What are scam projects and how to prevent business failure
Posted: Tue Apr 22, 2025 4:06 am
According to Statista, more than 30% of MLM projects cease their activities within the first 2 years. This statistic makes entrepreneurs distrust new network projects due to the fear of failure or becoming a victim of fraud.
What are scam projects?
Scam is a term that is often used to describe a scam or deception.
In business, the word "scam" means the failure of company twitter data managers to fulfill their obligations. For example, delaying payments or stopping them altogether and violating other contractual terms with partners or investors. When all this happens, you can safely say that the project is close to closing.
Investment hype projects and pyramids have a strong reputation as scam organizations in the network business industry. They are built on matrix marketing, gain momentum very quickly and stop working within one year. The closure of such companies for their investors and partners usually leads to large financial losses.
The main feature of scam projects is the way of earning money in them exclusively through attracting new participants.
In typical network companies, there is a product that is sold by distributors, and attracting new partners is an additional source of income and a classic referral bonus. While for partners of scam projects, attracting new people to the system is the main source of profit.
When new partners invest their funds, the scam project receives profit, and the system leaders receive a percentage of the newcomers’ investments.
What are scam projects?
Scam is a term that is often used to describe a scam or deception.
In business, the word "scam" means the failure of company twitter data managers to fulfill their obligations. For example, delaying payments or stopping them altogether and violating other contractual terms with partners or investors. When all this happens, you can safely say that the project is close to closing.
Investment hype projects and pyramids have a strong reputation as scam organizations in the network business industry. They are built on matrix marketing, gain momentum very quickly and stop working within one year. The closure of such companies for their investors and partners usually leads to large financial losses.
The main feature of scam projects is the way of earning money in them exclusively through attracting new participants.
In typical network companies, there is a product that is sold by distributors, and attracting new partners is an additional source of income and a classic referral bonus. While for partners of scam projects, attracting new people to the system is the main source of profit.
When new partners invest their funds, the scam project receives profit, and the system leaders receive a percentage of the newcomers’ investments.