Fri, Feb. 17, 2006
Pay-to-Surf Inquiry Continues
Business Practices of 12dailypro Scrutinized
Andrew Shain, Consumer Writer
A Charlotte Internet marketing company under investigation for paying people to surf Web sites is going ahead with plans for a convention next week and is touting a new, similar business.
Since May, the company sold memberships costing up to $6,000 to an estimated 300,000 people worldwide. Members were promised daily returns of 12 percent for visiting a dozen Web sites for five minutes a day.
The Better Business Bureau and consumer regulators in at least one state, Georgia, say it appears 12dailypro generates most of its money by members recruiting new investors. Businesses based solely on getting other people to join can be illegal under state and federal law.
The FBI in North Carolina and Georgia regulators have begun preliminary probes into 12dailypro. StormPay, the payment service used by 12dailypro, is being investigated by regulators in Tennessee, where it is based.
StormPay and 12dailypro have denied any wrongdoing.
Problems erupted when StormPay froze accounts of 12dailypro members more than two weeks ago. StormPay said in statements that it took this step because of investigations into "what appears to be massive illegal" operations.
StormPay said it's not holding enough money to cover what 12dailypro owes members. Kathleen Calligan, head of the BBB of Middle Tennessee, said she's heard StormPay is holding about $50 million in 12dailypro money, but the 800 people who have filed complaints with her agency say they and others are owed $400 million.
StormPay officials did not respond to several interview requests this week. The company said in statements it will return money once investigations are complete.
Charis Johnson, head of 12dailypro, referred calls to her attorneys, who blamed StormPay for the problems. They said 12dailypro, headquartered off Tyvola Road near Interstate 77, is a legitimate business. The lawyers did not explain how the company made money. Johnson, a former Triad filmmaker now living in southwest Mecklenburg County, is cooperating with authorities, they said.
"She would like to get back to work," said Steve Carr, one of her attorneys.
Johnson is moving ahead despite the recent controversy.
Her company is sponsoring a convention next week in Charlotte. It's a chance for 500 Web administrators, surfers and promoters to "find new advertising and promotional opportunities," the company Web site said. Also promised is a question-and-answer session with 12dailypro staff.
Johnson also plans on launching HitsDaily Pro, which offers "small to medium sized businesses the opportunity to advertise directly to a captive audience of like-minded online business professionals who are qualified potential consumers."
Tom Bartholomy, president of the Charlotte-region Better Business Bureau, said it sounds exactly like 12dailypro. His agency has received more than 25 complaints about the company.
Spencer Barfuss, a teacher from Houston, wants to get back the $200 in fees he gave 12dailypro last month. StormPay stopped 12dailypro's payments before he was eligible to make his first withdrawal, which members can make within 12 days of signing up.
"They said you could look at some great products and services," he said about the pitch to surf sites. "It was a joke. I saw nothing but other dailypro sites."
Ralph Singer, like many 12dailypro members, blamed StormPay. The Cornelius truck driver said members would still get their money if StormPay hadn't frozen accounts.
Singer said he, his wife and daughter invested about $20,000 since joining 12dailypro. They withdrew $10,000, but have about $24,000 in frozen accounts.
Singer said he wondered whether 12dailypro was legitimate, but the money was good and thousands were joining. "They never missed a payment," he said, "until this."