What is a Pyramid Scheme?

The pyramid sales plan, commonly known as the Rat Club, is a metamorphic "multi-level pyramid scheme." In the United States, it is called the "Infinite Chain System", "Pyramid Promotion Plan", "Pyramid Sales Plan", "Pyramid Club"; in Hong Kong it is called "Pyramid Marketing Law"; and in Japan it is called "Unlimited Chain Sales" and "Multiplier marketing" refers to emphasizing that the method is based on multipliers, which can not only multiply time and space, but also multiply turnover. In addition, the pyramid sales plan is also called "snowball sales plan", "chain sales plan" and "pyramid plan".

Pyramid sales plan

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The pyramid sales plan, commonly known as the Rat Club, is a metamorphic "multi-level pyramid scheme." In the United States, it is called the "Infinite Chain System", "Pyramid Promotion Plan", "Pyramid Sales Plan", "Pyramid Club"; in Hong Kong it is called "Pyramid Marketing Law"; and in Japan it is called "Unlimited Chain Sales" and "Multiplier marketing" refers to emphasizing that the method is based on multipliers, which can not only multiply time and space, but also multiply turnover. In addition, the pyramid sales plan is also called "snowball sales plan", "chain sales plan" and "pyramid plan".

company name

Pyramid sales plan

Commonly known

Rat club

Nature

scam

Category

Sales

Founder

pyramid selling

Features

Entrants must pay royalties

Pyramid sales plan is a scam. It uses high allocation ratios as bait, and simply relies on the speculation of the bonus system to achieve geometric growth in sales, so that the income of a few people can reach astronomical numbers in the short term, in order to deceive newcomers Join, buy a lot of products that you do nt need and ca nt sell. It is also possible that some companies will tell

1. Entrants must pay royalties .

2. Participants must subscribe to a considerable amount of goods and not allow returns.

3. Participants must subscribe to a considerable amount of goods and allow return, but the hesitation period is very short.

In accounting theory, pyramid sales plans are also illegal.

The promotion organization of the so-called "investment" or "sale and purchase transaction" method uses the geometric progression method to earn the fees paid by new members joining these methods in order to make money and become rich. Many related fraud methods found by judicial units in various countries have various names, including "chain letters", "snow balls", "

For example, in order to join, you may have to pay a small investment or thousands of dollars. One thousand yuan can be purchased at a location on the ground floor. Five hundred yuan will be given to your first online, and the other five hundred yuan will be given to the person at the top of the pyramid, the promoter. If all the positions in the chart are filled with affiliates, the promoters will earn 16,000 yuan, and you and everyone else at the bottom will lose a thousand yuan. When the promoter earns enough money, his position is cancelled, and the second tier is promoted to the top. At this point, the two talents at the second level will start making money. In order to feed these two people, thirty-two vacancies are added at the bottom, and then new entrants are searched. Whenever a level rises to the top, a new layer is added to the bottom layer, and each layer is twice as large as the previous layer. If there are enough new entrants, you and other fifteen people in the same level may reach the top. However, in order to make you rich, 512 people must be recruited, half of whom have to pay a thousand yuan each. in order to

Organizations established through the Pyramid Sales Program are effectively rewarded by adding new members (new offline) and their investments, rather than selling and distributing real products to people who actually use or consume those products. It does not actually buy or sell real products or services, but is basically an internal redistribution of wealth from the new offline to the founders of the organization. This structure does not play a legitimate business mechanism; the only "buying and selling" carried out in practice is the redistribution of the rights and benefits (or the so-called investment) of the new offline members in the structure.

Pyramid sales method does not require sustainable operation in terms of commerciality, because they basically assume that there will be an endless stream of newcomers coming in, and they will be willing to pay the membership fee, and then they will join for the newcomers who join in and do the same Get rich. However, due to the limited number of new recruits they can recruit, the newcomers who join later have a level of difference, and have fewer and fewer opportunities to become rich than those who introduced them. As a result, such organizations tend to be short-lived, and those who join last have no opportunity to recover their membership fees, let alone to benefit from such a structure.

Early pyramid sales laws were identifiable at any time due to the lack of tangible products, and they were also prohibited by law. However, later fraud organizations have argued that they are a truly multi-level direct selling company, and they do "sell" goods and services in an attempt to deceive the public and avoid lawsuits. Of course, multi-level direct sales is a well-established sales method. It is a way to make direct sales personnel profit from selling products to consumers (including those who join this sales method) through an independent network of distributors.

If you look closely at the so-called "products" of the pyramid sales method, you often find that they do not have real market value. This is because those products are usually just "gimmicks", such as certain certificates, fake training programs or magazine subscriptions, illusory discounts, or "magic" treatments that are overpriced and very inefficient, and so on. Newcomers are often forced to "invest" in large quantities to buy these products, but there is no real possibility to sell these products to real consumers (or return repayments). However, the money they put in has become a lucrative income for the people they join.