Pyramid Schemes!
What is a pyramid scheme? I find a lot of people that are willing to throw this term around without actually understanding what it is they’re talking about. For a while, I found it quite confusing myself so I can understand if maybe you don’t really know what a pyramid scheme is. If you want all the jargon, you can check out wikipedia’s definition here. But if you find that a little confusing, stick around and I’ll try to explain it as best I can.
Why is it so important to understand what is a pyramid scheme? Because I don’t want you to miss out on the many available legitimate opportunities out there that you would normally brush off as scams. There is a wealth of opportunities that could earn some good legitimate income, but many people are simply turning the other way with the excuse that ‘it’s a pyramid scheme’. Of course I’m talking about things like MLM’s, affiliate programs, and network marketing. If done correctly, these can all be very good sources of passive income, and I don’t want you to be passing them up as options.
You know I like getting straight to the nitty gritty, so here it is. A pyramid scheme should contain some or all of the following characteristics:
- No products. If the ‘business venture’ or ’scheme’ doesn’t have one or more concrete products that you can personally identify with, STAY CLEAR.
- They have a product but it’s highly overpriced. If they are offering a product, make sure that the price is not over the normal retail price for a similar product.
- You earn for referrals. A legitimate business should pay you according to the business volume that you are moving yourself or through your network, in other words you should only consider a business if they are paying you commission on the products that you are selling. If you get paid only for referring others, its most likely a scam.
- You only benefit by signing others onto the scam. In a legitimate business you should benefit by signing up other distributors, but you should also benefit, by using whatever product they’re offering, as a customer.
- Payment structure is iffy at best. In a pyramid scheme, most of the members will be left out in the cold with nothing but a bad experience. If, technically, the people at the bottom of the pyramid don’t get a chance to make any money then there is some serious problems. This will be the case with most schemes, they don’t offer products, and they pay you for referrals, so you have to go out and try to get other people to waste their money on thin air and if you can’t you’re left with nothing.
- Huge joining fee. If you’re being asked to pay a large sum up front without seeing any concrete products, then don’t bother.
- Sneaky products. They tell you that you’re making an investment, or that you’re all helping each other. Don’t be fooled, investments are not that hard to understand, so if you don’t really understand what it is, don’t bother.
- What really happens in a pyramid scheme is that money is being shifted up the pyramid, so the guys at the top make all the money and the guys on the bottom do nothing but pay for it all.
If you get used to spotting the wrong thing when it comes along, then you’ll be a lot more confident when talking to that over eager dude spouting gibberish, and when something legit is presented you won’t automatically brush it aside in fear of the unknown.
Be safe and prosperous.
Simon
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