Recruits. There may be other income from the sale of products, but it is insignificant additional income that cannot hide the illegal operation. Binary planes can be designed to function and be legally implemented as follows: A pyramid is a structure with a wide foundation, which makes the structure stable even at high altitude or depth. The organizations that train their members in the pyramids are among the most successful in the world. Governments, churches, schools and most businesses are pyramids in terms of organizational structure. Network marketing companies are structured in a similar way. According to the law, all these entities are legal pyramids. Fraud is detected and stopped. Even if it is not legally stopped, the pyramid functioning of government goes like this: citizens who are at the lower levels of the pyramid pay their taxes and vote for the people who will form the government. These taxes and votes are the values that serve as citizen investments. What do citizens get in exchange for their taxes and votes? The expected returns from their “investments” are government services related to economic programs, security, infrastructure, education, etc. If these services do not reach citizens at the lowest level of the pyramid, there is no exchange of value for value. Citizens are then deprived of the services to which they should be entitled.
This government is therefore an illegal pyramid that deserves to be overthrown by the people`s power. The first thing you need to do is educate yourself by reading articles like this or watching documentaries on the internet. Second, you need to be careful and not pressured by others to make an investment without fully understanding how the business actually works. Don`t believe easily just because someone is very famous, a celebrity or someone in a superior position tells you. Protect yourself and always be smart when it comes to financial decisions. You can also get financial advice from people who have extensive knowledge of the business and other things that involve money. Be very careful when choosing business products, especially those that claim a guaranteed monthly income, which sounds too good to be true. And finally, educate your family and friends on how MLM and Ponzi schemes actually work. Just because something is legal doesn`t mean it`s legitimate or not a scam. Under Republic Act 7394 a.k.a.
The Consumer Law of the Philippines, pyramid schemes or chain distribution schemes are defined as “sales devices by which, provided that a person makes an investment, is granted the right by the company or its representative to profitably employ one or more additional persons to whom such right is also granted, provided that it makes similar investments: provided that the profits of the person benefiting from such a plan derive mainly from the hiring of other persons participating in the scheme and not from the sale of consumer goods, services and credits … A consumer is led to believe that he is joining a network company so that he can take advantage of the opportunity to buy consumer goods and earn income by recruiting other consumers to buy the same consumer goods. For example, Amy joins Company A by investing, say, 500.00 pesos, and she receives a laundry soap or detergent as well as a sales kit in exchange for her investment. Soap or detergent actually costs 50.00 P on the market, but the company claims the “membership fee” as payment for the kit (brochures and literature), handling fees, computer access fees, membership card, etc. The sales presentation asks Amy to hire at least five additional people for the system so she can recoup her investment and earn income immediately. The compensation plan presented to Amy is a 5×5 network marketing system where she can earn from her 5 recruits who also recruit 5 recruits each, and so on, up to the 5th level. In this case, if Amy`s 5 recruits invest 500.00 P each, Amy P earns 200.00 of each for a total of 1,000.00 P. These 5 recruits are the downlines of Amy de la 1. Step. If these 5 downlines each recruit 5 more people, Amy will have twenty-five level 2 downlines, of which she earns P 100.00 each, for a total income of 2,500.00 pesos. The presentation further explains that Amy P earns 25.00 from each of her 3rd level descending lines for a total gain of 3,125.00 pesos; P25.00 from each of their 4th level downlines for a total profit of 15,625.00 pesos; and P 10.00 of each of their 5th level downlines for a total profit of P 31,250,00. Then she could start all over again, from a new set of downline lines from 1st level to 5th level.
Nowhere in the presentation is the word pyramiding mentioned. The company bills itself as a network marketing company that provides income opportunities to housewives. Hence the use of household items such as soap, which housewives buy anyway, whether they join the company or not. Other pyramid construction companies use more sophisticated methods that are increasingly difficult to detect or locate. They offer other products such as gold coins, jewelry and houses and land. Internet pyramid scams offer domains as the primary product or service that participants are encouraged to purchase, as advertised on websites, web malls or e-commerce centres. Whatever form it takes, a pyramid scam is a growing scheme that does not offer a legal business transaction. How to recognize a pyramid scam? A detailed analysis of a pyramid scheme would show that: a.) The main income of the participants comes from the money that their recruits invest. There may be other income from the sale of products, but it is insignificant additional income that cannot hide the illegal operation.
b.) There is no exchange of value for real value. The money invested does not generate the corresponding value of the consumer goods or services offered for sale. Consumers pay more than the actual cost of the goods they buy. c.) The majority of participants (80%) do not earn a living. They end up being losers when this scam is exposed and stopped. Even if it is not legally stopped, it must stop itself when the system is saturated. The followers of the operation, who represent 80% of the participants (90% in the other scams), end up being scammed. These are consumers who were deceived into buying very expensive consumer goods because they believed in the possibility of making easy money.
Unfortunately, it never works that way. THE PYRAMID PRINCIPLE – LEGAL OR ILLEGAL? A pyramid is a structure with a wide foundation, which makes the structure stable even at high altitude or depth. The organizations that train their members in the pyramids are among the most successful in the world. Governments, churches, schools and most businesses are pyramids in terms of organizational structure. Network marketing companies are structured in a similar way. According to the law, all these entities are legal pyramids. When is a pyramid unit considered illegal? Let`s take the case of Government, Inc. as an example. The head of state (president) stands at the top of the pyramid. The lower 1st level lines are cabinet members, judges, senators, commissioners and national officials. The 2nd level descending lines are directors, administrators and regional managers. Let`s move on to the levels of mayors, city councilors, barangay officials, and citizens in general.
The pyramid operation of government is as follows: citizens at the lower levels of the pyramid pay their taxes and vote for the people who will form the government. These taxes and votes are the values that serve as citizen investments. What do citizens get in exchange for their taxes and votes? The expected returns from their “investments” are government services related to economic programs, security, infrastructure, education, etc. If these services do not reach citizens at the lowest level of the pyramid, there is no exchange of value for value. Citizens are then deprived of the services to which they should be entitled. This government is therefore an illegal pyramid that deserves to be overthrown by the people`s power. What happens if a foreign-based company operates an illegal snowball operation? Let`s say the company Amy joined in the previous example is a foreign-based company.