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A grand way to lose money

Brian Livingston discovers a funny thing about the Internet: With so many legitimate e-businesses going broke, get-rich quick Web sites are raking in more dough than ever.

    Funny thing about the Internet: With so many legitimate e-businesses going broke, the "get rich quick" Web sites are raking in more money than ever.

    One of today's most prominent "make money" sites is called Going Platinum. The company's Web site, initiated last August in Lancaster, Penn., promises that its multilevel marketing program can "turn a $3,000 per month Going Platinum income into well over $30,000 per month!"

    Don't laugh. Going Platinum is doing quite well. As company CEO Alan Catalan said in an interview, "We've got a few hundred thousand pre-enrolled members."

    That claim has credibility because there are many Web surfers who eagerly seek out new multilevel marketing programs. In a multilevel system, early joiners receive a percentage of the funds paid in by later arrivals. The possibility of being an "early bird" in a new system, therefore, can be very alluring to some.

    Going Platinum is unusual among multilevel marketing systems in that its initial $25 membership fee is fairly low. Going Platinum even offers a free membership. (With a free membership, you earn credit by signing up other people for paid memberships.) But Going Platinum repeatedly emphasizes the benefits of a paid membership, which offers you much higher rewards from the business. And the business sounds great.

    As Going Platinum describes itself, "It is a full-service ISP, Internet gateway, search engine/directory, shopping mall, virtual office, and just about anything else you can think of, all rolled into one easy-to-use site."

    Let's all go to the mall?
    A mock-up of the proposed Internet shopping mall's home page looks impressive. An illustration prominently bears a large photo of President George W. Bush as part of the site's planned "news coverage." But in truth, there is no Internet mall. Although Catalan once announced that it would open before Christmas 2000, and then on January 15, the mall now has no stated launch date.

    In the absence of a functioning mall, Going Platinum's only significant revenue source comes from new, paying members who enroll other new, paying members.

    New members who are recruited by an existing Going Platinum member count as part of that member's "Organization." People who enroll 39 other payers are promised as much as 40 percent of the fees the later members pay. Filling an Organization is called "Going Platinum."

    Members who do all of this, however, may be surprised to find that they are entitled to little, if any, of the promised money. A lengthy "Membership Fees" document explains that Going Platinum will subtract a "monthly fee," up to the amount of a member's estimated payouts.

    For a Platinum member with a full Organization of 39 other members, the "monthly fee" is a whopping $6,125 per month. Sounds like you'd better get busy selling a lot more memberships.

    Although the payout plan is complex, one aspect of Going Platinum is easy to understand. A prominent heading at the site announces a Member Testimonial page. If you locate this page, it's very honest about the "member testimonials." None are listed.

    One of Going Platinum's sharpest critics is a whistleblower site known as WorldWideScam.com. This gadfly organization has published detailed critiques of Internet malls in general and Catalan's in particular.

    The Going Platinum site currently states that it will pay commissions through CompuBank, a respected online bank in Texas. But the WorldWideScam site posted a message from CompuBank saying the bank ended its relationship with Going Platinum on Feb. 1.

    Going Platinum confirmed this Feb. 21, in a message to members that was also republished at WorldWideScam's site.

    The horror stories of earlier Internet malls that collapsed may ultimately scare away potential members from multilevel programs like Going Platinum.

    If you've decided not to invest, however, I do have a bridge I'd like to sell you.

    Consumer advocate Brian Livingston appears at CNET News.com every Friday. Do you know of a problem affecting consumers? Send info to tips@BrianLivingston.com. He'll send you a book of high-tech secrets free if you're the first to submit a tip he prints.