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CYCLING PROGRAMS & PONZI SCHEMES |
by:
Judy Thompson |
Copyright 2005 Judy Thompson
People make money and people lose money with cycling programs. People also make or lose money with network marketing and any other kind of legitimate business under the sun! While Ponzi schemes are illegal, some people make money with them, too, while many more lose money..
In this article, I would like to give the reader some information about Ponzi schemes and about “Cycling” programs.
PONZI SCHEMES
Ponzi schemes are a type of illegal pyramid scheme, named for Charles Ponzi, who duped thousands of New England residents. In the year 1920, Ponzi offered 50% profits every 45 days. He collected $9.8 million dollars from 10,550 people and paid out $7.8 million in just 8 months.
This was a kind of swindle, also called a “bubble” and has existed for hundreds of years. In reality, it is not an “investment” as people are led to believe. Money is simply being transferred from new investors to earlier investors. It is a fraud in which the “investors” are promised extremely high returns over a very short period of time.
This short payment time and high rate of return soon attracts large numbers of people. Initial “investors” make a lot of money, but their profits are not a result of the success of a business. Their profits actually come from the contributions of those people who later join, thinking they are participating in a legal business investment.
Ponzi schemes typically claim that their moneymaking abilities are because of their elaborate, inventive investments or business process. Because of word-of-mouth advertising about this great “opportunity,” new depositors are quick to jump on board. Usually a Ponzi scheme will not last very long. It eventually collapses since it was based on something that either never existed, or was grossly overvalued.
A major attraction of a Ponzi scheme is that it appears to be a high paying investment opportunity. As a passive type of program, a person does not need to work in order to generate great profits. The impression that people are given is that they need only to put their money into it and wait for the money to come rolling in!
Unfortunately, only a few “early birds” actually make money, which they actually receive by fraud, while everyone else loses most of or maybe their entire investment!
CYCLING PROGRAMS
Most people who are looking for ways to make money, truly just want to find something that is legitimate and is within their ability to do. A conventional business generally requires a large investment and long working hours. Network marketing, even though it is also a business that takes investment of time and money before a great deal of success is realized, has the advantages of being able to work part time and takes far less investment than does a conventional business. Unfortunately, with network marketing or MLM, there is a lot of hype. Often people are made to believe that they should be making lots of money in a short time. Since that usually doesn’t happen with MLM, as in any other legitimate business, people may begin looking for something that has less involvement and is more “passive” in nature.
So along comes an offer of a promise to make money in a short period of time. All you have to do is invest your money…and wait. There may or may not be some sort of product involved. A product of some sort at least keeps the program within “legal” limits. The so-called product may be leads that have been used over & over again, or some other internet thing that a person would not normally spend their hard-earned bucks for.
The promoters can be very skilled at making a person think that they are getting into a type of investment that really pays off. Indeed, a person, provided they are in “early” enough, does get paid. Investors are led to believe that the “investment” is what is paying off, when in reality, it may be they are being paid from new people investing their money, or even may be getting part of their own money back. These high-yield investment programs (HYIP’s) are actually much like the “cycling” programs only they are not called that. Most of those programs last no longer than about 6 months or so, and then collapse.
Then there are the programs that tell you that you will get paid when you cycle, or it is your turn. At first it takes only a few days to “cycle” and your money may double. The longer the program lasts, the longer it takes for a person to cycle. Eventually the cycle program collapses and the promoter starts another one. Most likely the same people that got in early on one program, will be the ones who get in early on the next program, and so on. A few people make real money, while the majority of folks are left holding the bag!
The promoter of this kind of program, I believe, is running an illegal Ponzi scheme! Even the people who get in early and make money are actually making money at the expense of those who invested later on, and may be in legal trouble, at least in the United States.
From the little bit of experience I have had with both the HYIP’s and the cycling programs, even though at the time I believed each was probably legitimate, a close analysis now tells me different. In general, I would advise anyone to stay far, far away from HYIP’s and from cycling programs.
However, I believe there may be some exceptions to the above information: there are at least a couple companies which have been around for several years that offer cycling plans to their members to help them in advertising or obtaining leads for their business. It should be noted, though, that the members purchase product from these companies each month. Their compensation plan is not based on when they “cycle.”
Dear reader, face up to it, if you are going to develop an income in a legitimate business, you will need to be prepared to work, invest some money, and allow time before you realize the income of your dreams!
About the Author
Judy Thompson is an experienced network marketer. She is with a nutrition company that has an automated support system designed to help you achieve real success. For details, go to http://automaticbuilder.com/333015895/?source=SYA805
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