What’s The Difference Between MLM and Pyramid?

MLM and Pyramid are at first glance similar. The difference is with pyramid it’s1) illegal in most developed countries,
2) it’s immoral (IMO),
3) the sole source of income with pyramid is the recruiting of new members who pay a fee to join.

Sometimes with pyramid, members are forced to buy some worthless stock which they can never sell, such as cleaning products costing thousands. Their income (and the people above them) is derived solely from new members joining and paying their “membership fee” which then gets shared out up the tree.

The longest time a pyramid scheme will manage to last before collapsing is about 18-24 months. In Cork in Ireland early in 2006, there was a variant on pyramid which slipped through the legal loopholes because it involved people “gifting” several thousand pounds to other people in the hope that in a few weeks another batch of people would do the same for them.

Needless to say it ripped the community apart when the money ran out, there were death threats etc., but essentially it all boiled down to stupidity and greed.

Before this was Women Empowering Women, another pyramid scam aimed at women, doing the same thing. I believe it originated in Canada where many politicians and police are involved, so don’t expect that one to come to a happy conclusion.

There have been many variants over the years, do a Google for “Ponzi scheme”.

On the other hand, MLM is perfectly legal as it involves goods that have worth and are truly retailable, which is regarded as the rule of thumb. It is also closely scrutinised in many countries.

A very good example in the UK is VWD and their e-Lottery Syndicate. It’s been going for 4 years now and appears to be totally above board. There’s enough money going in that it won’t ever collapse, and you’re actually getting a product for your money in the form of lottery entries. And you can drop out at any time and there’s been no big investment of money. Very clever.

As someone has pointed out to me, the payment processor PayPal don’t differentiate. To them Pyramid and MLM are one and the same.

I think probably everyone has (at some time) had emails from people involved in a chain email and 5 people on the list, where you pay £3.00 by PayPal? That’s pyramid, and that’s a scam, so don’t ever get involved.

It’s a variant on the old chain letters from 30 years ago and more that used to do the rounds where you send money to the next person in the chain, then send it to 10 other people. All pyramid, all scams.

The people at the top get the lion’s share and the people at the bottom get nothing.

If you think about the PayPal email, it’s total BS. Very little of it stands up to any kind of scrutiny, but it relies on the emotions to drag you in.

I think it quotes things like 10% take up rate (yeah right), PayPal have said it’s legal (yeah right), it can’t be cheated as PayPal will only let you have one account ( yeah right).

And with that last one alone, we all know you can have multiple email addresses with a single PayPal account, up to 8 I think. So you just take out 5 free email addresses, add them all to your PayPal account, edit the list to include all your email addresses and send it out to everyone in your address book.

It’s just scummy. Why go to all the bother? If as much effort was put into legally earning money, they’d all be wealthy people.

Posted by Frank Haywood