Friday, 12 February 2010

What is a scam?

Sometimes scams are easy to spot. I think by now we all know about most species of internet-based scams. We all know about the “419” scams in which a total stranger emails you asking for your assistance in transferring a mythical fortune from one country to another and you get to keep a share.

We also all know that emails and text messages that suddenly appear announcing that we’ve won a lottery that we never entered (or even those that we DID) are all scams.

Most recently the “fashion” in scamming has focussed on recruitment. We’ve heard from people who have received emails out of the blue inviting them to apply for jobs, others have fallen for the fake advertisements from so-called companies (in fact scammers) like Dalberto Sponsors. However the essence of the scam remains the same. At some point (very early on in the case of Dalberto Sponsors) you have to pay them money and that’s when they go quiet on you.

I also think that a lot of Multi-Level Marketing schemes are scams as well. We’ve dealt with the so-called Success University, now part of World Ventures, and more recently with GenQuest who sell ludicrous magical “health” products but who mainly want you to recruit other people beneath you. Just this week we were asked about a bunch called TVI Express. This is another scheme that offers travel vouchers but is most interested in you joining and then recruiting others. On their web site there is a Frequently Asked Questions page that includes this question and answer. It’s so revealing it’s worth quoting:

Question:Do I need to sell any products?

Answer: “No. You don’t need to sell any products. TVI Express is a unique e-commerce opportunity allowing you to build the Business around the globe sitting at your home.”

They freely admit that there is no actual product involved in this scheme? THAT is a pyramid scheme. A scam.

Like other crooks, scams can appear in a number of disguises. They can pretend to be lotteries, they can fake recruitment companies and they can pretend to be travel schemes.

Over the last few weeks we’ve had several complaints about Prokard, a holiday discount scheme operated by Protea Hotels in South Africa. Their web site says that:
“PROTEA HOTELS Prokard is a status travel club that offers all members exclusive accommodation, dining and partnership privileges throughout Protea Hotels and African Pride Superior Deluxe Hotels, Lodges and Country Houses to which only our PROKARD members are entitled.”
The problem people have had is that they seem to have been deceived into joining the scheme. They all claim to have received “cold calls” from Prokard telemarketers who have engaged them in polite, friendly conversation, asked them flattering questions about their family life, pastimes and holiday habits and “sold” them the idea of joining the Prokard club.

Several of these consumers have claimed that during their conversations they were asked for their credit card details so Prokard could establish whether they would be entitled to “Gold” membership. What happened in all the cases reported to us is that, allegedly without their explicit consent, they were then charged the P1,000 membership fee.

Every one of the people who contacted us claims that they did not give explicit consent to payment. Every one of them claims they did not actually say they wanted to join the Prokard scheme. Every one of them feels like they’ve been conned.

We got in touch with Prokard in South Africa and passed over the complaints we’d received. In a couple of cases the consumers have been completely refunded their membership fees which I think suggests that Prokard realises that things weren’t as proper as they should have been.

Now, before I go any further I need to make it clear that I don’t have the evidence, I just have the stories told by the consumers who have contacted us. Prokard have told us that they record all telemarketing calls so they have evidence to back them up if they need it. I’ve asked Prokard for copies of their recorded calls but they don’t seem to want to hand them over. I wonder why?

The bizarre aspect of this situation is that Prokard is almost certainly not worth the membership fee. They claim to offer discounted hotel stays but I can’t seem to find any real savings in their scheme. To test this I went to the Prokard web site and selected a fairly normal Protea hotel in Johannesburg. The Prokard web site gave me a discounted price of R998 but when I checked whether rooms were available on the dates I chose I was told “Rooms Not Available.”

Curiously, other non-Prokard web sites said that rooms were indeed available on those dates, admittedly at a higher price.

More importantly, I then went to the Bid2Stay web site ( and looked for other hotels in the same area. For as little as R700 I could stay in a suite (yes, an entire suite!) at a significantly better hotel. I didn’t have to join a scheme, I didn’t need to pay P1,000 to join and I got the exact dates I wanted without any hassle.

So what’s the point of Prokard membership if the discounts you have to PAY money up front to receive aren’t worth it?

My dictionary defines a scam as “a dishonest scheme” and I can’t help ask myself if Prokard is a “dishonest scheme”. It offers savings that aren’t really savings and it has a habit of acquiring members in a less than honest fashion. So is Prokard a scam? I leave that up to you to decide.

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