There are many dangers and scams lurking on the internet, schemes designed to snare and entrap even the most tech-savvy amongst us. This is the first in a new series of articles geared towards internet safety, scams and schemes with the aim of spreading awareness about the many different traps around. Many of the discussed schemes are just modern incarnations of age-old scams. This weeks topic is Multi-Level Marketing schemes.
I just want to start off with a quick statistic. According to a report published by the Federal Trade Commision, between 99.0% and 99.9% of all participants in multi-level marketing schemes lose money. That’s right, it’s practically a given that you will lose money if you participate in one of these schemes. The only people who can possibly make any money from them are the people who start the schemes, the individuals at the top of the pyramid. Yes, I said pyramid, because that’s what Multi-Level Marketing is; Pyramid Selling.
In a tale as old as time, these multi-level marketing (MLM) companies generate almost the entirety of their revenue by utilising a non-salaried workforce who sell the companies products/services and recruit further “salespeople”, with the earnings coming from a pyramid-shaped commision structure.
Not all MLM companies are bad, and it is a legitimate marketing strategy that has been successfully used by respected companies. That being said, there are far more scam companies around than legitimate ones. Whether it’s selling health or diet formulas, trading scams or a miracle baldness cure, the result will always be the same; you lose. The system is designed that way, milking what it can out of every participant. If you’re required to put down a sum of money in order to get your starter pack, put your credit card away. It’s probably a pyramid scheme.
I was approached by an individual on Facebook, talking about an AI Crypto Trading bot that he’d come across, so I said “tell me more”. He sent me a link to a video, which was just some guy talking over PowerPoint slides, and the penny dropped when they were asking for $500 - $2000 for this trading bot. That was a no from me instantly, as I’m not gonna drop that kinda cash on something I can’t verify. He seemed so earnest and sincere, the guy probably didn’t realise he’d been caught by a pyramid shaped trap. “But you can make even more money by selling licenses for the AI trading bot!” I’m sure you can mate, I’m sure you can.
Even supposing that the trading bot that guaranteed daily profit was real, what was stopping me from just selling the licenses at a rock-bottom price, shifting thousands of them, cutting everyone else out of the market and just laughing all the way to the bank? It’s the old phrase “if it seems too good to be true, it probably is”. If we stop and think these things through, the logic soon starts to fall apart. These seemingly lucrative and promising investment opportunities are getting more and more victims every single day as the Crypto fever spreads throughout the population. Scams are becoming so common, new ones are popping up on the hour and are still gobbling up willing participants. By the time you’re hearing about a MLM scheme, it’s already too late to make any money on it.
Stay vigilant, do your research and don’t get carried away with the thrill of the crypto hunt. It’s never a good idea to take financial advice from unqualified internet denizens. Have you come across any scams or schemes on your travels? Share your thoughts in the comments down below, and as always make sure to follow me for the latest Crypto, Internet and Pop Culture updates. Peace!
Sources:
The Case (for and) Against Multi-Level Marketing By Jon M. Taylor, MBA, Ph.D., Consumer Awareness Institute (https://www.ftc.gov/sites/default/files/documents/public_comments/trade-regulation-rule-disclosure-requirements-and-prohibitions-concerning-business-opportunities-ftc.r511993-00008%C2%A0/00008-57281.pdf)