Hey Jon, thanks for the reply.
I agree that any company can fail, and at least for myself, I don't think that is a reason to run the founders, or the concept through the mud. In the case of gas savings mlms, I can definitely concur with Watchdog as we have literally picked them apart on numerous occasions (companies that were found to be less than authentic), and I want to make it clear that as of yet, and so long as everyone is reporting that they got what they earned, there is no reason to clump FillerUp Club in with them, but keep in mind it sort of brings up a bit of cynicism.
As far as the house goes, I agree with you that not every legit business should, or does have a large office, 100 man staff and a huge communications network, I'm just pointing out that it looks a little odd to be quite that small, yet manage so many transactions. I wasn't certain if you read Watchdog's breakdown of past systems, so I wanted to re-post it here just to get your response. One thing I disagree with you about however is that you feel you think you know how the rebates work, but won't say so simply to protect a trade secret, but in some ways that sort of adds to the shadowy suspicious surrounding companies like this. Certainly for a company you seem to respect, I would think in the interest of keeping their name clean, you might sort of debunk the more cynical ideas. There are few avenues here on these forums that such trade secrets could ever impact you or Fillerup Club in any way. Helping to explain rebates however, would help us understand those concepts and would directly add to the integrity of Fillerup Club, especially since so many people come here to research companies in an effort to better their investment options. I guess I can't imagine why would prefer not to.
Anyway, here is Watchdog's post about gas rebate companies:
Every time gas prices spike up, another 50% gas deal or half off gas deal springs up.
What do they all have in common?
None of them ever survive.
Does that make FillerUp Club ( FillerupClub.com ) a scam? Maybe, maybe
not. But I'll stake my track record on identifying businesses that are
going to fail against their operation - the last version I saw crash and
burn was virtually identical ( as in essentially indistinguishable )
from the FillerUp Club offering:
- Join the Club! Free trial membership, and only $10 per month if you decide to stay!
- Stock your 'Fuel Tank' only one time with Gas Vouchers. (details inside)
- Continue to purchase gasoline at any station in the USA or Canada.
- Send your receipt(s) to the FillerUpClub.
- Receive a rebate check for up to 50% of your original cost.
You sent in your receipt with a voucher from the fuel book. You were
supposed to get a check back. A few people did initially get checks
back. The owner of the deal went to jail. The book was sold via MLM as
well as a fundraising booklet.
The reason the deal collapses is because this entire deal is based on a breakage model.
FillerUp Club Breakage Model
A "breakage model" is a business model where a benefit is provided -
usually a dramatic savings - based on a mathematic model that suggest
that less people will redeem the coupon, voucher or certificate than
actually purchase the certificate. The product or service can be sold
for less than its actual cost, because the "breakage" from revenue
earned from unused vouchers is anticipated to exceed the amount paid out
in savings and "benefits".
In this case the "benefit" is 50% off gas. The revenue comes from the fees payed for the certificates.
FillerUp Club Math
Based on information posted elsewhere online, the fees for Fillerup Club are as follows:
$10 per month membership fee
Voucher Fees ( required to get 'rebates' on your gas purchases via FillerUp Club )
Three Voucher Choices:
$200 - Allows a maximum of $66 per month in gas rebates
$400 - Allows a maximum of $132 per month in gas rebates
$600 - Allows a maximum of $200 per month in gas rebates
FillerUp Club claims the vouchers do not expire during that period.
On the face of it, it sounds great, right?
Spend $600 for a six month voucher, and get back $1200 by submitting
gas receipts each month of $200 for the six month period the voucher is
valid.
Let's simplify the program and say there are only 10 active members.
Each member pays $10 per month for the first six months.
Each member pays $600 when they enroll for the maximum voucher benefit.
Company revenue is $660 per member ( to keep it simple ).
The company has generated $6600 in revenue.
If the first 5 people in the FillerUp Club each submit their vouchers
and gas receipts for the maximum amount every month for the first six
months, the company will have paid out $6000. ( 5 people times $200 =
$1000 x 6 months = $6000 )
Leaving a whopping $600 for operating expenses. And that's at a 50% breakage.
But if it's such an awesome deal, why would only 50% of the people use it?
Let's say that 6 out of the 10 people use it.
Uh oh.
That's $1200 a month the company must pay out in gas benefits for a
total of $7200 meaning Joseph Dutton must take $600 out of his own
pocket to pay the gas vouchers submitted by these people. And that's at
40% breakage...
Wait a minute. What about commissions? How is the company going to
pay MLM Commissions if they will be going bankrupt if only 6 out of 10
people use the vouchers?
Here's where it gets dicey ( and potentially illegal ). Ask your
FillerUp Club rep how this breakage math can possibly work, and they are
likely to tell you "But new people are signing up all the time! There's
tons of money coming in, just look at my commission check from new
enrollments..."
FillerUp Club Ponzi?
If a company is paying benefits owed to members based on fees paid by new members, it's a ponzi scheme.
Every time I have seen this fuel deal pop up, this is exactly how it
ran, and exactly how it failed. And how at least one executive went to
jail.
Consumers ( and MLM Reps ) may be willing to forget about a $10 a
month charge on their credit card - millions of AOL ( America Online )
users did exactly that for years after they stopped using AOLs service -
but it's very unlikely anyone in this economy is going to forget about a
$600 dollar gas voucher they purchased which promises to pay them $200 a
month back on their gas purchases for six months.
In order to be profitable and persist as a company, what kind of breakage does FillerUp Club need to stay in business?
Add in normal expenses. Rent. Payroll. Phones. Taxes. Can they survive only with 70% breakage? 80%?
Is there some other magic ingredient to the FillerUp Club business model that I'm not aware of? If so, please enlighten me here.
FillerUp Club Red Flags
Who does the merchant processing for FIllerUp Club voucher purchases?
( If the company folds, will you be able to get your money back from
your credit card company )
What is the business history? ( how long in business, business rating, etc )
Who are the owners, and what is their success ( or failure ) history?