There is a deep need for a very important clarification in Network Marketing.
Recently I was approached by someone speaking about their marketing community that had an admirable team synergy. I congratulated them on finding such a group, it’s one of the more important elements in marketing. A strong team will maintain others focus and motivation.
They continued to tell me about what their group does, which is fine with me, I like to keep up on what other networkers are doing in the industry. As they explained, I realized we weren’t in the same industry at all.
What they were involved in was Cash Gifting. It is VERY crucial for all marketers to know that Cash Gifting is NOT Network Marketing.
What is Cash Gifting?
Simply put it is the transfer of cash, in the form of a gift, with nothing gained in return from the person it is being gifted to. The cash moves up, so more people are needed to join in the cash gifting program to maintain the flow of cash. There is no product involved, just a transfer of cash.
Cash gifting is often called a Ponzi scheme, named for Charles Ponzi, and promises an ridiculously high investment return in a short period of time. Investments are regulated by the SEC and any found to be fraudulent can be shut down and there are criminal penalties for those who engage in these illegal investment acts. Therefore, cash gifting programs avoid using the words “investment”.
Most cash gifting programs involve a system that requires a membership on top of the cash gift to cover the costs of promoting the system. The particular “team” that I was approached with required a $20 fee for the promotion of the team. The team would help assist new “gifters” in the recruit of the gifters that they needed to bring into the program.
The team is willing to give this assistance because in a cash gifting program the money first goes to the top of the program to pay off those who entered first. Without the recruit of new gifters the entire organization would collapse. With no product or service involved in the cash gifting program it falls under the terms “Ponzi Scam”, which also has been interchangeable with the term “Pyramid Scheme”.
That is why it is vital to know the difference between cash gifting and Network Marketing. There is no product involved in cash gifting and cannot be marketed to anyone on a “customer” level. A cash gifting team promotes themselves by invitation only, just as I was invited, but there is NO product involved.
Cash gifting ultimately fails because of the ever growing need of people to fill up the system and send money up to those at the top. Once those at the top are paid off their promised return amount then those below them can begin receiving their cash gifts.
People at the bottom of the system wait until there are more people recruited to refill the system.
The system I was invited to required a $100 gift to be given. Then to complete the level in the structure enough people would have to be recruited to finish paying the person I gifted, then recruits would be added under me until I received $400. Each of those 4 people that gave me the $400 would need 4 each. And then those 16 would each need 4.
After I reached $400 I would gift $200 to the person above me. And then my next promised gift amount I would qualify to collect would be $800. The number of gifters required to fill this level in system get even larger.
These systems rely on the people at the top to rejoin. Even with their return eventually the number of gifters needed becomes so outlandish that the whole system collapses and this is why so many people cry out SCAM! Because the large number of people at the bottom never receive anything out of the program.
There is no opportunity for any commissions to be earned off of outside sales and there is no residual income available. Cash gifting relies solely on recruiting, therefore it is not to be confused with Network Marketing.
Yet another clarification to tell you what no one else is telling you.
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