Evening star. [volume] (Washington, D.C.) 1854-1972, 1963-06-16
Citizens Warned Of 'Giimmick Selma

getting for free. It serves them
right, for not taking the
chance when 1t was offered to
them.
The pyramid doesn't have to
be even as big as the sales
mans minimum" factor Of 6;
any number will do. For in
stance, try the smallest num-
Der of sales by which you can
pay for your 5000 unit: Four.
(That will give you 5000 COM
mission from your friends and
$500 from your friends friends,
for a neat 500 profit.) A py-
ramid Of fours takes a little
longer to run Width be nine
steps before all the home
owners in the Washington area
are used UP, and IA steps before
you'll run through every man,
woman and child in North
America.
This is all very we'll, the true
believer will say, but after all
it's only figures. Besides, some
people actually collect their
commissions. What about that?
It's true, commissions are
paid-as long as the company
is still around. People who get
into the program high enough
up on the pyrmid, before the
remorseless geometic progress
sion really goes to work, are
limited in the money they can
make only by their own ini-
tiative and the gullibility Of
their friends and their friends
friends.
Like the old chain-letter
routine, the ones at the head
of the list can often make a
killing.
It's only when the pyramid
reaches its inevitable, gigantic
size that the whole system
crumbles. Naturally, it's the
last ones in-the ones whose
purchases enable those higher
UP to make money-who wind
up bearing the full load Of the
pyramid.
"Well, then" the true believer
asks, "how about that guar
antee of $500 a year for 20
names, whether they buy or
not? I'll still get back what I
paid for the unit"
This, Of course, is theoreti-
cally possible up to a point,
although fiscally insane. Since
the money to pay the guarantee
comes from further sales OF
the product, and since further
sales depend on one Of those
crazy pyramids, 1t becomes
clear that the company can
not possibly pay off without
going bankrupt.
It's conceivable that the
company might carry out its
guarantee as long as it can,
after all the buyers and all the
prospects have been pyramided
out Of existence, and then go
honorably into bankruptcy. It's
conceivable. If you think the
company that approaches you
with a chain-referral program
is that honorable-well, lots Of
luck.
Even with the best Of inten-
tons, the company obviously
couldn't pay off the full 5000
for prospects who don't buy, in
three years or 800 years. They
have already paid out 500 of
your 5000 in commissions, re-
member? And somewhere along
the line they had to pay the
manufacturer for his product.
And do you really imagine
those fast talking statesmen
have been working for nothing?
This may seem to be bella
boring the obvious. All 1t really
takes to puncture the bubble
of the chain-referral scheme is
a little common sense. Nobody
could reasonably expect that a
company would give away a
5000 product-or even a 9-cent
product-to everyone who asked
for 1t. Sooner or later, COM
mon sense insists. somebody's
going to have to pay.
'Tn Get Mine"
That, of course, is the rub.
People who normally would
know better seem to throw their
common sense out the window
when the chain-referral sales
man comes in the door.
There is, of course, another,
less charitable explanation Of
the ease with which these
schemes catch on. and that is
that people figure, "I'll get mine
before the pyramid crumbles. "
Whether this is what you
think or not, 1t is very likely
just what your friends lower
on the pyramid-the ones who
eventually get stuck-will be-
lieve you were thinking when
you put their name on your
list. One Of the saddest aspects
of the chain-referral business
is the recriminations that fol-
low the inevitable breakdown
Of the scheme.
What can be done about
chain-referral programs2
You can, Of course. complain
10 the authorities II you get
stuck. Then, II you can prove
that the program was misrepre-
scented, or that the product was
no good. maybe you can sue
the company and collect - II
you can find anyone around to
sue.
Not all referral systems are
fraudulent. by any means, but
the chances are that a crooked
operator will be Just the one
who will skip town without
leaving a forwarding address.
Prosecutions for fraud are