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PSA: Affiliate/referral programs vs HYIP/Pyramid schemes

So, since I put up my website, I've been trying as hard as I can to promote it and get people to start earning using my referral links.  Obviously, I want referrals so I can make more money.  I have occasionally been accused of promoting pyramid schemes, because obviously any program that rewards you for getting people to sign up MUST be a pyramid scheme, right?

WRONG!!!

Nearly every legitimate online business nowadays has some type of affiliate/referral program to incentivize users to bring in new customers.  This isn't a pyramid, it's Advertising 101.  The vast majority of new customers are brought to a business by word-of-mouth.  All respectable businesses know this, which is why customer service is so important.  So, how does one tell the difference between an affiliate program and a pyramid scheme?  Here are a few key characteristics of each:

1.  Affiliate programs are usually free to join/use.  Pyramids almost always require new customers to buy their way into the program.

2.  Affiliate programs may offer a few free or low-cost user resources to help advertise and get referrals, but in general each user is expected to manage on their own.  Pyramid schemes, on the other hand, are frequently characterized by seminars, classes and "professional" mentors and these things usually cost money beyond what was already invested to buy into the program.

3.  I have never seen an affiliate program that promises vast riches in small time frames.  However, this is the cornerstone of the pyramid scheme: get rich quick!

4.  Affiliate programs are usually used by long-standing, well-known businesses.  Pyramid schemes never last long because they can't sustain the cost of paying members for recruiting, so the person/group that started the program cuts losses and kills the program.  There are a few limited exceptions to this.

5.  Affiliate programs have rules and regulations regarding how users may attempt to generate referrals in order to prevent the company becoming associated with spamming.  Pyramid schemes, in general, not only allow but encourage all forms of spamming, misdirection and any other shady method that might result in suckers being taken in.

Those are just a few ways to tell the difference.  There are a few HYIP and pyramid operations that begin as free-to-use, but like a casino, they do everything in their power to entice members to invest large sums, ostensibly to speed up profits, but really it's just to line the pockets of the few at the top.  I'm working on incorporating a  HYIP/pyramid list into my website to warn users away from these schemes, but as yet I am quite busy with life and the site is moving rather slowly.  Be patient with me, please, as I am only one man trying to run this operation out of my home and using my own money to investigate each opportunity.

Thanks for taking the time to read this and I hope it helps you to identify real opportunities and scams as you continue your investing adventures!

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