Pyramid Schemes Exposed (Controversial)

Pyramid Schemes Exposed (Controversial)

Pyramid SchemesSo what exactly are pyramid schemes and does the shape really have any bearing on the legitimacy of a particular business model? Is it possible that you’ve been involved in a pyramid scheme and could you and your family be involved in 1 or more pyramid schemes right now, as we speak?

In this post, I’m going to expose some untold truths surrounding pyramid schemes and really dive into this controversial topic. As I address the pink elephant in the room, I want to invite you to lean in close and really pay detailed attention to the words you read.

So what Are Pyramid Schemes?

The official, or ‘technical’, definition of a pyramid scheme is this: An illegitimate non-sustainable business model that pays participants for recruiting other participants as opposed to selling a legitimate product or service.

It is possible that maybe you’ve been approached by someone involved in a pyramid scheme. Many times (and in most cases), the people involved in pyramid schemes aren’t even aware of it. There are innocent people that look at them as “investment” opportunities but at the end of the day, these ‘schemes’ don’t offer any REAL product or service. Many of these companies have “profit pools” that get distributed out amongst all of the participants.

Most pyramid schemes are also known as Ponzi schemes. A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation.

What Came First: The Pyramid Or The Scheme?

Let’s first look at the pyramid shape. At the top is a point and as you move down the sides of the pyramid (triangle), it gets wider and wider until the widest point which can be found at the base of the pyramid.

Before we use the shape to judge whether a company or opportunity is legitimate, let’s take some time to examine the shape of some different types of companies and organizations.

Pyramid SchemesIf you were to describe the internal structure of the company you work for, what shape would it be?

If you were to describe the internal structure of the church you attend, what shape would it be?

If you were to describe the internal structure of the United States Government, what shape would it be?

If you were to describe the internal structure of the boy scouts or girl scouts or the NFL, NBA, or MLB….what shape would it be?

Pyramid. Pyramid. Pyramid. And yes…pyramid.

So it’s pretty safe to assume that the shape of the organization is completely irrelevant when it comes to trying to determine if a company or an opportunity is legitimate.

The danger of so-called pyramid schemes can be found in the scheme itself – not the shape. Let me repeat that: The danger of so-called pyramid schemes can be found in the scheme itself – not the shape.

Is MLM, Network Marketing, And Direct Sales Pyramid Schemes?

The Multi-Level Marketing (MLM) and Network Marketing industry (also known as Direct Sales) have become associated with pyramid schemes for 2 reasons:

1. Like other companies, churches, governments, and various organizations, a Direct Sales company is also shaped like a pyramid.

2. Network Marketing is based on relationship marketing, or “word of mouth” advertising, where the goal is not only to sell individual products – but also build a network of distributors that also sell individual products and services (recruiting).

Just like at your job, when you join a Network Marketing company, you will fall into a specific position in the companies ‘pyramid’ structure – but here’s the major difference between Network Marketing and a dream stealing life sucking job: Network Marketing empowers you to be at the top of your own pyramid and build your own organization!

Unfortunately, the main reason why MLM and Network Marketing gets labeled as a “pyramid scheme” is because many people join with the intentions of being successful and becoming financially free – but unfortunately many people don’t take their business seriously nor do they learn the skills needed to build a profitable business. The ultimate result of this is failure and when most people fail, the don’t want to be responsible for their own actions (or lack thereof). It’s much easier to just blame the company or call it a “pyramid scheme”.

Are You Unknowingly Involved In A Pyramid Scheme (or Ponzi Scheme)?

A Ponzi scheme is generally a system in which investors think they’re investing in something real but are instead being used to pay one another back. Eventually, the scheme runs out of new investors and collapses.

Sounds very similar to Social Security. Scary thought, huh?

Network Marketing Pyramid SchemeMany people say that the only ones that make any money in MLM are the people at the very top of the “pyramid scheme”.

But consider this: The companies we work for have a CEO at the top that makes million dollar bonuses and plays golf all day, yes? Below the CEO would be the Presidents, Vice Presidents, and other upper management, correct? Then there’s the middle management, then the supervisors, and then at the very bottom of the corporate pyramid are all of the hard working employees.

Very interesting.

So What Is Network Marketing?

Network Marketing can be summed up in 2 simple words:

Recommend and Promote.

Network Marketing is nothing more than recommending and promoting what you know and like. That’s all it is and we do it everyday.

Everyday, we recommend music, movies, restaurants, churches, cheap gas, etc…but we never get paid for it.

A Network Marketing company allows us to get paid for something we already do everyday anyway. To learn more about Network Marketing and learning how you can make money in this new economy, click here.


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Committed to Your Success,


Leigh Ellis












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About The Author

Leigh Ellis

Just a decade ago in 2002, Leigh was a broke unemployed skeptic living in his car and bumming showers off of any friends that would let him over to clean up. Fast forward several years later, Leigh has seen success by building 2 successful traditional businesses of his own as well as obtaining leadership positions in 2 network marketing companies. With simplistic and practical application, Leigh mentors others on the true value of Attraction Marketing and teaches people exactly how to succeed in their business. Connect with Leigh on Facebook or . If you'd like to know more about how Leigh can help you build your business, then contact Leigh by Clicking Here

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