Fake Profit Claims

[Melissa]

[[Thread split from here - Clinton, Sept 7, 2012]]

Sorry to bump this old thread, one of the first threads I posted on, but this post is relevant.

We're looking into ways to minimise these listings, or at least flag them for unsuspecting buyers. Hope to have a solution soon.

Luke, if you work for Flippa, what have you done about this so far? Is there some sort of flag system now? Companies often get out of sticky situations by saying lessons have been learned or that they are working on improvements. It's very rare that they update the general public with what those improvements have been.

This seller is still on Flippa and he's made numerous sales since this thread started. Many of them have the same dishonest sleight of hand.

[OLechat]

Hi Melissa -- Luke no longer works for Flippa, so I'll answer this.

We no longer allow sites under 2 months to claim revenue at all. You can read about this here: http://flippa.com/blog/update-to-ter...bsite-revenue/

We have also implemented the suggestion above for revenue and profit fields going back 12 full months.

One more thing: an increasing number of sites use Verified AdSense for their revenue claims (when they use AdSense, of course). This data comes to us straight from Google.

[kvmcable]

Hi Melissa -- Luke no longer works for Flippa, so I'll answer this.

We no longer allow sites under 2 months to claim revenue at all. You can read about this here: http://flippa.com/blog/update-to-ter...bsite-revenue/

We have also implemented the suggestion above for revenue and profit fields going back 12 full months.

One more thing: an increasing number of sites use Verified AdSense for their revenue claims (when they use AdSense, of course). This data comes to us straight from Google.

With all due respect, having rules and enforcing rules are two completely different statements. You have many rules that would protect novice buyers but unfortunately those rules are rarely enforced with any sort of consistency.

I know one Flippa member that has reported more than 400 violations in the last few months. The majority of those reports were ignored and went without any sort of response. I'm willing to place a small wager that I could, at this very moment, find more than half of your current listings violate one rule or many rules. You know they're there and just a glance at one page shows potential revenue reported on many new listings. That took me 5 seconds to find.

There is no longer any point in reporting rule violations to Flippa because it's quite obvious Flippa doesn't want to hear them. When a member spends 4 hours of his time in one evening sending more than 100 current violations and is completely ignored then the message is loud and clear from Flippa; leave us alone and please don't show us the violations.

You have a two month revenue rule but if your support response is anything like it's been in the last 3 months, concerned members can report all the listings that violate that rule and not a darn thing will be done to most of them. I bet in less than an hour I could report more than 50 listings right now that violate just that one rule. If I'm lucky I'll get a response to less than 5 of those reports. You know and I know you have hundreds of listings on your site that violate that one rule. Throw in the potential revenue in title rule and the no revenue or traffic claims without evidence and you would have to correct or take down half of your listings.

Words are one thing - actions are entirely something else.

[kvmcable]

I took a glance at Flippa a couple minutes ago and spotted this gem. Not only does the listing violate several rules including the 2 month claimed revenue rule but he links to his other auctions that he claimed false revenue.

Site Established 26th August 2012

Title: Amazing - SOCIAL MEDIA BIZ GROSSED $2,310 IN 6 DAYS / FREE YEAR OF PAID TRAFFIC! (I just bet you did)

https://flippa.com/2812621-amazing-s...f-paid-traffic

Read his description and find him boasting of his other sites he sold on Flippa (each violating the 2 month rule) making thousands in the first weeks.

WOW * These similar sites have already made THOUSANDS OF DOLLARS! * WOW

https://flippa.com/2800795-hot-socia...instant-profit

https://flippa.com/2804473-hot-outso...-proof-ez-cash

https://flippa.com/2800795-hot-socia...instant-profit

Like I said before. Having rules and enforcing rules are two entirely different things.

[Clinton]

kvmcable, the thing is that there is no automated way to spot all scams and so some scams would filter through.

TBH, even if Flippa was able to stop every fake claim, they wouldn't want to do it because that would reduce the number of listings to a point where their business model wasn't sustainable anymore.

True that they can manually weed these out or at least respond to reports of violations and take action. But, seriously, how many listings do you estimate they'd have and by what percentage do you see their turnover drop ... if they did do this?

I've often argued that the marketplace shouldn't get involved in due diligence, that's the job of the buyer. But at the same time I do believe that blatant scams like shill bidding and violation of their own rules should be acted on ... and acted on seriously. No mild rap on the knuckles, but a banning of the account. One of the things I'm noticing with the seller research tool is that for several sellers my database has multiple listings in their name that lead to pages now removed from Flippa. So Flippa allows the listing, leaves it for I don't know how long and when it's discovered as shady it's quietly removed and there's no note anywhere to serve as indication to buyers that this seller posted dodgy sites in the past.

[kvmcable]

kvmcable, the thing is that there is no automated way to spot all scams and so some scams would filter through.

For a website that averages about 60 new listings a day I don't see any need for an automated solution. I could scan and report every new listing that violates a rule in less than an hour. If Flippa was serious about enforcing rules they could do it easily without additional staff or resources.

I agree with the rest of your comment with one exception. I don't believe the sellers would go anywhere and listings wouldn't drop over the long haul if rules were enforced. The sellers would step back in line and know rules are enforced and checked daily. It would only take a couple smacks to each violator to straighten out the marketplace. The unknown benefit is maybe some legitimate sellers would step back in and participate if the scammers weren't allowed all their false claims. Maybe legitimate sellers would return and pick up the lost revenue from tossing the scammers.

In our State, they recently enforced no smoking rule for restaurants and many businesses. I've heard both sides of the debate and many restaurants feared their business would die without the smoking customers patronage. Now more than 2 months since the law was enacted, the restaurants have reported either the same sales or a boost in sales. I read the recent report and not a single business reported loss in sales since the law took affect.

I think the same would happen on Flippa if the rules were enforced. What they loss in scammers would be filled quickly by legitimate sellers that now see there is a fair playing field. It's hard to play the game when the referees are just walking the field with blinders and missing all the penalties. Not every seller will stoop to blatant lying, fake traffic reports, fake revenue reports and otherwise scamming to sell a website.

[Clinton]

OK, we disagree on whether Flippa's business model can take the tightening we both see as necessary and desirable. Fair enough.

But why then do you suppose Flippa are not straightening out the marketplace? Do you think, perhaps, that they believe the model is not robust enough?

[kvmcable]

But why then do you suppose Flippa are not straightening out the marketplace? Do you think, perhaps, that they believe the model is not robust enough?

I gathered 3 reasons Flippa is lax in rule enforcement:

1.) The model has proven itself weak, not robust.
2.) They're unsure how many sellers will fill the shoes of those they toss.
3.) 30% drop in listings (and I'm sure revenue) in the last 4 months.

After watching several very good websites not gather significant bids by reputable brokers I'm confident many buyers with deep pockets have found another playground. Meathead123's latest listing was a steal (at least the latest I saw) and should have been an easy sale, IMO.

Flippa will soon need to do like eBay did when they pushed the envelope too far and offer free listing days or reduced listing days to fill the website back with inventory. Anyone that has participated on eBay any length of time knows every fall and around the Holiday season eBay fills their website with inventory using such a strategy. Flippa will be forced to do the same. Their inventory is dropping like a stone and the buyers are leaving. Flippa has forced sellers to pass through the expense of their recent price gouging and buyers have responded by leaving. Now Flippa announced they're shortening the bid extension for the buyer's benefit but honestly it has nothing to do with the buyers, IMO. It's trying to squeeze blood from a turnip. Reduce auction exposure to capitalize on relist fees. Tie up inventory that doesn't sell due to the reduced exposure, increasing listings on Flippa and increase relist revenue.

The next tool that needs created is the success rate tool. From what I see the success rate is now under 20% and perhaps less than 10% without multiple relists. Once the success rate tool shows true numbers of the marketplace success, Flippa will have to do a lot of justification of their $29 listing fee. Currently listings need an average of one list and two relists before a buyer pays. With the reduced exposure of the one hour extension I guess that number will double if not triple.

Flippa cried for months they wanted to be rid of their template listings (70% of their inventory) and it looks like they'll be there by the end of the year. What's the adage, be careful what you wish for?

Maybe Andrew can give us a sneak peek when Flippa will have their first reduced/free listing day. I imagine Matt and Mark aren't going to be happy with the current listing and revenue numbers but that's purely a guess.

[Clinton]

Thanks for your reply, kvmcable

The next tool that needs created is the success rate tool.

I could release such a tool tomorrow. I have all the details I need in the database to calculate historical success rates i.e. to show how many of the listings ended successfully and how many failed. But even though that would show a poor success rate, it still over-estimates successes as it doesn't take into account NPBs so I'm integrating the data with WHOIS queries to track change of ownership before marking a listing as successful. Once I'm happy with that I'll release the tool.

Flippa cried for months they wanted to be rid of their template listings (70% of their inventory) ...

I advised them to get rid of the templates over two years ago! But they thought it was a dumb idea. If they had done it then they wouldn't have become so reliant on the easy, short term income before the inevitable implosion and may have devoted more time and energy to attracting the better quality sites rather than partnering with sellers of MMO products to "educate" the general public.

Andrew may be away. I haven't heard from him or seen him around for days.