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Why Should You Choose Your Investment Wisely

Author: Mohamed Fareed
by Mohamed Fareed
Posted: Dec 13, 2020
pyramid scheme

If you are in the market looking to make an investment, it is often quite hard to choose the right company. However, there are many other factors that you need to be careful about. One such predominant cheat scheme is the pyramid scheme. In such a scheme, there is no actual product or service the company is selling and most products that consumers buy are unsellable. Even though it has been made illegal in most states, it is still practiced in many others. However, it is very similar to the multi-level marketing model used by many legitimate businesses.

Difference Between Pyramid Scheme Vs Mlm

Focus On Sales:

One big point in pyramid scheme vs mlm is that pyramid schemes usually do not include distributorships or the sale of a product. This trend mainly fakes the involvement of those two things just to show their legitimacy in the market. The prime reason for this is to throw off the regulatory authorities since most states have banned the practice of pyramid schemes and all such companies that earn their majority profit through recruiting other investors and not product sales. In simpler words, in pyramid schemes selling a product is of least importance, while, recruiting new investors is of prime importance.

On the contrary, multi-level marketing has a different story altogether. Since it does not show fake profits, unlike the pyramid scheme, there is more focus on selling the products and services than recruiting new investors. Companies that follow multi-level marketing only recruit new investors when it is absolutely necessary or when they have made a huge profit. This is one huge difference that comes to mind when comparing pyramid scheme vs mlm.

Selling Products:

In a basic pyramid scheme, every new investor has to pay a fee to enter the company. The fee allows them to sell said services and products along with giving them the right to recruit other investors into the system for rewards that are not related to the services or product sales. More often than not, in such a system, the services or products that one buys are unsalable by the consumer. When the consumer goes back to the seller and tries to give it back, the promoter does not repurchase them as well. This is where they cheat the consumer and make money off of them.

However, when it comes to multi-level marketing companies, they do not cheat the customers. They essentially focus on providing the best products and services to their customers. Now by chance if the products do not sell, and the consumer comes back for a refund, they are more than obliged to take it back, nevertheless, at a discount on the original price. This makes this type of marketing more trustworthy and efficient.

These are some of the main differences between MLM and a pyramid scheme company. Before investing in a company, these are some points you should know that can help you differentiate between a legit and non-legit company. These are the basic things that you should know before investing in the pyramid scheme. You need to identify such schemes so that you do not invest your hard-earned money in such schemes.

About the Author

Fareed is a graduate of computer science engineering, a writer and marketing consultant. he continues to study on Nano technology and its resulting benefits to achieving almost there.

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  • Guest  -  2 months ago

    thanks for the useful information. • Business Promotion • product promotion • product launch

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Author: Mohamed Fareed
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Mohamed Fareed

Member since: Feb 11, 2017
Published articles: 868

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