The Differences between Pyramid Schemes, Legal MLM and HDML

The industry where the phrase pyramid schemes is used most often is the network marketing industry. It is unfortunate that network marketing seems to be the only business concept associated with pyramid schemes. This is understandable considering many MLM distributors can’t tell the difference

What is the difference between a legal pyramid-shaped organizational structure and an illegal pyramid scam and Portex 1?

Ask most persons what a pyramid scheme is, their answer will almost always be of a general type.

The truth is, there is a fine line between legitimate network marketing and the so-called pyramid schemes.

As a Portex 1 marketer you will be faced with questions similar to this. It becomes important then to be prepared.

A pyramid scheme or scam is a fraudulent business scheme or swindle. Almost always, the process involves collecting money from other people and paying it over to those who joined earlier.

Here is a list of the major characteristics of a pyramid scheme:

1. People at the top make most or all of the money: A pyramid scheme’s compensation plan is based on the amount of money made from new recruits, not one’s productive efforts.

Your position in the organization also determines how much money you can make. Those who join early and are positioned at the top make most of the money. Participants at the bottom have to wait for others to join before they can make any money.

1. People who get in at the beginning make most or all of the money:Timing is important with pyramid schemes. Those who join early occupy top positions…and it is from these top positions that they will earn most of the money.
2. No product or service of value is involved: Pyramid schemes are based primarily on the recruiting of other people. They do not offer any value to participants. Even if a product or service was involved, this would be merely to give the scam some form of legitimacy. The product or the service would be of no value to the participant.
3. The promise of quick, short-term profits:Now, don’t get me wrong here. I see nothing wrong with getting richer quicker. The problem comes in when the getting rich quick is the hallmark of the scheme.
4. Returns are linked to how much you invest:The returns in a pyramid scheme are usually linked to the amount of money you invest. Bring in a thousand bucks and collect ten thousand in 8 weeks. Two thousand will give you twenty thousand in the same period.

The question to ask here is, where does all this money come from? If nobody joins the scheme after you, would you still get value from your participation?

With the above points in mind…

Where does network marketing fit in?

Is network marketing one of the pyramid schemes merely because its structure looks like a pyramid to many?

Who makes most of the money in MLM?

Let’s take the points one at a time and apply them to multi-level marketing.

People at the Top Make Most or All of the Money

Yes, in network marketing, people at the top make most or all the money. The question is, how did these people make it to the top?

In MLM, like any other legitimate business you may think of, you work your way to the top. You start at the bottom, and through hard work, work your way to the top. Realize that in network marketing you are rewarded for work well done. No work, no pay, regardless of your position in the organization.

In a typical pyramid scheme, you don’t make it the top. You are “born” into the top by joining in at the beginning. Your position is determined more by your arrival time than by any work on your part.

So, it would be unfair to regard network marketing to be a pyramid scam merely because people at the top make most of the money. They worked for it.

People Who Get in at the Beginning Make Most or All of the Money

Anyone who starts up a business do so with the sole purpose of making money, and a lot of it at that. Business owners in all types of businesses make more money than anyone else in that organization. There is no reason why this should not to be the case.

Contrast this with distributors in network marketing. Do people who come in early make most of the money? By all means no. Not necessarily. Why? Because in network marketing it is not how soon you join that counts. It is what you do once you are in that counts.

I have yet to find a network marketing company where the first distributor to sign up makes more money than all the distributors in that company.

No Product or Service of Value is involved

If the product or service the company offers does not offer fair value for money to every consumer, it is more than likely that it is a scam. MLM companies offer products or services which provide value for consumers in exchange for money.

It may be helpful to ask yourself this question…

“Would I buy this product or service if it was not for the business opportunity?”

The promise of quick, short-term profits

Yes, there are cases of distributors who made quick, short-term gains in network marketing. Within six months some distributors made it to beyond six figure incomes. But these are not the norm. They are rare.

An average distributor would take three to five years to start making any real income from the business.

Realize that not all distributors who sign up will do any work. Here is why…

• Some people will sign up to reap the benefits of buying products at discounted prices. They see and like the value the products provides them, but have no interest in running a network marketing business.
• Others were conned into signing up, and as soon they realize this, they quit.
• Others came in because of the promise of get rich quick. And when the promised money does not show up, they quit.

I mentioned earlier that in network marketing you make money from the sale of products or services to the consumer. This selling is made by you personally or members of your down line. Your income is therefore directly related to the sales activities of your down line.

Returns are linked to How Much You Invest

Many network marketing companies require a minimal investment to start. This usually goes towards the purchase of marketing literature and sample products. That’s about all you will have to pay for upfront.

From here onwards any payment you make will be optional. This includes such things as telephone costs, marketing or advertising costs, as well as training costs.

Making money in MLM has nothing to do with whether you pay these costs or not. It has everything to do with selling. Selling your products to end users and selling your business opportunity to potential distributors.

What about Portex 1?

No one at the Top so benefits are equably distributed while also rewarding those who enroll new token holders.

Compensation plan is based on sharing value and one’s productive efforts.

There is no position in the organization superior to another.  How much money you can make depends on your ring team’s activity.

Joining early has little benefit other than the reasonable override received from enrolled token holders.

New participants are not at any bottom as that does not exist being dimensionally organized.

Timing is not so important in HD..XL.. There are no top positions from which to earn a proportionate amount

Many products and services of value are involved: Portex 1 is not based primarily on the recruiting of other people. Portex 1 is about providing value.

The promise of deep long-term benefits:  Getting rich quick is and is not the hallmark of Portex 1.

Returns are not linked to how much one invests:

Portex 1  is linked to the amount of value you contribute.