If you are here for a quick answer, then the answer is no, Wealthy Affiliate is not a pyramid scheme. But if you are interested in a more detailed answer and you want to learn how to analyze other programs and be able to categorize if they are a pyramid scheme or not, keep reading.
Pyramid Schemes
Now I am going to explain what a pyramid scheme is. This categorization is often misused. There are a lot of scams out there but they are not always necessarily a pyramid scheme.
What is a pyramid scheme and why is it illegal?
Pyramid schemes are all about money rather than creating great products or services. They often have a product or service to hide their real intentions. A pyramid scheme basically pays you for getting new referrals by telling them they can make money also by referring.
The problem with this as you can see from the picture is that very quickly it is impossible for new members to make a profit. There is no added value in this kind of “business model”, it is just money being moved around.
Therefore pyramid schemes are illegal. If someone promises you to make quick money by referring others and your sales pitch would be the same: be careful, sounds like a pyramid scheme. Don’t waste your time and money on these things.
Types of Pyramid Schemes
Pyramid schemes can take different kinds of forms. Here are 3 of the known types of pyramid schemes.
Ponzi Schemes
Ponzi schemes basically ask you to invest money in the “business” and they promise you to make a great return on your investment, and if you are lucky you will. The “profit” you will get will come from new investors. So, same thing here again: the ones joining last will lose all their money.
Chain Emails
This is a system where you will be asked to donate a chunk of money to everyone within the email. After making the donation, you can add your name to the list and delete the first one and send the email to your contacts in the hope to make the money donated back.
Multi-Level Marketing Pyramid Scheme
Multi-Level Marketing will be explained in more detail afterward. But there are also pyramid schemes that have a product or service, but the main money-making method is again by referring to others without having to make a sale.
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Multi-Level / Network Marketing
Real multi-level marketing is very often mistaken for a Pyramid Scheme because there were and are many examples that are that case.
What is the difference between a pyramid scheme and multi-level marketing?
So, the big difference is that you don’t just get paid for new recruits. Instead, you get a percentage of all the sales your recruits make and also a percentage the recruits of the recruits make. That’s why it is called multi-level marketing.
Business Model
Why does multi-level marketing work? Basically instead of spending most of the budget on advertising and other marketing strategies: this money goes back to the sales representatives. It’s basically like getting a commission, the only big difference to that is, that you also get a percentage on the commissions that your recruits generate.
How high the commissions are and how many levels deep it goes depends highly on the company.
Bad stigma
Multi-level marketing has gotten a bad stigma because of all the bad examples of misuse in pyramid schemes. So, make sure to differentiate between a pyramid scheme and a multi-level marketing approach. I think the concept of multi-level marketing is very appealing from a member and business point of view. It is basically incentivizing word-of-mouth advertisement.
Imagine you go to a new pizza place and you love pizza! So, what will you do? Probably talk to your friends about it how amazing the pizza was you ate at this new place. Now imagine, you would get a commission on every pizza your friends and your friends friends eat there. In the end, they wouldn’t have tried out this place if you wouldn’t have talked about it. And that is true multi-level marketing.
Affiliate Marketing
Now we move more to the online world. Affiliate marketing, in a nutshell, is also getting paid a commission when you refer someone to a product or service and they buy something. Even Amazon has an affiliate program! And yes, all the review sites you go on, they get commissions from you 😉
How does it work? You can sign up as an affiliate for all kinds of affiliate programs and you will basically get a special link. If someone clicks on this special link, the company knows that you referred them and if you generate a sale, you get a commission from that.
Affiliate Marketing Programs
There are tons of affiliate marketing programs out there. An affiliate marketing program is basically a company allowing you to sign up to their affiliate platform, maybe even get access to marketing material and of course your affiliate links.
From Amazon to Namecheap, a lot of big known brands and also smaller ones have affiliate programs. If you are looking for a great overview, I found this website-> affiliate.watch
Affiliate Marketers
Many people have become affiliates nowadays. Why? Because it has a great appeal to it and you can work from anywhere! Now, is it easy? How long will it take? Of course, it’s not easy, but it’s learnable and doable. Affiliate marketing is not for everyone, let’s make that clear. There are a lot of things that you need to learn and there are many different approaches on how to promote products you believe in. From social media to email marketing to native ads. The possibilities grow each day, so does the competition.
Is Wealthy Affiliate a pyramid scheme?
Wealthy Affiliate is first a platform where you can learn how to make money online with Affiliate Marketing, a hosting service, a keyword research tool, and a community. It is a platform that gives you all that and you pay a monthly fee. Why would people think that Wealthy Affiliate is a pyramid scheme? Because you will be paid if someone else signs up. But it is not a pyramid scheme, it’s not multi-level or network marketing… you can promote Wealthy Affiliate as an Affiliate and you will get a cut on the sales only on the first level. It’s the same as if you write a review about the best notebook in 2021 and you add an Amazon affiliate link and you get a certain percentage of the sale if someone buys the notebook after clicking on your link.
Affiliate marketing is much more complex than just spamming your affiliate link everywhere, and Wealthy Affiliate is a platform that teaches you the niche site approach and has a great community behind it that will help you with every step.
What you can earn with Wealthy Affiliate:
Yes, I am a member of Wealthy Affiliate myself and I joined back then in 2015.
If you are interested in joining Wealthy Affiliate, the sign up is free and you can have a look around and once you decide to upgrade your account you will be charged the monthly fee. If you want to support this site, make sure to use my affiliate link -> Join Wealthy Affiliate now!
