This is the second of a three part series in making money fast scams. The first post was on Chain Letters.
When money is tight and we have bills to catch up on or there are nicer things we would like to buy, we often search for easy and quick ways to make some extra cash.
The internet, and sometimes people we know, offer a multitude of opportunities for making money with “no experience necessary”.
Some of those opportunities are legitimate, while some are scams intended to part you with your money.
Pyramid Schemes and Ponzi Schemes
Seductive Offers of a High Rate of Return in a Short Time Span
The term “Pyramid Scheme” has a long standing reputation of being a scam.
The problem is that most people don’t know how to tell if an opportunity is a pyramid scheme or a genuine business opportunity, so many people get sucked in.
Pyramid Schemes and Ponzi Schemes are both similar and both illegal.
Both make extravagant claims for huge earnings in a short timeframe.
They both rely heavily on recruiting new affiliates.
A Pyramid Scheme has a product to sell, but relies on the members within the organization to buy the products. This is often a huge monthly quota my mentor, Hugh, calls “filling your garage.”
There are also no retail sales to the general public.
A Ponzi Scheme only recruits new members. There are no products or services offered. There are no commissions paid for recruiting new members.
The promotor just collects the sign up fee and pays it to the upline.
“Both pyramid and Ponzi schemes are illegal because they inevitably must fall apart.
No program can recruit new members forever.
Every pyramid or Ponzi scheme collapses because it cannot expand beyond the size of the earth’s population.
When the scheme collapses, most investors find themselves at the bottom, unable to recoup their losses.”
(http://www.ftc.gov/speeches/other/dvimf16.shtm)
Legitimate Network Marketing, or Multilevel Marketing, businesses should not be confused with Pyramid or Ponzi Schemes.
A genuine MLM business offers a product or service and generates retail sales to the general public.
Believe in Your Success, I Do!
Karen
mentor.karen.j.miller@gmail.com
