Is Keller Williams a pyramid scheme? – Remember the saying “If it seems too good to be true, it probably is”. Individuals are uninformed to the way that fraudulent pyramid schemes destroy lives, properties, and connections many have worked for a considerable length of time. In this article, I would answer a few questions like is Keller Williams a pyramid scheme? is Arbonne a pyramid scheme?
In the year 2007, Barry Minkow, an indicted criminal who at that point turned fraud investigator, composed a 500-page report and offered it to the FBO, IRS, and SEC, blaming USANA for working an unlawful pyramid scheme.
USANA began offering extraordinary chances to win a full-time salary from part-time work. USANA offer was available to everyone paying little mind to education or experience. For new members to participate in the USANA scheme, they have to follow these two easy steps ;
- Purchase $305 200 points USANA products
- Recruit two other people to do the same
The organization developed rapidly, turning into a worldwide activity that brings in 50,000 new investors (members) month to month at its peak. USANA investors were branded globally and the executives are commended from various states and various nations. USANA executives in 2007 were celebrated when it reports $423 million dollars as a profit for USANA organization, but the vast majority and most especially it`s new participants earned less than they pay into the business.
USANA was in the long run accused of working a pyramid scheme. A typical sort of fraud where individuals bring in cash by enrolling more individuals to get tied up with the business.
WHAT IS A PYRAMID SCHEME
A pyramid scheme is a sketchy business model, where individuals recruit newer participants via a promise of payment of services for enrolling others into the business model rather than sales of the products or services rendered. Pyramid schemes have existed for a very long time, but it comes in different business models and promises of a life-time investment funnel. Due to the viral cover-up of a pyramid scheme, multi-level marketing plans have been classified as pyramid schemes to help investors avoid being defrauded.
Fraudsters utilize the pyramid scheme to channels income from those on lower levels of the organization to the top and are frequently connected with fraudulent operations.
HOW THE PYRAMID SCHEME WORKS
The sketchy business model begins with one member called the FOUNDER. The founder requests an underlying gathering of individuals to purchase in and promote the scheme – they are then urged to enroll others and promise part of the proceed those people invest. The founder takes a portion of each enrollment into the scheme.
The pattern repeats for each gathering of new investors with cash from the new investors funneled to those who recruit the investors, the upper levels executives and the founder takes the larger share.
IS KELLER WILLIAMS A PYRAMID SCHEME
I have my readers send me tons of questions to ask about two companies, and to confirm if they are a pyramid scheme operation or not.
So, is Keller Williams a pyramid scheme? Well, Keller Williams is a real estate company with a full-on service that focuses on helping clients or customers sell and buy properties.
Research shows the company has been solely focused on their primary business, which is real estate. This is what makes Keller Williams different. So, It’s inaccurate to term Keller Williams a pyramid scheme.
IS ARBONNE A PYRAMID SCHEME
This is a tricky one with Arbonne. The company almost run like a pyramid scheme, but they are able to avoid a few loopholes to stay on the right path. So, is Arbonne a pyramid scheme? Yes and No.
Arbonne policy mandate $150 to be spent by each distributor monthly. The customers have to spend this amount in order to stay “active” in the business. Do you need to spend $150 on beauty products monthly? Is there a distributor out there that spent such an amount monthly? Yes!!!
Arbonne increases commission and gives cash bonuses to for recruitment, increase your commission, and promote the distributors who are recruiting more than selling. They never hand you a “DIRECT” cash reward.
So, while it isn’t technically doing pyramid scheme stuff, it’s also definitely doing pyramid scheme stuff if you’re picking up what I’m throwing down.
So, while Arbonne is practicing a pyramid scheme like system, It continues to show his customers a grey area. You can also check out the Arbonne pyramid scheme meme which raises concerns about the company`s credibility.
DIFFERENCE BETWEEN A PYRAMID SCHEME AND A PONZI SCHEME
We have had a lot of questions from readers asking, How do you spot a pyramid scheme? How do you spot a Ponzi scheme? What is the difference between a pyramid scheme and a Ponzi scheme? well, here is your quick answer.
A pyramid scheme is a sketchy business model, where investors recruit newer investors via a promise of payment of services for enrolling others into multi-level marketing rather than sales of the products or services rendered. From the start of a pyramid scheme model, you’re aware you are paying money for the opportunity to get others to pay you money.
A pyramid scheme is an Insidious kind of securities fraud that attracts 4 years of jail time in the United States of America and maybe more on other continents.
In a Ponzi scheme, cash taken in from newer investors is utilized to pay off early investors with a profit, therefore ‘approving’ the investment (until, obviously, the entire thing breakdown when the last cash cannot get reimbursed.). Ponzi scheme requires deceiving the members, covering the exchange of cash with an (as far as anyone knows) genuine investment business.
A Ponzi scheme is a Stockbroker Fraud through Misrepresentation which pulls in 7 years of jail time in the United States of America and maybe more in other continents.
The fundamental difference between these scams is the structure. pyramid scheme business models work in a top-down way, including different investors. Ponzi scheme, then again, has an increasingly roundabout structure based on the culprit of the scam, with all investors on the equal, illegitimate footing.
The two schemes may be different, but it takes time knowing how to spot a pyramid scheme at it`s earliest, unlike Ponzi scheme.
WHY does THE PYRAMID SCHEME FAIL?
As the pyramid scheme grows, it becomes difficult for new recruits to make money. Since there are only a limited number of people in a given community, all pyramid schemes will ultimately collapse. The only people who make money are those few who are on the top of the pyramid.
Take a business model structure where you as a founder have to recruit six people to make a profit.
Let`s take a business model structure where a founder has to recruit 6 participants to make profit. If he/she is successful in recruiting six people to start and each of them recruits 6 more, there will be 36 people in that second round of recruitment. If the model continues and each recruits 6 more, the 12th round of recruitment will amount to 2,176,782,336 billion members.
For the pyramid scheme to be successful, the members have to recruit about 13,000,000,000 participants and that`s more than the world`s population. Over 80% of the pyramid scheme new participants will lose all their investments.
PYRAMID SCHEME STRUCTURE
Pyramid schemes are illegal in most countries and they are difficult to detect. The pyramid scheme comes in different forms which entirely depends on the founder`s idea business model
The scheme comes in different forms;
- Multi-Level Marketing (MLM)
- Investment Clubs
- Gifting Groups
MULTI-LEVEL MARKETING (MLM)
Multilevel marketing is a system for selling services (investments or goods) through a network of distributors. MLM may well be a legitimate business, but the idea of encouraging existing investors to recruit new distributors who are then paid a percentage of their recruits’ sales.
Many pyramid schemes business model endeavors to introduce themselves as authentic MLM organizations. A few sources state that all MLMs are basically fraudulent business models, regardless of whether they are legitimate. The U.S. Government Trade Commission (FTC) states: “Avoid staggered advertising plans that pay commissions for enlisting new wholesalers.
Are people familiar with you have one way or another offer you to buy into the next level easy money-making investment machine right? The scheme disguises Itself as an investment club that offers big profit in return for recruiting new members instead of promoting goods or services.
In spite of their enticing new-age talk of a gifting economy, they are essentially a modern twist into an old pyramid scheme.
Gifting clubs are an unlawful fraudulent business model where new club members regularly give cash “gifts” to the highest-ranking individuals. If you get more participants to oblige, they promise you will climb to the most noteworthy level and get gifts significantly greater than your original investment.
DIFFERENCE BETWEEN PYRAMID SCHEME & MULTI-LEVEL MARKETING BUSINESS
The difference between legitimate MLM and a pyramid scheme is the product sale or services rendered. MLM is individuals selling products to the public – often by word of mouth and direct sales while there is no real product that is sold in a pyramid scheme.
COMPARISON (MLM vs PYRAMID SCHEME)
MLM is a Legal business model
A pyramid scheme is an Illegal business model
MLM is used by companies to sell goods or services
In a Pyramid scheme, there is no real product except a fake investment
MLM is a marketing strategy for companies
Pyramid scheme is a fraudulent scheme for fraudsters
In MLM, you pay money to start selling and primarily make money from selling a product or offering services
With Pyramid scheme, you pay money to start selling.
MLM pays contributions to distributors depending on the level
The pyramid scheme has no real product it sells.
Pyramid scheme capitalizes on already existing relationships like family members, churches, colleagues, or tight-knit community groups. The founder encourages the first few members to report an excellent review of the company before they start making a profit.
As members continue to give excellent reviews to the scheme, this prompt others to buy into the business model before it becomes clear only a few top-tiers are making money while most members lose money.
The pyramid scheme entices people with opportunities and empowerment, so, when members don`t end up making money, they blame themselves and not the scheme. Some victims are often embarrassed into silence when members lose all their investments while others keep trying multiple new schemes and losing money each time.
HOW TO SPOT A PYRAMID SCHEME
In spite of all the factors mention in this article, there are ways you can easily spot a pyramid scheme.
- Paying for an opportunity to sell a product or offer services
- To make money you will be required to sign up other people
- Constant time pressure to sell.
- The system is designed to benefit a few of the management and top-tier partners
There is no easy way to make money out there. You need to constantly do research and educate yourself about different schemes before investment.
So, is Keller Williams a pyramid scheme? No!
Also, is Arbonne a pyramid scheme
If you want to invest, kindly visit your nearest bank and ask for financial planner assistance or a professional investor certified by the financial body of the country.
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