So I’m actually trying to figure this one out because we all heard so many stories regarding this.
Hopefully the online community can chime in here. Your opinions will be much appreciated.
It is referred to as the pyramid scheme or the old chain mail / letter scheme, pipeline scheme, guess there are many names for this scheme but I will break it down in logical steps and hopefully we can all reach a solid conclusion by the end of this post.
Lets say hypothetically someone starts a business and calls it “Collecting To Give” and the only stream of income is by creating an affiliate program, referring others and charging a membership fee.
So it works like this:
1. To join CTG you have to pay a once off LIFETIME membership fee. $10
2. For this $10 you get lifetime access to the membership area of the site and your account which has your affiliate referral link, a basic profile and pic.
3. The only way to earn is by referring others and when you do, you get $1. For every unique person you direct to CTG and they sign up for a lifetime membership for just $10 you receive $1.
4. Since CTG cares about their members they have a bonus incentive so for every ten people you refer you get a extra $1 and every one hundred you refer you get a $10.
This is what the 10:1 Scale + Bonus incentive would look like:
As we can see if you have referred a thousand people to CTG you will get a pay out of $1000 + $300 in bonus incentives.
So if you have a banner on your website with lets say 1000 traffic per month that view this banner and 100 sign up, every 10 months you will get $1300 (passive income) for putting up one banner. You can do the math if you have more websites, traffic or both.
Alternatively there is a forum on this website for members only where they discuss different strategies for getting more referrals so its not completely tedious and boring.
There seems to be no problem here right?
So I would like to ask a few more questions.
- Is this system in anyway illegal?
- Is it ethical or immoral?
- Does it come across as a legitimate opportunity?
- What providence will it build long term?
- Is this not a basic method a lot of successful companies use for their affiliate programs?
If you would like to answer any of these questions please feel free to state your opinions in the comment section below.
Lets use one more scenario…
You at a open club party, just arrived and paid your $10 entrance fee. You find a table, sit down, close your eyes and start enjoying the music. About five minutes later the club owner approaches you and asks if you having a good time? You smile and say yes. He then makes you an offer an says “If you invite some people to the club tonight I will give you $1 for every person that walks through that door. When they arrive they must use your name and the number 83 as a password at the front door and by the end of the night you will receive your payment”. You smile again and don’t take him very seriously but five minutes later you decide to post an update on your facebook profile about the party, just for fun “P.S. the password: Tommy83 and $10 entrance”.
You enjoy yourself a few more hours, meet someone new, dance a while and have a great time. You look at time and its 3am, wow! Time to go. When you get to the main entrance the doorman approaches you and sticks out his hand holding something, you don’t quite make out what it is because it’s dark, your eyes are blurry… he says “Here is your $58 Sir, I got your name and number on the entrance list 58 times”.
Interesting night out?! 🙂