Consumer Alert: HOPE prepaid gasoline card program
updated 6/7/97
June 7, 1997 update
The Cagey Consumer has received a report that the HOPE prepaid
fuel cards have begun to be distributed to people who previously
purchased them; these are not Visa
products, as it was previously indicated they would be, but
they are debit cards issued by Corestates Philadelphia National Bank
and should be recognized at gas stations that accept MAC cards.
If these are debit cards as reported, there is no assurance that the full
value of the debit cards which have been issued has been deposited in the
appropriate bank account.
HOPE's failure to effectively communicate a business plan that would
make it possible for these debit cards to be offered at a 10% discount
should raise serious concerns among people who are involved with or are
considering becoming involved with HOPE.
High Opportunity Petroleum Enterprise
has a double meaning:
the acronym HOPE suggests that you'll have to hope
that you ever get your money back if you participate, while the high opportunity
describes the situation from the perspective of the program's promoters.
The program purportedly enables you to purchase $50 in prepaid gasoline
cards for $45.
Although the HOPE web site now claims that you can become a distributor
by paying a $50 refundable fee (or no fee in some states), few if any
of the web sites of HOPE Independent Distributors mention this.
Instead, these web sites imply that you must purchase a "wholesale unit", consisting of
either a set of "collectable" prepaid fuel cards, or a combination of fuel
additive and a smaller quantity of collectable prepaid fuel cards.
Assuming you choose to buy only the collectable fuel cards, you will receive
cards with a face value of $150 for a purchase price of $295.
While the program literature suggests reselling the cards for $495,
it seems unlikely that there will be any significant premium over the $150
face value of these cards.
To recoup the $145 premium paid for the fuel cards, you would have to
purchase 29 of the $50 prepaid gas cards for $45 each.
If you pay only the $50 distributor fee, you can recoup your cost
by purchasing only 10 of these cards.
Keep in mind, however, that
program rules prohibit commercial use of these cards as well
as offering them for retail sale.
Mobil backs out
Until recently, the HOPE web site featured correspondence with Mobil officials
regarding its intention to purchase a large quantity of Mobil's GO
prepaid gas card.
HOPE removed the Mobil correspondence from its web site after the Mobil officials
identified began denying that they were doing business with HOPE.
It appears that Mobil decided it didn't want to be involved with
HOPE once it became aware of the details of the program.
HOPE program as bad as ever!
Even with the claim that purchase of a wholesale unit
is not required to become a HOPE distributor, each aspect
of the HOPE program is suspect:
- $50 prepaid fuel card for $45
The HOPE web sites of independent distributors
claim that the prepaid fuel card is obtained through
VISA, and will be accepted at any gas station that takes VISA.
(Does anybody know if this was ever or is still on the HOPE corporate web site?)
What they don't say is how they can afford this 10% discount.
It is unlikely that VISA would accept 90 cents on the dollar
for a prepaid card, since they typically would pay the merchant 97 cents
for each dollar charged.
Perhaps HOPE is counting on new distributors to invest
enough money in new cards to cover the losses on cards previously
sold.
If that's the case, HOPE would be following the lead of
Charles Ponzi.
- collectable fuel cards
Whether your business prints baseball cards for a couple of cents and
manages to sell them for a dime each, or manufactures a porcelain
figure for $5 and sells it for $500, the benefits of having your
product recognized as a collectable are enormous.
So the appeal to HOPE to define their product as a collectable is
also enormous, but it's total speculation to suggest that their
particular product will reach the point at which distributors
who pay the "wholesale" price will ever break even.
- fuel additive
Oil companies, automobile manufacturers, and consumer advocates alike
dispute the claims that fuel additives can boost fuel economy.
Believe them or don't, figure out the cost of adding a container
of HOPE's fuel additive to each tank, and you may think again.
If HOPE really has a product that will reduce the overall cost of
operating a vehicle with no negative side effects or will reduce
emissions without increasing the cost, then it stretches credibility
to believe that they would be unable to hire an independent laboratory
to demonstrate the results and obtain the interest of government
and business at all levels.
- training program
Become a HOPE distributor, take the training course, and then you
can receive training fees from other people recruited into your
organization!
But is there a difference between a training fee and a
recruiting fee?
Paying a fee to receive the right to collect fees from new
recruits is virtually the definition of a pyramid scheme.
- compensation plan
The major attraction for participants in HOPE is the opportunity
to receive bonus payments based on the volume of "wholesale units"
purchased by downline members and/or personal sales.
To effectively market a product, it's important to know what
your net cost is, but it's tough to tell this under the HOPE
compensation plan.
Even if your organization has enough volume that you would
be entitled to a bonus, you could lose your bonus because
the sales are not divided evenly enough between your downline
legs.
The overly-successful distributor faces another potential
way to miss out on earnings:
if a distributor is so successful that his organization sells
enough product that he would be entitled
to multiple bonuses in the same cycle on the same day, only
one of those bonuses is paid.
Thus the compensation received becomes dependent as to how
many orders for wholesale units come in on a particular day.
HOPE has created a program in which
the compensation that one receives is more dependent on chance
than is reasonably justified by business needs, thus creating
the potential for HOPE's program to be prosecuted as a lottery.
Scam or no scam?
To accept that HOPE's program is a bona fide multi-level marketing program,
you have to believe that there's a commercially-viable retail market
for the collectable gasoline cards or for the fuel additives.
If there is not a viable market for these products, then
this a just another money game.
Decide for yourself!
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