DIFFERENCES BETWEEN MULTI LEVEL MARKETING, PYRAMID SCHEME & PONZI SCHEME

Alot of people found themselves in the most confused state of life when it comes to debating the fine line between these 3 synonymous but different investment scheme. This has made alot of people to missed opportunities as well as taking up wrong opportunities thereby falling the victim of illegal schemes and scams.

This piece is a token from my long years of investigation into every well known MLM and ponzi companies around the world.

Have you heard of the Millionaire Charles Ponzi?

 

charles ponzi, carlo ponzi
Millionaire Charles Ponzi poses for pictures in his pajamas in 1942. HART PRESTON/TIME LIFE PICTURES/GETTY IMAGES

If nope!………….. let me enlighten you

In 1920, Charles Ponzi ran a scam promising New Englanders a 50 percent rate of return in 45 days for a convoluted investment involving international mail coupons [source: The New York Times]. Ponzi ended up collecting $10 million and paying back $8 million, leaving a cool $2 million for himself. He served back-to-back federal and state prison sentences for mail fraud. A Ponzi scheme isn’t a pyramid scheme because the fraud is centralized — controlled by one person or entity — instead of being spread across a network of people who willingly or unwillingly perpetrate the crime.

ponzi

A Ponzi scheme is a fraudulent investment plan in which the money isn’t invested at all. Instead, every new investment is used to pay earlier investors [Source: The New York Times].

pyramid scheme

On the surface, it’s hard to tell the difference between a legitimate MLM and a pyramid scheme. That’s because they’re both built on the business model of “multiple levels” of distributors and recruits.

 

multi level marketing, mlm

Multi-level market (MLM) or network marketing is an American institution. Companies like Amway, Tupperware, Herbalife, Growing Circle, Avon, Mary Kay GNLD and The Pampered Chef support huge networks of distributors and recruits who sell every type of product from dietary supplements to kitchenware to beauty products. Salespeople are called independent business owners (IBO) and generally work from their homes. Amway stresses that the main difference between a legitimate MLM business model and a pyramid scheme is that a legitimate MLM is focused on selling products, not recruiting more salespeople. In a legitimate MLM, it should be possible to make money by simply selling products directly to customers, though managing team of sales people as an active member might attract pay as well.

In short, Multi-level marketing is meant for business people, entrepreneurs or would-be entrepreneurs. Not as if it is not possible for someone without business or product to sell to thrive in multi-level marketing, of course alot of people without a business but who are investment-minded with perseverance and creative are making millions from MLM everyday. But if you are not the business-type who is creative and belief in investment and not some “Get Rich Overnight”, i’d advice you keep off MLM as it’s not a Blood Money scheme rather an investment for those that are not only engaged but hardworking.

Next time on our business and investment opportunities, we shall be alighting various legit Multi level marketing schemes in town with a tested and trusted tips on how to best exploit them

 

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