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It looks like the K in Klout stands for Ka-Ching.

If you’ve been active on Facebook or Twitter in the last several years — or even in just the last few weeks — you may have heard of Klout, the San Francisco-based technology company of self-proclaimed “data nerds” who assign a score to your activity across a wide variety of social networks.

Although the company has made their mark on the social media industry for three years, recent changes to Klout’s algorithm have its users up in arms over their plummeting scores.

The fact that there is an “i” in social is the root of the problem. Many people’s egos inflate & deflate daily based on the rise, or most likely fall, of a number that none of us can explain, because it’s cloaked in a secret algorithm that is updated regularly, just like Google’s.

In the words of nerds, “the Klout score measures influence based on your ability to drive action. Every time you create content or engage, you influence others.”

The question is — if you retweet 20 articles a day written by other people — what action are you driving when you are posting the ideas of others? Is a cave influential in music because it can produce the echo for an opera?

For businesses not familiar with online ‘influencers’ in the emerging medium of social media, the Klout score of a person or brand might help them decipher the worth of a potential hire or business partner.

No employer should ever use a Klout score or the number of followers a person has to determine their social media “value,” social thought leadership or intelligence of a potential hire, but that’s another whole post in itself.

With the introduction of Klout Perks this summer — a series of promotional product giveaways, like travel-size Axe hair gel to users with high Klout scores —  the company broadcasted their true intention:

Klout is really just trying to sell their advertisers’ products.

And you’re the billboard.

At first, Perks seemed like a kind gesture from Klout to its early adopters. If you devote a lot of time to sharing and interacting with the thoughts of others, there’s a good chance you could be a perfect brand evangelist — ‘hey, let’s call it a Perk!’.

And we’re so enamored with the idea of “free,” we forget that there’s no such thing as a free lunch.

Just as Facebook hides the fact that they capture nearly every single behavior a person does online under the guise of “connecting the world” — aka data mining — Klout has figured out a way to fuel egos in exchange for product placement.

When you claim a Klout Perk, you’re encouraged to post your winning Willy Wonka ticket-having status to your loyal audience on Facebook and Twitter — enabling and fulfilling the company’s stated mission of “driving action” in one fell swoop.

In response to the public outcry from falling Klout scores, founder Joe Fernandez published several blog posts on Klout.com to save face for his brand about what his product offers; here’s the most recent one:

Unfortunately, this statement didn’t seem to quell the underlying tide of concern, as noted by one reader:

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Forget whether or not Klout measures your social influence — it measures your ability to drive the sale and promotion of products affiliated with Klout.

And the recent ability to give “+K’s” in specific topics to people? Seems like good social media karma, but they’re about as useful as a Poke on Facebook.

In reality, you’re helping Klout determine exactly what actions the recipient of the +K is able to drive — the sale.