In studying
MLM for several years, it has been my experience that vast MAJORITY of people in MLM have NO BASIC CONCEPT of what a pyramid scheme is. They hear some super-short summary of denial by their upline on how their MLM is NOT a pyramid scheme, and they take that at face value, without ANY fact checking.
So consider this a basic education, what is a pyramid scheme, how similar is network marketing to pyramid scheme, why is network marketing legal while pyramid scheme is not?
First of all, a pyramid scheme is an ILLEGAL
BUSINESS MODEL, where the primary emphasis is on recruiting people, and have them put money into the system, so people on top of the pyramid can take money out and reap the rewards.
The simplest and most used example is the 8-ball scam, i.e.
airplane game.
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A simple binary tree diagram illustrating the hierarchical structure of a multi-level marketing compensation plan. (Photo credit: Wikipedia) |
In the airplane game, i.e. 8-ball scam, you originally starts as one of the red balls at the very bottom. Your upline (not your direct upline, who's a level above you) needs bodies to full all the red ball spots. Once it's filled, he's "done", "cycled out", gets the reward. Maybe he can join someone else's game and start over from the bottom.