Pyramid Properties

Ponzi and pyramid
The House of Cards, My company is one of those MLM?

If you have been around network marketing long enough, you've probably heard the MLM business model as "pyramid selling", or "some" pyramid "or (more rarely) a" Ponzi Scheme ". How can you answer something like that? The first thing you need to do is learn about the pyramids and ponzi schemes that are in reality. If you do not know what is the answer, then how will you be able to respond sure if the question does not arise?

How the "ponzi" got its name.

Charles Ponzi was a fraudster and swindler career. Although gambling "of sound that would become the most famous of his fraud, it was not his first, and ironically, not his last scam. Back in 1920 there was money in the millions of dollars! That'sa lot of money by today's standards. Imagine what this amount of money shown in 1920, if one considers that the Ford Model T cost about $ 300!

Here's what he did. He sold notes investors benefit payment order 50% in 45 days. He then took the money to pay later investors to pay back profits to investors earlier. So he had an endless supply of people willing to invest their money, he had money to follow through on its promise, but when the number of people waiting for their return has increased by more than the amount of purchase investors, the whole operation has failed.

So, in other words, he had less money to more people, fewer people to pay more money. It does not take a genius in mathematics to understand that ultimately there will not be enough people invest on the promise to repay. It takes no imagination to see that some people will lose any gains other. People who invest in early paid by people who inevitably lose.

What is important to remember about a Ponzi scheme is that it has only one official promoter.

Pyramids

Pyramid schemes, on the other hand have the look and feel of a Ponzi. The difference is that they are committed in a chain letter "style of recruiting a person 2, who recruit two, who constantly recruit 2 (or any other number). Recruits generally pay a certain sum to the person at the top chain, which is a predetermined number of levels above them in the recruitment chain. It is usually not the product but product alone does not determine the label "Pyramid." Rather, the main source income that determines whether a program is called "pyramid" or not.

illegal pyramid schemes may or may not have a product. If they do not have a product, so they are easy to spot. hands money to the exchange line in any way with the hope of getting more money below is a classic pyramid illegal, but what about those who actually do have some kind of product ?

In this case, the law officials will determine if the product has value, and if it is the subject of income. Commissions must be paid when the product is sold, and never paid the startup costs (kits, tools, free). Business (if required) must also provide proof that their product has a customer base, and not only consumed or purchased by people who want to make money. In other words, organization or company needs financial contributions of new "recruits" to survive, or is it a customer base that continues on turnover in the company.

The difference between Pyramid and Ponzi

The only real difference is that the Ponzi One person who collects the profits from investment and distribution. In a Ponzi, all investors, they have made money or lost money, are the victims. In a pyramid, however, the victims become executioners, the direct promotion of a crime and in fact most of the others that fly has been stolen.

What the Federal Trade C.