Club Scheme
A club scheme is a somewhat unsustainable form of Pyramid and Ponzi Scheme where new members are recruited through a process where they are asked by the founder or existing members to be part of an "exclusive" club where they can pay to move through the ranks and, the more money they invest and the more tasks they perform (usually solicitating merchandise or high demand products to non-members) the more privileges and powers they have within the group. First, if new recruits wish to join they must purchase group merchandise and put in a weekly membership fee (e.g. $25) (Note: Sometimes they will have different kinds of memberships, e.g. a gold membership will cost $75 instead). To a "waiting list" where they have to pay a small fee (e.g. $5) Once they get to the end of the waiting line, they will then be placed behind the then lowest ranked member in the club, who will be replaced by the highest ranked member. Then, not only will you have to pay the same small fee to the person in front of you, put you also have to pay a cost (e.g. $50) to be split to the people in that rank (Unless there is only 1 person in that rank. You can also "invest" in the club, which you will receive back the money made from other people in the scheme. You can also buy/sell spots, but the person selling the spot won't make much money because most of it is given to the highest ranked person. Same with auctioning a spot. If someone quits the scheme, people in the waiting list are used to patch the holes up. If not, they will rearrange everyone in the scheme. Sometimes people can be given rewards, but most people can never receive these anyways. The structure of these things are simple: each 4 layers are divided into tiers, each 4 layers of every tier are divided into ranks. Rank I is the lowest, while Rank IV is the highest. This also applies to tiers. People late to enter this "exclusive" club will lose all their money, as when people are late to enter the scheme, they spend more money than is theoretically possible to obtain. Result: When the new member sources dry up, the schemer runs out of sources of income and will quickly dissolve the club and set up another. Combined with the fact that the schemer will make all of the early investors fake, he will run off with most of the money. This scheme is extremely hard to detect because
-Not many people are aware of this kind of fraud and there are no laws regarding it.
-It is easy to make it seem legit.
-It does not focus on recruiting new people, just selling it's merchandise, although recruiting is somewhat encouraged.
-Since there is a pseudo-legit source of income, it is easier for people to believe the investments are real (and the club, of course.)
-Some legit clubs have a system similar to this.
References[edit]
References will be added in the future, thank you.
This article "Club Scheme" is from Wikipedia. The list of its authors can be seen in its historical and/or the page Edithistory:Club Scheme. Articles copied from Draft Namespace on Wikipedia could be seen on the Draft Namespace of Wikipedia and not main one.
