My Shopping Genie is browser plug-in that promises to help you find the cheapest products on the web. Search on Google for anything and the MyShoppingGenie toolbar provides quick links to the search results pages on Amazon, Buy.com and a number of other websites for that product. The application itself isn’t particularly remarkable, but the marketing approach is curious.

My Shopping Genie - Fraudulent Scam?

The MyShoppingGenie was launched here in Ireland in August at two evening events held in hotels in Galway and Dublin. At the launch the audience was told how MyShoppingGenie was going to transform the way people bought products online. They were told that the first five pages of Google were sponsored listings and that you couldn’t use Google to find the cheapest products. However, one of the key features they highlighted was no more than a link to the Google Shopping search feature.

I wasn’t at this event but the half-truths I heard from people who did attend raised some concerns. These were to deepen as it was explained to me how My Shopping Genie intended to spread the word about the application.

Each attendee was promised that they could make money by telling their friends and family about this great new application. In order to make money however they needed to become a distributor – at a cost of $199 plus a monthly payment of $29. Upon paying this sum, the distributor is given a unique number which they then send round to all of their contacts. When anyone downloads the application they are asked to input a distributor number. Each time a user searches for a product using My Shopping Genie, the distributor receives a small sum of money.

Furthermore,  each time you as a distributor recruit another distributor you receive $50. You also receive money when they introduce new distributors, and so on. Thus each distributor is financially incentivised to get people to use the application and to then become distributors themselves.

Is the My Shopping Genie marketing tactic essentially a pyramid scheme? A pyramid scheme, as defined by Wikipedia, “is a non-sustainable business model that involves promising participants payment primarily for enrolling other people into the scheme, rather than from any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud.”

Pyramid schemes are illegal in many countries. In Ireland, as reported on RTÉ’s Primetime tonight, any emphasis on generating money from introducing others into a scheme is illegal.

Primetime also reported tonight that one of the founders had been previously imprisoned for fraud. And Primetime’s legal expert suggests that under Irish law the founders could face further prosecution, under the Consumer Protection Act 2007.

UPDATE (24/09/2010): The National Consumer Agency today published advice for those concerned about pyramid schemes. Giving “tips on how to spot this type of scam, the penalties if you recruit others to a pyramid scheme” and instructing people to contact the Gardaí or themselves if you are approach about joining a pyramid scheme – http://bit.ly/cJXSfp