Citing a lack of community buy-in and negative feedback, the Hagensborg Water District is considering shelving a controversial online shopping program.
In response to emailed questions from The Coast Mountain News, Hagensborg Water District’s chair Ken Dunsworth confirmed that the district’s involvement with DubLi. Inc.’s “Angel Program” has failed to attract community membership or raise any significant revenue for the district.
“There have been three people from the community sign up under the shopping portal,” said Dunsworth. “The HWD has made $4.68 dollars under the Shopping Portal and Jim Smart has made $0.00 dollars.”
Jim Smart is the husband of Rosemary Smart, the CAO of the HWD.
Dunsworth also confirmed that, “due to the negative feedback regarding the shopping portal, the trustees have put the project on hold and Jim Smart has recommended that the account be closed.”
Jim Smart signed up the HWD for the Angel Program, and would have received commissions based on the sale of goods and DubLi memberships in the “Hagensborg Shopping Portal,” had local consumers signed on.
HWD Trustee Donald Mikkelson told CMNews in December that Rosemary Smart had visited the Valley in late September 2014 to deliver a presentation on the Angel Program. Smart, who previously held the CAO position, was recently re-hired in October.
The HWD sent a flyer to local residents in December inviting them to join the Angel Program.
DubLi, whose offices are located in Cyprus, describes itself as a “shopping and entertainment portal.” According to its website, DubLi receives commissions for purchases members make from merchants in DubLi’s shopping malls. The company claims it then passes this commission back to its members in the form of “Cashback.”
However, in order to access more benefits and cash returns, DubLi also encourages its customers to sign up to become “Premium” and “VIP” members at an additional cost, both of which were promoted in the HWD’s flyer.
The membership proposition is a red flag to Robert Fitzpatrick of North Carolina, the president of the non-profit consumer education group, Pyramid Scheme Alert. He has appeared on CBC’s Marketplace, NBC’s Dateline, and is the co-author of “False Profits: Seeking Financial and Spiritual Deliverance in Multi-Level Marketing and Pyramid Schemes.”
He was contacted by CMNews in March.
“Dubli is part of a large syndicate of companies known as “multi-level marketing,” [MLMs],” said Fitzpatrick. “It’s fair to say all MLMs should be considered suspect by the public for whether they are truly market-based sales companies or whether they are marketing a false business opportunity known as the 'endless chain.' ”
Fitzpatrick describes the endless chain as: a customer pays money to join (i.e. by purchasing a membership with the company) and is promised future income. However, that income is dependent on enrolling others.
“The endless chain is typical of a pyramid scheme,” explains Fitzpatrick. “The legality of it is questionable but the government has done virtually nothing to enforce the laws, and treats these companies as de-facto legal. I would say that Canada is particularly weak in this area of enforcement.”
“As a business venture you need to ask yourself, could you make money at this without recruiting someone else underneath you?” Fitzpatrick said. “If you can’t offer a product or service on your own and make money, then you are in an endless chain.”
DubLi does offer shopping, travel and entertainment services, but it also focuses on recruiting more people to join. For example, if a person purchases a VIP membership, which costs $99 per year, they are awarded $20 every time someone they refer also purchases a VIP membership.
The company also operates DubLi Network, in which people can become “Business Associates.” Participants earn money on customer commissions, and on the number of customers sign up. A standard Business Associate package starts at $99 USD plus a VIP Membership Package for $495. A “Team Member” or “Partner Program Accelerator” designation costs up to $2,475 USD.
The HWD did not promote the Business Associates option.
In a series of emailed questions subsequent to those sent on March 5, CMNews asked whether the HWD did any independent research regarding the business structure of DubLi Inc. The HWD declined to comment.
In an emailed response, HWD stated it “formally withdraws all our answers to your questions that have been previously supplied, and that the board has no comments to make at this time.”
The HWD has previously stated the district does not incur costs to partner with DubLi’s Angel Program, and that taxpayer dollars are not involved.
“To begin to address the increasing operational costs, the trustees decided to implement a shopping portal project to earn commissions from folks both inside and outside the valley who order goods and plan their vacations via the Internet,” said Dunsworth. “It cost the district nothing to set up, and it could be an alternative to increasing the water tolls for operational costs.”
But Fitzpatrick says that essentially misses the point.
“The fact is that the money has to come from somewhere, and it will come from the community and flow upstream,” he explained. “Meanwhile the affiliate is profiting – he has managed to get a government agency to do his marketing for him.”
While Dunsworth acknowledged that the “approach could have been better” in regards to communication about the Angel Program, he also said he hoped it wouldn’t detract from the real issues at hand.
“From all appearances, the public did not respond favorably to the program. At their March meeting, trustees will be discussing and considering whether or to cancel the shopping portal,” Dunsworth said. “The HWD Trustees don't want the shopping portal to detract from the real issue that needs to be discussed at the AGM – whether voters want to continue with the water treatment system as legislated under the Water Act or consider the replacement of our aging pipeline as the first priority under a possible changing government policy regarding water treatment.”