MLM vs. Ponzi scheme


We all want to make quick money, don’t you? Well, we all know about various Ponzi schemes and Multi-level marketing all out promising a good harvest of money. They might be legitimate ones as well as illegal ones. Here is all you need to know about the two.


Definition of MLM

Multi-level marketing is a marketing strategy also known as referral marketing where products and services are sold or offered, and the sale personnel is only paid for what has been generated from the sale. These strategies are used by companies to encourage distributors to hire or get more distributors with a promise of paying them from the percentage the recruits have sold.


Definition of a Ponzi scheme

This is an illegal investing scum that promises unsuspecting investors with high-income returns from small risk. The first investors in this scheme will always be paid from the money of the later investors to attract a huge number of investors. This scheme doesn’t involve any investments such as business activities but uses gullible groups by enticing them with bright promises.


Differences between MLM and Ponzi scheme



  • Duration of operation

Most of the top MLMS agencies have been running the industry for over longer duration of years such as 10 to 20 years of operation. On the other hand, pyramids are not legit, and they don’t last for long. This is because the moment they earn a huge profit, they automatically close down their service.


  • Setups

MLMs are set up to sell products, and commissions are granted to the individuals who sell the products. The other commissions can only be attained from the sells of the individuals’ recruits. On the other hand, in Ponzi schemes, no real product is being sold.


  • Activity model

MLMs are always straightforward with the activities they run. The sells personnel are always hired to sell out huge chunks of products to people. On the other hand, Ponzi schemes are never straightforward as all they do is promise heaven on earth and hide the reality which is that they don’t have a legal nosiness operation. In MLMs one can easily understand their operations while in Ponzi schemes, they are always confusing as they focus on recruitment and selling of a non-existing product.


  • Earnings



MLMs make their money from sales of the products. Since MLM wants to get more sells people, they pay the people who have recruited more sells persons well. It just works like a pyramid where the person on top of the pyramid is always earning more than those at the bottom since all their sells earn the recruiter some commission. Pyramid schemes or Ponzi, on the other hand, don’t have actual products they sell. If they claim that they have products, you will have to research a little bit but believe me. You will find out that it was just a scam. Pyramid schemes depend on people mostly to buy packages of fantastic products that are letter discovered as false. In the Ponzi schemes, the first participants will always earn from the enrolment of other participants. The more the participants add up, the more money they get and the sooner they are to shut down their operations.


  • Promotions

In pyramid schemes, you move up the promotion ladder depending on how many people you have recruited or signed in. The more the people you recruit in the Ponzi, the more the steps you move up the ladder and the more earnings you get. On the other hand, in MLMs, people get promoted based on the number of products they have sold.


If you are an individual who is focused on making extra cash through marketing of products, then try out a multi-level marketing since they are reliable in sources of income than Ponzi schemes which can give false hopes.


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MLM vs. Ponzi scheme




MLM vs. Ponzi


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