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View Full Version : network marketing, shady and immoral or not so bad?


natzucowww
11-20-2006, 01:55 AM
I'm thinking of getting involved in a network marketing system but am not sure if the scheme in general is shady. Here's how the payment plan works: (there is no product, only monetary transactions of $3500 which the invitee pays to the invitor (there are other smaller payments possible but for simplification we can say only $3500 transactions take place and it doesn't change the general layout or the grid.))

Okay first off, picture a standard x and y chart with a center point at zero (four quadrants). Our grid of potential invitees which is potential $ will include the entire lower right quadrant (arbitrary but just picture it) with you being at the center point of the axis. Got it?

Okay now first, before you are even allowed onto the zero point in the chart, you have to pay the person who invited you, $3500, simple. That is step one. Step two is to gain access to the grid of potential money/invitees (lower right quadrant, so as to basically be able to play the game, make your own money). In order to do this, to get access to the grid of potential money/invitees, you have to become qualified. To become qualified you must invite one person to plug into the system, which means basically they take your step 1, pay $3500, only this $3500 doesn't go to you, it goes to the person who invited you, for this first time. This is like an initiation fee. You work one time for the person who invited you, and then you are able to be off on your own, paying nothing more ever and doing no more work for free. Follow so far? It's easier now, I'll come back to the qualifier and tighten it up in a minute.

Okay, now you are on the grid at zero point (paid $3500 to your invitor) and you are qualified (signed up one person who has paid your invitor, through your work) which means you can start creating your own 'receiving lines'. Here's how the receiving lines work:

My name is Cow, I am at the center of the grid and have been qualified, I now invite David S., who pays me $3500. For a visual idea, picture David S. at the point of (1, -1) on the grid, in the lower right quadrant of course. Now David S. needs to be qualified so he signs up his buddy Mason. This is his qualifier, and Mason's money goes through David, to me, because just as I incurred this 'loss', David's first invitee is like his initiation cost for joining the club, and David's compensation is that he is now out on his own, owing nothing more forever. Visually place Mason at value (1, -2) on the grid. Of course now Mason has paid his fee, which goes to me, to get on the chart and now he needs to become qualified to get out on his own. So Mason signs up his buddy, MidGe, who simulates the same process, becoming qualified, and the money his qualifier enlists, goes to me again. MidGe is at value (1, -3) on the chart and the process repeats itself down the y axis to infinity, each time the money going to me. That is receiving line #1 for me. Do you see how this process of each new person having to become 'qualified' keeps the cycle going?

Now I invite another person to join. This person is the beginning of receiving line #2, (2, -1), (2, -2) etc. . . and the same process occurs, where I make money off the qualifying process, to infinity, both ways, x, and y, or until someone in the chain pays the initial $3500 but then bones out and doesn't qualify.

Okay to round out the recieving line thing. . basically you were in one of your invitor's receiving line, and by signing up your qualifier, you kept the qualifier compensation perpetuating for your invitor. Now, once you're out on your own, other people essentially do the same thing for you. . . got it? By you doing that one 'work for free', initiator, pro bono work, you made it possible for your invitor to have a chance at an infinite income stream.

Sounds like a pretty powerful payment system to me, but my roomie, who's a pretty smart guy said it's flawed. He couldn't explain how and gave up and went bed so I thought I'd post and see what you guys thought. Theoretically, regardless of how difficult, or easy, it may be to get people to fork over $3500 as a 'gift' (no taxes), does this plan work as stated? I think it's the qualifier process that makes it work and I think there's a mathmatical equation to explain it but I can't figure it out.

My other difficulty with this is that it might be shady. My roomate also called it a zero-sum game, my gain is someone's loss so somebody's always going to lose. But what if the train keeps going? People die and people are born and theoretically couldn't the process continue so long as there is interest?

Thank you so much for anyone taking the time to get this far and if you respond . . . I'll make you a millionaire!! Hah no I thank you very much for any feedback. Sincerely, Cow.

P.S. Well hey if you are interested I can give you the website, I think a network marketing thing in the poker community could dominate. Alright thanks again.

CrazyIrishman
11-20-2006, 02:10 AM
Typical Pyramid setup...This is known as Multi-level marketing. The only people who generally make money off of these are those who start them. Good luck convincing someone to give you 3500 dollars for the privilege of asking other people for 3500 dollars.

natzucowww
11-20-2006, 02:40 AM
Yaaaayyyy for positive thinking!

MidGe
11-20-2006, 02:55 AM
Scam.. and illegal under many jurisdictions.

John21
11-20-2006, 03:12 AM
Wiki - Ponzi Scheme (http://en.wikipedia.org/wiki/Ponzi_scheme):
A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.

Charles Ponzi
http://upload.wikimedia.org/wikipedia/en/0/0a/Ponzi.jpg

FortunaMaximus
11-20-2006, 09:08 AM
Didn't the entire country of Albania try that? Heh.

TomCollins
11-20-2006, 10:08 AM
So people are stupid enough to fall for this, wow.

Hopey
11-20-2006, 10:50 AM
[ QUOTE ]
Yaaaayyyy for positive thinking!

[/ QUOTE ]

Don't let the nay-sayers get you down. Go out and scam your friends, you go-getter, you!

John Kilduff
11-20-2006, 12:07 PM
There exist both legitimate and illegitimate versions of MLM, as well as a whole range in-between.

*Legit* MLMs make most of their money from selling actual product *to outside customers*, not to each other or to new distributors. The large fee you cite should be a tip-off that this scheme is structured so as to be financially abusive or exploitative at the expense of new recruits.

That said, even fully legitimate, non-exploitative MLMs can be very hard to make money with for most people. The time and dedication required to be successful in these pursuits is generally far more than is typically suggested to new recruits.

You might want to search the web for a comparison of various MLM plans. You might also want to google something like "exploitative" + "MLM" , or "abusive" + "multilevel" or some variant of that sort of search, and read up a bit on these things, before getting involved in any MLM (and especially for any MLM with a large start-up cost for new distributors).

Some MLMs are actually flat-out illegal pyramid or Ponzi schemes. This (among other things) gives a bad name to even legitimate, legal, MLMs. You should definitely research MLM itself (and this particular company too) from the outside and not just via literature or videos the company provides for you.

You might also try googling "the name of this company" + "scam" and see what comes up;-)

BigBuffet
11-21-2006, 01:47 PM
[ QUOTE ]
That said, even fully legitimate, non-exploitative MLMs can be very hard to make money with for most people. The time and dedication required to be successful in these pursuits is generally far more than is typically suggested to new recruits.

[/ QUOTE ]

My cousin and his wife are involved in an MLM that uses tea tree oil as a major ingredient in cleaners and health products. They devote a LOT of time to this. It basically becomes your life as you have to continually help your downline learn to recruit (there are quotas for each level) new members. You also have to "drink the kool-Aid" so to speak.

Read a book on some of the famous MLM's written by former members. It sounds just like the experience of people who escaped from the group Tom Cruise is in...

There are so many MLM's out there and just about everyone has been a seller, customer or been asked to join one, that it's very hard to get going in them now.

arahant
11-21-2006, 02:32 PM
If you're serious...
This isn't 'network marketing', it's a pyramid scheme.
How old are you, anyway?

It works fine if you can find 2 people to pay you 3500. If you find them before you sign up, you have zero risk! If you are willing to pay someone 3500, there's some chance that you hang out with people who might do so also.

Of course, it's illegal. In theory, pyramid schemes end when so many people are 'signed up' that new recruits can't find anyone to participate. This particular scheme has the advantage that it's so blatantly obvious that you will probably never try to 'recruit' anyone who's already in...

oh man...

samsonite2100
11-21-2006, 03:01 PM
I am intrigued by your ideas and would like to subscribe to your newsletter.

CORed
11-22-2006, 02:50 AM
What you are describing is not multi-level marketing, but a pyramid scheme pure and simple. If you are foolish enough to participate, the most likely result will be that you lose your $3500, with no return. This is assuming that they don't manage to sucker you out of more money after you get involved.

PairTheBoard
11-22-2006, 12:34 PM
Why bother paying anybody? Just start it yourself. If you absolutely insist on paying someone feel free to pay me.

PairTheBoard