Review of ei42

This is one of a few examples of Business Opportunity Watch Reviews which are freely available for everyone to read on the public section of the website. The reason for making a small sample of the reviews freely available is to help you to decide if you want to join, and also to communicate some matters of general interest arising in the case of some of the reviews. All the other reviews are available only to members.

Review from Business Opportunity Watch Reviews
February 2009 Issue 24

ei42
Ei42 Limited
3 The Square
Manfield Avenue
Coventry
CV2 2QJ
www.ei42.com

- Extract from sales copy
- Review
- Your feedback

Extract from sales copy:

Even the Business opportunity is Free!

When you join Ei42 you not only get your very own personal online shopping centre but you also have the opportunity to choose to become an Independent Affiliate allowing you to run your own Ei42 business on a part-time or full-time basis.

In the early days you can develop a useful part-time income and over time there is a fantastic long term business that you are able to build if you wish to do so, simply by promoting Ei42 and helping others to do the same.

Becoming an Independent affiliate of Ei42 is easy and Free and allows you to access passive income generated from members of your team. You also get an Affiliate back office as part of your admin area and all of the help and support you might need. There is no easier way to work for yourself.

Every day Millions of people in the UK are doing their shopping online, and Ei42 offers them all the opportunity to receive an extra discount in the form of a personal rebate. Ei42 is an opportunity to sell millions of products to users and members who love the convenience and ease of use that Ei42 brings to their online shopping experience.

The Commission Plan

The Commission Plan is open to all members of Ei42, there is no qualification criteria and no commitment to buy anything.

You can earn two types of commission:

Personal Rebate
When you make a rebate eligible purchase through your Ei42 shop you will receive a personal rebate.

Team Commission
When you share Ei42 with your friends you automatically qualify to earn a percentage of the commissions generated from sales made by your whole team up to and including seven levels.

Member Benefits

- Your own Ei42 website with unique URL

- Online administration area

- Tell your friends email tool

- Online financials area to view your commissions and payments

- Affiliate newsletter with testimonials, and business building tips

- Access to downloadable marketing materials including banners, flyers, and other promotional tools

- Easy-to-follow user guides

- Access to online helpdesk

How much does it cost?

Incredibly, you get all of this, a complete personal online business for Free.

How can it be free?

There really isn't a catch. In just the same way that YouTube, Google and Hotmail are free services that make their money from advertising, we do exactly the same. It's as simple as that. You will not be charged when you join or in the future.

Review:

Ei42 explains its unusual name as follows:

"E is for Everything, I is for Internet, 42 is the Answer to Life the Universe and Everything .....go to Google and type '42' for proof."

Ei42 has several other unusual aspects. One is that it is unusual for a network marketing company not to be offering exclusive products. The exclusivity aspect is normally important for multi-level marketing businesses for three reasons:

1. Exclusive products acquire a certain prestige in your customers' minds. This is crucial not only for retailing but also for attracting people to become Consultants in your team; and
   
   
2. Your customers can only buy these products from you; and
   
   
3. You don't risk being embarrassed by a customer telling you that they can buy the same thing more cheaply elsewhere.
   

However, because ei42's business is so very different - being general Internet shopping of anything and everything - this lack of exclusivity is not a disadvantage.

Another unusual aspect which is of more concern, however, is that ei42 does not seem to be happy that it is a multi-level company. I could not find any mention of the fact that it is an MLM scheme anywhere on the site except in answer to the following question (buried away as question number 38) in the FAQ section:

The people at the top will make all the money?

Ei42 is not a pyramid scheme, we pay multi level commissions and sometimes people get confused about the difference between pyramid schemes (which are illegal) and businesses such as Ei42 with legal multi level payment structures.

All members are equal and you are all earning the same amount of money from each genuine sale through your team of friends in Ei42. No member can be promoted or elevated in any way to an income position above any other member. In addition Ei42 is free to all members.

Just for a moment, think of the first person that you introduced to Ei42. Now think, how is his or her situation is any different from yours? The answer is.... It's Not! It is EXACTLY the same and will remain so.

Everyone who joins Ei42 has the same equal opportunity. The business is structured in such a way that if everyone bought the same item from the same retailer in their own shop, on the same day, they would ALL earn the same commission payment.

The difference comes when people naturally refer and tell their friends about Ei42. Each person gets access to team commissions within 7 levels creating an equal opportunity for all.

This explanation and its statement that "All members are equal" doesn't make sense because the amount of commission varies according to what level you are on. So I wrote to Steve Dawson, the ei42 MD, to ask him about this, together with a number of other questions as shown at the end of this review.

I checked out a few items in an ei42 shop as follows:

1. Zanussi ZWF120701 White Washing Machine
Sold in the ei42 shop for £205.10 from Pixmania plus shipping £19.90, total £225.00, with Personal Rebate: 1.8%
Cheapest other deal I could find was at www.electrical123.com for £219.60 with free delivery i.e. a saving of 2.4% compared to the ei42 price

2. DKNY Ladies Stainless Steel Crystal Set D-Link and Silver Dial Watch
Sold in the ei42 shop from Goldsmiths for £125 Personal Rebate 5.4%
Sold on Amazon for £86.25 with free UK delivery i.e. a saving of 31% compared to the ei42 price

3. Hayter Harrier 48 Autodrive Rear Roller Lawn Mower
Sold in the ei42 shop at Mow Direct for £678.99 Personal Rebate 2.03%
Cheapest other deal found - www.mowerwarehouse £664.55 i.e. a saving of 2.1% compared to the ei42 price

4. Influx Linton Workstation Filing 3 Drawer
ei42 price £154.38 from Office Giant with Personal Rebate 3.6%
Cheapest other deal found was at www.suppliespartner.co.uk £142.79 i.e. a saving of 7.5% compared to the ei42 price

5. Raleigh Pioneer Metro LX Gents 2009
ei42 price £233.99 from Evans Cycles Personal Rebate 2.25%
No cheaper deal found. The best other price was at www.holcroscycles.com £229.99 plus £6.95 shipping (compared to free shipping at Evans Cycles), total £236.94 although this does also include free accessories worth £29.95.

These results were good, although not quite as reliable as the major price comparison websites, which is where I found most of my cheaper deals.

Also, a disadvantage of the ei42 site is that it's cumbersome to use it to search for the cheapest deal because if you enter your search term into the search box (e.g "Zanussi ZWF120701") it simply gives you a list of likely retailers, so that you then have to visit each individual merchant's shop to search for what you want. In the case of the Zanussi search, a list of 4 retailers resulted. In the case of a search for "DKNY ladies watch" it gave a list of 45 retailers, including shoe shops (two of which were positioned above Goldsmiths jewellers), even though I had put the search term in quotation marks, which usually ensures that you only get search results which match all the terms.

If customers have to go outside the ei42 site to do an efficient price comparison, then it must increase the risk that they will not return to ei42 to make their purchase.

No doubt this is because, although the choice for most items in the ei42 shop was very wide with 1380 retailers featured, ei42 has some way to go because Kelkoo has price comparisons for 3 million products and Ciao has price comparisons for 6 million products. However, these companies have been going for a while, whereas ei42 has only been going for a year.

The results of my test were that in only one case (the Raleigh bike) was ei42 host to the cheapest supplier on the Internet - Evans Cycles. In the case of the DKNY watch, ei42 was 31% more expensive than Amazon. In the other 3 cases, it was between 0.6% and 2.9% more expensive AFTER taking account of the rebate. So it's certainly not the case that you will always save money by buying from your ei42 shop. Not only are the personal rebates small, but so are the commission rates. For levels 1 to 6 the commission rates are 12.5% of the Personal Rebate and then at level 7 the rate jumps to 25%.

So, for example, if you brought someone into your ei42 team and he then bought a Hayter Harrier 48 Autodrive Rear Roller Lawn Mower in his ei42 shop then you would receive team commission of 12.5% x 2.03% x £678.99 = £1.30.

To make anything more than pin money with ei42, then, you'd need to recruit a large number of people. This is particularly so because it is generally the case with MLM schemes that a lot of the people you recruit will either not themselves recruit anyone or will recruit only 2 or 3 people.

Here are the questions we sent to Steve Dawson at ei42, with his replies inserted:

Dear Steve,

I've now reviewed ei42 and you invited me to contact you with any queries I had, so here goes. Sorry about the length of the questions, but they mainly arise because your scheme is rather an unusual one.

There are several aspects of the ei42 scheme which puzzle me, as follows.

I have the impression that you are unhappy with ei42's classification as a multi-level marketing scheme. I know that when we communicated about this last March you were adamant that ei42 was not an MLM. I told you that you needed to get specialist legal advice on this, but it does not seem to have happened very quickly because it was only towards the end of last year that the legal position of ei42 was regularised.

ei42 reply: I now accept that Ei42 is governed by the laws of MLM although it is generally now accepted that these laws are archaic as they were introduced in a very different time to address very different issues.

Against this background, various puzzling factors are as follows:

1. Although ei42 now has an agreement for distributors which is compliant with the law, nowhere on the ei42 site could I find an explanation that ei42 is a multi-level scheme except buried away in the FAQ section in answer to the question number 38 "The people at the top will make all the money?" in the list of questions. Why is this?

ei42 reply: Adding a full detailed explanation of how MLM works would not benefit anyone. There is a clear explanation of the commission structure contained with the plan written in a way that anyone can understand and then make their own informed decision. We ask people to read the plan before joining and we include a link on the signup form as well.

2. Why does the answer to question 38 say, "All members are equal" when in fact the amount of commission people receive from ei42 varies according to what level you are on. For example, someone on level 2 will receive commission down 2 levels, and someone on level 7 will receive commission down 7 levels.

ei42 reply: That is completely wrong Marian, I thought you understood MLM?

No MLM company works in the way you have described above. In effect every member is on their own level zero and they can build down 7 levels. So for example you could be on my level 7 which would be your level zero and you could build 7 levels down and so on.

In addition, the commission rate at level 7 is 25% of the rebate, which is double the commission rate of 12.5% which applies to all the other levels.

ei42 reply: That's just the plan. When you have done enough work you deserve a little extra so everyone's level 7 pays double commission. This is the most simple MLM plan you will find anywhere.

Also, the answer to this question says, "Just for a moment, think of the first person that you introduced to Ei42. Now think, how is his or her situation is any different from yours? The answer is.... It's Not! It is EXACTLY the same and will remain so." Surely, this is incorrect, because you will receive commission on the rebates of the first person that you introduce to ei42, but they won't receive commission on your rebates?

ei42 reply: I think you are clutching at straws with this one, but I have to agree with you that it's possible to misinterpret the way we have the phrased.

That would be better to read.... .... "It's Not! You all start with the same equal opportunity" I will get this amended.

2. The Statutory Warning is required to be displayed on any "advertisement which contains information likely to lead directly or indirectly to persons becoming participants in a trading scheme" and must "insofar as the advertisement contains any information as to the sources of the income for participants from participation in the trading scheme, appear together with such information and be given no less prominence than such information" (Trading Schemes Regulations 1997 section 3). "'Advertisement' means any advertisement, document, prospectus, circular or notice, whether transmitted in electronic or any other form, which promotes a trading scheme" (Trading Schemes Regulations 1997 section 2).

ei42 reply: I also thought this was the case but apparently according to our lawyers this is a common misinterpretation of the law that has somewhat become myth as companies over used the statutory warning in an effort to appear compliant. I'm happy that there is no better person to advise on this than the lawyer we engaged, who is a highly experienced specialist.

As you know, I am not a lawyer and therefore I must be mistaken here, but I expected to see this Statutory Warning on the following:

1. the Step 2 page of your website where you talk about the commissions a person receives from recommending ei42 to other people, and the commissions which people recruited by that person can receive; and

2. the Strike for Five page which talks about telling 5 friends about ei42 with its "opportunity of repeat commissions" and the fact that "there is no ceiling of possibility with commissions achievable"; and

3. on the Business Opportunity page of your website which talks about earning Team Commissions; and

4. on the Share page of your website which talks about Personal Commissions and Team Commissions

5. in the Commissions brochure which explains how to calculate Team Commission down to 7 levels; and

6. in the Business Plan brochure which explains about income streams and earning commissions from your network.

7. in the 3 Simple Steps to Success document which explains how you can earn commissions from recommendations.

ei42 reply: Our lawyer assures me that none of these require the warning as explained above. Rest assured that if I felt this was required then it would be there but there would be little business sense to me paying for very expensive lawyers and then ignoring the advice.

The Statutory Warning reads as follows:

1. It is illegal for a promoter or a participant in a trading scheme to persuade anyone to make a payment by promising benefits from getting others to join a scheme.

2. Do not be misled by claims that high earnings are easily achieved.

The Statutory Warning is important because it helps to bring people down to earth, to stop them being carried away by thoughts of how much commission they could earn with Power 7, for example, and as a result spending more money than they would normally have spent and later regretting it. It seems to me that this warning is particularly needed for your scheme because your Terms and Conditions do not include the usual limit for participants to only spend up to £200 in the first seven days of joining.

Please comment.

ei42 reply: This is not really an Ei42 answer but for your info....

I think you have totally misunderstood the £200 element of the law as far as the statutory warning goes. That refers to the maximum amount anyone can pay to join any MLM scheme and not to the maximum amount that they are allowed to spend in the first 7 days of joining. The maximum anyone can pay to join a scheme is £200 and they are entitled to a full refund within 14 days. They are also by law entitled to a full refund of any stock that they may have purchased for resale in any such scheme. Including any promotional material bought directly from the company.

3. Presumably the reason why the £200 limit does not apply is because the products or services accessed via the Ei42 shop are described in the Terms and Conditions as "third party products or services" which are not included in the ei42 scheme.

However, please explain how this can be so since the Trading Schemes Act 1996 says that "any reference to the provision or supply of goods or services by a person shall be construed as including a reference to the provision or supply of goods or services under arrangements to which that person is a party" (section 118 (9) of Part XI of the Fair Trading Act 1973 as amended by Chapter 32 of the Trading Schemes Act 1996).

Surely ei42 is a party to the arrangements by which products and services are supplied via the ei42 shops? For example, ei42 set up these arrangements in the first place, the shops are hosted on the ei42 website, and ei42 has negotiated the commission arrangements with the merchants - and presumably also ei42 receives a commission cut itself on all sales through the shops? So how can they escape being included in the scheme?

No doubt this has been puzzling some readers, too, and I'm sure there is a proper explanation which I'd be interested to hear.

ei42 reply: Again, the £200 limit as I have just explained above is not a maximum spend it is the maximum you can pay to join any MLM scheme. The cost of joining Ei42 is FREE so we would have nothing to refund. Nevertheless this does not exclude us from item 3 of the statutory warning. The law states that we must include the warning EXACTLY in this way. It must be displayed in text of the same font size and type and be placed directly above the submit button, which it is.

- It is illegal for a promoter or a participant in a trading scheme to persuade anyone to make a payment by promising benefits from getting others to join a scheme.
- Do not be misled by claims that high earnings are easily achieved.
- If you sign this contract you have 14 days in which to cancel and get your money back.

As you can see item 3 says "If you sign this contract you have 14 days in which to cancel and get your money back". Even though they pay nothing. The law does not even allow us to put a note of explanation next to this which would be nice to do as I am sure many people do not join when they get to that point as the legal wording reads as if they are about to pay for something (which they are not). Still, the law is the law so we comply with it as you can see here
https://uk.ei42.com/friends/index.php?req=newaccount&pid=1&sc=

4. The ei42 Terms and Conditions require participants to "abide by all DSA codes of conduct".

There is a DSA Code of Conduct for companies, too. According to the DSA website, a key feature of the DSA Code of Business Conduct for MLM companies is that it "Demands truthfulness and openness in all recruitment advertisements" and "Prohibits unreasonable investments". In view of the fact that your website hardly explains that ei42 is a multi-level scheme and the fact that a recruit could get carried away with making a lot of initial purchases since the normal £200 limit does not seem to apply, do you feel that ei42 meets the DSA codes?

ei42 reply: Yes, and for your information we were finally accepted into the DSA on Monday 26th Feb having applied 1 year ago. As you will be aware Richard Berry is very thorough with his investigations. We will be visible on their website shortly.

5. What happens to Team Commissions when someone's team goes beyond 7 levels?

ei42 reply: As explained above, for every individual commissions are paid to 7 levels. Anyone on your level 7 is their level zero so they will simply build their own 7 levels which is perpetual.

6. How do you feel that ei42 will weather the recession? With people spending less and looking for the best bargains, do you feel that the rebates offered by your suppliers will be adequate to persuade people to buy through your scheme rather than shopping around elsewhere for the best bargains?

ei42 reply: I liken Ei42 to a Tesco club card or other such loyalty cards. We all know that we earn only a tiny rebate when we use the card but we still collect the points because over time they add up. In terms of weathering the recession Ei42 is placed exceptionally well. We are not trying to persuade any member to buy from any particular retailer. Our members make their own choices about who and what they buy. We say "Buy what you want - when you want - from who you want" this allows our members to shop around for the best bargain and then buy it via their own Ei42 shop and earn an additional rebate.

I look forward to your replies, which will be posted with the review on the BOW site.

Yours sincerely
Marian Owen
BOW

I hear what Steve Dawson says but I still can't see why he's saying that for the purposes of the trading schemes legislation the ei42 scheme is limited to the goods and services provided by ei42 (i.e the supply of the websites and the arrangements for paying the commission down the various levels).

The definitions of "trading scheme", "promoter" and "goods and services" are drawn very widely. For example, section 118(9) of the Fair Trading Act 1973 says, "In this section any reference to the provision or supply of goods or services by a person shall be construed as including a reference to the provision or supply of goods or services under arrangements to which that person is a party". and section 118(3)(a) says, "[the condition in this subsection is that-] goods or services, or both, are to be provided by the person promoting the scheme (in this Part of this Act referred to as "the promoter") or, in the case of a scheme promoted by two or more persons acting in concert (in this Part of this Act referred to as "the promoters"), by one or more of those persons".

Therefore, on my reading, for the purposes of the trading schemes legislation the ei42 scheme also includes the goods and services provided by the retail companies etc. advertising on the ei42 sites, who also promote their own commission rates on the sites. So the retail companies are co-promoters of the scheme.

On my interpretation, the limit on spending more than £200 on purchases in the shops in the first seven days would apply, as would the participants' 90-day right to send them back for a refund.

No doubt other MLM companies would like to avoid the £200 spending limit and the 90-day refund right if they could. I had assumed that this was the reason why the legislation was worded so widely, to catch arrangements which might be made between a company setting up an MLM scheme and a separate company which provides the goods and services.

Obviously, however, Steve has had the highest level of specialist legal advice, and Richard Berry of the DSA has also thoroughly investigated the scheme, so there must be some let-out which I've not found which means that my interpretation is wrong.

Putting this issue to one side, my conclusions are that the strong points of ei42 are the fact that it's free to join, which certainly helps to make it easy to sell, it's of general appeal to consumers because it covers the whole range of Internet shopping, and the company is managed in an efficient and business-like fashion.

Congratulations to ei42 on being accepted into the DSA.

The weak points are the fact that it's unlikely to pay you more than pocket money unless you are heavily into recruiting. And recruiting is not going to be easy with a scheme which it seems to me is being very coy about what it really is.

If ei42 were more open about its nature, I would give it a rating of 7 out of 10. As it is, I'm giving it 6, which is still quite a good mark by BOW standards. (Of course, this is on the basis that my interpretation of the trading schemes legislation is incorrect.)

Rating:

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