Definition of Pyramid Schemes Grand Rapids
What is a pyramid scheme in English?
Pyramid schemes depends on recruiting members in order to make money scheme miss-leads the people and promises that it gives very high amount of Return.They advertise it as very high and quick money. The initial recruiter at the top of the structure which is called level 1. He joins two members who both have to pay the recruiter to get in system let’s assume a $100 each this creates a second level within the organisation but in order for this members to make a profit at least to start they have to recruit new members to invest which brings us to a Third Level $50 of which is paid to their immediate joining in level 2 and the other $50 of which is paid to the initial member in level 1.
Anytime new members are joined their investments are divided and distributed to every member on top of them in the organisation structure now lets add up everything to see results. As you can see the members at the bottom lost $100 the members in the middle did not make any money And member at the top made a nice $400 at the expense of everyone.
How does pyramid schemes fails:
In theory, everyone can make money as long as they recruit enough people with themselves but the problem rises when no member is added because earth’s population in finite and one day if everyone joins the system there will nobody to join new members. this is how the pyramid schemes fails because it is impossible to keep joining forever.
That is why the majority of the members ultimately and up losing money in this type of scheme never return back the money they invested initially.
Defination of Pyramid Schemes
Basically The pyramid scheme is a variation of the Ponzi scheme, promising higher investment returns that are not available from traditional investment. the structure of the pyramid scheme inspires others to join new member and collect money which finally reaches the top of the pyramid. In this type arrangement, one person recruits another person to invest a certain amount.
Other people invest by employing people downline to invest in the ponzi scheme. The more people he can promises higher amount of profit, and a certain percentage of the profits of all recruits serve to enrich those who worked before he was on the pyramid. Each person must new person. This process continues until they found a new pyramid under them called tree and it collapses due to its own weight.
Pyramid Schemes Facts
- It is true that you can make money with pyramid scheme.
- The recruiter get opportunity to connect with the maximum number of people.
- Company can make huge amount of profit by adding more people in less amount of time.
- The people at the top of the pyramid get commission from everyone in their downline.
- You will get maximum number of people working for you even they don’t know about you.
- Generally, only people near the top of the pyramid earn profits, and those at the bottom never going to recover their investment. multilevel marketing companies are structured like a pyramid.
Every Individual have the opportunity to invest in their own business, which distributes a product. However, the real profit is not from selling products, but from motivating others to buy into their own products and add new joinings, where the percentage of investment increases the recruiter.
These companies like Amway, Rodan + Fields and Tupperware. Among the high-profile multilevel marketing companies research as pyramid schemes is Herbalife company. Herbalife distributors can only make money by selling company products.
Critics give an allegation that the company’s top recruiters get the biggest profit. Regulators claims that the multilevel marketing structure is not fake if companies need to recruit new agents and ask these agents to buy their products. Most of the profits are generated by consuming and encourage other people to consume the same products of the company.
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