20/07/2009

Is Network Marketing a Ponzi Scheme?

The Telegraph Digital Headlines dated 20.7.09 tell us all that "Celebrities lose out in 'British Bernie Madoff Ponzi fraud."

It reports that more than 600 people have lost, in some cases, a huge amount of money in an alleged scam by British Consulting International (BCI), including a household name 1960's pop star and other well-known figures.

They say that "The fraudsters behind the conspiracy are said to have used their business connections to target wealthy names in the sports, music and finance industries, although people with modest incomes have also lost out. Like Madoff, the conmen "befriended and groomed" their victims, many of whom recommend friends and family join the scheme."

So how is it that people can be taken in by such schemes? Why is it that people are so gullible when faced with a seeming 'get rich quick' proposal? Is it greed, or are the Bernie Madoff's (who was recently jailed for 150 years for orchestrating a £39.5bn fraud) so clever that they can weave a tale that will fool most people?

To the Network Marketer, the hallmarks of a scam are all too apparent. For instance, in this recent alleged Ponzi fraud, the Telegraph reports that "According to police, BCI and connected companies offered returns of between six and 13 per cent a month, claiming that the tempting dividends were generated by lending money to struggling firms who were willing to pay high rates of interest. In reality the monthly payouts were funded by the original investments. The con men used the rest of the capital to fund lavish purchases including a fleet of luxury cars, it is alleged."

Network marketing simply doesn't work this way. Whoever heard of your Avon or Kleeneze rep, your Betterware distributor or your Telecom Plus distributor contacting you to ask for huge sums of money?

Ponzi frauds, like Pyramid schemes, are generally asking you for money. Network marketing is offering you goods or services. What's more, to join a network marketing scheme as a distributor will generally cost you less than £200 and even this is refundable with some companies.

In the current economic climate, with companies asking staff to take wage cuts, sabbaticals or part time instead of full time work, NOW is a great time to consider starting your own home based business in network marketing. It's a way to protect yourself against the changes in the economic marketplace, and it's a way to build yourself a residual income that you will receive For the rest of your life! Plus, it is NOT a Ponzi scheme, and it's NOT a Pyramid scheme.

No, it doesn't promise 'get rich quick' and, yes, you will need invest some time and effort. In fact, to go one further, you may need to invest some time in Yourself. In other words you might have to be open to change, and be open to learn, and to set your own goals. But then, the people who promise get rich quick may, Like Madoff, find themselves to have bitten off more than they can chew.

In sum, network marketing may well make you rich, but it won't come about by conning your friends, family and colleagues!


1 comment:

  1. Great post. It really highlights the difference between the different schemes, and shows how anyone at all can be taken in by Ponzi (& pyramid?) scams.

    ReplyDelete

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