9097 If you've been to eBay, you've probably seen the listings: offers to explain how you can get an iPod, or other expensive items, at a fraction of the cost. As usual, if it sounds to good to be true...

Thanks to Wired for posting a clear explanation of how the Cheap iPod scam works:

The eager bargain hunter is told not to bid on the item, but is directed instead to sites like My3Mobile, The Phone Matrix or Goraks.com, which offer iPods or cell phones as free gifts when products like CDs or eBooks are purchased.

The catch is that buyers only get their free iPod after more people sign up. When making a purchase, the buyer's name is added to a list. As new members join, names are shuffled up the list. When they reach the top, the iPod is dispatched

To speed up the process, buyers are often encouraged to recruit new members to join the scheme. And that's where all the eBay posts come from: Victims are using eBay to recruit new members.

It's a classic pyramid scheme, where the objective is not to sell a product, but to recruit new "members" and funnel their money up the pyramid. But hey! What's wrong with that? Well, besides being illegal, according to James Kohm, an attorney with the Federal Trade Commission, they also don't work for anyone who's not at the top of the pyramid:

Kohm noted that simple math shows these schemes cannot work. As the scheme grows, the number of new members needed to support it grows exponentially. The number of people needed to sustain the scheme would exceed the world population after about a dozen iterations. In practice, the schemes collapse much sooner than that, although early members sometimes get what's promised, Kohm said.

Save your pennies, save yourself the work, and best of all, avoid the scams.

Bill's been using Macs since the late 80s. When he's not making smartass remarks to amuse Kirk Hiner, he enjoys fighting for the user.

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