|Free, but you still can be cheated!|
By Stuart Miles, Freedigitalphotos.net
While it is true that if a scheme does NOT charge you any money your chances of being cheated is smaller, it is NOT zero. A scam can promise "absolutely free", yet still cheat you, through several ways.
- Bait and switch
- Partner offers
- Spam Harvest
- Forced Upsell / Slamming
- Identity Theft
Bait and Switch
By promising free benefits, get you to sign up, then changing the terms on you with a good excuse, the schemer can get you to accept the broken promise. This is due to "foot-in-door" technique, where once you agreed to a small change, becomes more amenable to a large change.
If there's a significant effort already invested, such as recruitment, websites created, and such, there's also the "sunk cost fallacy" involved, where you are less reluctant to disengage because you already have so much invested.
A variation on bait and switch is to offer a "premium" membership which promised more income or more benefits for pay vs. free membership that has very limited earning. Another way is to limit free accounts to credit only (against whatever's being marketed), instead of cash.
Burnlounge did that and was ruled a pyramid scheme. it offered free membership but free members can only earn credit to music. "Moguls" (those who paid the monthly fee) can earn real cash when they recruited members. Music was rarely sold. Only 2% of revenue came from music.