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A Home-Based Business Online
_______________________________________________________________
Practical home business ideas, opportunities
and solutions for the work-from-home
entrepreneur
Issue 163 : December 9, 2002
Sent to 14,656 Opt-In Subscribers
Editor: Elena Fawkner
Publisher: Fawkner Publishing
http://www.ahbbo.com
Contact By Email
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IN THIS ISSUE
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1. Welcome and Update from Elena
2. Home Business Idea of the Week
3. Feature Article - A Pyramid By Any Other Name
4. Surveys and Trends
5. Success Quote of the Week
6. Advertise with AHBBO
7. Subscription Management
8. Caveat Emptor
9. Contact Information
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1. Welcome from Elena
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Hello again and a warm welcome to all the new subscribers
who have joined us since the last issue.
In her prepared statement to the International Monetary Fund's
seminar on "Current Legal Issues Affecting Central Banks" in
May 1998, Debra Valentine, General Counsel for the U.S. Federal
Trade Commission, had this to say about pyramid schemes:
"What is striking about these schemes is that while they are
very old forms of fraud, modern technology has vastly
multiplied their potential for harming our citizens. The Internet
in particular offers pyramid builders a multi-lane highway to
world-wide recruits in virtually no time."
To make matters worse, often times the line between
illegal pyramid scheme and legitimate MLM is hard to find.
This week's article, "A Pyramid By Any Other Name" will
show you what to look out for. It's at segment 3.
As always, thanks for reading and I hope you enjoy this
week's issue.
Remember, AHBBO is for YOU! If you have comments or
suggestions for topics you would like to see addressed, or
would just like to share your experiences with other
subscribers, I want to hear from you. Please send
comments, questions and stories to Contact By Email .
_______________________________________________________________
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2. Home Business Idea of the Week - Travel Club
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Most Travel Clubs are organized on the premise of building a
sizable membership capable of negotiating discounts with various
travel providers.
The Travel Club makes money earning a commission every time a
member purchases airline tickets, books a hotel room, or goes on
a cruise. Today, things have changed quite a bit.
SELLING MEMBERSHIPS
With a swelling membership basis it is difficult for travel clubs to
ignore the profits of charging for membership, no matter how
insignificant the amount. With 10,000 members, a travel club
charging only $20 a year will earn $200,000 in membership dues.
This revenue is over any commission the Club earns when a
member travels.
SPLIT DISCOUNTS
A Travel Club normally acts as a travel agent for the exclusive use
of its members. As an "agency", it gets standard agent commissions
from airlines, hotels and cruise lines. This can range anywhere
between 10% and 18% of the purchase price. What travel clubs
usually do is offer its members a rebate equivalent to 50% of its
commission (meaning 5% to 9% of their purchase price). If the
member spends $1,000, he/she gets back anywhere between $50
and $90. This is enough reason for people to join a travel club,
especially if the membership dues are just $20 a year.
ALL-CRUISE
As today's market shifts from the "all-in-one" and "do-it-all" service
companies to that of "specialized" services, so do travel clubs.
Based on industry statistics, the best area to specialize in is the
Cruise business, the fastest-growing segment in Travel.
YOUR BUSINESS
Sell memberships to your All-Cruise Travel Club and offer rebates
on all cruises and peripheral services the member books through
the club. Find products or services that you can give as bonus for
signing up for a year's membership.
You may even want to seek distributors who will purchase
membership cards in advance, at 15% of the retail price. This means
that if the membership retails for $20, a distributor buys it from you
for $3. If you sell 10,000 memberships this way, you've just earned
$30,000. Then, add to this revenue from commissions when members
take a cruise.
-----
This is just one of over 130 ideas from the new "Practical Home
Business Ideas From AHBBO" e-book. Find out more at http://www.ahbbo.com/ideasbook.html .
_______________________________________________________________
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3. Feature Article: A Pyramid By Any Other Name
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© 2002 Elena Fawkner
"Three Days, Three People, Retire in 30 days!
Make no mistake, People will start BEGGING you to sponsor
them in!
Take a look at this Income Projection Chart:
Level | # of Days | # Benefactored | Income Projection
1 3 3 $70
2 6 9 $130
3 9 27 $290
4 12 81 $660
5 15 243 $1520
6 18 729 $3520
7 21 2,187 $8160
8 24 6,561 $18,880
9 27 19,683 $43,520
10 30 59,049 $99,840
11 33 177,147 $227,840
12 36 531,441 $517,120
13 39 1,594,323 $1,167,360
Days add up in a hurry and so does your downline!"
OK people ... I know how tempting this looks but REALITY check
time. This is but one example of a number of "wealth generation
programs" recently touted online. The idea is that you
must find three people who want to join this program, you pay
$20 to "benefactor" each of them into the program (for a total
"investment" of $60) and you're set for life. Oh, and you have
to do it in three days. Each of your three, if they are to remain
in the game and thereby derive the same wondrous riches from
the program as you, must also find three people, benefactor
them into the program (again within three days) and their
three must find their three in three days and so on.
And, because non-performers are booted from the program,
so the theory goes, the only people getting paid are the
ones actively benefactoring in their own recruits, each of
whom down the line contributes their "investment" of $60.
THE "PRODUCT"
The product each person gets for their $60 (because this is
NOT, of course, a PYRAMID SCHEME) is:
"Software entitled "Building an MLM Empire using the Internet",
in which you Own Full Licensed Retail Rights to Market the
software. Retail Value $29.95 All Sales Are Final-No Refunds!"
OK, three points on the "product".
First, your investment is $60. The product is worth (let's give
them the benefit of the doubt) $29.95. HELLO!? But you get
RESELL RIGHTS!, I hear you protest. That makes it more
valuable than just the purchase price of the product itself. Oh
yeah? Well, you HAVE to be able to sell the product otherwise
the whole scheme ... er ... program would be nothing more than
a wealth distribution arrangement wouldn't it? And that's
against the law, and we couldn't have that.
Second, this is not "software", it's an e-Book.
Third, the title of the e-Book deviously and insidiously implies
a relationship between this "wealth creation program" and MLM
(multi-level marketing). MLM is a different thing altogether.
For a more detailed explanation of what MLM is and what it is
not, read "Not MLM! ... Why ever not?" at
http://www.ahbbo.com/notmlm.html .
'WEALTH CREATION' PROGRAMS
OK, so what about these "wealth creation programs" then?
Sounds like a great idea, right? Everybody wins! Well, think
about this ... if everyone goes out and gets three people who
each have to throw $60 into the pot for their three, everybody
up and down the line has effectively contributed $60 and that's
all there is in the pot. How do you get more than your $60
back?
Ahah! you cleverly point out, those who don't recruit ... er ...
"benefactor in" ... er ... SELL (yeah, that's it, SELL) the "product"
to their three gets dropped, don't they, so now the $20 their
benefactor contributed for them to join the program is still in the
pot but they're not. They've forfeited their investment. THAT'S
how we make money.
OK! Very good. I can see you're paying attention.
Just one, teensy little problem with this brilliant plan.
It's B.S.. It's a pyramid scheme and it's ILLEGAL.
PYRAMID SCHEMES VS. LEGITIMATE MLM
In her prepared statement to the International Monetary Fund's
seminar on "Current Legal Issues Affecting Central Banks" in
May 1998, Debra Valentine, General Counsel for the U.S. Federal
Trade Commission, had this to say about pyramid schemes:
"What is striking about these schemes is that while they are
very old forms of fraud, modern technology has vastly
multiplied their potential for harming our citizens. The Internet
in particular offers pyramid builders a multi-lane highway to
world-wide recruits in virtually no time.
"What is a Pyramid Scheme and What is Legitimate Marketing?
"Pyramid Schemes now come in so many forms that they may
be difficult to recognize immediately. However, they all share
one overriding characteristic. They promise consumers or
investors large profits based primarily on recruiting others to
join their program, not based on profits from any real
investment or real sale of goods to the public. Some schemes
may purport to sell a product, but they often simply use the
product to hide their pyramid structure. There are two tell-
tale signs that a product is simply being used to disguise a
pyramid scheme: inventory loading [recruits are forced to buy
more product than they could possibly sell] and a lack of
retail sales [sales are made only between people inside the
pyramid, not to the public in general - sound familiar?]. ...
"[P]yramids are quite seductive because they may be able to
deliver a high rate of return to a few early investors for a
short period of time. Yet, .. pyramid .. schemes are illegal
because they inevitably must fall apart. No program can
recruit new members forever. Every pyramid .. scheme
collapses because it cannot expand beyond the size of the
earth's population. [Footnote 3: "Assume a pyramid scheme
in which each person recruits 10 new people. There would
be one person at the top, 10 beneath her, 100 beneath them
and so forth. The pyramid would involve everyone on earth in
just 10 layers of people with one con artist on top. The
bottom layer would have more than 4.5 billion people."]
When the scheme collapses, most investors find themselves
at the bottom, unable to recoup their losses.
"Some people confuse pyramid .. schemes with multilevel
marketing. ... [U]nlike pyramid .. schemes, MLM's have a
real product to sell. More importantly, MLM's actually sell
their product to members of the general public, without
requiring these consumers to pay anything extra or to join
the MLM system. MLM's may pay commissions to a long
string of distributors, but these commissions are paid for
real retail sales, not for new recruits."
Now consider how our "wealth distribution program" above
works. Which is it, do you think? Pyramid scheme or MLM?
Bzzzz ... time's up. All who think it's a classic pyramid go
to the top of the class.
FEDERAL TRADE COMMISSION GUIDELINES
Not surprisingly, the U.S. Federal Trade Commission ("FTC")
pays close attention to so-called MLM's that are, in reality,
nothing more than pyramid schemes. It regularly prosecutes
the promoters of such schemes, obtaining injunctions and
orders freezing the assets of the promoters to be applied
in redress of victims. If you knowingly participate in a
pyramid scheme, you too can be named as a defendant in
such an action.
Bear in mind that as a distributor (whether you're participating
in a legitimate MLM program or an illegal pyramid scheme),
you're legally responsible for the claims you make about the
company, its products and business opportunities. It is no
defense that you're merely rehashing the same old
representations made to you by the company. The FTC can
require you to verify the research behind any claims you make.
For more on the subject of representations and your
obligation to be able to back them up, read "Not Just Six Lines ...
65 Characters" at http://www.ahbbo.com/adsftc.html .
In addition, if you solicit new distributors, heed the FTC's
warning in its Consumer Alert, "The Bottom Line About
Multilevel Marketing Plans": "You are responsible for the claims
you make about a distributor's earnings potential. Be sure to
represent the opportunity honestly and avoid making
unrealistic promises. If those promises fall through, remember
that you could be held liable."
Finally, here's the FTC's tips for evaluating a multilevel
marketing opportunity:
"1. Avoid any plan that includes commissions for recruiting
additional distributors. It may be an illegal pyramid. [And,
by the way, calling it "benefactoring" won't help. Just a
handy hint ...]
"2. Beware of plans that ask new distributors to purchase
expensive products and marketing materials. These plans
may be pyramids in disguise.
"3. Be cautious of plans that claim you will make money
through continued growth of your downline, that is, the
number of distributors you recruit. [Don't take this tip out
of context - by definition, the more people you have in
your downline, the more you'll legitimately make in MLM.
What the FTC is saying here is to watch out if the plan
rewards you for recruiting per se, rather than paying you
a commission on sales of product to the general public
generated by your downline.]
"4. Beware of plans that claim to sell miracle products or
promise enormous earnings. Ask the promoter to
substantiate claims.
"5. Beware of shills - "decoy" references paid by a plan's
promoter to lie about their earnings through the plan.
"6. Don't pay or sign any contracts in an "opportunity
meeting" or any other pressure-filled situation. Insist on
taking your time to think over your decision. Talk it over
with a family member, friend, accountant or lawyer.
"7. Do your homework! Check with your local Better
Business Bureau and State Attorney General
about any plan you're considering - especially when the
claims about the product or your potential earnings seem
too good to be true. [Don't rely too much on the BBB
though - companies pay to be listed with them so they're
not as authoritative and independent as they seem. Asking
whether they have complaints on file about your particular
program is worthwhile, however.]
"8. Remember that no matter how good a product and how
solid a multilevel marketing plan may be, you'll need to
invest sweat equity as well as dollars for your investment
to pay off."
By testing any opportunity against the above tips, you'll
go a long way to ensuring that what you're getting yourself
into is a legitimate MLM program and not an illegal pyramid.
Probably the best gut check of them all though is the good
old "if it sounds too good to be true, it probably is".
Hmm ... $1.1m in 39 days for an investment of $60 ...
somehow, I JUST don't think so ...
------
** Reprinting of this article is welcome! **
This article may be freely reproduced provided that: (1) you
include the following resource box; and (2) you only mail to
a 100% opt-in list.
Here's the resource box to use if reprinting this article:
------
Elena Fawkner is editor of A Home-Based Business Online ...
practical business ideas, opportunities and solutions for the
work-from-home entrepreneur.
http://www.ahbbo.com
_______________________________________________________________
I DIDN"T EARN A DIME ONLINE UNTIL
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from your computer. Tired of selling and recruiting but with
the desire to succeed, I kept looking for the right opportunity
until I found this way to very good income on part-time effort.
Find out for yourself at: http://reply2it.com/tr/4you2
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4. Surveys and Trends
_______________________________________________________________
© 2002 Ryanna's Hope
The following is an extract from the current issue of Larry
Wack's excellent weekly, "Surveys and Trends". Subscribe
using the link below for the full issue.
------
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WHICH WAY ARE THE SENIORS HEADED?
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A new survey by Greenfield Online has found that 92 percent of US
seniors with Internet access have window shopped online, while 78
percent have made an online purchase.
The study ranked the top five products purchased by online
seniors. Computer software has been purchased by 43 percent of
senior users. This compares to 19 percent of users across the
overall Internet universe. Books have also been purchased by 43
percent of Internet users, compared to 21 percent of the Net
universe.
Greenfield also found that 27 percent of senior users in the US
have made a purchase at an online drugstore, with 9 percent of
these buying a prescription product.
The findings are based on a survey of 1,265 Web users aged 55 and
over, from across the US. 80 percent of those surveyed are aged
between 55 and 64, with 20 percent aged 65 and over.
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A LARGE BUYING/SPENDING SEGMENT ON THE NET
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A new Harris Interactive study indicates that college students
are the most wired group in the US.
The survey found that 93 percent of American college students
regularly use the Internet, making them the most connected
segment of the population.
Around 92 percent of students aged 18-30 own a personal computer,
while 13 percent plan to buy a PC in the next year.
In addition to this, mobile phone ownership amongst students
stands at 69 percent, with 18 percent planning to buy a cell
phone in the next year.
------
SUBSCRIPTION INFORMATION
Subscribe to "Surveys and Trends" with an email to:
mailto:rypublish@sprintmail.com and say 'survey' in the
subject line.
_______________________________________________________________
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5. Success Quote of the Week
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Nothing astonishes men so much as common-sense and plain
dealing.
-- Ralph Waldo Emerson
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6. Advertise With AHBBO
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Ezine (electronic magazine or newsletter) advertising is
the most cost-effective and targeted form of advertising
online today. This is because the ezine's editor has already
done the hard work of bringing together a large group of
readers highly motivated by the subject-matter of the
ezine itself.
Therefore, assuming you place your ad in an ezine with
a subject matter that fits with what it is you are
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group of highly targeted prospects for your product or
service.
AHBBO offers four different advertising packages:
(1) top sponsor ad placements,
(2) single ad placements,
(3) ad paks (4 ads for the price of 3), and
(4) exclusive mailings.
To learn more about advertising in the AHBBO ezine,
visit http://www.ahbbo.com/advertising.html .
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7. Subscription Management
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8. Caveat Emptor
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Although all of the information presented in AHBBO is
published in good faith, I accept no responsibility as to the
accuracy or otherwise of the information presented. By making
use of the information contained in AHBBO the reader assumes
all risk that certain information may prove to be incorrect.
**I do not endorse any advertisements unless stated to the
contrary. Your money, your decision, your responsibility.**
All advertisements are accepted in good faith. However,
advertisers are solely responsible for the content and
accuracy of their classified advertisements and I give no
warranties, nor accept any responsibility, in relation to any
classified advertisement appearing in this publication. ALWAYS
carry out your own due diligence! Remember, if it sounds too
good to be true, it probably is.
_______________________________________________________________
9. Contact Information
_______________________________________________________________
Elena Fawkner, Editor
A Home-Based Business Online
Contact By Email
http://www.ahbbo.com
_______________________________________________________________
All Rights Reserved