WHAT IS THE DIFFERENCE BETWEEN NETWORK MARKETING AND PONZI SCHEME?

Network Marketing explained

Much effort has been made in the preceding articles in offering a definition of Network or Multilevel Marketing as a legitimate business regulated by the extant law of a country and regulated by trade and investment principles. Multi level marketing like every other business is managed by people and operated by those who buy in into the business and system of rewarding their partners. It suffices to say, that Network Marketing is a serious business that requires investors involvement, it is not a business that you put in your money and go and sit waiting for returns.

Ponzi scheme

Without mincing word, Ponzi scheme is illegitimate and fraudulent. It is named after an Italian Swindler by name, Charles Ponzi who gained notoriety as a con man in the 1920s in America. His practice can best be described as Robbing Paul to pay Peter.
According to Wikipedia, A Ponzi Scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.

HOW DO I KNOW IF IT IS A PONZI SCHEME?

• Any business that does not have legitimate product or services that they trade in is most likely a Ponzi Scheme
• Any organization that pays you interest from people that you introduced to the business on the basis of them just making an initial capital deposit is most likely a Ponzi Scheme
• Any organization only asked you to recruit downlines who does nothing other they make an initial investment is most likely a Ponzi whether registered or not
• Any organization that promise you a ridiculous return on investment is most likely a Ponzi scheme

EXAMPLE OF PONZI SCHEME ORGANIZATIONS

These will include:
1. MMM where people lost over $ 10 billion
2. BERNARD MADOFF – People lost over $ 20 million
3. Wonder Bank
4. ABCDONOR
5. TWINKAS
6. ULTIMATE CYCLER etc

PYRAMID SCHEME AND NETWORK MARKETING

A pyramid scheme is another scheme that is illegal and prohibited by law in most countries. A pyramid scheme is not the same as multilevel marketing. A pyramid scheme is essentially a system that promotes earlier investors based on recruit brought into the scheme rather than through any known or significant investment. It based on a hierarchical setup and not on a promoted work or products.

PARTY PLAN AND HYBRID DIRECT SALES MARKETING MODEL

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