Pyramid scheme and MLM
In this article we will discuss about the dangers of pyramid scheme and how multi level marketing(MLM) is similar with pyramid scheme
what is pyramid scheme?
As Webster dictionary definition pyramid is a usually illegal operation in which participants pay to join and profit mainly from payments made by subsequent participants
which simply means a fraudulent system of making money based on recruiting an ever-increasing number of "investors." The initial promoters recruit investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because at each level, the number of investors increases.
how dose pyramid scheme work?
the way it work is someone will found a business and the founder will go tell some people if they want to invest in his amazing business and since it sounds amazing they will invest and this investors are told to invite new investors in order to get their investment and this cycle will continue downward
why is it illegal?
the reason it is illegal is to make money a person should invite other people why this is bad is if the founder invites five people and this people invite another five at the 15th level we will pass world population when the people at the bottom of the pyramid realize they are not making money the pyramid will start collapsing from the bottom up
why Pyramid Schemes Succeed?
the reason why the pyramid scheme succeed it:
promise easy money or passive income
pry on unemployed people
promise high returning in a short period of time
the only people who profit from pyramid scheme are the people at top the rest will lose their money
What Is Multilevel Marketing (MLM)?
The term marketing (MLM) refers to a strategy used by some direct HYPERLINK "https://www.investopedia.com/terms/s/sale.asp" sales companies to sell products and services. MLM encourages existing members to promote and sell their offerings to other individuals and bring on new recruits into the business. Distributors are paid a percentage of their recruits' sales. New recruits become the distributor's HYPERLINK "https://www.investopedia.com/terms/n/networking.asp" network or downline and are, in turn, encouraged to make sales to earn money.
The difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme.
the only way to make money in mlm is to recruit new member and sell them some stuff this is why it is called legal pyramid scheme
to differentiate between legit and scam mlm is the amount of money they make from the consumer if the company make more money from distributer more than a customer this mlm is a scam and probably will collapse
In conclusion their is no easy way to make money therefore you should always be careful and aware of things before you go and start spending your money because someone told you that it's true
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