Why The Internet Has Changed MLM Forever! - Part I

Where The Confusion Begins

There is a lot of confusion about Multi-Level Marketing so I’m hoping that this article will help you understand the key differences.

What helps fuel the confusion is the number of names that are used interchangeably by people who don’t understand the differences themselves, some of the terms being completely misleading. Names like:

Ponzi Scheme

Pyramid Scheme

Network Marketing

Multi-Level Marketing

Viral Marketing

One At A Time

Let’s discuss them one at a time. A Ponzi Scheme is the same as a Pyramid Scheme. People became aware of these during the early 1900’s when Charles Ponzi instigated one of these scheme’s, though the idea was first mentioned in the 1857 book ‘Little Dorrit’ by Charles Dickens.

The way it works is simple; people with some money to invest are promised a high rate of return within a few days. Other people are brought in as investors and THEIR money is used to give the FIRST investors the return (profit) on their investment. Still more people are found to invest, often by word of mouth, because the initial investors where very happy with the profits they had already made.

Then What?

This goes on until no more people can be found to invest any money, at which time, the LAST group of investors is left with no return on their investment. This group by necessity, would be a much larger group than the earlier groups of people, because there had to be enough people with enough money to support the smaller groups who invested before them. Because there were more people further down the system supporting those above, the name ‘Pyramid Scheme’ was coined.

Does Anybody Win?

Only the originator of the scheme and the first few levels of the ‘pyramid’ get more money back than they invested. The main point to consider is that there was NEVER any PRODUCT to sell or buy; it was just a transfer of money based on promises of future returns.

Ponzi/Pyramid schemes are illegal in most countries and they are considered by most people to be, at the very least, unethical, and in my opinion completely immoral.

In Part II tomorrow, I’ll discuss Network Marketing vs. MLM.

Luke.