It amazes me how many people still ask the question; “Is this one of those pyramid scams; you know, where a lot of people on the bottom work really hard and make a handful of people on the top rich?”
The truth may shock you, but every single Corporation, School, Church, and all federal, state, and local governments, use a time-proven hierarchy taught in every business school, and is referred to as a “pyramidal structure”.
Take a look at this example of a typical corporate structure!
Owners and Executive Officers (Highest Paid) Few
Vice presidents and Upper Level Managers
On Site Managers and Foremen
Hourly Workers (Lowest Paid) Many
At the top of the structure are a few highly paid Owners and Executives…
At the bottom of the structure are the lowest paid masses. Sound Familiar?
It should. If you have a job, it’s likely the same structure the company or organization you work for has. There is absolutely nothing wrong with the pyramidal structure when properly applied in business.
Why are so many people confused and financially illiterate?
Why do people still ask… Is this one of those “Pyramid Schemes?
Illegal Pyramids, or Ponzi Schemes as they are sometimes called are illegal in all 50 states, under both State and Federal Laws. State and Federal agencies are constantly on the lookout for groups operating as illegal pyramids. When they are discovered they are immediately investigated, shut down, and the perpetrators are prosecuted.
How do Illegal Pyramids differ from Legitimate Pyramidal Business Structures?
Illegal Pyramids look more like this…
|Masses of people investing hundreds and thousands of dollars into a get rich quick scheme with no legitimate products or services offered.||One or two dishonest people taking all of the money… hoping they can get out of town before they get caught.|
It may surprise you, but you already participate in one of the largest pyramid schemes if you conduct business with fiat paper money. And, the perpetrators don’t even try to hide the fact; look at the pyramid on the back of the dollar bill!
The only thing that makes this pyramid scheme acceptable are some unconstitutional legal tender laws passed in 1862 in violation of Art. I Sec. 10 of the U.S. Constitution. Yet, I don’t hear people complaining of the evils of this pyramid scheme that has allowed a few international bankers to steal the wealth of most Americans.
An “Illegal Pyramid Scheme” and a “Legitimate Business Opportunity”
Here are some common “red flags” to help you know the difference…
- The biggest and most common “red flag” is that there is no real product or service offered! In a pyramid scheme, merchandise or service is largely ignored, and little or no mention is made of a market for the products. Pyramids concentrate mainly on quick profits to be made by selling the right to recruit others. That is, they seek to make money from you–and quickly. You must then attempt to recoup your investment in products by recruiting from the ever-decreasing number of potential investors in a given area.
Multi-level marketing companies, on the other hand, seek to make money with you as you build your business (and theirs) selling consumer products.
- Most “illegal pyramids” and “ponzi schemes” are very short term. State and Federal Regulators shut them down as soon as they are discovered. Always check with the Better Business Bureau and The State Attorney General’s office for reports and Complaints about any business opportunity that you are unsure of.
- Legitimate business opportunities offer value driven products and services to customers on a retail and wholesale basis. They discourage “frontloading” which is selling an excessive amounts of products that you in turn must re-sell to recover your investment and make a profit.
Examples of illegal pyramid schemes
- The Gifting Scheme
These often have names like dinner party, women empowering women, dinner club, circle of friends or women’s empowerment network. This scheme is a naked pyramid scheme in which new participants “buy in” with a set amount of money that is “donated” to the person who recruits them. They, in turn, are required to recruit more people. As you collect more recruits, you move up the pyramid Recruits are promised a substantial lump sum once they reach the peak level.
- Ponzi scheme
This is a fraudulent investment plan in which the money isn’t invested at all. Instead, every new investment is used to pay off earlier investors. 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.
- Affinity schemes
These pyramid schemes target certain ethnic or religious groups. The scammer presents him or herself as a member of that group and sells the pyramid scheme as a way for people to “give back” to the community while providing job opportunities for other members [source: New York State Office of the Attorney General]. Scammers try to lure in prominent members of the community first to set an example.
Most people who mistake legitimate Network Marketing or Multi-level Marketing companies with “Illegal Pyramids” are simply misinformed.
Multi-level Marketing; now more commonly referred to As Network Marketing is legal in all 50 states.
According to the Direct Selling Association, over 10 million Americans work from their homes, marketing some of the highest quality, most unique, value driven products and services in America. Companies like Amway, Tupperware, Herbalife, Avon, Mary Kay 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.
In fact, network marketing is at the forefront of a massive shift… in the way products and services are delivered to consumers!
Old Economy Distribution: Poor efficiency – – – Higher Prices!
New Economy Distribution: High efficiency – – – Lower Prices!
Direct – Manufacturer to Consumer distribution.
Direct – Consumer to Consumer word of mouth advertising.
Network Marketing in the new economy is the most exciting, efficient, fastest growing form of “Free Enterprise” in the world today!
Contrary to the “Old Paradigm” about “Pyramids” A lot of people on the bottom working real hard to make a few people on top rich… the top people in Network Marketing know that their success is in direct proportion to their ability to help others rise to the top with them!
Unlike the Corporate structures of today…
The “Room at the Top” in today’s Network Marketing Opportunities, is Unlimited!
Network Marketing Endorsed by Robert Kiyosaki
That’s right… multi-Millionaire investor guru Robert Kiyosaki has come out with a strong endorsement of the Network Marketing industry.
Oh sure, there are the nay sayers who have a pretty negative opinion of this industry. They have been jaded because they did not know how to make the business work, or they’ve heard stories of someone who failed at it.
Robert Kiyosaki, on the other hand, describes a MLM Home Business Opportunity as one of the ways to realize financial freedom. The #1 reason Robert Kiyosaki recommends network marketing is for its system of education. Network Marketing can teach you success principles, leadership skills, communication skills, and people skills while providing a cash flow for you as you learn to better position yourself for financial freedom.
Watch The Perfect Business video and see what I mean.
Robert Kiyosaki’s book, “Rich Dad, Poor Dad‘ is the longest running best-seller on the New York Times, Wall Street Journal, USA Today, and Business Week best-seller lists. He is also the creator of the board game “Cash Flow 101” that teaches individuals the financial strategies that his rich dad taught him.