There are sites on the internet which promise to pay money for just referring traffic.

  • How trustworthy these are and what are their sources of income?
  • Are these sites worthwhile to consider for extra income?
  • What do I need to consider tax wise?
  • Is there a best practice for handling the income?
  • Is there a good test to determine what is and isn't a scam?
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    @littleadv - I would've deleted this, but if you want to take a shot at an interesting answer I certainly believe you could. I can see discussing the best practices for web or meatspace referral programs, the tax implications or how to do earn extra income with them safely and honestly. – MrChrister Dec 14 '12 at 19:53
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Yeah, I'll take the challenge...:)

How trustworthy these are and what are their sources of income?

These are in fact two separate questions, but the answers are related. How trustworthy? As trustworthy as they're clear about their own sources of income. If you cannot find any clue as to why, what for and how they're paying you - you probably should walk away. What's too good to be true usually is indeed too good to be true.

For those of the sites that I know of their sources of income, it is usually advertisements and surveys. To get paid, you have to watch advertisements and/or answer surveys. I know of some sites who are legit, and pay people (not money, but gift cards, airline miles, etc) for participating in surveys. My own HMO (Kaiser in California) in fact pays (small amounts) to members who participate in enough surveys, so its legit.

Are these sites worthwhile to consider for extra income?

Not something you could live off, but definitely can get you enough gift cards for your weekly trip to Starbucks.

What do I need to consider tax wise?

Usually the amounts are very low, and are not paid in cash. While it is income, I doubt the IRS will chase you if you don't report the $20 Amazon gift card you got from there. It should, strictly speaking, be reported (probably as hobby income) on your tax return. Most people don't bother dealing with such small amounts though. In some cases (like the HMO I mentioned), its basically a rebate of the money paid (you pay your copays, deductibles etc. Since the surveys are only for members, you basically get your money back, not additional income). This is in fact similar to credit card rebates.

Is there a best practice for handling the income?

If we're talking about significant amounts (more than $20-30 a year), then you need to keep track of the income and related expenses, and report it as any other business income on your taxes, Schedule C.

Is there a good test to determine what is and isn't a scam?

As I said - if it looks too good to be true - it most likely is. If you're required to provide your personal/financial information without any explanation as to why, what it will be used for, and why and what for you're going to be paid - I'd walk away. Otherwise, you can also check Internet reviews, BBB ratings, FTC information and the relevant state agencies and consumer watchdogs (for example: http://www.scamadviser.com) whether they've heard of that particular site, and what is the information they have on it.

A very good sign for a scam is contact information. Do they have a phone number to call to? Is it in your own country? If its not in your own country - definitely go away (for example the original link that was in the question pointed to a service whose phone number is in the UK, but listed address is in Los Angeles, CA. A clear sign of a scam). If they do have a phone number - try it, talk to them, call several times and see how many different people you're going to talk to. If its always the same person - run and hide. Do they have an address? If not - walk away. If they do - look it up. Is it a PMB/POB? A "virtual" office? Or do they have a proper office set up, which you can see on the map and in the listings as their office?

And of course your guts. If your guts tell you its a scam - it very likely is.

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    Very good. I'd also toss if that if it isn't clear how the company makes money, then it isn't a good bet. If the money comes from signing up new agents, and not selling a good or service, it is best to stay away. – MrChrister Dec 15 '12 at 3:59
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    Yes, definitely. That would be a "pyramid" scheme, illegal in most countries. Of course, no promoter would admit that that's what it is, but once you understand where the money comes from, its much easier to identify than, say, a Ponzi scheme. – littleadv Dec 15 '12 at 5:38

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