from other ppl's blog
MLM? Or Pyramid Schemes?
by poook, commented by bee87
8 November 2004, Monday - 22:43
The following entry was taken from Friend-less (with added personal comments). It was written by my friend, poook.
- What is a Pyramid Scheme?
It is an illegal scam where large numbers of people at the bottom of the pyramid pay money to a few people at the top. It works like the MLM Binary plan. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later.
Example:
1
2.2
3-3.3-3
With reference to the diagram, we will assume each Level consists of 1 person only.
In this example, $1,000 buys you a position in Level 3 . $500 of your money goes to the guy in Level 2 [The person who pulled you in] , and $500 goes to the guy at Level 1 [The promoter]
If every position in Level 3 is filled up, the guy at Level 1 will each earn $2,000. Everyone in Level 3 will be $1,000 poorer.
When Level 1 has earned enough, he will step down and Level 2 will upgrade to become Level 1. Only then will these 2 guys start to profit. [Remember that they are initially from Level 2.]
For the 2 guys at Level 1 to earn their profits, they must each find 4 more people to fill up Level 3. Which means that they now need 8 people to fill up Level 3 in order to keep the profits coming.
As for the people at Level 3, their job now is to find more people to join in. Which means that they have unknowingly been upgraded to Level 2! Once more people have joined in, they will be able to earn their profits from the people at Level 3. And this cycle just keeps repeating itself.
- What are the signs of a Pyramid Scheme?
1) You are required to pay a LARGE amount of money to participate.
They would tell you that the large amount of money is needed because of TRAINING COURSES, PURCHASE OF PRODUCTS, SERVICES, ENTRY FEES, ETC.
This is a clear sign of a scam, because MLM only requires you to pay a SMALL fee to participate. The purpose of MLM is to make it easy and inexpensive for everyone to be able to participate in, and that includes the vegetable auntie at the market.
2) They focus entirely on RECRUITMENT.
This is because the Pyramid Scheme benefits entirely from recruitment fees, like I've just explained earlier. The company will emphasis on this VERY MUCH. They will just encourage you to recruit more people and not to think about it.
3) Products involved are usually not useful and grossly OVERPRICED.
Multi-level marketing (like other methods of retailing) depends on selling to consumers and establishing a market. This requires quality products, competitively priced.
Pyramid schemes, on the other hand, are not concerned with sales to end users of the product. Profits are made from new recruits who are required to buy those products in order to participate.
A common product that Pyramid Scheme uses is aromatheraphy products . Aromatheraphy products does not allow one easily to know its market values because it is uncommon. Hence, it is definitely easier to pull off using aromatheraphy products.
Why do they bother to use the product in the first place? It's used to shut the mouths of those who argue about the entry fees. They could tell you that the product alone costs $300. And because you do not know about the market value of the product, you stupidly agree with them.
Think about it; a few hundred dollars for aromatheraphy products? Isn't it a bit suspicious?
4) Nothing is mentioned about their products.
When you question about their products, they will openly REFUSE to answer you. Instead, they will concentrate on how much you can earn monthly by increasing the number of people under you in the pyramid. This is a clever form of brainwashing because people are GREEDY (Note from editor: Or rather, such 'industry' attracts greedy people. That, however, is clearly an understatement because there are people who are not greedy but are coaxed into joining. They belong to the Gullible group.). As long as they can get their money, they don't care where it comes from.
Furthermore, if the company really does depend on the selling of products to survive, why are they not talking about the advertisement and sales of the products? Why are you not required to know about them? Ask yourself.
5) You are required to do almost nothing at all.
MLM is like any other business and needs hard work, perseverance, good service and good products to make money.
Pyramid schemes need little effort to make money because all they need to do is to RECRUIT PEOPLE. That is why it is easy to make money.
THERE IS NO SUCH THING AS EASY MONEY IN THIS WORLD.
[Edit by original author] This is basic common sense. But because people get blinded by greed so often, they tend to forget this very important advice. (Editor: Actually, it dosen't really matter what course you're taking. It's more like being able to analyse the situation with a mature enough mindset and not make stupid decisions because of certain factors, like greed.).
6) You get stuck with products that you CANNOT refund.
Legitimate MLM companies which require inventory purchases will usually "buy back" unsold products if you decide to quit the business.
Pyramid Schemes, on the other hand, will decline to provide a FULL refund even if you request for it. Such companies will promise you that a full refund is possible, but will decline to do so when you request for it.
This entry is written especially for some of my friends who are in NTI Paris currently. Not that I'm against them, but the details my friends have given me about the company matched those of a Pyramid Scheme exactly.
I hope that they will read this and make a decision for themselves.
(Information extracted from: DSA and sgForums )
I've decided to copy the entire post here, as well as included llink to the Original entry. I would like to make the article more prominent, instead of only available over at Friend-less.
by poook, commented by bee87
8 November 2004, Monday - 22:43
The following entry was taken from Friend-less (with added personal comments). It was written by my friend, poook.
- What is a Pyramid Scheme?
It is an illegal scam where large numbers of people at the bottom of the pyramid pay money to a few people at the top. It works like the MLM Binary plan. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later.
Example:
1
2.2
3-3.3-3
With reference to the diagram, we will assume each Level consists of 1 person only.
In this example, $1,000 buys you a position in Level 3 . $500 of your money goes to the guy in Level 2 [The person who pulled you in] , and $500 goes to the guy at Level 1 [The promoter]
If every position in Level 3 is filled up, the guy at Level 1 will each earn $2,000. Everyone in Level 3 will be $1,000 poorer.
When Level 1 has earned enough, he will step down and Level 2 will upgrade to become Level 1. Only then will these 2 guys start to profit. [Remember that they are initially from Level 2.]
For the 2 guys at Level 1 to earn their profits, they must each find 4 more people to fill up Level 3. Which means that they now need 8 people to fill up Level 3 in order to keep the profits coming.
As for the people at Level 3, their job now is to find more people to join in. Which means that they have unknowingly been upgraded to Level 2! Once more people have joined in, they will be able to earn their profits from the people at Level 3. And this cycle just keeps repeating itself.
- What are the signs of a Pyramid Scheme?
1) You are required to pay a LARGE amount of money to participate.
They would tell you that the large amount of money is needed because of TRAINING COURSES, PURCHASE OF PRODUCTS, SERVICES, ENTRY FEES, ETC.
This is a clear sign of a scam, because MLM only requires you to pay a SMALL fee to participate. The purpose of MLM is to make it easy and inexpensive for everyone to be able to participate in, and that includes the vegetable auntie at the market.
2) They focus entirely on RECRUITMENT.
This is because the Pyramid Scheme benefits entirely from recruitment fees, like I've just explained earlier. The company will emphasis on this VERY MUCH. They will just encourage you to recruit more people and not to think about it.
3) Products involved are usually not useful and grossly OVERPRICED.
Multi-level marketing (like other methods of retailing) depends on selling to consumers and establishing a market. This requires quality products, competitively priced.
Pyramid schemes, on the other hand, are not concerned with sales to end users of the product. Profits are made from new recruits who are required to buy those products in order to participate.
A common product that Pyramid Scheme uses is aromatheraphy products . Aromatheraphy products does not allow one easily to know its market values because it is uncommon. Hence, it is definitely easier to pull off using aromatheraphy products.
Why do they bother to use the product in the first place? It's used to shut the mouths of those who argue about the entry fees. They could tell you that the product alone costs $300. And because you do not know about the market value of the product, you stupidly agree with them.
Think about it; a few hundred dollars for aromatheraphy products? Isn't it a bit suspicious?
4) Nothing is mentioned about their products.
When you question about their products, they will openly REFUSE to answer you. Instead, they will concentrate on how much you can earn monthly by increasing the number of people under you in the pyramid. This is a clever form of brainwashing because people are GREEDY (Note from editor: Or rather, such 'industry' attracts greedy people. That, however, is clearly an understatement because there are people who are not greedy but are coaxed into joining. They belong to the Gullible group.). As long as they can get their money, they don't care where it comes from.
Furthermore, if the company really does depend on the selling of products to survive, why are they not talking about the advertisement and sales of the products? Why are you not required to know about them? Ask yourself.
5) You are required to do almost nothing at all.
MLM is like any other business and needs hard work, perseverance, good service and good products to make money.
Pyramid schemes need little effort to make money because all they need to do is to RECRUIT PEOPLE. That is why it is easy to make money.
THERE IS NO SUCH THING AS EASY MONEY IN THIS WORLD.
[Edit by original author] This is basic common sense. But because people get blinded by greed so often, they tend to forget this very important advice. (Editor: Actually, it dosen't really matter what course you're taking. It's more like being able to analyse the situation with a mature enough mindset and not make stupid decisions because of certain factors, like greed.).
6) You get stuck with products that you CANNOT refund.
Legitimate MLM companies which require inventory purchases will usually "buy back" unsold products if you decide to quit the business.
Pyramid Schemes, on the other hand, will decline to provide a FULL refund even if you request for it. Such companies will promise you that a full refund is possible, but will decline to do so when you request for it.
This entry is written especially for some of my friends who are in NTI Paris currently. Not that I'm against them, but the details my friends have given me about the company matched those of a Pyramid Scheme exactly.
I hope that they will read this and make a decision for themselves.
(Information extracted from: DSA and sgForums )
I've decided to copy the entire post here, as well as included llink to the Original entry. I would like to make the article more prominent, instead of only available over at Friend-less.
posted by little cow @ 5:17 PM
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