Return of the Matrix

The Office of Fair Trading (OFT) has warned conusmers to beware of websites offering free gifts in return for buying a low-value product.

Known as 'matrix' schemes, these websites are very popular with teenagers because they promise people the chance of getting a valuable 'free gift', such as a mobile phone or iPod, so long as they spend £20 on a low-value product such as a CD containing ring-tones and games.

But consumers could have a long wait for this freebie, if they get it at all.

The matrix works by sending the person at the top of the list their 'free gift' only after a prescribed number of new recruits has signed up.The prescribed number varies according to the choice of 'free gift' but can be as great as 100.

Once the 'free gift' has been sent, the remaining members each move up one place on the waiting list. But the person next in line for their gift has to wait until the prescribed number of new recruits has signed up again.

This is leading people to try and boost their chances. In order to get more people on board, they are placing misleading adverts on auction sites said the OFT.

John Vickers, OFT Chairman, said:"These waiting-list schemes require many more people to join than will ever receive their 'free gift'. The schemes will ultimately collapse and the vast majority of people who have joined will lose out".

One company involved in this type of promotion has already been forced to shut up shop. Liquorice Mix promoted a website selling CDs, the purchase of which entitled people to the chance of free electronic gift. It was wound up in the public interest on 18 August 2004 following an investigation carried out by the Department of Trade and Industry Companies Investigation Branch.