CYCLING PROGRAMS & PONZI SCHEMES
Author: 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 towork, 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