This is being discussed on the Warrior Forum as well.

http://www.warriorforum.com/forum/topic.asp?TOPIC_ID=157679

Multi-level Marketing, Pyramid and Matrix Programs
You may not use PayPal to send or receive payments for any form of multi-level marketing programs (including online payment randomizers), as well as matrix, pyramid and Ponzi schemes, "get rich quick" schemes, “Autosurf” programs, High Yield Investment Programs (HYIP), or other similar ventures.

Multi-Level Marketing
Multi-level marketing plans, also known as "network" or "matrix" marketing, include any business in which a person receives proceeds from his or her own sales of goods or services, of recruited members, or any combination thereof. Similarly, PayPal prohibits as a Multi-Level Marketing plan any business in which payouts occur at two or more levels (both by the individual who actually sold the product as well as by the person(s) "upline" that recruited the selling individual). PayPal prohibits Multi-level Marketing plans whether or not they are legal under the laws of one or more states.

Pyramid and Ponzi Schemes
Pyramid schemes, including Gifting Clubs, involve the exchange of money in relation to the process of enrolling other people into the scheme. PayPal includes in its definition of "pyramid schemes" any system in which a hierarchy is created by people joining under others who joined previously, and in which those who join make payments to those above them in the hierarchy ("upline"). Pyramid schemes are prohibited as a form of investment fraud by federal laws and by the laws of each of the fifty individual states. PayPal considers online payment randomizers to be a type of pyramid scheme because the majority of commissions are paid for recruitment of new members, and typically operate by random placement within the program.

Ponzi schemes involve a system in which existing members of a program receive payouts that are largely funded by new payments into the program. The source of these new payments into the program can either be from new members paying to join the program or from existing members contributing more money to the program.

Matrix Programs
PayPal prohibits as a "matrix program" any business model that involves the exchange of money primarily for the purpose of being added to a waiting list for a product. In these instances, the individual at the top of the list receives the product only after a set number of people have joined below him or her.

"Get Rich Quick" And Other Related Businesses
Get Rich Quick schemes include any type of self-employment, start-up businesses, or investment opportunity where the claims of profit or returns on investment are unrealistic or unsupported. By law, if a business opportunity costs $500.00 USD or more, the promoter is required to support any claims regarding earnings or profits with written documentation.

In determining whether a website or account violates our Multi-level Marketing, Pyramid and Matrix Programs Policy, PayPal will consider some or all of the following factors:

    * Offering commissions to recruit new members
    * Requiring new distributors to purchase costly inventory or "start-up kits"
    * Members' profits are derived from recruiting new members or from the sales of newly-recruited members ("downline"), rather than their own sales
    * Payouts are funded through money paid into the system by new or existing members
    * Money paid into the system is significantly greater than money paid out
    * Unrealistic or unsupported promises regarding profits/return on investment
    * Percentage of the company’s goods sold by non-distributor
    * Businesses warned against by the Better Business Bureau, state Attorney General, Federal Trade Commission (FTC), or any state or federal agency
    * Flow of money derived from new members predominantly moves "upline"
    * Preservation of the business rests on the exponential growth of new members or customers
    * Speculative real estate or non-development property

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These are the only things that seem to be remotely applicable.

Although, in most cases, people are offering commissions to sell products, not to get new 'members' I suppose that offering commissions to recruit new subscribers might be stretched to match.

Not sure I understand the "percentage of the company's goods sold by non-distributor"  Is an affiliate a distributor? What constitutes a distributor?

As Doug pointed out in the Warrior forum I'm rather ill at the moment, but I thought I'd post my reply from the Warrior forum here.

I'm glad I decided to come online and saw this thread. Jon Leger's actually away for the weekend so it might be late Sunday or even Monday before he's aware of this, unless he manages to check online over the weekend.

7dollaroffers.com has, as a requirement of inclusion, a policy of accepting only sites with a totally open affiliate program. That eradicates any suggestion of an illegal pyramid scheme. There are, rather riskily, a good number of sites which aren't listed there that push the 'buy this report then sell it on' concept that is so closely related to MLM. That's not down to the use of the script though.

I've also seen a number of products rejected at 7dollaroffers because they look suspiciously like MLM or Matrix products - with or without forced opt-in.

I've installed a great many $7 sites and I have to say a huge number of people just don't understand that they have to give customer service and satisfaction as well as selling their product. A lot seem to think that forcing people to opt-in will miraculously make them money. Even more seem to think that just mentioning 100% commissions is some magic formula to generating wallet busting profits. I've lost count of the times I've had to explain to people why it might not be a good idea to force an opt-in.

Amazingly, even the people who want to force the opt-in don't seem to think that it might be a reasonable idea to let the customer know in advance.

The scripts themselves have never forced anyone into a particular sales strategy (beyond the obvious of payments by Paypal, OTO etc). And they don't have to be used for $7 products - you can price your product at what you like, as several people have. The scripts are incredibly flexible, if you take the time to look at them and there's really no good reason for every $7 site to look and operate like every other.

What I've seen happen is that a lot of people who didn't want to put any effort into their marketing efforts disengaged their brain and applied no thought whatsoever to the information given in the original report. Quite a few haven't even read it.

Personally, I very much doubt that Paypal are limiting somebody's account because of use of the scripts that come with the report. There are simply too many sites out there using the script and making sales every day for that to be likely. I have heard of a number of cases where the nature of the offer has given Paypal pause for thought, apparently. But frankly, at first glance, some of those cases would give *me* pause for thought.


Amin

Thanks, Patrick.

I kind of get the impression a few people would like to see $7 Secrets not being so popular anymore.

I can tell you it doesn't look like it's slowing down from where I sit!

Amin

The issue isn't with the $7 Script, or even how you set up your affiliate program.

It's how you describe your product.

If you offer a 100% commission for reselling anything, it doesn't take much of a leap for someone to assume that the primary offer is the biz-opp, and that the product you're selling is secondary.  If you go so far as to stress the business opportunity, you'll be raising red flags all over the place.

Any offer that looks like the primary objective is to sign up other people, will appear (on the surface) to be an MLM program.   More red flags.

Set the price on your product so that it's a true impulse buy.  While you're at it, set your price at anything BUT $7 so you don't let the cat out of the bag right away.

If you're in the IM market, make the "biz-opp" an unannounced "bonus" that you tell them about on your download page.  Better yet... use it as a reason for the customer to opt-in to your list.  On the squeeze page, give them the download link, but  tell them that if they give you their contact info, you will email information about how to make money selling the product.

Hope this helps,

sid

Hey guys,

I'm in discussion with PayPal now.  It looks like they think the P.P.S. on the standard sales letter means that the $7 scripts products are pyramid schemes.  Just for review, that P.P.S. says:

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In hindsight, I can see why a PayPal compliance rep might think that.

I just got off the phone with a PayPal rep who agreed that it sounds like there was a misunderstanding, and they are putting in a request for the compliance department to take a second look at it along with the rep's description of what the scripts really are, how they work, the affiliate program, etc.

For now I'm keeping 7dollarsecrets.com down, since the initial review from PayPal told me to remove PayPal as the processor from the site, but I hope to have it back up in a few days.

In case you're worried, it was NOT the 100% instant commissions that was the issue, but rather the verbage that said you could turn around and resell the product.

I'll post here as soon as I have a response from the second review.

Jon