At 09:47 AM 1/21/98 -0500, you wrote:
>Can somebody explain to an innocent what a "multilevel marketing" scheme is?
It is a spin off of the Ponzi scheme which is a pyramid scam where the
people on top of the pyramid get rich and everyone else gets screwed. This
is how it works in a Ponzi: a product, lets say snake oil, is sold at a
price below cost. But the product price is so attractive that an ever
increasing number of people, lets call them marks, buy it in ever
increasing amounts. There is enough money coming in to pay the bills
(which get paid late, if at all), order more product, line the pockets of
the schemers, and pay very large dividends to the initial investors
(crooks). The large pay-offs attract more investors (suckers), whose money
goes, not to buy more raw material, but to the initial investors. As you
can see, eventually when the supply of new investors runs out, the last
ones in, on the bottom of the pyramid, put money in, but get nothing out;
the crooks have taken their ill-gotten gains and scrammed.
There is another type of pyramid scheme. It is very old and it involves the
sale of burial mausoleums with sub-standard sandstone.
Now, with multilevel marketing, instead of layers of investors, there are
layers of product sellers, district managers, directors, etc. In this
pyramid each level gets a percentage of the money from the lower level.
The only way to make real money is to be on a high level with levels below
putting some of their money into your pockets. The problem for those on
the bottom becomes that either the market becomes saturated with product
and they can't sell anything, or their pay-off goal before they make any
money is impossibly high, or the good sales territories are gone, or they
find out that every other house on the block is selling the same thing, or
they are required to buy truck loads of product, or.....etc. Well, you get
the idea.
I think that Doe and his followers had a better chance to get to the next
level. But what if you want to get to that higher level, but if you don't
like grape juice.... Woops, wrong dodge......
I hope this answers your questions. If not contact me directly. In the
mean time, I have this warehouse full of snake oil, and for the right
amount of money from you, I promise that you will make.......
Peace, John
