Author: David Van Sambeek                             Date: January 12, 2013.

The above image is actually the pyramidal structure of every type of business that you shop at every day, the church you go to on Sunday and the government that rules your country.
It is NOT a PYRAMID SCHEME!

And because a company transacts online instead of from a physical premises does not make it an illegal pyramid scheme! It just means that the owners are savvy enough to cut costs, aim for a bigger target market and pass savings onto their customers.
And yet, they are vilified for this by people who accuse without establishing the facts.

Despite all the media attention surrounding multi-billion-dollar fraud schemes that have left hundreds, possibly thousands, of investors broke, I have noticed that many individuals, including those in the media, haven’t grasped the differences between an illegal pyramid scheme, a ponzi scheme and a legitimate network marketing or retail sales business (and NO, they are NOT the same thing).
In this article, I will address the differences between ponzis, illegal pyramids, multi-level marketing companies and retail sales companies.

So, what’s the difference…?

The Ponzi Scheme

A ponzi scheme can be defined with one simple statement: “taking money from “new” investors to pay “old” investors.”  Ponzi schemes usually promote and solicit for what appear to be real investment opportunities.  Popular ponzis use valuable assets to entice investors into parting with their money, e.g. gold mines, oil drilling, diamonds, and beach-front real estate.  Some ponzis may own the asset they are soliciting for investment, and others are simply promoting the opportunity to invest in an asset that doesn’t even exist.

From this you can see that the soul of a Ponzi Scheme is investment. The ponzi mastermind comes up with some sort of new opportunity that pays incredible rates of return. Regardless of the specific details of the plan, a ponzi scheme always has a mastermind who ends up taking from one investor to pay another.

The Illegal Pyramid Scheme

In its most basic form, an illegal pyramid scheme exists where an individual is recruited into the scheme by someone. The new recruit enters the matrix at the bottom and the recruiter moves up a level and keeps moving up as new people join at the bottom until the recruiter exits at the top with a large sum of money.  At some point the amount of money to be paid out far exceeds the scheme’s income so the pyramid collapses and the people at the bottom lose the money they have put in. Take note that this article is using the term illegal pyramid scheme.  A common misunderstanding among the general public is that all businesses with a triangular or pyramidal structure are illegal pyramid schemes.  This is not true.  Many Multi-Level Marketing (MLM) or Network Marketing (NWM) businesses and retail businesses have a legitimate network of distributors, salesmen and agents, selling a real product or service to the general public.  Although their distributor structure may resemble a pyramid, this does not mean that the NWM or retail company is operating in violation of the law.  The company becomes an illegal pyramid scheme when they pay distributors ONLY for the recruitment of others for their advancement up the ladder.

In other words, in an illegal pyramid scheme, the person does not remain in one position forever. They move up level by level as new recruits enter the scheme until they either cash out or lose out.

In addition, pyramid schemes have no products for sale in return for the money paid in.
In contrast, businesses with pyramid structures DO sell products and services and they form the basis of all legitimate businesses, churches and governments.

All illegal pyramids must inevitably collapse because of the size restraints associated with the pyramid’s exponential growth.

What to Watch Out For…

If you find yourself being solicited to invest directly into a new company that promises huge returns on your investment funds, do your due diligence. This company could be a ponzi scheme looking for the next round of funds to keep the ponzi alive.  On the other hand, if you are getting a sales pitch for a new MLM / NWM (Network Marketing company) or retail sales company, make sure you understand what the company is selling.

Ask yourself:

  • Are the products being sold at a fair price? (BizHub: YES)
  • How are the distributors being paid? (BizHub: From commissions on product sales)
  • Are there any real retail sales to customers outside of the company?  (BizHub: YES)

The multi-level marketing industry is a great way for members of the public to start their own businesses selling products or services to consumers, but do your homework on the company before getting involved. 

Retail sales are what we all grew up knowing as the main or only way to buy goods and services. Salesmen and -women earn commissions for making product sales to customers.

We now hope you will be able to tell the difference between a ponzi scheme, an illegal pyramid scheme, a legitimate Network Marketing company and a legitimate retail sales company like the BizHub Central online shopping mall and Income Plan, so you can identify the first two as opportunities to avoid and the latter as an opportunity to embrace. 

For more information on our Income Plan, go to:
https://www.bizhubcentral.co.za/bizhub-income-plan/

Summary.

BizHub Central SA

  • Is a legitimate retail sales company, not an illegal pyramid scheme, even though it does have an Income Plan with a pyramidal structure, as all businesses, governments, churches and institutions have.
  • Pays commissions when subscribers sell our products and services, so it is a strictly legal retail business paying commissions on sales to consumers.
  • Subscribers do not move up a matrix and out the top when new subscribers arrive as in a pyramid scheme. They stay where they are, so these 2 elements alone prove that BizHub Central cannot be called an illegal pyramid scheme.
  • Does not inflate product prices to accommodate referral commissions. All products are sold at or below normal market rates to the general public. Commissions are taken from the Selling Price set by the supplier, as would happen if an employed salesman made a sale for a company.
  • Does not pay commissions on recruiting new Affiliates. It pays commissions for sales of products made by our agents from our Shop and for sales of current and new services.
  • Pays commissions taken from its own profit margins to reward subscribers for bringing us new business. It does not load extra cost in top of the price to pay a MLM network.
  • Uses its salaries and commissions budget, normally allocated for salespeople employed by a company, to pay customers for sales resulting from successful word-of-mouth, media and online advertising. In this way, we have a much bigger sales force and everyone who markets our business successfully gets a percentage of our profits for their efforts. “Our best advertisement is a satisfied customer.”
  • Does not make unrealistic claims regarding potential returns. All commission and bonus payouts are a maximum of 55% of turnover derived from the introducers’ marketing efforts, creating an equitable split between BizHub Central and its Subscribers. This percentage is broken down into smaller percentages so a larger number of people can be paid a reasonable return for having been directly or indirectly responsible for a sale.
  • Allows members of the public to purchase products and services from our online Shop and therefore, by definition, cannot be described as an illegal pyramid scheme.
  • Has been sanctioned and endorsed by some major corporate companies to market their products and services. These companies would not associate themselves with a ponzi or illegal pyramid scheme for fear of tarnishing their own reputations, which means that they have done their due diligence on BizHub Central and have given us a clean bill of health.

29 thoughts on “Is This a Pyramid Scheme, a Ponzi Scheme, or a Legitimate Retail Sales Company?”

  1. Undeniably believe that which you stated. Your favorite reason appeared to be on the internet
    the easiest thing to be aware of. I say to you, I definitely get annoyed
    while people consider worries that they just do not know
    about. You managed to hit the nail upon the top and also
    defined out the whole thing without having side-effects , people could take
    a signal. Will likely be back to get more. Thanks

  2. Wonderful blog! I found it while surfing around on Yahoo News.
    Do you have any tips on how to get listed in Yahoo News?
    I’ve been trying for a while but I never seem to
    get there! Thanks

  3. Thank you for your positive feedback.
    I will certainly continue writing.
    The blog is for merchants to write articles about their businesses and products so people can learn about them and make more informed decisions when buying.

    I have also set up a Q&A Forum for our merchants and consumers to interact directly with each other, to ask and answer questions that everyone can read and learn from.

    Please continue to post here, and tell your friends about the BizHub Central online shopping mall.

    We are looking for people to become agents/distributors in their countries so we can open a mall there to the benefit of every business and consumer, where you can find whatever you are looking for with only a few clicks and buy directly from the suppliers without having to go through a middleman.

    Regards,
    Paul von Wildenrath.
    CEO, BizHub Central SA

    1. You’re welcome. We are here to talk business and to help each other survive and thrive on this great online business platform. We are currently operating in South Africa, but we are looking to expand our brand into other English-speaking countries as well, whether English is first or second language, that’s ok. If you’d like to have your own (collectively) BizHub Mall in your country, let me know. Email or message me with your first and last names and your Whatsapp no. Mention your requirements and let’s talk about the scenario in your country and how/where we can fit in.

  4. Just want to say your article is as astonishing. The clearness in your post is just nice and i can assume you’re an expert on this subject.
    Fine with your permission let me to grab your feed to
    keep updated with forthcoming post. Thanks a million and please continue the gratifying work.

  5. Awesome site you have here but I was curious if you knew
    of any community forums that cover the same topics talked about
    here? I’d really like to be a part of community where I can get opinions from other experienced people that share the same interest.
    If you have any suggestions, please let me know. Thanks a lot!

    1. We have our own community forum called the BizHub Q&A Forum, where merchants and consumers can discuss their products and educate people on their qualities and uses. Each merchant that registers to list their products in our mall gets their own forum platform and administrator rights, so tell all the people you know in South Africa who have products to sell to look at BizHub Central Online Shopping Mall. If you are in another country, contact me directly, Paul von Wildenrath, through the “Contact Us” menu tab if you’d like to see a BizHub Mall in your country, and if you know anyone who would like to be my representative in that country to start generating interest amongst merchants first of all, so we can fill up the mall with products before we invite consumers to visit.

  6. Hi everybody, here every one is sharing these kinds
    of know-how, thus it’s nice to read this web site, and
    I used to pay a quick visit this website daily.

  7. Hello to all, the contents present at this website are really
    amazing for people knowledge, well, keep up the good work fellows.

    1. Thank you, Gilbert.
      The entire BizHub Central Online Shopping Mall concept was created to ensure that all SMME business owners, in whichever country, can get an affordable web presence to compete equally with large and corporate businesses for the billions now being spent online. This blog was created so that the merchants can write articles about their businesses and products so consumers can read them and make informed decisions whether to buy from them or not, and the reviews and star ratings given by buyers goes a long way to instilling confidence in new customers.

      The article about pyramid and Ponzi schemes relates to our retail-based rewards program called the BizHub Businss Development Plan (BDP).
      The BDP was created to help merchants learn to start and run online businesses off the platform of the BizHub Online Mall.

      We pay commissions based on sales performance when our products are sold by our BDP subscribers, also known as Business Associates (BA’s).
      The BDP is currently a single-tier commission structure, so it can therefore, by definition, NOT be a pyramid scheme or structure.
      (The difference between the two is mentioned in the article).

      When BA’s, or Salespeople, hit preset sales targets, they are promoted (NOT upgraded) to higher status levels where they become Sales Supervisors then Sales Managers then Sales Directors of their own Sales Teams. At this point, they have their own BizHub “mini-biz” and it’s their responsibility to nurture and grow it.
      They will begin to earn overriding sales commissions on their Team Members’ sales, exactly as things are done in conventional retail sales companies, where I got my grounding.

      As they are promoted up the ladder and grow their Sales Team memberships they will qualify for bigger and better commissions, sales incentives, rewards and bonuses, as encouragement. This is all because of the WORK and EFFORT they put into running and managing their BizHub businesses.

      They are NOT rewarded for recruiting. They have to sell actual products, which is why I included the article, to show and educate people about the differences between legitimate, performance-based commission structures where actual products are sold, and illegal pyramid schemes where no products are sold.

      We are currently running in South Africa, but we have received many positive inquiries from other countries and we are eager to expand and offer our unique services to those countries’ merchants and consumers.

      If you would like to have a BizHub Mall in your country, and if you know anyone in your country who would be an excellent representative for us in that country, please let us know which country it is, who the person is and what their contact details are.

      Thanks again for your positive comments.

  8. Everything is very open with a clear clarification of the issues.

    It was definitely informative. Your website is useful. Thank you for sharing!

  9. Thanks for finally writing about > Is This a Pyramid Scheme,
    a Ponzi Scheme, or a Legitimate Retail Sales Company?
    – BizHub Central SA < Loved it!

    1. I thought the article covered the topic very well.
      Please note that it wasn’t written by me.
      I just related it to my business and posted it for everyone’s interest and education.

  10. Greetings from Carolina! I’m bored at work so I decided to browse
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