Spoiler Alert! The Tranzact Card is A Scam
In the ever-evolving landscape of personal finance, it’s crucial to stay informed and vigilant against potential scams. In November 2023, a “new opportunity” made waves. The Tranzact card entered the scene claiming to revolutionize the banking industry. However, after extensive research, I’ve chosen to steer clear of it, and in this article, I’ll lay out the many reasons why I recommend you do the same.
Before we dive in, I have to say this: The advice and recommendations in this blog are my opinion. It’s always crucial to do your research. But if you’re curious about this financial coach’s thoughts on this new “business opportunity”, please read my full Tranzact Card review below and settle in. It’s a long one.
What Is the Tranzact Card
The Tranzact Card presents itself as a game-changer, offering a chance to be part of a financial movement. However, beneath the enticing exterior lies a potentially deceptive scheme, targeting individuals with promises of wealth, multiplied income, and exclusive benefits.
What is the Tranzact Card promising?
The Tranzact card comes with some pretty big promises and opportunities. Some examples of the financial revolution this card is ushering in include:
- It’s changing the banking industry (and you can be a part of the movement!)
- It’s the best deal (make money but first pay $495 down and $50/month).
- Everyone is doing it (they’re not).
- It’s not an MLM (it is).
- You can multiply your income (yeah… no) and in only 2 hours per week (get-rich-quick).
Who the Tranzact card is Targeting And Why
The populations this card is targeting include some of the most susceptible and vulnerable people. The Trazact Card is being sold to people who are often in desperate need of financial security and are more likely to seek out and be influenced by what this card claims it can do. The Tranzact Card is being marketed to:
- Single parents
- Marginal communities
- Charitable organizations
If you’re a part of one of the populations that have been targeted by the Tranzact card, you will be told this card was designed with you in mind (it wasn’t.)
Why it is a SCAM: The REAL details about the Tranzact Card
It’s a debit card where you earn points. In this way, it’s similar to a credit card where you earn points based on how much you spend. But keep that in mind… it’s a debit card. It’s just a debit card.
Here’s what you should know: It is the same old scam, just in new, shiny packaging. And here’s how you know. There are a few ways to spot a scam from a mile away.
Scam rule #1:
Take something people are familiar with that is currently free, dress it up with gimmicks, and charge for it.
If I came to you right now and said, “Hey! That debit card in your wallet, I’m going to give you a new one. It’s $495 and then $50/month after that…”, what would you think? You’d probably look at me with one eyebrow raised, and I would not blame you.
But for the sake of this example, let’s say you’re like, “Okay, sign me up.” You pay for it, and then your employer walks around and tells all your family and friends the same thing. “That debit card in your wallet… I can give you a new one. You’ll have to pay a $495 fee and then $50/month.”
What benefits could it possibly provide that would make paying for something you can get for free worth it?
Great question. The people who’ve already bought into the Tranzact card have some ideas. Every one of the following statements is copied and pasted from someone’s post I saw about this “opportunity”:
- This is the best and easiest opportunity for the average person to gain financial independence.
- Earn passive income.
- Earn cash back every time you go grocery shopping or fill up your gas tank.
- Earn extra money with minimal effort.
- Own your own business or simply be a customer.
- Double your buying power.
I’m sure some of these things sound nice.
But, as a money coach, here’s the healthy dose of reality I like to provide. Please consider the following:
- Financial independence isn’t created by spending money.
- You will have to hustle a lot for this “passive” income (PS: it’s not at all passive.)
- Earning extra money rarely happens with minimal effort.
- You are not owning your own business.
- Their marketplace* cannot possibly have lower prices than massive suppliers such as Amazon and Walmart.
We can spot the Tranzact card as a scam because it’s taking something that’s already free and dressing it up with gimmicks. But there are two other massive red flags for the Tranzact card.
RED FLAG #1: They talk more about making money than the product itself.
Tip: If a product’s marketing talks more about how you can make money from the product versus the actual product itself, it’s probably because the product isn’t any good. “Look how much you can earn selling this product” is equivalent to a magician’s sleight of hand.
A debit card that earns points, on the surface, is not a bad idea. However, it is a fairly new concept, which means it needs more explanation and transparency and deserves more scrutiny.
RED FLAG #2: The Questionable Former CEO
The founder and CEO is Richard Smith. Well, technically he’s the former CEO. He stepped down as CEO when Tranzact launched in November 2023. But even before launching this “opportunity”, the company’s operations were investigated. I have so much more to say about Mr. Smith, so let me elaborate. Brace yourself for a rollercoaster of legal challenges, failed ventures, and a pattern that’s hard to ignore. This tea is scalding hot.
About Tranzact Card Founder and CEO, Richard Smith
Smith has faced legal challenges for securities fraud and for his involvement in Ponzi schemes… not once… not twice… well, just keep reading and you will see. Let’s just say we’re not talking about a one-time whoopsie-daisy.
Richard Smith’s Troubled Past: A Timeline of Deception
Securities Fraud in 2010
In 2010, Smith faced criminal charges for securities fraud in Utah related to two Ponzi schemes, defrauding consumers of approximately $10.9 million.
Divvee: A Failed MLM Venture (Mid-2016 – July 2017):
Smith was involved with Divvee, a service charging $9.95/month for access to cell phone plan discounts. Divvee operated on a multi-level marketing (MLM) model, where recruitment played a significant role. Unsurprisingly, it failed.
Nui and Crypto Schemes (November 2017):
With Divvee’s failure, Smith shifted his focus to Nui, a company centered around crypto schemes. In 2017, he pled guilty to one count of Pattern of Unlawful Conduct. This 2nd-degree felony came with hundreds of thousands in fines, probation, and community service.
Legal Troubles for Nui in Texas (July 2018 – February 2019):
The state of Texas issued a securities fraud cease-and-desist to Smith and Nui. In February 2019, the TX State Securities Board fined Nui $25,000, leading to the cessation of offering unregistered securities.
The Digital Vault, RevvCard, and R Network (March 2019 – April 2023):
Smith faced scrutiny for his involvement in various MLM ventures, including Divvee, Nui, The Digital Vault, RevvCard, and R Network. There is little information about The Digital Vault because the company was forced to scrub its marketing information from the internet. But thanks to this site, we know:
“The Digital Vault is being advertised as “an actual bank account with all features of a bank account.” Affiliates sign up through a referral link, which forms a separate downline outside of Nui. RevvCard is a debit card that Digital Vault affiliates can ‘load all of their cards, accounts, and do onto…”
After the demise of RevvCard, Smith resurfaced with a new venture, R Network. Despite promises and charges for physical “Revvcards,” the company postponed availability by a year. In mid-2020, the original RevvCard concept was abandoned, and Smith offered “stock ownership” to R Network affiliates, without SEC registration.
In March 2021, RevvCard was sold to another problematic company, iX Global.
Smith returned in April 2023 with the Tranzact Card. It’s a lot to keep track of, but the bottom line is this: after failed crypto schemes, securities fraud, MLM ventures, and shady banking practices, Smith’s next move was the Tranzact Card.
Connecting the Dots on the Tranzact Card: It’s The Same Pig with Different Lipstick
Looking over Mr. Smith’s questionable business practices, I am calling the Tranzact Card what it is. It’s the same pig, just with different lipstick. Smith’s track record of fraudulent practices, over-promising, and under-delivering raises a massive red flag. Doing business with trustworthy individuals is paramount, and Smith’s history does not inspire confidence.
I think it’s sooo important that we do business with people we trust. And I don’t know about you, but this dude… I do not trust him.
But maybe you can set that aside. A company’s CEO might not be enough to dissuade you from spending your dollars with that company. I am sure there are people out there who drive Teslas but aren’t Elon Musk fans. So let’s put the Tranzact Card CEO aside and examine the card itself.
Tranzact Card Fees And “Perks”
The Tranzact Card The company touts three big perks of the Tranzact Card:
- The Power Save account
- The ability to make money (AKA their compensation plan)
But before we get there, we have to talk about the fees. Because to reap the “benefits’ of the card, you have to fork over a decent amount of cash in fees first.
A Breakdown of the Tranzact Card Fees
Tranzact Card offers two fee options, and both raise red flags.
Fee Option 1:
As I write this, you can pay $25 for the first year and then either $4.95/mo or $47.50/yr to just use the product. Remember from the beginning of this post that I said this product is just a debit card. Do you pay $25-$47.50/year to use your debit card now? If so, please switch banks. With this option, you “miss out” on the “opportunity” to make money. (Man, my quotations are going to do a lot of heavy lifting in this post.)
This option makes me incredibly nervous given the issues the company has had with its banking partners already. Plus, this option only makes sense if the Z-Bucks, Z-Club, and Power Save accounts (their so-called “perks” which I’ll explain in a minute) make sense… and they don’t (my opinion, of course).
Red flag#1: Paying money to get a discount.
Fee Option 2:
You can become a Digital Branch Office. This is the option where all the “money-making perks” exist (supposedly). This level costs $495 plus $50/month plus a 10% service fee. I’ll break down the DBO compensation in a little bit.
Red flag #2: Paying money to be able to refer people.
I gladly recommend products or programs I use all the time, and sometimes even get a little perk for doing so. But never have I been made to pay the company in order to refer people to them. Technically this option makes the compensation plan below available to you.
So those are the fees. Let’s dive into the “perks” now, shall we?
Tranzact Perk #1: Z-Bucks
The Tranzact Card boasts that if you “spend $1, you get a matching Z-Buck.” You then spend these Z-Bucks in their marketplace called Z-Club. Their marketing says, “Your Z-Bucks can be spent in Z-Cub making everyday items, luxury items, and even vacation packages more affordable.”
The biggest (and it’s a biggie) red flag I see with Z-Bucks is the company does not disclose how these Z-Bucks are funded. You spend $1. They give you $1 in Z-Bucks. How are they doing this? Where is this money coming from? Where is their source of funds coming from to make this possible?
Another issue is you must use these Z-Bucks in their marketplace, called Z-Club. This undoubtedly creates processing fees on their end (even my business incurs processing fees when I accept debit or credit cards from my clients). How is the company covering these fees and giving you a match on your money all while providing discounts on “everyday items, luxury items, and even vacation packages?” Plus, think of these Z-Bucks like a gift card. Would you rather have a $100 gift card to Starbucks or $100 cash? I love Starbucks, but I’d rather have $100 cash to buy a cup of coffee and then whatever else I might want.
The math doesn’t jive for me.
If the fees people pay when they’re recruited are being “churned” to then fund the Z-bucks, this too closely resembles a Ponzi scheme. Not to mention that Z Club is technically still in the pre-launch phase. So, while there are items to buy, it’s not a robust marketplace. And if it’s not competing with the Walmarts and Amazons of the retail world, how can it compete on price? Until then, it’s likely anything you can spend your Z-Bucks on is going to be overpriced.
None of these details are disclosed by the company so I’m purely sharing my speculations here. These things make me nervous, and I’m smelling (sniff-sniff) something a little fishy.
Tranzact Perk #2: Power Save Account
The idea here is a long-term savings account that gets funded by your Z-Bucks. The company website says “1% of all Z-Bucks you earn is going to go into this Power Save Account.” So you spend $1, they give you $1 Z-Buck (although I don’t know how). Then 1% of your Z-Bucks spent (i.e. $1 for every $100 in Z-Bucks spent) goes into a Power Saving Account. Tranzact Card claims they will then pay a “fixed interest rate” plus a “variable rate” from a “real estate investment trust.”
Quick note: Are you remembering that this is just a debit card? And supposedly just a savings account? Why is it all so complicated then? Another magician’s sleight of hand perhaps? I don’t like it… I really don’t. Given what I’ve already told you about Smith, why would I (or you) trust any of this?
If this Power Save Account does indeed pay interest in the way it suggests, not disclosing more details is potentially already a violation of the FTC Act (disclosures) as well as a securities compliance issue in and of itself.
And if that’s not enough, here’s another big Red flag: The Power Save Account is “coming soon.”
Tranzact Perk #3: Making Money as a Digital Branch Office (DBO)
The compensation plan is where my red flags really start flying. If you are going to involve yourself with an MLM, please, please, please read the company’s compensation plan carefully. Do a quick analysis by asking yourself: “If I didn’t recruit anyone, how much money would I make just by having people use the product?” Also, look at the additional fees charged after you sign up. For example, at the time of writing this, Tranzact charges a $30/mo marketing fee and a $20/mo technology fee. These additional fees are typical in MLMs.
A Digital Branch Office means someone has signed up as a Tranzact Card Affiliate. As a DBO, you earn commissions and to start, you earn basis points (BPs) for transactions (0.00001% value per BP). The more people you recruit, the higher your basis point or BP. Is anyone else getting confused by all these acronyms?
There are six ranks within the card’s compensation plan. All involve signing other people up for the card and getting them to make retail transactions with the card. But let’s examine the lowest rank to demonstrate how this works.
What It Looks Like To be a Level 1 – DBO:
Pay your monthly fees and personally refer three retail members (i.e. get three people using the card). You earn 10 BPs for personally referred retail transactions.
Take note, that right away you must recruit others. My guess about how this plays out: Unless your new people are spending a boatload of money on their debit cards, you’re not making enough to cover your start-up fee, monthly fee, and service fees. Do the math yourself or see my example below.
DBO (LEVEL 1) EXAMPLE: 10 basis points is:
$2.50 in commissions for $2,500 in “downline swipes” or
$100.00 commission for $100,000 in “downline swipes”
How many people would you have to recruit to have them swipe $100,000 worth of transactions every month on their debit cards? And that’s just to earn $100 in commissions, which may be reduced under certain rules in their compensation plan. As I said, please review the compensation plans carefully.
Level 2 – Manager 12 BPs
Level 3 – Senior Managers 14 BPs
Level 4 – Vice Presidents 16 BPs
Level 5 – Presidents 20 BPs
PRESIDENT (LEVEL 5) EXAMPLE: 20 basis points is:
$5.00 in commissions for $2,500 in “downline swipes” or
$200.00 commission for $100,000 in “downline swipes”
Your “level” is determined by, you guessed it, how many team levels you have!
Weird – almost looks like the shape of a triangle… or maybe an upside down cone… or something else shaped just like a triangle… hmmmm…
There are also bonus check opportunities when you, again, recruit more people.
None of this makes sense to me. None of it.
And to reiterate this point one more time: You’re doing all of this… for a debit card!
But I will give Tranzact card one thing. They’re doing a great job selling the dream. The dream of passive income, being part of a movement for change, giving powerful rewards and perks, earning compound interest, financial freedom, and having your own business.
But that’s all I will give them. Because I’ve saved my biggest pet peeve with the Tranzact card for last.
My Biggest Tranzact Card Complaint
This is essentially the business model and compensation plan for the Tranzact card:
Here’s what I see when I look at this image…
This image illustrates your team. It represents people you are probably surrounding yourself with consistently. Everyone on this team gets paid more money by downline swipes, That is th money that is spent on retail transactions by all members of the team.
That means your boss, leader, whoever (AKA your recruiter) gets paid the more money you spend. The people at the top make money so long as the folks on the bottom keep spending.
And the people at the top are given the titles “President” and “Senior Manager” and without a doubt, the people in Level 5 will look up to these Presidents and Vice Presidents and think they care about them, they’re looking out for them, and they know what they’re doing.
After all, look how successful they are at running a business! But it’s a business that only exists if the people at the bottom continue to spend and find more people to recruit to the team.
All the while TranzactCard’s marketing wants you to focus on how this “opportunity” helps you to:
- “make extra money with minimal effort,” and
- “gain financial independence,” and
- “earn passive income”…
It’s all hyper-focused on spending money. They need you to keep spending and keep recruiting more people to spend. Everything about it is connected to (and dependent upon) you and the other people around you continuing to spend money. Is this what you want your life and your thoughts around money to be about all the time?
I can’t imagine how this could possibly be a healthy community.
It is preying on peoples’ desires for money by encouraging them to spend money. And that makes me sick. It’s unethical. It’s destructive. It’s wrong.
The Tranzact Card Is Not Legit
So there you have it. That’s my full Tranzact Card review. In summary, I really hate everything about this “opportunity” which is why I wrote this incredibly long article to tell you about it. I’ve told you how this card came to be, how the man who created it should not be trusted, why it looks and acts like an MLM (and is Ponzi scheme adjacent), and why its perks aren’t actually perks. There are so many red flags that point to the Tranzard card being a scam. Its business model is not sustainable, and I suspect in a matter of time, it will be another failed experiment or future legal trouble for its founder, Richard Smith. I will tell anyone I know to run away from it, and I would strongly encourage you to do the same.
Have you heard of this “opportunity” yet? I’d be curious to hear what your thoughts are about this great “opportunity.” (<– Final heavy lift for my quotation marks in this series. Good… because they are pooped.)
Did you like this post? To get more educational, thought-provoking financial strategies and money musings, click here to add your name to our email list.