Definitions of some of the terms you may see referenced on this site -
From mlmlaw.com -
Whether a program is a legitimate multilevel marketing plan or an illegal pyramid
depends principally on: (1) the method by which the products or services are sold; and
(2) the manner in which participants are compensated. Essentially, if a marketing plan
compensates participants for sales by their ""enrollees," "recruits," and/or their downline
enrollees and recruits, that plan is multilevel. If a program compensates participants,
directly or indirectly, merely for the introduction or enrollment of other participants into
the program, it is a pyramid.
Take particular note of the part that states
If a program compensates participants, directly or indirectly, merely for the introduction or enrollment of other participants into
the program, it is a pyramid.
Overly simplistic perhaps, but it's a good
rule of thumb. If the focus of a site is on the rewards you will receive by introducing new members, don't waste your time or destroy your reputation. The site is unsustainable. Eventually there will be no one left to join. Only the early adopters have a chance to earn.
Onto some descriptions from Wikipedia -
- Foreign exchange fraud.
Foreign exchange fraud is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. The foreign exchange market is at best a zero-sum game,[2] meaning that whatever one trader gains, another loses. However, brokerage commissions and other transaction costs are subtracted from the results of all traders, making foreign exchange a negative-sum game.
https://en.wikipedia.org/wiki/Foreign_exchange_fraud
- HYIP - High-yield investment program.
A high-yield investment program (HYIP) is a type of Ponzi scheme, an investment scam that promises unsustainably high return on investment by paying previous investors with the money invested by new investors.
https://en.wikipedia.org/wiki/High-yield_investment_program
- Ponzi scheme - The scheme is named after Charles Ponzi, who became notorious for using the technique in the 1920s
A Ponzi scheme is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or financial trading. Typically, Ponzi schemes require an initial investment and promise well-above-average returns.
https://en.wikipedia.org/wiki/Ponzi_scheme
- Pyramid scheme - also referred to as franchise fraud or chain referral schemes.
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.
- The "eight ball" model.
The scheme requires a person to recruit two others, who must each recruit two others, and so on. Such schemes may try to downplay their pyramid nature by referring to themselves as "gifting circles" with money being "gifted".
- Matrix schemes - reference here is not to legitimate "forced matrix compensation structures"
https://en.wikipedia.org/wiki/Matrix_scheme
Matrix schemes use the same fraudulent non-sustainable system as a pyramid; here, the participants pay to join a waiting list for a desirable product, which only a fraction of them can ever receive.
https://en.wikipedia.org/wiki/Pyramid_scheme
- Revenue sharing - Revenue sharing is the distribution of profits and losses between stakeholders. As such, legitimate.
If however, to be eligible to receive profit sharing you first have to purchase an 'Adpack' and you are promised a return greater than your purchase, it is not sustainable. The introduction of new members is required to pay existing members. Think 'Pyramid/Ponzi/HYIP'.
