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New to MLM…Watch out. 1
Pyramid Schemes….Scams
Putting it as simply as I can the idea behind a pyramid scheme is that the ‘investor’ is invited to make only one payment, but is promised in return to receive exceptional high income return from other people. The instigator of the pyramid will take a fee for the right to sell the same offer to other people, or receive commission through other people they refer. Each sale includes a fee to the original seller. BUT there is no tangible end benefit; the money simply travels up the chain, and only the instigator and probably the first few to join make any money. As the pyramid grows so more and more people are sucked in by the promise of high returns, and the last in lose their money because the scam runs out of steam and they were unable to recruit any followers themselves.It is guaranteed that 80+% will lose money. Those who join early may recoup some gain, but only at the expense of the losers because a pyramid scheme is a non-sustainable business model. If there is no actual product or service then there comes a time when the supply of gullible investors runs out. By then of course the instigator is long gone with other people’s money. Sometimes the scheme will sell a so called product, such as a system which merely tells the purchaser how to find new members, or the purchasing of name and address lists, or simply directing the purchaser to other expensive advertising media, where the instigator will earn a commission on the introduction. So watch out for things like An exaggerated sales pitch.
An assurance that it is not a pyramid scheme and it is perfectly legal to participate
Little to no information offered about the company.
No product, or a product being sold at a price ridiculously in excess of its real market value, or the product is vaguely described.
An income stream that chiefly depends on the commissions earned by enrolling new members
The insistence they are not here to pressure you but merely to guide you.
The key distinction between these schemes and legitimate MLM businesses is that in the latter cases a meaningful income can be earned solely from the sales of the associated product or service to customers who are not themselves enrolled in the scheme, whereas in the former it cannot.
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This intel was contributed by katnic
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May, 2012
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