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What's The Difference Between PONZI Scheme & Multi-Level Revenue Sharing ?

Discussion in 'Business & Tax Advice' started by Electriiin, Apr 17, 2015.

  1. Electriiin

    Electriiin BANNED BANNED

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    I am thinking of building a Wordpress membership site, where users will pay to be able to view the contents of the site and there are 10 levels of referred members (like paid members referred by some members and they are referred by some others and they are referred by some others) with each of whom I will share a % of the membership fee - in this case is this legal ? Is this MLM ? Or this will be considered a PONZI scheme ?
     
  2. Electriiin

    Electriiin BANNED BANNED

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    Anyone here ? ///////////////////////////////////////////////////////////////
     
  3. asap1

    asap1 BANNED BANNED Jr. VIP

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    The only difference is in a ponzi scheme the people dont get paid LOL
     
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  4. Electriiin

    Electriiin BANNED BANNED

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    But in my website, everyone will be paid.
    Do you think my business model is still a PONZI ?
     
  5. Electriiin

    Electriiin BANNED BANNED

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    huh ? /////////////////////////////////////////////
     
  6. Sunday Lunch

    Sunday Lunch Junior Member

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    From what I can gather, you are saying

    Member A signs up and refers member B, Member A receives a percentage of member B's signup. Member B then refers Member C, Member A receives a % of Member C sign up and Member B receives a percentage of Member C's sign up. And so on.

    This to me looks like an elaborate affiliate program. This is the same system used by the women who sell make up products, AVON (4 Billion Market Cap).

    I would not call it a Ponzi because the point of signing up and getting other people to sign up is to read the content, the payments you make are only secondary for referrals. If there was no content and the whole point of A signing up was to then try and entice B, then C in order to get an increasing payout then I would call it a Ponzi.

    Because there is a product, for me it is not a ponzi.
     
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  7. reallife

    reallife Jr. VIP Jr. VIP

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    If all of the payments are coming from actual revenue, it's not a Ponzi scheme. A Ponzi scheme is taking money from one person to pay another what's due him.
     
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  8. Electriiin

    Electriiin BANNED BANNED

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    Many thanks dudes or dudettes for your help.
    Further confirmations from other BHW members will be very helpful.
    People, please keep on posting on this thread relevantly.
     
  9. sysco32

    sysco32 Jr. VIP Jr. VIP

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    Don't forget the difference between MLM and ponzi scheme.As i saw talking about avon.At avon u are getting paid to sell items,and you receive percentage after it.Big percentage of the persons income have to come from selling actual products to the end user.

    If your users are going to get paid only by refering other users who will pay the fee also to enter your website and no actual product has been delivered to the end user/consumer...than it is pretty much against the law and goes for a ponzi.

    Has to be a product what you deliver /digital or physical / to the end user who is not necessary your affiliate otherwise it is against the law.
     
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  10. Electriiin

    Electriiin BANNED BANNED

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    I see. So I will make my product to be a digital product as per your recommendation.
    Hope this will be fine and legal then.
    Please people, post more insights.
    Thanks.
     
  11. InnovativeSEO

    InnovativeSEO Senior Member

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    [h=3]Five Key Elements of a Ponzi Scheme[/h]
    1. The Benefit: A promise that the investment will achieve an above normal rate of return. The rate of return is often specified. The promised rate of return has to be high enough to be worthwhile to the investor but not so high as to be unbelievable.
    2. The Setup: A relatively plausible explanation of how the investment can achieve these above normal rates of return. One often-used explanation is that the investor is skilled and/or has some inside information. Another possible explanation is that the investor has access to an investment opportunity not otherwise available to the general public.
    3. Initial Credibility: The person running the scheme needs to be believable enough to convince the initial investors to leave their money with him.
    4. Initial Investors Paid Off: For at least a few periods the investors need to make at least the promised rate of return - if not better.

    • Communicated Successes: Other investors need to hear about the payoffs, such that their numbers grow exponentially. At the very least more money needs to be coming in than is being paid back to investors.

    I believe you will be fine, just operate with some integrity and not to steal from your members.