Hotnews No. 100 Unveiling the Risks of “Automatic Passive Income” Scheme
In recent months, a new scheme called Automatic Passive Income (API) has gained attention, attracting individuals with promises of easy earnings. However, a closer look at the operation behind API raises significant concerns about its legitimacy.
What’s Behind the “Automatic Passive Income”?
API operates on a multi-level marketing (MLM) structure, claiming to generate passive income through online stores. The process revolves around purchasing positions within a tiered matrix system (3×3 and 5×3), with commissions earned based on the recruitment of new affiliates. The initial investment is low—around $50—but the system’s sustainability and legality are questionable.
What stands out is that API does not offer tangible products or services, relying solely on membership recruitment for income. This structure closely resembles a Ponzi scheme, where returns are paid from the money invested by newer members rather than from legitimate business profits. Without proper regulation or financial oversight, API’s claims about passive income ranging from $180 to $300 per month are hard to validate.
Dubious Connections and Unclear Ownership
The API Business website is privately registered and lacks transparency about its ownership or executive structure, which is a red flag for potential investors. Further investigation reveals links to the Sparissimo platform, a now-defunct e-commerce site, raising doubts about API’s business operations. API also operates under vague affiliations with Switzerland and Dubai, both locations known for their limited regulatory scrutiny of MLM activities, adding another layer of concern.
Regulatory Issues and Lack of Transparency
Despite promoting investment returns, API fails to provide any evidence of registration with financial authorities in any jurisdiction. This lack of regulatory oversight makes it difficult to trust its operations and the promised returns.
The scheme’s business model does not focus on actual sales or product transactions, which should be a primary indicator of a legitimate business. Instead, its success relies almost entirely on the continuous recruitment of new members, a characteristic of pyramid schemes.
Red Flags for Investors
- Lack of tangible products: API doesn’t sell real goods or services, raising the likelihood of it being a Ponzi or pyramid scheme.
- Unverifiable claims of passive income: The promise of passive earnings through online stores with minimal work is unrealistic without any substantiated proof.
- Dubious connections: The links to the Sparissimo platform and offshore locations further suggest that API may be part of a broader web of questionable MLM operations.
- Regulatory evasion: The absence of financial regulations or licenses is a major red flag.
Conclusion: Proceed with Caution
While the initial investment required may seem small, the underlying structure and promises of high passive income should raise alarms. As with many MLM-based schemes, the focus on recruitment over product sales typically signals an impending collapse, leaving the majority of participants at a loss once the recruitment slows down.
As always, it’s essential for potential investors to research thoroughly and approach opportunities like API with caution.
Your DefendMe Team