Internet Marketing is A Scam

The promoter starts by recruiting a hundred people and charges each of them $100 to join. Each person joining is promised $500 for every 10 people they recruit into the scheme.

All of the first hundred then manage to recruit 10 new members each. At this point the promoter of the scheme has collected $110,000 in fees and paid out $5,000.

The 1,000 investors in the second wave also get 10 recruits each. The promoter has now collected $1,110,000 and paid out £55,000.

The 10,000 investors in the third wave recruit their 10,000, the 100,000 in the fourth wave recruit a million, and the million in the fifth wave recruit 10 million.

With 10 million people trying to recruit new members it becomes very hard to recruit more. The scheme ends here.

At this point the promoter has made $1.1bn and paid out $500m. 1.1m people have made a $400 profit each and 10m will have lost $100 each.

If the 10 million in the sixth wave manage to get some new recruits the promoter will get yet more money, but as few of them are likely to manage to get the 10 required to get the £500, the promoter is likely to pay out little of this extra money.

A lot of money has moved around, but the net result is that the promoter of the scheme gains and most of the "investors" lose. Investing in a pyramid scheme is very similar to gambling, with the promoter playing the part of the bookmaker.

Schemes are likely to be shut down by the authorities long before they get this big. There are cases of pyramid schemes getting big enough to threaten national economies, as in Albania in the 1990s.

Promoters of pyramid schemes are usually very good at disguising their nature. The most common of these is to use an inferior product sold at an inflated price as the 'hook' to persuade people that the scheme is genuine.

As a general rule:

* If you have to recruit people into the scheme to make a profit, it is possibly a pyramid scheme.
* If it is a marketing scheme that involves recruiting people to sell goods at above normal market prices, it is almost certainly a pyramid scheme.
* If a substantial part of the income it promises comes from recruiting new people into the scheme, it is possibly a pyramid scheme.
* If there are any rewards for recruiting people into the scheme, look at it in detail, and check with the financial regulators if you are unsure.

The last step is always a precaution worth taking with any investment that looks suspicious or offers rewards that look to good to be true - there is nothing to be lost by checking.

A Ponzi scheme is an investment scam that appears to be actually paying exceptionally high returns for the value of your investment.

A typical Ponzi scheme promises investors a high rate of return in a short time. The money that is collected from investors is used to pay the return. This means the scam can run for some time, because investors appear to be making the promised return. People that join early will normally make a profit, as they can with a pyramid scheme.

The easiest way to explain this is with an example. Suppose the scheme promises a return of 10% a month. The scammer simply takes investors' money and duly returns 10% of it at the end of every month.

The fact that investors appear to be getting the returns they were promised will encourage more people to talk about it and put even money into the scheme, and even encourage their friends to invest.

After ten months the fraudster will have returned all the money invested by the very first investors (assuming they did not reinvest), but will have most of the money invested by later investors. At this point the fraudster simply takes the money are disappears.

Common types of Ponzi scheme operate under a variety of names including "high yield investment program" and "high yield debentures" also the vast majority of "cash gifting schemes" come into the same category. Their common characteristics are very high returns with no clear underlying business to generate them.

More complex forms of Ponzi scheme can be harder to detect. They may well appear to be legitimate investments. They may even be part of an investment that includes both legitimate and Ponzi elements. An example of the latter is an investment or finance company that offers very high returns to depositors, and does lend the money (as a real finance company would) to make returns, but does so knowing that the return on loans will not suffice to cover the interest paid to depositors.

Anything that offers very high returns without correspondingly high risk should be regarded with great suspicion. Any investment sold through unusual channels (spam email or cold calling) or by a business that is not appropriately regulated (e.g., by the FSA or another national regulator) is also both suspicious and probably illegal. It is usually possible to check with regulators whether someone selling investments is regulated or not.

Ponzi schemes are named after Carlo Ponzi who ran a huge Ponzi scheme in the US in the 1920s.

They offered 10 "customized" websites and instructions for how to make up to $20,000 a month with them. They even offered an option to create 120 websites! Imagine how much money those 120 sites could make!!

What are they really offering?

Here is how those "plans" work:

For your $39.95, you will be sent basic information on making money with affiliate marketing. They will tell you about affiliate networks like ClickBank and PayDotCom and how to use them. All of this information is freely available on the internet for free

They will also give you ten websites, this is how they do that:

Following your registration they will give you the address of their form page. This form page has a few fields such as your user name, email address and your chosen programs. You push the 'submit' button and you have your ten sites created instantly!

That is when the problems begin, you are given a sub-domain address, NOT a full address. Your address will be something like: www.YourUserName.TheirDomain.com
Not a first level address like www.YourSite.com.

This creates a lot of problems. Here is just one of them:

The search engines do not like duplicate content at all!
All of those sites are created from the same template. That means there are lots of sites (possibly thousands) out there already that are almost EXACTLY the same as yours (only the user information is different).
Each of these sites will be penalized by the search engines; none of them will ever receive any search traffic.

How can they promise $20,000 per month?

Maybe that was achieved when the site was first put up and was original, but since they have sold hundreds of copies it can never be achieved again.
Also as long as they have a "refund guarantee" in place, even if they bother to honour it (which many don't) they know that only a small percentage of the people who signed up will ever bother to ask for a refund (typically around 20%). So they can't lose.

Up to this point you probably think I am against network marketing, far from it, I am a network marketer, all I wanted to do with this lens was point out that there are a great many dishonest "scammers" on the internet who are only there to rip your money off you as quickly as possible and then disappear until they come up with a new idea to rip even more people off.

Do your due diligence when considering joining a new program, 'Google' the name of the program in your favourite search engine and see what is out there about, not just the advertising pages but forum posts as well.
If the program is brand new -beware- the vast majority fail after a few months.
If it has been around a while look for forum posts about it, some will be critical but take an overall view.

There are many legitimate programs run by honest people that you can make money from.
It wont happen overnight, it will take a lot of work building yourself a reputation for honesty and consistency.
If you are new to the industry you will need to learn the basics of this type of marketing. It is not that much different from traditional marketing but you will need to enter it with a slightly different mindset.

You will need to learn how to sell on the internet, whether you choose MLM or affiliate marketing doesn't really matter, the basic techniques are the same.

Sell yourself first then your product, because of all the scams out there potential clients are extremely wary of people that they don't know, to build a reliable client base you need to get to know your customers and more importantly they need to get to know and trust you.

There are many training programs available on the internet some are better than others, most just tell you WHAT to do, they do not let you in on HOW to do it, read the page that this link opens and it will explain what it is all about http://www.marketingmerge.com/internet-and-network-marketing/attraction-marketing/ . When you have read it and decided that this is the best way to learn the skills you need to make it on the internet sign up here for a free basic training program at the Renegade University.
This training will not only tell you what to do, it will teach you how to do it in a step by step manner making it extremely easy to do. If by some chance you do have problems with it you will always have my details to hand so that you can get in touch and I will help.