Here's why 100% Cashback Schemes Are a Scam

Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Albert Einstein said, "God doesn't play chance". Indian Startups said "But we do".


Every single day there is one new startup that is spending lacs of rupees on advertisements in print, billboards and virtually consuming their resources assuming consumers are actually dumb enough to fall for their 100% cash back schemes. Unfortunately, the oldest trick in the book has also travelled into the start-ups phase as well. Instead of focusing on a sustainable model of schemes, tons of revenue is wasted on silly luck-based schemes and advertising about them. In a cut throat world, headlines like "Win and iPad for Rs 1 only!" unfortunately have more eye-ball grabbing powers than "Get guaranteed 10% off everything, all day everyday".

The latest in line is Jabong, with its "Every Shopper No 5 Shops for Free" scheme. simultaneously, as is the rule with all start-ups, all rivals must have a nearly equivalent schemes as well, which they do. PayTM is also offering a similar 100% cash back scheme. Here's 100% cash backs are scams that should die soon:

False advertising

They are misleading and using catchy big photographs and colors to entice the user into thinking ads are being truthful. The fact of the matter is that iPad isn't selling for Rs. 1. That motorcycle isn't going to be yours if you spend 500 rupees. And no, India has millions of daily web users – you're not special enough to be the one that spend the most in today to win that customized motorcycle.

Statistically, you're lose

There are millions and millions of users everyday on these web portals. Do you really think you statistically have a chance to win the lucky draw? You'll have a better luck to search on Google for a better scheme at whatever service or good you're transecting in than this.

Basically its gambling

Are you a fan of gambling? Well you shouldn't be – because it's illegal and illogical for a startup that wants to expand its growth to rely on such under-belly tactics to expand their network. Not only does this encourage obsessive behavior from customers, but in the long run an average user gets more and more frustrated and eventually loses interest in the brand and switches.

You're better off with a guaranteed discount/scheme

Would you risk recharging your phone for 500 rupees to gain it for free (which will probably not happen at all), or have a guaranteed sweet discount of 50 rupees every time? Everyone thinks by the same logic. It's best to stick with traditional and more assured stable forms of schemes and cash backs.

Are you as annoyed by these marketing gimmicks as I am? Let us know in the comments on our official Facebook page Entrepreneur India