Already tired of these pyramids “Often, speaking about network marketing (aka multi-level), people just do not understand what is at stake. The phrase “network marketing” or “stacked” associate them with “financial pyramid”. But this is not true. In this article I will try to explain what is all the same network marketing differs from all so familiar and chilling our ears – the financial pyramids.
Acquainted with the term “Ponzi scheme” Ponzi scheme (named after Carlo (Charles) Ponzi, an Italian immigrant who founded the USA in the 1920’s the world’s first financial pyramid) – is essentially the same as a pyramid scheme, as is aimed at attracting new members. In this scheme, no goods for sale and does not provide for fees to participants for recruiting new members. Instead, the organizers collect fees from the new member, promising them quick and large profits. Ponzi scheme has nothing to do with investment. Money is the new members used to pay those lucky enough to have been the first participants of the pyramid – they are something really quickly enriched.
In the Ponzi scheme is based on a simple principle: ‘Rob Peter to pay Paul. ” Financial schemes built on the principle of Ponzi, usually very attractive and provide a rapid and significant enrichment of a small number of initial participants, who then, as Typically, forced to hide the cook from prosecution and from defrauded investors. Network marketing companies operate in the market for many years, and pyramid schemes quick and ignominious collapse, causing financial damage gullible citizens and moral – to work honestly network organizations whose sole fault is in the likeness of the organizational structure! The difference between a pyramid scheme and network marketing, that the network Marketing – a way of selling goods and services through a network of distributors. Working in a network marketing company, the distributor receives a commission for sale of goods and services, as well as the involvement of new distributors. Financial pyramids, to explain the Federal Trade Commission (FTC), even though they have a similar structure, but pursue other goals. Creating a financial bubble assumes a constant increase participants, however, without the sale of goods and services. In most countries, pyramid schemes declared illegal along with other forms of financial fraud, as the lead organizers of the enrichment at the expense of ordinary participants. Financial pyramid and network marketing just like the organizational structure. And there, and there is a constant recruitment of new members, who are invited to attract them are being paid. However, in the network marketing of basic income workers have for the sale of real goods and services. Therefore, to distinguish the company from fraudulent network organization, which is based on the Ponzi scheme, it is simple: in the latter there is no real goods – Goods or services that distributors sell to the public. If compensation is paid only to attract new members and membership fees last – we see a typical pyramid scheme. The company has a network marketing money to pay for the sale of goods and services. I suggest you get acquainted with one of network marketing companies with which I work. This is an American company that sells foreign language courses EN101.