I have been asked how the scams I
regularly out on this site can make money if they don't steal your credit card
information (and to my knowledge, they don't) and if they refund your money.
Indeed, people have said to me if
refund the money, they can't be a scam, right?
Wrong.
- They are scams because they all claim to cure illnesses
but don't.
- They are scams because many contain harmful substances,
which in some cases are actually contraindicated for the disease they
claim to cure.
- They are scams because -in EVERY case- the same set of
ingredients is touted as a "cure" for many different unrelated
conditions and claims of "research"
and "results" listed on the sites are untrue.
Let's break down how some of them
work: I will take a few examples, starting with Oslo Health Solutions
(read more about them here, here, here and here) and Berlin Homeo Products.
Both companies have almost 300 sites
(that I know about). Each site claims
to cure a different disease, ranging from Abdominal Adhesions to Wiskott
Aldrich Syndrome (no diseases starting with X, Y or Z apparently). Each
company therefore works on volume and makes money in at least three ways:
- Profit: I guarantee you the product they ship does not
cost anywhere near the selling price. They probably resell cheap vitamins (I hope) ...or something (I hope not!) and have at least a 900%
markup on those pills.
- Fraud: You send the money and they don't send you any product. Some people won't apply
for a refund or will be refused a refund.
- Investment of takings in a high-interest account: They
hold your money as long as possible before issuing a refund, then they
keep the interest earned from YOUR money.
Oslo Health Solutions:
I have Ehlers-Danlos Syndrome. Let's
assume I order Danlotab (don't worry, some of the pages are for Angiotab
because they are scammers and cut-and-paste everything, but we'll call it
all Danlotab, for the purposes of this exercise). Let's say I order the product on
April 15th using my tax refund money, because I am sick and can't afford to
spend $80 out of my regular income.
By May 15th, I haven't received
anything, so I e-mail OHS in "Norway" (but it's really Pakistan). I
have to e-mail them, because I can't call them. I assume there are several
reasons for this, such as:
- No need for expensive, English-speaking
phone operators
- It is much easier to fob someone off
via e-mail than on the phone
- People may become suspicious when
the "Norwegian" company has a Pakistani phone number (and accents)
This is my (imagined) e-mail exchange
with Oslo Health Solutions (OHS): I start around mid-May, when a month has gone
by without hearing/receiving anything.
Me: "Dear Oslo, I haven't
received my Danlotab. You charged my card on April 16th, so I am assuming that
product shipped, right?"
OHS: "Yes. it shipped (untrue).
It may be hung up in Customs. Give it two more weeks"
June 1: I e-mail again:
Me: "I still haven't received
my Danlotab."
OHS: "Very sorry about that,
OSM, we'll ship you out another"
June 14th, I get my credit card
statement. I was charged for the additional pills.
Me: "You charged me for two sets of tablets, and I have received
none."
OHS: Our mistake. We shouldn't have
charged you for that second set. We will credit you that amount. Your new
replacement pills are on the way" The extra $80 is credited, but
they still have the original $80.
July 1 -no sign of the second order
(because it wasn't sent).
Me: "Dear OHS, I still have not
received the second shipment. I started all this in APRIL! Can you cancel
my order please?"
OHS: "We did send it. We don't know why you didn't get it! Maybe someone in
customs stopped it because *whine* this horrible blogger has been saying nasty
and untrue thing about us. Tell you what: Why don't we send you out another one
-free of charge?"
Me: "Oh OK"
August 1: I finally realize nothing
is coming and cancel the order. The refund the remaining $80 to my account
-after several prompts- around August 15th
In this scenario, which is fictitious
but plausible (based on the feedback I have received from many, many
"scamees"), I was out $80 for 4 months and out $160 for two weeks. I received no product, but I got my money
back eventually.
So was I really scammed if I got my
money back?
Definitely.
How The Scams Work.
Did you know what is the base
interest rate in Pakistan? No? Well it
is 13% at the moment. It recently went DOWN.
So we'll assume that -allowing for
time differences- OHS deposited my $80 in their high-yield saving account on
April 16th and returned it on August 15th. Plus they had an additional
$80 for two weeks. They had my money earning interest for them
all this time. If we assume they were earning the base rate of interest plus two
points (15%), they made $0.99 per month from me (actually more, as I just calculated the
simple interest rate and the bank would use compounded rates), plus 49¢ for
that "accidental" overcharge. That's a total of $4.44. In return for this, they did nothing at all
except answer a few e-mails. For every
day they stalled me, they earned money on my money at a rate of a dollar per
month. And I might think it's OK because I got my money back.
A dollar per month probably doesn't
sound like a lot to you. This is where volume comes in:
Oslo Health Solutions have 282 sites
that I have identified, each one for a different disease. If we conservatively
estimate that the company gets 10 orders per site on average, that's 282 x 10
which is 2,820 orders per month. For $79.00 EACH! that works out at $222,780.00
per month in sales -almost a quarter of a million dollars per month, $2.6
million USD per year. The interest return on that lot is a lot better than a
buck a month.
Even if they refund ALL of these
orders (which they won't); if we allow
for around 4 months to refund, this means that they will make
approximately $1,113.90 in pure profit on interest rates alone. Much more, in
fact because the interest rates should be compounded. And that's not accounting
for any "accidental" double billing.
Costs
OK, we know they do ship some product, so they do have some
costs. If we assume they ship for around half the orders received, at a cost of
$3 per unit and $5 S&H, which makes $8 cost per order shipped. For half
of the orders; that is $40 cost per site per month. Therefore 40 x 282 = $11,280.00
in direct outgoing costs per unit There are more costs too: personnel, website
costs, advertising etc, but I am going to concentrate on direct costs relating
to YOU.
Refunds
Scammers rely on a very simple
premise: A certain percentage of customers won't even request a refund. This is
especially true of people who are sick, because they don't have the energy to
fight; or who have an embarrassing condition. This is the true evil genius of
these scams who target the sick. Some people are too sick (or have died) and
can't demand a refund! Free money for the scammers! Even if they have
shipped their shitty product, they are only down a few bucks. Except they often
don't ship anything, so they get all the money AND the 13% interest! Yay!
We will assume that 5 people out of
10 will not request or will be denied a refund. This is a conservative
estimate. My guess is that it is more like 7 out of 10. So In our little
scenario, refunds are approximately $111,390.00 on the higher rate of
refunds. If I assume a much lower refund rate of 3 returns for every 10 orders,
that number goes down to $66,834.00. So OHS are incented to hold your money as
long as possible and deny refunds as often as they can.
To recap, I reckon OHS could easily
be clearing the following figures (more if their sales are higher)
|
Price per unit
|
$79.00
|
|
Number of sites
|
282
|
|
Units ordered per month*
|
2,820
|
|
Monthly income/deposits
|
$222,780.00
|
|
Interest earned 4/mos
|
$1,113.90
|
|
Estimated costs (50%)**
|
$11,280.00
|
|
Assume refunds @ 50%
|
$111.390.00
|
|
Net profit
|
$111,249.00
|
Wow! 100 grand profit per month, =$1.2
million profit per year. And like I said, these estimates -all of them- are very
conservative. If I assume that all orders are refunded and they
"only" make money off the interest; the number is $13 grand.
Berlin Homeo Products:
If I apply the same principals to
Berlin Homeo Products; those of the dodgy green stuff that is supposed to cure 285 different diseases, including Cushing's disease, Parkinson's disease and some forms of cancer and who sell these "cures" for $85 apiece (they
have a cheaper, 30 day supply, but all the sites recommend at least 60 days,
therefore I chose the higher number) the numbers look like this:
|
Price per unit
|
$85.00
|
|
Number of sites
|
285
|
|
Units ordered per month*
|
2,850
|
|
Monthly income/deposits
|
$242,250.00
|
|
Interest earned 4/mos
|
$12,112.00
|
|
Estimated costs (50%)**
|
$11,400.00
|
|
Assume refunds @ 50%
|
$121.125.00
|
|
Net profit
|
$101,075.38
|
But wait: As both these companies
are covered by SPAH, These two companies could conceivably be linked. And if
they are linked, to each other, they are linked to Botanical Sources. The other
company usually found on the SPAH list of "independent evaluations".
Botanical Sources
This um... "brand" has 186 sites
(that I know) and they also sell two sizes. I chose the smaller size here,
because -although there was no timeframe specified for treatment, that size
corresponded to the grace period for the refund. Applying the same figures to them gives us a potential
income for them of $1.45 million per annum.
...and when we add all three of those together, using the
original assumptions, we get much more interesting figures:
753 websites
$76.33 average price for each
product
$7 million per annum, of which 3.5
million is profit.
Someone in Pakistan is living very high off the hog indeed. And all of it made off the sick and desperate.
Please please don't be sucked in to
these scams. Even if you do get your money back, an evil person will profit.
