You’d think that the Scott Messina and Shawn Pringle would have had every single ‘i’ dotted and ‘t’ crossed when they launched their chat to text program a few days ago – but in this case, no matter how many thousands of dollars you throw at your legal team, someone always wants to throw a monkey wrench in your operation.
That Chat To Text FaceBook application came out on last weekend on Jan.31 and the app seemed destined to catch on like wild-fire – of course there is a ‘network marketing’ distribution model attached to it and one of those “invite your friends and we’ll pay you a commission for every friend you refer as well as a percentage of revenue from their friends” and Facebook decided to shut it down immediately. Pyramid scheme? Yes – but whether people want to accept it or not, network marketing is a legal and legitimate business model in all 50 US states and Canada (which is probably why they haven’t got their app working outside of north america from what I understand). What’s worse is they are using Paypal as their payment processor and network marketing schemes are in violation of the Paypal Terms of Service – ooops.
Either way, the concept itself is sound and the technology is applicable for so many other ways other than for facebook (imagine if there was similar interface for eBay or craigslist listings where people could instant message you with questions about your listing (with appropriate filters and privacy of course) in order to sell your item(s) quicker and possibly establish a little more trust. So if you do see something like that on those auction / classifieds sites – you heard it from me first 
Anyway, it’s not looking so good for those guys and their app, but in all honesty, it would have been easier to just release the app for free and attach a donation model to it – or just have it as a one time fee without the MLM aspect to it.
There’s a great thread over at Warrior Forum talking about it:
http://www.warriorforum.com/main-internet-marketing-discussion-forum/52248-chat-text-facebook-app-multi-level-marketing-caveat-emptor.html