Wondering if your MLM business is conducting unethical practices? Check to see the differences is between MLM, Network Marketing, Ponzi Schemes, and Pyramid Schemes.
The Difference Between MLM, Network Marketing, Ponzi Schemes, and Pyramid Schemes
1. The DifferenceBETWEEN MLM,
NETWORK MARKETING,
PONZI SCHEMES, AND
PYRAMID SCHEMES
Presented by Robert Proctor of Multisoft
AboutRobertProctorMultisoft.net
2. THE PROBLEM
MLM (Multilevel Marketing) & Network Marketing are legitimate
forms of business, while Ponzi and Pyramid Schemes are
illegal.
Ponzi SchemePyramid SchemeMLM Network Marketing
3. MLM
MLM, or Multilevel Marketing,
is a form of business that
works by gaining and
nurturing distributors, while
also selling products. These
distributors (1) help to sign on
more distributors under them
and (2) encourage their newly
gained distributors to sell
products to people.
4. NETWORK
MARKETING
Network Marketing is similar to MLM
but varies slightly. Many people use
the terms interchangeably. Network
Marketing functions by having
salespeople who sell products and
gain more salespeople by networking
at different organizational meetings.
These salespeople will find
organizations, either related to their
field or not, and visit them to find more
people to sell to and gain more
salespeople from them. They then
reach out to the prospects' networks of
influence to gain more prospects.
5. PONZI
SCHEME
The term, "Ponzi Scheme," came from a
man, Charles Ponzi, who used arbitrage
to earn money on coupons for postal
stamps in 1919. Although that is not
illegal, he obtained investors and paid
them off with new investors money. He
even used gambling to earn new
income to pay off investors. He was
caught only one year later after his
business was found out by the
Securities Exchange Company.
6. PYRAMID
SCHEME
Pyramid Schemes are difficult to catch,
as they are similar to MLM, a
completely valid form of business. The
difference is that Pyramid Schemes
sell barely any products and rely on
the steady influx of new distributors to
pay off people who are higher up in the
hierarchy. The new recruits
accumulate hardly any real income
from this and are used at the expense
of people higher up on the pyramid.