Last weekend I wrote about how the big social gaming companies are making hundreds of millions of dollars in revenue on Facebook and MySpace through games like Farmville and Mobsters. Major media can’t stop applauding the companies long enough to understand what’s really going on with these games. The real story isn’t the business success of these startups. It’s the completely unethical way that they are going about achieving that success.
In short, these games try to get people to pay cash for in game currency so they can level up faster and have a better overall experience. Which is fine. But for users who won’t pay cash, a wide variety of “offers” are available where they can get in-game currency in exchange for lead gen-type offers. Most of these offers are bad for consumers because it confusingly gets them to pay far more for in-game currency than if they just paid cash (there are notable exceptions, but the scammy stuff tends to crowd out the legitimate offers). And it’s also bad for legitimate advertisers.
The reason why I call this an ecosystem is that it’s a self-reinforcing downward cycle. Users are tricked into these lead gen scams. The games get paid, and they plow that money back into Facebook and MySpace in advertising, getting more users. Who are then monetized via lead gen scams. That money is then plowed back into Facebook and MySpace in advertising to get more users…
Here’s the really insidious part: game developers who monetize the best (and that’s Zynga) make the most money and can spend the most on advertising. Those that won’t touch this stuff (Slide and others) fall further and further behind. Other game developers have to either get in on the monetization or fall behind as well. Companies like Playdom and Playfish seem to be struggling with their conscience and are constantly shifting their policies on lead gen.
The games that scam the most, win.
And some users aren’t dumb, either. For every user who gets tricked into some fake mobile subscription, there’s another who can beat the system. That’s where the legitimate advertisers, like Netflix and Blockbuster, get hit. Users sign up for a free trial with a credit card, get their game currency, then cancel the membership and start over. Netflix has a policy of only paying for a user once. But game developers use a complex set of partner chains to launder these leads and try to get them through for payment. Netflix sees an overall lowering of quality and pays less for leads. Game developers, desperate to monetize, then search for ever more questionable offers to make up the difference. In the end, the decent advertisers are out, and only the worst of the worst remain.
Left alone, the system really will slide into a full blown disaster. The platforms (Facebook and MySpace) are in a position to regulate this, and even have rules prohibiting some scams. But those rules are routinely ignored by developers, and are rarely enforced by Facebook and MySpace.
There can be only one reason Facebook and MySpace turn a blind eye to user protection – they’re getting such a huge cut of revenue back from these developers in advertising. If they turn off the spigot, they hurt themselves.
Zynga may be spending $50 million a year on Facebook advertising alone, fueled partially by lead gen scams. Wonder how Facebook got to profitability way ahead of schedule? It was a surge in this kind of advertising. The money looks clean – it’s from Zynga, Playfish, Playdom and others. But a large portion of it is coming from users who’ve been tricked into one scam or another.
And recent moves by Facebook to shut down application spam only make the problem worse in some way – game developers have to spend more money on advertisers to get users now that the viral channels are shut down. That means the games have to monetize even better. Which means more scams.
It’s time for this to stop. Facebook and MySpace need to create and enforce rules against it so that game developers aren’t tempted to get a competitive edge by scamming users. And if Facebook/MySpace won’t protect users, then the government will have to step in.
There’s an easy way to determine if something is a scam or not. For any particular offer, ask yourself if anyone would buy the product or service if the terms were clearly spelled out for them, and they weren’t being bribed with in-game currency. The answer for many of these is a resounding “no.” A few examples are below.
Examples Of Scams:
A typical scam: users are offered in game currency in exchange for filling out an IQ survey. Four simple questions are asked. The answers are irrelevant. When the user gets to the last question they are told their results will be text messaged to them. They are asked to enter in their mobile phone number, and are texted a pin code to enter on the quiz. Once they’ve done that, they’ve just subscribed to a $9.99/month subscription. Tatto Media is the company at the very end of the line on most mobile scams, and they flow it up through Offerpal, SuperRewards and others to the game developers.
As you can see in the image below, nothing in the offer says that the user will be billed $10/month forever for a useless service.
Another scam: Video Professor. Users are offered in game currency if they sign up to receive a free learning CD from Video Professor. The user is told they pay nothing except a $10 shipping charge. But the fine print, on a different page from checkout, tells them they are really getting a whole set of CDs and will be billed $189.95 unless they return them. Most users never return them because they don’t know about the extra charge. Woot. Again, sites like Offerpal and SuperRewards flow these offers through to game developers. See here for more on the Video Professor scam.
Of course, there’s no mention of any of these payments in the offer itself:
An Industry In Denial
Yesterday I attended the Virtual Goods Summit in San Francisco. In the Q&A session of one panel I asked Offerpal CEO Anu Shukla to explain the ethics of her business, and outlined my ecosystem of hell argument above. Shukla went on a tirade, calling my points “shit, doubleshit, and bullshit” (yes, really), but never really addressed the points. A video of the exchange is below, care of Alexa Lee.
Offerpal now has a blog post up on the exchange, but they still don’t address the issues. They offer misdirection, denials and a shield of rules that are never actually enforced.
Sadly, most of the audience of game developers was on Offerpal’s side. Many of these developers see quick dollars with lead gen scams and they don’t really care about how users are affected.
In one session earlier in the day, IGG Cofounder Kevin Xu recommended that game developers “get users in the door to play free, then monetize the hell out of them once they’re hooked.” Sadly, it’s simply human nature to push the rules until they break. It’s time for Facebook and MySpace to protect their users from this stuff and make sure it stops.
p.s. – An interesting development. Offerpal defended their mobile survey scams on stage and in the blog post referenced above, saying there was no scam involved. But today those offers have quietly been pulled down from all the games I’ve checked. If there’s no scam, why remove them? At least some good is coming from my ongoing rants.
Update: Two Companies That Said No To Social Media Scams
Update 2: How To Spam Facebook Like A Pro: An Insider’s Confession
Update 3: Scamville: Zynga Says 1/3 Of Revenue Comes From Lead Gen And Other Offers
Update 4: Zynga Takes Steps To Remove Scams From Games
Update 5: RockYou Joins The No Scams Parade. But What’s Facebook Up To?
Update 6: MySpace Says Zero Tolerance For App Scams, Changes Terms Of Use
Update 7: Tragedy Of The Social Gaming Commons: A Blueprint For Change
Update 8: Offerpal Tries Out A New CEO. Shukla, Queen Of Scams, Is Out.
Update 9: Facebook To Increase Enforcement Of Anti-Scam Rule
Update 10: ScamVille: New Offerpal CEO Admits Mistakes, Makes Bold Promises
Update 11: Zynga CEO Mark Pincus: “I Did Every Horrible Thing In The Book Just To Get Revenues”
Pincus’ response: to zwink or not?
Update 12: Time Magazine: Are You Getting Scammed by Facebook Games?
Update 13: Is Facebook a Paradise for Scammers?
Update 14: “Horrible Things” Slink Back Into Zynga
Update 15: Zynga’s FishVille Sleeps With The Fishes For Ad Violations
Update 16: Zynga To Remove All In Game Offers
Update 17: Zynga’s FishVille Gets Out Of The Penalty Box At Midnight
Update 18: The ScamVille Lawsuit: Facebook, MySpace, Zynga And More Face Possible Class Action Suit
Years ago Arrington’s cry was “Plaxo is Evil.” Now the new cry is “Offerpal is a Scammer.” What’s the next cry Mike, “The Internet Stole My Martian Baby”?
the nice thing is that plaxo completely changed its business. next up is post transaction marketing, since you asked.
I applaud Mr. Arrington for being on the front line of important issues.
Regardless of who’s right or wrong, Shukla is perhaps the most unprofessional CEO I have ever seen and loses purely on the grounds of her filthy f’ing “Carol Bartz-ian” gutter tone that only hurts her case. When will these “successful” yet no class execs be purged? To the court of public opinion, which is the only court that counts, she has already lost her case.
I have to agree. Way to prove your point by cursing.
I developed lots of Facebook apps before, and the only way we could reach any sort of virality was by scamming users. The trick in 2008 was to have Quiz apps that forced users to make invites before they could see the answers. This would increase the virality of the app 10x and we could see 1m users in a month. At some point, we’d change the URL of the quiz to the REAL app we were trying to grow, and all the new users would be directed to our new app – et voila, we’re viral.
Dirty? As Sarah palin would say: you betcha. That’s why I’m out of that business.
Thank you so much Arrington for pointing this out. I’ve been telling everyone Zynga is a huge scam but no one believed me
By the way, I bet a very high percentage of Zynga’s revenues are outside the US by clueless foreigners. One thing we noticed last year was that the US market is pretty savvy about most things, but the Eastern Europeans, Turks and other foreign networks would just about do anything to get their Quiz answers….
In a recent talk by Mark Pincus he even talks about how he charges very high prices for virtual goods because ’some guy in Kuwait’ won’t clue in and buy anyways
The process is as follows:
U.S. = Have Money = Smart = Don’t pay for IQ ads
Southeast Asia = Dumb = Try to pay = Don’t have money
Europe = Dumb = Pay
That’s not fair.
Asians have money too.
Asians have far more cash than the usa, the US gets all its money lent from asia!
“They are asked to enter in their mobile phone number, and are texted a pin code to enter on the quiz. Once they’ve done that, they’ve just subscribed to a $9.99/month subscription.”
By whom, the cell phone company? And after the first 1000 users complain to the cell phone company, wouldn’t the company put an end to that. The transaction as described above seems pretty cut and dry fraud, Why not get some AG on the case and send the culprits to jail?
There’s something missing in this story.
by tatoo under a random and often changed domain name. the carriers get around 50% of this, they love the money. yes, the AGs need to get involved to put an end to it.
What’s missing is actual facts.
Fact: The carriers are actually very aggressive in policing mobile vendors that serve up “junk” offers or products. All it takes is a few negative customer support calls for a short code to be blocked at any given carrier.
Fact: Getting a mobile program approved takes months. Carriers now have very extensive review processes to weed out bad apples. Do bad apples still make it through? Of course. Do they eventually get removed? Yes. Try getting a short code approved and you will see what I mean.
Fact: The revenue earned from these type of programs for the carrier is equivalent to a rounding error for them on their books. They would rather not have the bad publicity.
Fact: Carriers used to have lax policies with regards to these kind of programs. They cleaned this up years ago.
that isn’t what i’m hearing from insiders. they’re saying carriers love this revenue stream. but please contact me and we can discuss, off record if you like.
what’s clear is that the offers are there, or were there until today, and all the carriers were represented.
While these facts may be true, I am unsure if the carriers can take any action at all. I don’t play Farmville myself, and so do not know..But for these tactics to be unethical and not outright illegal, the fine print would have been put in somewhere…and this is enough for the carriers to wash their hands off the scam..
Well that is complete bullshit to be honest!
Look at Jamba/Jamster? They have cleaned up their act in recent years, but that was just because it was screwing up VeriSign’s name in the US.
I have been in meetings with carriers all over the world -I used to work with them providing them with short-codes- and carriers would meekly complain to Jamba that they were not operating with transparency i.e. “you are ripping off 12 year olds” and the response from Jamba/jamster was “ok then either shut us off or stfu”, guess what? They never shut them off.
OK if a small 10 man company wants to offer a new short code service, the operator will pick the corn out of their crap and leave them waiting 6 months to get approval.
BUT if a company that is going to spend millions in advertising -for example Jamster in Germany used to buy every ad on MTV between 10PM and 6AM- the screening process is not close to being the same.
I am seeing the same small print crap happening now in this new ecosystem, in a few years, someone will come along and state outrage and shock at this stuff going on.
At that stage, there will be a new scam, same shit, different day guys.
It is the same thing with Facebook
It would be good to if developers could tell users to fulfill some task on amazon’s mechanical turk or something similar/bigger in exchange for virtual currency. A lot of the users are willing to do perform some boring tasks in exchange for game credits.
From this moment forth the people shall call you the Digital Avenger.
Seriously though. Good stuff. Don’t let this one go, if noone wants to listen at first, just get louder.
You knew that already.
Who gave that ineloquent hag a mic in the first place?
I’ve had to scour my phone bill to get rid of these charges after my kid was suckered into several of these scams — for a long time, I had no idea where they came from, and there’s no information given. I’m hoping Zynga will step up and get rid of these fraudsters.
yes. a big part of the problem is you don’t even know who it is that’s billing you. 99.9% of people scammed have no idea offerpal is behind it.
Source please on the 99.9% statistic? Spin. Spin. Spin.
well, at no point anywhere does offerpal’s name appear, and these companies constantly switch corporate names and domain names to reduce the hit from complaints. so 99.9% may be low.
The assumption that you are making here is that every consumer on the planet forgets about every charge they make on their cell, or with their credit card. Offerpal, Super Rewards, and Gambit aren’t changing their domain names, or ducking their responsibilities to the end consumer. The charge shows up as a 3rd party because that is the company who is responsible for the service. Offerpal just linked to them. The reality here is that many consumers do remember where the charge came from, and reach out to the offer company’s if they genuinely have an issue.
Offerpal links to third party companys that provide the actual service. This is why their name doesn’t appear on the actual credit card or cell phone statement. The assumption you are making here is that the majority of consumers forget about the transactions they make. This is not true otherwise we wouldn’t see the customer support inquiries that come in daily from our users. Offerpal, Super Rewards, and Gambit are also not changing their domain names, corporate entities, etc. They aren’t ducking their responsibilities here.
offerpal and the like are the ones linking to the scammers! they share responsibility, and the whole point of this is that they aren’t policing their associations and have a conflict of interest that may prevent them from doing so.
Hey Anu,
Stop hiding behind this nick.
This is EXACTLY the same scam that has been playing out on cellphone networks (many active class action lawsuits and settlements by the carriers) for ringtone and chat subscriptions.
I’m surprised it took this many years to be reported by the “media”. These kind of scams have been going on for years and I get several emails a month from these vendors promising to make me millions of dollars a month. I’ve no doubt I could make millions a month off these scams, but they are scams and will eventually bring government regulations. Michael mentions tattoo media look up tatto media sued on google and you will see all the government agencies sueing them.
Michael, is just barely scratching the surface, these scams are extremely far reaching and deep. Some of these scams are charging users over $1 million dollars a day, and many of these middle men/networks are nothing more than smoke screens.
This is my first post on Techcrunch. As the developer of some of these games, the basic premise of Arrington’s post is incorrect. The reality is that the games that employ the best game mechanics, and offer the best content make the most money. Social games do not make most of their money from “offers” but from legitimate credit card transactions. This is sort of like the infamous 80/20 rule. Zynga could shut off offers from Super Rewards, Offerpal, Gambit etc. tomorrow and it wouldn’t stop their advertising blitz on FB or other social networks, because the vast majority of their revenue is from direct transactions. Social gaming is actually a pretty clean business, and these offers are just a tertiary revenue stream. The whole premise that this is a “self-reinforcing downward cycle” is totally false. In fact, its blatant misinformation.
As the social gaming space continues to expand, the “junk” offers that exist in the system will get cleaned up naturally. The social networks are already starting to police this stuff more aggressively. Also, game developers are in the business of maintaining good relationships with their players. At the end of the day, does it serve the developer if a player believes they’ve been scammed? All it takes is one vocal player to make a post like Arrington’s for people to get upset, and for players to leave the game in droves. We want our players to have a high quality, fun gaming experience. We don’t want them to feel scammed.
Normally I am a huge fan of TechCrunch, but i’d rather not see “opinion” pieces like this where Arrington is intentionally trying to spin the conversation. I really hope this site doesn’t become like Fox News where all we get is sound bytes, and things pulled out of context to serve as the basis for edicts from TechCrunch editorial staff. Stick to the facts Mike. Its better for you, and for your readers. If you don’t have the facts, then please go out and get them first.
actually, the flood of advertisers, developers and other insiders i’ve spoken with disagree with you completely. The good offers are the ones being squeezed out, and the system is getting more and more polluted. And nobody can figure out why facebook won’t enforce their own rules.
I’m here presenting what i’ve learned under my own name, with no financial incentive at all to lie. You are here anonymously, and frankly you seem to be one of the bad guys.
I am here anonymously because I like my privacy, not because I am “one of the bad guys.”
You didn’t respond to the main thrust of my post. You make 2 key points in your article:
1. “Offers” are in general an unregulated, unethical business.
2. Game developers make most of their money via “Offers” so therefore they too are unethical etc. There is a “vicious cycle” that must be stopped.
My response to number 1 is that there are a number of natural elements that already exist in the ecosystem to help get rid of bad offers. When ever I meet with other major game developers, one topic that is always on our agenda is customer service. My recommendation to you is to discuss customer service policies, and efforts with Anu, SR, and Gambit. Also discuss this topic with the game developers. I think you will find that all of these company’s are investing a very significant amount of time and resources into providing customer service. Ask them about chargeback rates to the developers from customers that have a bad experience with offers. Can the customer service experience improve? Absolutely. Are there still bad offers out there? Definitely. Does anyone in our industry want the general public to think that we are out to scam them? No.
You didn’t respond to my thoughts on number 2. This is actually where I have the most beef with your article. I am a game developer, not a offer vendor. My interest here is for your readers to understand that the social gaming business is not a “Offer” driven business. It is actually a direct charge business with a few tertiary revenue streams including “Offers.” Any consumer that buys game credits on their credit card isn’t getting scammed. They made a choice to invest in a game they enjoy playing.
Based on this, there is no “downward cycle” to speak of. The big game company’s spend heavily on ads for their games, and earn the most money because they create high quality content. This is no different then what major game publishers do.
The last point I will make is with regards to the number of users who play games for free vs. those who pay. This is another stat your article really needs in order for it to be balanced. The reality here is that the vast majority of users don’t pay anything to play these games. The vast majority of users don’t participate in any “offers” to earn game credits. They just play for free.
Hey I like my privacy too but you come off as someone who’s just interested in protecting your cash stream from scam.
Legitimate developers would and will be happy to state who they are in the comments. Not to mention it’s good PR as well.
I routinely block all these silly “games” on Facebook as wastes of my time. Articles like this just reinforce my opinion that I made the right call in doing so.
This discussion reminds me of a “feature” in SpyMaster, via Super Rewards, where players are offered not only the same Netflix contract, but things like “Lose up to Four Dress Sizes with Our FREE Acai Berry Slim Trial!”, “I TWEET for Cash!!’ Yes, that’s right. Make $250- $837 Daily!!” and “DRIVERS: Take a GPS Navigation Survey and Win a GPS!”.
All from here: http://playspym...ards/get_points
The whole process seems gross to me. I have paid for features in games before (for the iPhone), but these offers are not a good thing. Any thoughts on Super Rewards vs. OfferPal?
Super Rewards vs. OfferPal? One is repulsive, the other is horrible. both are leeches, preying on the innocent.
I am not even going to respond to Mike’s comment here. This is like asking someone who invests in commodities whether they think AMD is better then Intel. Mike is clearly uninformed on this topic, so he is giving vapid responses.
You are clearly uninformed on this topic:
When investing, AMD and Intel are not considered commodities; rather, they are called “equities” (or, a bit more casually, “stocks”).
Stick to what you know.
Thanks Mike for shedding further light on this issue. I plan on implementing offer completion into my social dating community as way to monetize but I definitely don’t want to do it at the expense of user experience.
So my question is; how does one go about staying clean? Offerpal, Super Rewards, Peanut Labs; are they all dirty?!?
trialpay supposedly has a “quality dial” where developers can turn monetization, and thereby scamminess, up and down. Go with them, and turn it to the least scammy. If you can’t build a business, do something less harmful to society.
From what I know, all of the company’s are working on improving the quality of offers on their systems. I do not have any experience with Trialpay so I cannot comment on the “quality dial” that may or may not exist.
“may or may not exist” …really, dude, you’re just digging yourself deeper here. clearly it would be an illuminating comment if you detailed why you’re pushing back so hard on this topic.
Great article…
Another point, which is not scam: The games are really not that interesting. I played Mafia Wars and Farmville for awhile… I quit after I realized I was just doing the same thing every day…Click the button, wait, click the button, wait, get more points, get more points…
A total waste of time, but Zynga is brilliant at turning us into lab rats wanting to collect the pellet over and over again. It is the addiction to the games which tempt people in the first place to find out a way to get more points and see the juicy offers. Just fill out this innocent little survey and you can get more points to get a better weapon so you can get even more points.
When does the meaningless madness end? Hopefully users don’t only wisen up to the scams but also to the complete waste of time and mental energy.
These games would never succeed outside of the social networks as the point is you compete against friends. Think about tic-tac-toe, which is a stupid game that turns info a fun one when played with a buddy.
What about how Zynga just clones every fing site. All they do is steal ideas and remarket. Scumbags.
Comment from HackerNews:
“And the eagerness with which Zynga, et al copy every other game and then try to out-advertise their way to success comes across as amoral, too.”
Check out Peanut Labs. They seem to be in the space but focused on actual surveys (vs. the scammy offerpal ones). Anyone had any experience working with them?
I greatly appreciate this demonstration of real, valuable journalism. While Zynga and its cohorts have become the darlings of the digital media community, heralded as engineers of the next great revenue model, Arrington goes against the tide and takes them to task. I’m sure much good will come of this article.
I’m confused. Someone is scamming people on the internets? O Noes! Call the cops!
Puhleeze. Get over it, folks. It’s a self-equalizing system, those that burn the candle brightest will fall the hardest, and in the end, all these Facebook app monetizations will fail and bring FB down the same level as email and IM spam.
Zinga hirees, pass on the options and ask for the highest wage they’ll pay, cuz in the end, you’ll on the curb with nothing but a few more bullet points on the resume and yet another lame cocktail party story to tell like the rest of us.
http://www.medi...p;art_aid=95040
Tattoo Media Lawsuit Details.
I applaud you for raising this issue but I wish you had followed up with an actual question or two — despite your claims, I thought your points were essentially addressed by the panel.
But I do think it’s clear to anyone that these offers are using fine print and marketing tricks to hide the real costs and commitments users are subject to.
Other products like credit cards, and cell phone contracts have come a long way towards being more transparent — maybe there are some lessons to learn there.
I think the whole scheme of making people pay to advance faster than their friends is basically cheating and totally unethical – for both game developers and players.
Kudos to Mike for making a stand and declaring a war against the bad characters such as that cynical “lady” Anu Shukla!
This is just a tiny piece of a huge scamfest. What about the actual stuff users are buying with real money? Fake potato farms and dumb looking cows? This business won’t last more than a couple years, Zynga realizes this and they’re milking it (pun intended) for all it’s worth before someone figures out what’s going on. Maybe even get an IPO out of it and dump their shares to the dumb sheeple then hop on the next plane to the bahamas.
if people want to spend real money for virtual goods, i have no issue with that. it’s the scams that piss me off.
+1
If people want to open their CC to buy Virtual Goods or “genuinely” do an offer, it should be Ok.
But not knowing upfront that you will be recurringly charged $9.99/mo is BAD.
I write apps for facebook and am working on a game that would include Virtual Currency in the system. So, was planing to use either OfferPal, SuperRewards eventually. But, looks like that these companies should first clean up their act regarding the offers and be more transparent to the user.
Anyclue on PeanutLabs Meadia ?
They seem legit with their surveys. Seems like actual surveys vs fake ones that offerpal is running.
Just wanted to point out that “A Real Social Game Developer” is f-kin massive RETARD.
Good analysis, good stuff on the panel too.
But yeah, the ARSGD dude pisses me off, he obviously is from one of those -> SCAM <- site. (burn fucker)
+1
My favorite article on TechCrunch so far. It’s not like this is really that new of a trend – those “fine print recurring charge” ads hidden as “quizzes” have been scumming about for quite some time now. It’s just that with the increase in social gaming, the $$ has gotten so lucrative that legitimate (read: those who don’t have to put the $9.99/mo charge in the fine print at the bottom of the page) advertisers are being squeezed out as are developers who don’t get on board the money train.
Thanks for pointing it out Mike. Hopefully your posts will be the snowball that starts the avalanche of awareness rolling.
FB needs to restrict survey offers to 18 yrs and older.
Then they need to ban the PIN submit stuff entirely.
Any business that is generating a ton of cash without actually being paid directly is nothing more than a sophisticated money laundering scam, and this is one that will continue to cycle until someone steps in to shut it down. At that point who ever holds the most cash wins, typically.
There is no question whatsoever why they choose the survey vs. paying cash, and just like the credit card companies, this will do nothing but perpetuate the problems in our economy by teaching our youth to make bad decisions before they are even at an age where they should be making any of the sort.
I agree with the idea of an 18 age limit, but your assertion that any company that isn’t paid directly from the consumer is a scam is crazy.
That means all advertising companies are scams.
The customer isn’t the game player (they are supplied a free product in exchange for doing something), its the advertisers.
Ok, one thing I will say to this statement is:
“Wonder how Facebook got to profitability way ahead of schedule? It was a surge in this kind of advertising.”
So did Google, and believe me they knew it…up until about 06-07-ish, Google was 95% PPC arbitrage and CPA, so I’m not at all surprised.
Mike,
What took you so long to write about this?
I never believed in Offerpal in the first place. It will be a short-lived business model until the companies that use the service realized the kind of customers they acquire through these offers are probably not going to stick with them for a long time.
A lot of the huge money-making Facebook apps were using Offerpal since last year and made a lot of money on the short term.
Anu’s response doesn’t reflect well of Offerpal and herself too.
I predict some companies pulling out of Offerpal soon.
Very interesting.
I’m dealing with a different kind of scam as we speak. This one involving a company called MindJet, which makes a mind mapping program called MindManager, which I wanted to test against the free programs (the free programs are better, IMHO).
I contacted the company to ask about the software, the purchase and refund policies. I was emailed back by Christian Walter, who said they offered a 30-day money back guarantee, which I relied on to purchase and try the software.
When I requested my refund a couple days later, Christian denied the request and told me I would have to download a form, swear on it, sign it, and fax it to an international number.
On the form it said all fields had to be completed or else the refund would be denied. One of the fields was “Customer Number,” which it says is listed on my invoice. That is not true (at least not on the invoice I have seen, nor anywhere on my account on their website).
The other part of their scam is that when you buy the product they throw in a “free” year of support. What they don’t tell you is that this is really a subscription for *paid* support (with the first year free) and that they will bill you annually starting next year unless you figure out how to opt out.
I’m still dealing with the MindJet on this, gathering info for a detailed blog post with screenshots. Tune in there to see how the story ends, if they refund me on their own or I have to dispute the charge with Mastercard (I’ve already met the requirements to dispute the charge and am just waiting to see what they will do).
In meantime, I can tell you that, in my personal and perhaps biased and flawed opinion, MindJet is a scam company.
Good luck to you. I hate stories like yours. I hope everything works out good for you. This is my first visit to this site which is very informative. I’d like to see your write up on your situation in the future.
Well someone has to pay for all these. It’s a game. Users have a choice to play games from ethical companies too.
“It’s time for Facebook and MySpace to protect their users from this stuff and make sure it stops.”
Surprised to hear you advocate such a paternalistic approach, Mike.
This source of revenue is not sustainable, given the low quality of leads, regardless of how Facebook and MySpace choose to ‘protect’ their users.
I find pretty surprising that this article come from TechCrunch that is usually on the side of the companies in the bay. But I REALLY appreciate that they had the courage to say that. My experience is that when someone get mad as Anu… there is something true. I guess that they are working on an IPO or an acquisition and those are things that who is buying should not hear.
It doesn’t take a lot to understand that what Mike is saying is true. Try yourself… talk with someone that play the game… there are a few people that got hooked.. Google the scams/offers… and you will find the problems. Again GREAT JOB with this post!
I have to say that some of these “offers” also bring about a lot of malware/trojans with them. One site I frequent did this and then we had an explosion of posts saying “This site has given us a virus!”
Thankfully we have a stickied thread on thorough virus/spyware removal.
When you sign up to these “offers” they don’t tell you that you just signed up to a $10 a month or that they’re going to stick a nice little trojan into your PC. The small print, if you can fricking find it, is so convoluted and in such legalese that the poor user is bamboozled and thinks it’s respectable because they’re using such legal language.
Wonderful blog. Well done Mike. Totaly agree with antispam campaign. Great
great article.
its about time someone called them all out on this disgusting business practice.
its a race to the bottom, zynga is obviously willing and for facebook with all their talk on user experience it is surprising they dont police their eco-system better
I think articles should always be accompanied by some simple practical advice, just to help reinforce, even a little bit, what should be absolutely standard practice for anyone using a CC in an online or even telephone transaction: NEVER use the base card #.
The lament that scammer X is making unexpected and unauthorized charges on a card rests on the fact that somebody gave them access to a number that has zero security.
Sign up for a card that permits the generation of virtual card numbers (e.g. Citibank, but don’t take that as any particular recommendation, just one I have personal familiarity with, there are others – just avoid Bank of America like the plague).
Virtual numbers are incredibly powerful and effective security mechanisms. You have total control over the 1) Maximum amount that can be charged, 2) the expiration date, and 3) the lifetime of the number prior to expiration, you can revoke it at any time. Furthermore, I think they are set up so that only the first charger on the number can ever charge it again. That means even if the # is stolen it cannot be used by other than the original charger.
If anybody had ever (foolishly) paid the likes of VP $6.95 for their scam, but did it with a virtual card that was for precisely $6.95, VP could never charge it again. It would be used it. What are they going to do then, insist on their $189.95? The shoe’s on the other foot then, with all such scammers. And they won’t have a leg to stand on.
There is no doubt that most Offers are scams. We looked into adding OfferPal to our app several months ago but it didn’t pass the smell test. Virtually every offer we were presented with (and which we were going to present our users with) involved the scammy mobile PIN offer. As Mike noted, this offer presents the user with a simple request to complete a quiz. At the end of the “quiz”, the user is prompted to enter their mobile number to receive a PIN and then redeem the offer for in-game coins. Seems ok so far, right? But what actually happens is that by submitting their mobile number, the user agrees (check fine print on page) to subscribe to daily mobile SMS messages that cost as much as $3.99 per day.
The reason this is a great scam is that the user won’t find out for at least 30 days (when they receive their next mobile bill) that they have been scammed, at which point they have spent almost $100 on the scam. Also keep in mind that many of these users are teenagers or college kids whose parents pay their mobile bills know nothing about this scam…so they end up paying the bill.
This is pure deception and questionable business practice by OfferPal and any developer that promotes these scam offers. Thanks Mike for shining a light on the underbelly of this industry.
What!?! Scamy and dishonest doings on social-networking game apps??? People getting mugged thru misleading offers and fine print???
I’m shocked… shocked!
Just clicked through and read the OfferPal blog. It’s pure BS and obfuscation. If they really believe their offers aren’t scams I urge them to sign up to their own offers and NOT cancel the mobile SMS subscription that most users unwittingly sign up to when they complete a “quiz” offer. If every employee at OfferPal did this, they would be running for the exits.
It’s quite dreadful that the market leaders dont research their adverts or the companies they are dealing with, its only a matter of time before it turns into a bad PR case and brands get damaged.
Its not in anyones real interest to come down hard on this “scam”
Zynga are making a shedload of cash – flirting with an IPO, they need to keep a lid on this bigtime. We already know they are a litigeous company – so im not sure how many people are really going to want to start a war with them
Playfish the other big player are allegedly in the midst of a huge sale to EA – the last thing they want is for things to be blown out the water by these kind of stories.
Facebook – are making a tonne of cash off the advertising eco-system surrounding the games. Likewise the CPL companies themselves.
Arrington – don your CAPE and start gnawing away at them
I’ve been playing Farmville for a few months now and only recently “succumbed” to taking one of the offers to get some “cash”. For those who’ve never played the game, it is easy to earn coins but there is a separate catergory of “cash” that is difficult to earn in-game. Many virtual items can only be purchased with cash and not coins.
I signed up for the gamefly.com offer, something I had been thinking about subscribing to long before I started playing Farmville, so it was win-win, right? After signing up, I was presented with another offer, for several free weeks of magazines. I didn’t see any way to say “no thanks” and had not received a confirmation of my gamefly.com purchase, so I went ahead and got one free magazine, figuring I could cancel before it turned into a paying subscription. Not too surprisingly, after accepting that, I was presented with another offer, but at least this time there was a “no” option, which I took. Surprise, there was a third offer, again with no way to say no. At this point, I just closed all my browser windows.
I did get my Farmville cash and my gamefly.com subscription, but the whole experience has disgusted me and I’ve posted a link to this blog post on Facebook to warn my fellow players.
I’ll be sure to monitor my credit cards and phone bill to make sure I haven’t been scammed in some additional way.
so you got what you agreed to….. for what you agreed to.
No one was making you accept offers, as you said just close the window.
People need to take responsibility for their actions, click yes to a contract and you should have read it. If I signed a loan form I would be expected to pay it, this is no different!!
These are not scams, scams are illegal, these are contracts (its all in the text, if you dont understand dont accept it)!
“No one was making you accept offers, as you said just close the window.”
When accepting or declining contractual offers, it is standard practice for the party to have a clear way to decline. Forcing someone to close their browser window instead of giving a simple “no thanks” button detracts from the legitimacy of the contract.
“If I signed a loan form I would be expected to pay it, this is no different!! ”
You must be joking if you think this is an accurate metaphor. This situation is entirely different. It’s more like being assaulted by a banker who is trying to force you to take a loan. Your options are to say yes and sign, say no, or punch him in the throat and run. Except you’re (for some inexplicable reason) unable to say no. So what do you do? Most people don’t enjoy punching others in the throat, so they’d say yes, hoping to be able to get out of the contract later, as it stipulates that there is a trial period during which the party can cancel.
This is one of the best articles to appear on TechCrunch in months. Finally someone is paying attention to the ill-gotten gains the game companies are touting as legitimate.
This is fast cash, but it will only backfire in the end.
Great job, Mike.
ok so finally things are boiling up, for years I have been hating Google for serving up my web pages without my concent , would you call that an biz ethical issue too, as we all know how much ggl has made with searching & serving unauthorized web pages, we seem to be not raising voice about that as we feel its generating more traffic to our site or web pages though in actual ggl is making you pay for that traffic (your ISP charges you for the bandwidth & data transfer) & while ggl is making loads of $ through adv & btw I wonder how many actually make $ through Ad sense etc which doesnt seem to be a huge success
just a thought…
The whole $10-$15 slimmy cellphone subscription biz has been going on forever, and now that these social networks are here to fuel their intake it’s only going to get worse.
I happened to work for a company that did something like this and after a few months I couldn’t go on with my conscience and quit that job.
I bet they’re still making millions every month offering “free” or “complimentary” stuff, and signing users to useless “services”.
I think people should be checking their credit card statements. These small $10 charges can slip by without detection if you’re not careful.
hi Mike, would you be willing to take off the adv on your story to make it a good cause, this story seems to be creating a lot of traffic & as you are pitching it on a social domain & are concerned about all of us its more appropriate to keep it non commercial
what the hell is wrong with you.
to clean the system we need to clean ourselves first,
There is nothing wrong with monetizing your work. When anyone works as hard as Michael does, they deserve their due rewards. Try “cleaning” yourself and stop pressing your personal views on others.
Hey no one is forcing you to click on the ads on TC. There’s no scam here unlike those being pushed by Offerpal.
Mike’s ‘earning’ is keep unlike those scammers.
This article is extremely weak and doesn’t even fall into the realm of real journalism. The basic premise of how the games work with the loop of advertisers is faulty and obviously unresearched. The most popular games are not the most popular because they have the most scams so they can buy more advertising. This is an example taken from a 100 level marketing course that doesn’t apply to this situation.
The most popular games on Facebook are popular because they are the most fun to play. Paid advertising for these games plays little if any role in their popularity because the players gladly advertise the game for free and that is how it catches on. They are viral games. Just as the popularity of YouTube videos has nothing to do with advertising, so goes the Facebook games.
On top of it, these offers make no secret of the payments involved. I play several Facebook games and I have never been fooled by which offers are free and which ones you have to pay for. Anyone who falls for these “scams” deserves it for not reading the fine print. These people have to learn somehow. If they don’t learn, their money will end being taken sooner or later anyway.
Michael Arrington obviously went into this article with a decided opinion and tried to support it with “what sounds good” and not any facts. Deplorable.
huh. well farmville is a clone of another game that isn’t nearly as popular. Did they tweak it just right or did they take advantage of viral loopholes and spend huge advertising to get it popular? And how do they pay for that advertising?
Farmville is a vastly superior game to Farm Town in terms of graphics, up-time, playability, and fresh new content. Comparing the two side-by-side shows huge differences.
Of course, you obviously didn’t know that either because you chose to write on a topic for which you have no personal experience and, quite frankly, your research abilities are terrible. If you spent half the time and effort in your research as you do trying to defend your weak claims in these comments, you wouldn’t feel the need to try and justify your article to everyone who has an opposing view.
The amount of time you spend on these comments and your choice to post comments without the use of proper grammar only further devalues your credibility.
The most popular games on Facebook are popular because they are the most fun to play”
WRONG
they are most popular because they’ve figured out how to seed a viral loop the best. trust me, I’ve been there – it has nothing to do with product quality
Same deal with Youtube videos, sometimes even crappy videos get really popular because there are some viral loopholes in Youtube that can be exploited
Uhm,
A viral loop just brings people in. If you come in once because of some spectacular viral loop process and the quality is low, you may not return again. So even though immediately you may see a rise in monthly active users (MAU’s), you will see a drop after a month assuming the quality is low.
So for a crappy game, we should see a sinusoidal pattern that is overall increasing because of a wide facebook userbase that can be exploited. Over time you factor in saturation and the growth rate declines although the pattern continues. It is sinosoidal because some will like the game and some won’t.
If you observe the monthly marginal growth rate to be increasing more than other games, then that game will by comparison be funner.
bjones I’m telling you, you know nothing – your attitude that people have to learn by being scammed and deserve it, sums up your clear lack of understanding of the subject.
Anyone that has been following the tricks they play or is victim to these scams soon learns the truth – THEY ARE SCAMS – you are backing up the rights of the scammer over the rights of the consumer. A true Win-Win situation doesn’t leave a person with a bill they were tricked into – that’s what hostess clubs do.
If Mr Arrington is a bull, Ms Shukla is a cow. What language madam!
Good call Mike for bringing this up. Please don’t let facebook of the hook – I’d love to read their response to this.
Great article Michael. I’ve seen the offers you mention in your article and I’ve wondered if people fall for that stuff. I had no idea this is such a big business. Some offers look legit and they are tempting so I understand if someone tries it. I hope you keep raising this issue until it’s widely known. Then maybe facebook and myspace will feel pressured to do something about these people operating and associating themselves with their site.
Mike, I don’t normally agree with you, but here you’re spot on… keep after them. Their practices are terrible.