Would You Consider This A Ponzi Scheme?

Last Update: May 11, 2018

Can you give me a second opinion on this before I publish so I know I am doing the right thing?

I am reviewing a product and I am going to call it a Ponzi scheme....

I am always VERY careful about what I say. I never use the word "scam", or "rip-off".

I always keep myself rather impartial and say "In my opinion, this is low quality and I would not use it...."

This is to distance myself from slander charger or anything of that nature and keep disgruntled vendors at bay.

HOWEVER,...

The product I am reviewing this time:

  1. has NO product, service or information to sell or trade.
  2. provides no value.
  3. has one purpose - to share the affiliate link.
  4. any "training" related content continuously hammers home that all you need to focus on is sharing your link and everything else happens automatically and you earn while you sleep.
  5. there literally is no product or service being offered.



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MarionBlack Premium
I would still be cautious about labeling it a Ponzi scheme even though it sounds like it is. Perhaps you could provide definitions of Ponzi schemes and Pyramid schemes and ask your readers to decide which it is.
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skandy85 Premium
I have included an extract from the FTC and a link to it.

The nuts and bolts come down to this fact...

This scheme also pays a small commission rate to its free members when they refer new members...

So, as soon as the business model fails and people stop upgrading to VIP membership the money will dry up because it is the VIP membership fees which is used to to pay off the free membership commission.

The money circulates, just like a Ponzi scheme.

No money is being invested, traded or used - it is just circulating with the owner taking a cut of all new VIP commissions.
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HowardJaros Premium
Yes, sounds like the old mail out "five dollars" to five people, then ask others to do the same, and by the time you reach the top of your pyramid you are a millionaire! LOL

"Run Forrest, Run! (from the movie Forrest Gump for those that don't recognize that one)
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Elijah1916 Premium
A rather complicated pyramid scheme, unfortunately there are many online. Another gargantuan promise, shinny object indeed.
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spurway Premium
Hi, this is not a Ponzi Scheme, you can call it pyramid scheme but not Ponzi. Ponzi is different see the definition.
A Ponzi scheme (/ˈpɒnzi/; also a Ponzi game) is a fraudulent investment operation where the operator provides fabricated reports and generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading.
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skandy85 Premium
It is a tricky one....

If you join as a FREE member and someone joins under a person's link, they earn $1, or $100 if they become VIP. The other $900 goes to the company!

VIP membership costs $1,000

If they themselves are a VIP member...

When that person's referral becomes a VIP member you earn $500 commission - the other $500 goes to the company.

I presume that the company's $500 goes to paying off the $1 lead generation reward and the $100 rewards for the FREE membership level.

So would it no be a cross between both a pyramid and ponzi?

This is from the FTC website...

"A Ponzi scheme is closely related to a pyramid because it revolves around continuous recruiting, but in a Ponzi scheme the promoter generally has no product to sell and pays no commission to investors who recruit new "members." Instead, the promoter collects payments from a stream of people, promising them all the same high rate of return on a short-term investment. In the typical Ponzi scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits to pay obligations owed to longer-standing members of the program."

That initial $1 and $100 payouts is what's being circulated to keep bringing in new leads.

That money comes from the company's share of any membership fees.
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skandy85 Premium
so... yes, I am confident this is a Ponzi...

because as soon as this schemes' VIP membership subscription dries up then the FREE memberships payouts will bankrupt the company and everything will fold.

The only thing which keeps it going is the $1,000 VIP membership, which is used to pay off everything else, including the free memberships but the free memberships does not actually produce any income unless people go VIP.
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ThatGuyDev Premium
That diagram is the literal definition of a pyramid scheme lol
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