Home Advertise Contact Blog Advertiser Login RSS
Newsletter Signup

Buy A Business Opportunity of Franchise
Home-Based Businesses
Choosing a Business Opportunity Growth and Profit Marketing and Sales
Plans and Goals Running Your Own Business Start-Up
Working From Home Entrepreneur Exchange Feature Articles
Opportunity Community Opportunity Focus In The News

Happy first day of December! It’s December and the end of the year is in full-swing. Don’t go into the holiday travel season without the December Book-of-the-Month: Business Adventures by John Brooks.

December means that its holiday time. No matter what holiday you celebrate it’ll...

Female celebrities are breaking the stereotypes of Hollywood and diving into the world of business. Check out how these women are using their fame, fortune, and power to start their own companies. From media production to makeup, these Top Female Celebrity Business Owners are doing it all!

As...

With only a few weeks lefts in 2017, it’s time to get organized now! The holidays are around the corner and you don’t want to be scrambling at the end of the year. Use these Small Business Organization and Tax Tips to End 2017 to help you keep the end of the year stress to a minimum.

Happy...

Sponsors

STARSCAPES®
Imagine making up to $500 to $1,800 a day! Call or click now see how you can get your business for FREE! (602) 679-0257
Promotional Products Home Business
Run Your Own Business. Be Your Own Boss. Earn Great Profit Potential. Start At A Low Cost. Try It For Free! Learn More.
Residual Income Business Opportunities
Residual Income is the way that you work once and get paid multiple times—sounds great!... Read On
Top 7 Reasons to Consider a CMS
The internet loves obscure abbreviations. You can skip over most of them, but not CMS. What is CMS? read on...
The Ideal Length of Everything Online, Including Social Media Posts
When one of your busiest marketing channels limits you to 140 characters, you know that the internet sets its own rules.
Low Cost Business Opportunities to Own
Are your right for a Low Cost Business Opportunities to Own? The desire to own your own business... Read On
Why Advertise Your Business Opportunity?
Over the years we have been fortunate enough to receive quite a few testimonials. In fact, ... read on
National Property Inspections
Flexible work schedule, no experience needed, and complete training and support available!
How Many Leads Does It Take To Close A Sale?
This Featured Article is live on our blog and I know could be very insightful for connectivity and ROI.
Top 50 Home-Based Business Ideas
Home-Based Business ownership can be the most rewarding endeavor you will ever undertake. The new year... Read On
I Want To Buy a Business Opportunity or Franchise
Who are the types of people who buy a business opportunity or small franchise? According to people in... Read on
Copying & Publishing Business Opportunities
Today creativity abounds in the printing and publishing space with more unique business solutions than ever imaginable.
 
Resource Center > Article
Pyramids, Ponzis and Predators, Oh My!
Share this Article:

Many people confuse predatory pyramid and Ponzi schemes with legitimate multi-level or network marketing programs.  Tasked with protecting consumers from deceptive and misleading practices that negatively impact the free market, the U.S. Federal Trade Commission (FTC) will periodically make a proactive attempt to educate and inform the public about the key differences.

It’s unfortunate, but as each new generation of potential victims for these kinds of illicit marketing schemes comes of age, the job of protecting the public from them yet once again must and does ramp up.  Add to that the fact that today’s technology has made it far to easy to reach people in their own homes with these kinds of shady opportunities promising huge profits for really doing a whole lot of nothing, and the FTC’s job gets that much harder.

With a nod to the FTC and in support of its effort to educate and inform people who are shopping for a business opportunity, distributorship, licensee opportunity or franchise, here are some quick facts and hints about what you need to know and look out for when it comes to pyramids, Ponzis and other predators:


  • Pyramid schemers promise you large profits based primarily on your recruitment of others to join the program, not on profits generated by the sale of any real tangible product or service to the general public.

  • While some pyramid schemers claim to sell a product or service, it’s only to hide their true pyramid structure.

  • Two tell-tale signs that you’re dealing with a pyramid schemer:  1) Inventory loading that forces you to buy more than you could ever sell, oftentimes at hugely inflated prices; and 2) Lack of retail sales or “huge” sales that, on closer examination, are only going on among people who are already within the pyramid structure, not to the general consuming population.

  • Ponzi schemers also rely on continuous recruiting, but in a different way.  They generally have no product to sell and don’t tell you that you can earn money by recruiting others.  Rather, they collect payments from a stream of people under the guise of a phenomenal investment opportunity and promise a huge rate of return on their investment.  Then they go on to “rob Peter to pay Paul,” as the saying goes, using the money invested by later victims to pay off earlier ones, until they can’t anymore.  Think Bernie Madoff and the ultimate Wall Street swindle that wrecked so many lives not too long ago.

  • Both pyramid and Ponzi schemes are deemed to be predatory in nature.  They are also highly illegal because, without fail, they must and do fall apart, leaving 70% or more of those that get drawn into their web at the bottom of the pyramid and having suffered what can oftentimes be a significant financial loss.


To avoid getting caught up in one of these scams, the FTC recommends that consumers and businesses follow these six key tips:

  1. Any plan that makes exaggerated earnings claims, especially where there seems to be no real product sales or investment profits, should raise a red flag.

  2. BEWARE of any business or franchise opportunity that offers commissions for recruiting new participants, especially when there is no apparent product involved and/or there is a separate, up-front membership fee.  And just because there may be a product or service represented does not mean all is well.  The FTC has seen pyramids operating behind the guise of many a seemingly legitimate operation, including everything from charity benefits and jewelry to cosmetics, cleaning supplies and even women’s underwear and electricity, of all things!

  3. If the product or service being sold has an inflated price tag, members must buy costly inventory or most sales occur between people who are already members, that’s a problem.

  4. If any business claims to have a secret plan or approach that only the higher ups and/or members can know about or there's some mysterious overseas connection or any other special relationship that is unverifiable, run!

  5. Beware any operation that delays meeting its commitments and asks its participants to just have faith that things will improve.  Being in “pre-launch” mode IS NOT an excuse, as most operations that make that claim never do get off the ground.  Attempts to marginalize outsiders who question the opportunity and then label them as skeptics while promoting a sense of community and solidarity within should also be troublesome to you.  This is a commonly used tactic to recruit and retain victims.

  6. Any opportunity that implies overnight wealth can be yours thanks to the public’s interest in high-tech or by tapping into newly deregulated markets where pyramids and Ponzis are legit is most likely a sham if not a scam.  Even the most legitimate high-tech ventures are risky and become profitable only with time and years of hard work.  Additionally, deregulation rarely means that no rules apply such that pyramid and Ponzi schemes are suddenly okay.


When you’re shopping for just the right entrepreneurial venture, make sure you watch out for these important clues or indications that something just isn’t right.  Do your homework and educate yourself on what constitutes a legitimate opportunity and what doesn’t.  If you don’t, you run the serious risk of getting in over your head and paying a huge price for it down the road.

Related Blog Posts

Have you always wondered what exactly is a ‘business opportunity’?  Check out these Business Opportunity Examples! You’ll be shocked at the diverse opportunities you’ll find!

In a nutshell, business opportunity examples are the anecdote to the job’s problem in the USA. It can be tough to find...

What Women Want – Business Opportunities for Women! More and more women are looking to become their own boss. To help, we’re bringing you our best business opportunities for women.

As part of a new series for women, every Friday, we’re posting a blog related to hot topics for women in business....

Looking to start a business? Why not market to baby boomers? Take advantage of the fastest growing consumer demographic with these 25 Start-Up Ideas for Baby Boomers.

25 Start-Up Ideas for Baby Boomers - Whether you’re a baby boomer who is looking to start a business...

Best Money Making Small Businesses – What Industries Are Booming? What Industries Are Tanking?

It’s no surprise there are a million and one ideas for small businesses. Taking the risk to open your own business takes a lot of courage. You’re putting your livelihood, job security, and financial...

Entrepreneurs Wanted - Once you’ve decided to take the plunge and enter the scary, exciting, challenging and oh-so satisfying world of entrepreneurship, you need to find the best business opportunity. How do you find one that has potential, sparks your interest and doesn’t break the bank? How do...

 
   

I had the pleasure of chatting with Shawn Pigg, CEO of Hotels Etc. for BusinessOpportunity.com's Podcast series that will be released very soon on our new Digital Platform.  Here is the transcript from that call for our regular RSS feed subscribers who get all of our posts first.

If you would...
Read More


Premium Sponsor