Larus Palmi Magnusson has launched MyCenterBid, a new penny auction website based in Europe. This marks the latest rebranding for a business previously known as Bidify, which operated a model similar to the $600 million Zeek Rewards Ponzi scheme shut down by the SEC in 2012.
The Securities and Exchange Commission closed Zeek Rewards in 2012, citing it as a Ponzi scheme. Bidify used a nearly identical business model at the time. Bidify's management quickly removed its Ponzi points system and revised its compensation plan twice within one week. But the SEC's findings on Zeek Rewards affected the entire sector. Investigators found 98 percent of Zeek's revenue came from affiliate purchases, not actual customers. This revelation caused the MLM penny auction market to collapse.
Bidify abandoned retail sales by December 2012. It shifted to an affiliate-funded structure, which lasted for six months.
Larus Palmi Magnusson then decided to relaunch. He rebranded the entire operation, moving the company out of the United States. He launched the new mycenterbid.eu website. Five compensation plan changes later, the business structure remains largely the same.
The core product, now called CenterBid, is a penny auction engine. Bids begin at 0.50 EUR each. Affiliates purchase bid packs priced from 50 EUR to 300 EUR. Each bid costs 1 EUR and is tracked as "personal volume" or PV in commission documents. MyCenterBid pays commissions through three methods: daily binary commissions, weekly volume-based payments, and a daily "Customer Acquisition Bonus." The binary system places each affiliate at the top of a tree, with two legs branching downwards indefinitely. Filling these positions requires recruitment, either directly or by recruiting others who then recruit.
This multi-level marketing structure ensures most participants earn nothing. The system demands continuous recruitment to sustain payments to those at higher levels. Without new recruits buying bid packs, the entire operation becomes unsustainable. The move offshore signals the company's awareness that it cannot openly operate in the United States. The SEC's case against Zeek Rewards set a precedent. Regulators now understand that a business generating 98 percent of its revenue from people trying to earn money, rather than from actual product sales, functions as a recruitment scheme disguised as retail.
Magnusson has relaunched this business five times, each instance involving a name change, adjusted rules, and a new location. He has not altered the fundamental economics, which require a constant influx of new money from new recruits to remain solvent.