Pyramid / Ponzi Schemes vs. Legitimate Business

Below is a very nice summation for anyone that may be confused about what constitutes a pyramid or ponzi scheme, vs. what constitutes a legitimate business opportunity.

Perhaps some may be a bit confused about what can be a subtle difference between a pyramid and a true mlm. If the products are only incidental, and the true focus is on recruiting others, then it's probably a pyramid. If the products cannot be retailed separately in the marketplace apart from the business opportunity, it is probably a pyramid. So for example, if you have to pay to join the business in return for "resale rights" to whatever "products" are included in your membership, and you're not allowed to resell those products to others apart from the business opportunity, then it's a pyramid. Why? Because at some point down the line the number of people who can join the program will reach its limit, and those who get in late will lose out. Granted, it may take months, years, or longer....but eventually the stream of new recruits will end. Taking this a step further, the only difference between a pyramid and a ponzi scheme is that a ponzi doesn't bother with having a "product" at all...it's just based entirely on recruiting, with older members being paid by newer members, who again will eventually run out.

By differentiation, a legitimate business is based on the sale of consumable goods and services, all of which have a finite lifespan and must eventually be replaced. That lifespan may be a few minutes in the case of a piece of candy, or 20 years in the case of a new roof for your house. However, regardless of the lifespan, the goods and services sold by a legitimate business will always have a market.

So giving the "gurus" the benefit of the doubt, maybe some of them simply haven't stepped back from their viewpoints to see the true aspects of some of the things they promote. I'll admit that back when I was marketing, if I saw that a particular program had "products" of any kind, I pretty much assumed it was legit. But as you can see, that's simply not the case. I do think some of the big players in the online world mean well, in that they do try to share training, etc. with their followers and help them (of course some gurus couldn't care less about their minions). However, best intentions aside, if they're promoting a pyramid/ponzi type program as the "vehicle" for their followers to succeed, they are leading them down the wrong path.

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For further details, the full discussion can be found here: https://www.ftc.gov/public-statement...yramid-schemes