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FreeWebStuff.com Inc., a Paid-to-Surf company, has put itself up for sale, after finding out that hackers had undermined its entire business model.

The San Jose, California-based firm says it will also consider a partnership with an Internet security firm.

"We were getting too many sign-ups, too quickly -- many of them from the same group of sophisticated hackers," press spokesman Bill Johnson said, in a statement.

"The whole point of FreeWebStuff is to offer honest, affordable, targeted Internet advertising. If we 'looked the other way' and allowed multiple accounts from one person, it would appear to our advertisers that we had more users on our service than we actually had."

FreeWebStuff recently put its service on hold in an attempt to beef up security. The company plans to relaunch with stricter verification of member identification, a change in payout structure, and elimination of the multi-level referral structure.

"What attracted the large number of sign-ups and members, also attracted the cheaters. Eliminating multi-levels reduces the incentive to cheat and the ability to conceal it," Johnson said.

"Hopefully we can re-channel the hackers' energies into making honest commissions by helping us sell our advertising instead of trying to cheat the system."

Show me the money

FreeWebStuff operates in probably the riskiest B2C Internet sector of all - and that's without the security headaches.

Vast sums are being turfed into Paid-to-urf, mostly through its best known exponent, AllAdvantage. The model is entirely unproven, but already, if AllAdvantage is anything to go by, Paid-to-Surf looks financially unsustainable.

Paid-to-Surf purports to be a form of permission marketing. In other words, punters "earn" money or credits for expressly allowing companies to interrupt their surfing with adverts taking up the bottom of the screen.

However, in our book, this is not an authentic example of permission selling. Money-conscious bargain hunters will put up with the interruptions because they want the money, and not because they are interested in all that extra advertising shunted their way.

Usually with Paid-to-Surf businesses there is a multi-level marketing (MLM)element, with commissions offered for referrals.

FreeWebStuff deploys MLM and offers credits redeemable for merchandise and what it calls "online gift currency".

The company promises to deliver laser targeting at knockdown prices, and it offers the following example: "A dot-com that sells clothes can show their ads only when a surfer visits a competing site (such as Gap.com)."

But how targeted is that - waving an offer in front of someone when they are already in the store? This is, at very best, bad manners. ®

You can find out more about FreeWebStuff at www.extremetargeting.com.

Magic Quadrant for Enterprise Backup/Recovery