Regulators liken penny auction site to Ponzi scheme
By Rebecca J. Williamson
November 16, 2012 (San Diego's East County) -- What has 3,493 “likes” on one participant’s Facebook page that may turn into “hates” and lawsuits?
The answer? ZEEK REWARDS --- an online penny auction house that is under investigation by the U.S. Securities and Exchange Commission for financial fraud. See http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt041.shtm and http://www.sec.gov/news/press/2012/2012-160.htm.
Zeek Rewards has claimed to be an online profit sharing system. Regular folk signed up and accumulated rewards points for a cash payout.
In an online penny auction, items are posted by the site owner and you pay to bid for them, according to the Federal Trade Commission. Unlike a traditional auction where only the winning bidder pays anything, penny auctions require you to pay before – and as – you play, win or lose. Winning” according to the FTC doesn’t necessarily mean you win the item; it means you can win the right to purchase the item at regular price. The appeal is in the building of referrals and getting money back for each and every one you recruit to join the rewards program. Clients keep thinking it’s a “penny” auction so they are not losing that much money.
One East County resident, Brian Higuera, 42, started investing in Zeeks Rewards having heard about it “through the grapevine…through family and friends.”
“My motivation was to build a great financial future for my family,” Higuera stated. “There are other online penny auction houses like QuiBids. Zeeks was not the only one.”
The allure of a cash payout from Zeek has been presented as one way to build a bigger family nest egg.
Having reviewed information from various government reports Zeek presented itself as “legitimate” Higuera pointed out, adding, “The website required reading the full disclosure parts before you signed up.”
If you search the internet offers to get involved in these “rewards”, they are are still on the web. Just pony up $25 and earn up to $1,625 per day online without ever having to pick up the phone. Simply supply your e-mail to see an instructional video. This from an online Zeek Rewards member who is recruiting for the cause –maybe the new, hot video offers will be on how to get your money back.
Using your debit card to purchase items or upgrades was not an option. According to Higuera he used “cashier’s checks” to pay because credit cards were not allowed due to the fact that “people were using stolen credit cards.”
One of the Zeeks “how it works” websites presents the steps:
1. Create your account and determine if you are willing to buy any upgrades.
2. Decide how many sample bids you would like to start with.
3. Start participating in the auction house and have fun promoting your products.
4. Accumulate rewards for a cash payment.
Bringing in any and all willing to participate was part of the set-up.
The U.S. Securities & Exchange Commission announced fraud charges and an emergency asset freeze on the alleged $600 million Zeek Rewards Ponzi/pyramid scheme and that they are on the verge of financial collapse as of August 17, 2012.
If you and anyone in East County need further information check this government website at www.sec.gov/ and click on For Zeek Rewards Investors in the sidebar. An additional website for receivership is http://www.zeekrewardsreceivership.com regarding your personal relief from this potential life changing financial scheme.
To file a complaint on an online penny auction house with the Federal Trade Commission visit their website at www.ftc.gov/ or call 1-877-FTC-HELP.
“The jury is still out” Higuera reasoned on when and how Zeek investors will get their money back. “There were 1.5 million all over the world” involved in Zeek.
Words of advice to others doing online penny auction houses from Higuera-- “Be very cautious…it’s a risk like the stock market.”
This a developing story with more details to unfold nationally and locally on the web and in the news. Penny auction houses…. penniless can be an outcome as well.