Tuesday, October 19, 2010

Network Marketing vs. Pyramid Schemes

Oh boy. So some endorser from Global Fusion, Inc. tried talking me into joining his company which employs a multi-level marketing strategy. In a nutshell, MLM strategies gain profit not just from product sales, but also through sales from recruiting more endorsers of the company's products.

MLM, as some may know, is criticized mainly about it being a cover-up for a pyramid scheme, which is illegal in many countries (including the Philippines). What the pyramid scheme basically does is hire recruiters who give a certain amount of money, and those recruited will gain more recruits for a certain amount of money, profiting everyone from a percentage of that money, and so on BUT the number of potential new recruits will eventually run out, meaning those in the top tier of the pyramid will be the only ones benefiting, while those at the bottom are left without profits. My explaining sucks so you guys can gain a better understanding with this chart. Anyway, without any potential new recruits, who pay to join the company, and whose payments are the profits of the company, the company will just go bankrupt. As aforementioned, those in the top tiers are the only ones benefiting.

The guy who talked to me about this was a good speaker. He knew how to lure me in, but of course I'm not stupid and I realized his Wall Street hook, line, and sinker kind of talk immediately. I'm not accusing GFI of employing the pyramid scheme, but it does look like a scam at first, too good to be true and all. So yes, I did some research on some of the terms he mentioned while speaking. It made me double-take on the matter but, well, Esther wants to join, and I'm doing this for her. I love her so much, and I'm willing to make this work. I want her to be happy, even if this means I'm going to be taking a big risk with my moolah.

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