word. You might not want to do the maths, but the fact that they want you to bring in friends should make you suspicious.

Never buy anything without shopping around first. Make sure the price you're paying is reasonable.

Perhaps the biggest thing to remember is that you never get something for nothing. However good the promises look, the reality is going to be different.

What To Do If You're A Victim

Sadly, there's very little chance of you getting your money back, as you bought the goods without coercion. There's also next to no chance of ever seeing the free gift you chose.

The best thing you can do is report the company to the Office of Fair Trading and Consumer Direct. They can take action against the company and prevent others being scammed.

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