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I have discovered that a lots of people have wasted their funds on so many businesses that didn’t work and can’t even work because they are not built on a system that can work in the first place.
There are lots of things that needs clarification in this new era of PONZI, PYRAMID and MLM schemes. I have noticed some mixed up and it needs to be clarified.
What Do You Understand By Ponzi Scheme?
A Ponzi scheme is a type of investment scam that promises unsustainable high return on investment by paying previous investors with the money invested by new investors. Most of these scams work from anonymous offshore bases which make them hard to track down. E.g. MMM, Ultimate Cycler and many others.
What Do You Understand By Pyramid Scheme?
A Pyramid scheme is a dishonest and usually illegal business in which the money of later investors is used to pay the people who invested first. The fraudsters behind a pyramid scheme make their marketing scheme look real with many types of products or services. However, pyramid schemes simply use money coming in from new investors to pay off early stage investors.
Inevitably when new investors stop signing up and depositing, the scheme collapses, since no more funds can be paid out. When they can’t raise enough money from new investors to pay earlier ones, the pyramid scheme falls apart. As it comes crashing down, many people can lose lots of money.
What is Multi-Level-Marketing?
Multi-Level-Marketing (MLM) is also known as Network Marketing or Referral Marketing. It has been around for a very long time but to some people, it is still an unfamiliar territory. E.g. TREVO, GNLD, TIASHI, KEDI, EDMARK, GREENWORLD etc.
MLM is a very good way of starting a profitable, full-time business with little or no investment. It is also a good method of starting a second or part-time business to run alongside your existing business, career or lifestyle. You get paid commission on the products/services sold by yourself and a smaller commission on the products /services sold by the people you have introduced to the company.
In addition to this, you often get a percentage commission based on the sales of the people you referred…However, it is not a ‘lazy man’s’ way of making money. In order to build a successful business, like any business, one must invest a great deal of time and effort into it.
How do you tell one from the other?
- A Ponzi scheme is similar, but also different. In both Ponzi and pyramid schemes, existing investors are paid by the money of new investors. In a Ponzi scheme participants believe they are actually earning returns from their investment.
- Pyramid Schemes Have Only One Purpose. The entire purpose of a pyramid scheme is to get your money and then use you to recruit other suckers (- distributors).
- Pyramid Scheme achieve a substantial return on (money or property) after making a small initial investment:
- Multi-Level-Marketing or MLM, is a form of direct sales home business in which independent distributors or representatives sell goods and services from a company to an end consumer.
- Income earned in MLM comes from the commission earned on personal sales, as well as a percentage of the sales earned by other reps recruited by you.
- The entire purpose of MLM is to move product.
If you’re thinking about going into business for yourself, it’s always wise to find out more about the laws surrounding start-ups, franchises or MLM campaigns before you start.
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