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Multi level marketing and pyramid scheme

Updated on August 10, 2014

Multi level marketing and pyramid scheme, there basic difference

Multi level marketing is an another types of marketing and selling activities. Most of the countries are going to making a rules in terms of multi level marketing and few countries have prohibited multi level marketing when it seems to be a pyramid scheme. Pyramid scheme is considered as an financial crime. It is also called pyramid game. The structure of a pyramid and the structure of a multi level marketing is similar. But in legal view and style of operating of the selling activities can differentiate the pyramid scheme to multi level marketing. Few of the countries does not consider multi level marketing is legal. Exactly what will be crime or what will not be crime that is somewhat dependent on the view and on the way of tasks. Crimers are just like bacteria. How any specific bacteria can grow resistancy against a specific kinds of antibiotic, just like same crimers all of the world all time looks for an alternative way to achieve there goals, in what way they can do crime easily by avoiding the law. Though, multi level marketing is considered legal in few countries and not strictly restricting, crimers in few countries start multi level marketing with technically hiden pyramid scheme.

Structure of pyramid game

Pyramid game is a financial crime wher no productivity have done nothing but a fraud. In such kinds of pyramid game top of the people of the pyramid become rich and earn a lot of money within short time. But the bottom of the people become financially loser. It is a marketing as well as a recruitment process.

A recruitment of a sales executive with cost of money or any product that new sales people have to pay the previous people who have recruit him and the new recruited people is responsible to recruit new people. This chain of recruitment become a long chain. The sales peoples structural shape become a structure of a pyramid. Look how in this game the top people of the pyramid becoming rich. If the people A is the top people of the pyramid, he recruits 2 people bellow him and take 1000 dollar from each people. He can manage total 2000 of dollar. He instruct two recruited subordinate to recruit new people. Each two person recruit 2 peoples, hence extra four peoples are recruited with the cost of 1000 dollar for each. Hence he able to allocate extra 4000 dollar. 500 dollars are paid to each people for recruiting a new people. Top people of the pyramid pays to two subordinate of him 1000 dollar but he gained total 6000 dollar. Subordinate will motivate finding 500 dollar easily. But they does not know what is happening.

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